Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 02, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38066 | |
Entity Registrant Name | SELECT ENERGY SERVICES, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-4561945 | |
Entity Address, Address Line One | 1233 W. Loop South, Suite 1400 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77027 | |
City Area Code | 713 | |
Local Phone Number | 235-9500 | |
Title of 12(b) Security | Class A common stock, par value $0.01 per share | |
Trading Symbol | WTTR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001693256 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 86,824,127 | |
Class B Common Stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 16,221,101 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 185,438 | $ 79,268 |
Accounts receivable trade, net of allowance for credit losses of $9,731 and $5,773, respectively | 92,148 | 267,628 |
Accounts receivable, related parties | 595 | 4,677 |
Inventories | 34,366 | 37,542 |
Prepaid expenses and other current assets | 19,815 | 26,486 |
Total current assets | 332,362 | 415,601 |
Property and equipment | 907,980 | 1,015,379 |
Accumulated depreciation | (538,380) | (562,986) |
Property and equipment held-for-sale, net | 885 | |
Total property and equipment, net | 369,600 | 453,278 |
Right-of-use assets, net | 57,402 | 70,635 |
Goodwill | 266,934 | |
Other intangible assets, net | 118,801 | 136,952 |
Other assets, net | 2,468 | 4,220 |
Total assets | 880,633 | 1,347,620 |
Current liabilities | ||
Accounts payable | 11,037 | 35,686 |
Accrued accounts payable | 13,058 | 47,547 |
Accounts payable and accrued expenses, related parties | 300 | 2,789 |
Accrued salaries and benefits | 14,811 | 20,079 |
Accrued insurance | 10,227 | 8,843 |
Sales tax payable | 678 | 2,119 |
Accrued expenses and other current liabilities | 13,296 | 15,375 |
Current operating lease liabilities | 14,611 | 19,315 |
Current portion of finance lease obligations | 304 | 128 |
Total current liabilities | 78,322 | 151,881 |
Long-term operating lease liabilities | 64,217 | 72,143 |
Other long-term liabilities | 12,698 | 10,784 |
Total liabilities | 155,237 | 234,808 |
Commitments and contingencies (Note 10) | ||
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019 | ||
Additional paid-in capital | 907,832 | 914,699 |
Accumulated (deficit) retained earnings | (299,264) | 21,437 |
Total stockholders' equity | 609,598 | 937,177 |
Noncontrolling interests | 115,798 | 175,635 |
Total stockholders' equity | 725,396 | 1,112,812 |
Total liabilities and equity | 880,633 | 1,347,620 |
Class A Common Stock | ||
Current liabilities | ||
Common stock | 868 | 879 |
Total stockholders' equity | 868 | 879 |
Class B Common Stock | ||
Current liabilities | ||
Common stock | 162 | 162 |
Total stockholders' equity | $ 162 | $ 162 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Allowance for doubtful accounts | $ 9,731 | $ 5,773 |
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 | 86,824,127 | 87,893,525 |
Common Stock, Shares, Outstanding | 86,824,127 | 87,893,525 |
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 | 0 |
Common Stock, Shares, Outstanding | 0 | 0 |
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 | 16,221,101 | 16,221,101 |
Common Stock, Shares, Outstanding | 16,221,101 | 16,221,101 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | ||||
Total revenue | $ 101,242 | $ 328,968 | $ 471,766 | $ 1,015,501 |
Costs of revenue | ||||
Depreciation and amortization | 23,877 | 28,263 | 75,567 | 88,624 |
Total costs of revenue | 118,142 | 287,974 | 497,089 | 888,571 |
Gross (loss) profit | (16,900) | 40,994 | (25,323) | 126,930 |
Operating expenses | ||||
Selling, general and administrative | 15,955 | 27,280 | 58,902 | 86,953 |
Depreciation and amortization | 685 | 952 | 2,204 | 2,858 |
Impairment of goodwill and trademark | 276,016 | 4,396 | ||
Impairment and abandonment of property and equipment | 49 | 7,910 | 942 | |
Lease abandonment costs | 672 | 238 | 2,493 | 1,494 |
Total operating expenses | 17,312 | 28,519 | 347,525 | 96,643 |
(Loss) income from operations | (34,212) | 12,475 | (372,848) | 30,287 |
Other income (expense) | ||||
Gains (losses) on sales of property and equipment and divestitures, net | 891 | (2,033) | (1,727) | (8,233) |
Interest expense, net | (789) | (438) | (1,633) | (2,370) |
Foreign currency gain (loss), net | 13 | (59) | (6) | 268 |
Other expense, net | (2,364) | (272) | (4,805) | (62) |
(Loss) income before income tax benefit (expense) | (36,461) | 9,673 | (381,019) | 19,890 |
Income tax benefit (expense) | 201 | (2,501) | 495 | (3,250) |
Net (loss) income | (36,260) | 7,172 | (380,524) | 16,640 |
Less: net loss (income) attributable to noncontrolling interests | 5,719 | (1,793) | 59,823 | (3,926) |
Net (loss) income attributable to Select Energy Services, Inc. | (30,541) | 5,379 | (320,701) | 12,714 |
Water Services | ||||
Revenue | ||||
Total revenue | 54,516 | 196,782 | 259,834 | 619,388 |
Costs of revenue | ||||
Costs of revenue | 52,861 | 153,741 | 235,989 | 472,013 |
Operating expenses | ||||
Impairment of goodwill and trademark | 186,468 | |||
Lease abandonment costs | 673 | 173 | 2,456 | 620 |
Water Infrastructure | ||||
Revenue | ||||
Total revenue | 16,165 | 63,953 | 89,227 | 169,279 |
Costs of revenue | ||||
Costs of revenue | 12,816 | 46,748 | 74,500 | 126,634 |
Operating expenses | ||||
Impairment of goodwill and trademark | 80,466 | |||
Lease abandonment costs | 51 | |||
Oilfield Chemicals | ||||
Revenue | ||||
Total revenue | 30,561 | 67,932 | 122,705 | 197,762 |
Costs of revenue | ||||
Costs of revenue | 28,558 | 57,357 | 110,996 | 170,935 |
Operating expenses | ||||
Impairment of goodwill and trademark | 9,082 | |||
Lease abandonment costs | 4 | 42 | 11 | |
Other | ||||
Revenue | ||||
Total revenue | 301 | 29,072 | ||
Costs of revenue | ||||
Costs of revenue | 30 | 1,865 | 37 | 30,365 |
Operating expenses | ||||
Impairment of goodwill and trademark | 4,396 | |||
Lease abandonment costs | (1) | 61 | (56) | 863 |
Class A Common Stock | ||||
Other income (expense) | ||||
Net (loss) income attributable to Select Energy Services, Inc. | $ (30,541) | $ 5,379 | $ (320,701) | $ 12,714 |
Net (loss) income per share attributable to common stockholders (Note 16): | ||||
Basic | $ (0.36) | $ 0.07 | $ (3.76) | $ 0.16 |
Diluted | $ (0.36) | $ 0.07 | $ (3.76) | $ 0.16 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net (loss) income | $ (36,260) | $ 7,172 | $ (380,524) | $ 16,640 |
Other comprehensive (loss) income | ||||
Foreign currency translation adjustment, net of tax of $0 | 380 | 368 | ||
Comprehensive (loss) income | (36,260) | 7,552 | (380,524) | 17,008 |
Less: comprehensive loss (income) attributable to noncontrolling interests | 5,719 | (1,888) | 59,823 | (4,013) |
Comprehensive (loss) income attributable to Select Energy Services, Inc. | $ (30,541) | $ 5,664 | $ (320,701) | $ 12,995 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Foreign currency translation adjustment, tax amount | $ 0 | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Class A Common StockConversion of Class B to Class A | Class A 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) Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total |
Beginning balance at Dec. 31, 2018 | $ 790 | $ 260 | $ 832,934 | $ 813,599 | $ 18,653 | $ (368) | $ 277,839 | $ 1,110,773 | |||||
Beginning balance (in shares) at Dec. 31, 2018 | 78,956,555 | 26,026,843 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Conversion of common stock | $ 75 | $ (75) | $ 82,706 | $ 82,706 | $ (82,706) | ||||||||
Conversion of common stock (in shares) | 7,564,868 | (7,564,868) | |||||||||||
ESPP shares issued | 79 | 79 | 1 | 80 | |||||||||
ESPP shares issued (in shares) | 8,746 | ||||||||||||
Equity-based compensation | 9,045 | 9,045 | 2,829 | 11,874 | |||||||||
Issuance of restricted shares | $ 14 | 3,604 | 3,590 | (3,604) | |||||||||
Issuance of restricted shares (in shares) | 1,391,479 | ||||||||||||
Exercise of restricted stock units | 4 | 4 | (4) | ||||||||||
Exercise of restricted stock units (in shares) | 1,250 | ||||||||||||
Stock options exercised | 84 | 84 | (54) | 30 | |||||||||
Stock options exercised (in shares) | 5,282 | ||||||||||||
Repurchase of common stock | $ (16) | (15,902) | (15,886) | 2,501 | (13,401) | ||||||||
Repurchase of common stock ( in shares) | (1,597,150) | ||||||||||||
Restricted shares forfeited | (36) | (36) | 36 | ||||||||||
Restricted shares forfeited (in shares) | (10,017) | ||||||||||||
Distributions to noncontrolling interests, net | (349) | (349) | |||||||||||
NCI income tax adjustment | 89 | 89 | (89) | ||||||||||
Foreign currency translation adjustment | 387 | 19 | 368 | 85 | 472 | ||||||||
Net (loss) income | 12,714 | 12,714 | 3,926 | 16,640 | |||||||||
Ending balance at Sep. 30, 2019 | $ 863 | $ 185 | 925,708 | 893,293 | 31,367 | 200,411 | 1,126,119 | ||||||
Ending balance (in shares) at Sep. 30, 2019 | 86,321,013 | 18,461,975 | |||||||||||
Beginning balance at Jun. 30, 2019 | $ 802 | $ 260 | 848,638 | 821,968 | 25,988 | (380) | 278,210 | 1,126,848 | |||||
Beginning balance (in shares) at Jun. 30, 2019 | 80,176,078 | 26,026,843 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Conversion of common stock | $ 75 | $ (75) | $ 82,706 | $ 82,706 | $ (82,706) | ||||||||
Conversion of common stock (in shares) | 7,564,868 | (7,564,868) | |||||||||||
ESPP shares issued | 21 | 21 | 3 | 24 | |||||||||
ESPP shares issued (in shares) | 3,079 | ||||||||||||
Equity-based compensation | 2,774 | 2,774 | 792 | 3,566 | |||||||||
Issuance of restricted shares | 41 | 41 | (41) | ||||||||||
Issuance of restricted shares (in shares) | 17,549 | ||||||||||||
Stock options exercised | 84 | 84 | (54) | 30 | |||||||||
Stock options exercised (in shares) | 5,282 | ||||||||||||
Repurchase of common stock | $ (14) | (14,361) | (14,347) | 2,476 | (11,885) | ||||||||
Repurchase of common stock ( in shares) | (1,444,648) | ||||||||||||
Restricted shares forfeited | (13) | (13) | 13 | ||||||||||
Restricted shares forfeited (in shares) | (1,195) | ||||||||||||
Distributions to noncontrolling interests, net | (124) | (124) | |||||||||||
NCI income tax adjustment | 40 | 40 | (40) | ||||||||||
Foreign currency translation adjustment | 399 | 19 | $ 380 | 89 | 488 | ||||||||
Net (loss) income | 5,379 | 5,379 | 1,793 | 7,172 | |||||||||
Ending balance at Sep. 30, 2019 | $ 863 | $ 185 | 925,708 | 893,293 | 31,367 | 200,411 | 1,126,119 | ||||||
Ending balance (in shares) at Sep. 30, 2019 | 86,321,013 | 18,461,975 | |||||||||||
Beginning balance at Dec. 31, 2019 | $ 879 | $ 162 | 937,177 | 914,699 | 21,437 | 175,635 | 1,112,812 | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 87,893,525 | 16,221,101 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
ESPP shares issued | 65 | 65 | (6) | 59 | |||||||||
ESPP shares issued (in shares) | 10,834 | ||||||||||||
Equity-based compensation | 3,419 | 3,419 | 639 | 4,058 | |||||||||
Issuance of restricted shares | $ 15 | 2,422 | 2,407 | (2,422) | |||||||||
Issuance of restricted shares (in shares) | 1,477,488 | ||||||||||||
Exercise of restricted stock units | 1 | 1 | (1) | ||||||||||
Exercise of restricted stock units (in shares) | 625 | ||||||||||||
Repurchase of common stock | $ (22) | (12,292) | (12,270) | 1,416 | (10,876) | ||||||||
Repurchase of common stock ( in shares) | (2,199,824) | ||||||||||||
Restricted shares forfeited | $ (4) | (531) | (527) | 531 | |||||||||
Restricted shares forfeited (in shares) | (358,521) | ||||||||||||
Noncontrolling interest in subsidiary | (133) | (133) | |||||||||||
NCI income tax adjustment | 38 | 38 | (38) | ||||||||||
Net (loss) income | (320,701) | (320,701) | (59,823) | (380,524) | |||||||||
Ending balance at Sep. 30, 2020 | $ 868 | $ 162 | 609,598 | 907,832 | (299,264) | 115,798 | 725,396 | ||||||
Ending balance (in shares) at Sep. 30, 2020 | 86,824,127 | 16,221,101 | |||||||||||
Beginning balance at Jun. 30, 2020 | $ 869 | $ 162 | 638,472 | 906,164 | (268,723) | 121,165 | 759,637 | ||||||
Beginning balance (in shares) at Jun. 30, 2020 | 86,883,049 | 16,221,101 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
ESPP shares issued | 17 | 17 | (2) | 15 | |||||||||
ESPP shares issued (in shares) | 3,194 | ||||||||||||
Equity-based compensation | 1,889 | 1,889 | 353 | 2,242 | |||||||||
Repurchase of common stock | (249) | (249) | 11 | (238) | |||||||||
Repurchase of common stock ( in shares) | (43,923) | ||||||||||||
Restricted shares forfeited | $ (1) | (20) | (19) | 20 | |||||||||
Restricted shares forfeited (in shares) | (18,193) | ||||||||||||
NCI income tax adjustment | 30 | 30 | (30) | ||||||||||
Net (loss) income | (30,541) | (30,541) | (5,719) | (36,260) | |||||||||
Ending balance at Sep. 30, 2020 | $ 868 | $ 162 | $ 609,598 | $ 907,832 | $ (299,264) | $ 115,798 | $ 725,396 | ||||||
Ending balance (in shares) at Sep. 30, 2020 | 86,824,127 | 16,221,101 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net (loss) income | $ (380,524) | $ 16,640 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities | ||
Depreciation and amortization | 77,771 | 91,482 |
Net loss on disposal of property and equipment | 1,316 | 4,971 |
Bad debt expense | 6,108 | 1,764 |
Amortization of debt issuance costs | 516 | 516 |
Inventory write-downs | 787 | 228 |
Equity-based compensation | 4,058 | 11,874 |
Impairment of goodwill and trademark | 276,016 | 4,396 |
Impairment and abandonment of property and equipment | 7,910 | 942 |
Loss on divestitures | 411 | 3,262 |
Other operating items, net | 158 | 259 |
Changes in operating assets and liabilities | ||
Accounts receivable | 171,700 | 14,835 |
Prepaid expenses and other assets | 11,761 | 9,774 |
Accounts payable and accrued liabilities | (58,160) | (18,727) |
Net cash provided by operating activities | 119,828 | 142,216 |
Cash flows from investing activities | ||
Working capital settlement | 691 | |
Proceeds received from divestitures | 197 | 24,927 |
Purchase of property and equipment | (19,100) | (86,374) |
Acquisitions, net of cash received | (10,400) | |
Proceeds received from sales of property and equipment | 15,854 | 13,958 |
Net cash used in investing activities | (3,049) | (57,198) |
Cash flows from financing activities | ||
Borrowings from revolving line of credit | 5,000 | |
Payments on long-term debt | (50,000) | |
Payments of finance lease obligations | (189) | (743) |
Proceeds from share issuance | 59 | 110 |
Contributions from (distributions to) noncontrolling interests | 383 | (349) |
Repurchase of common stock | (10,876) | (13,401) |
Net cash used in financing activities | (10,623) | (59,383) |
Effect of exchange rate changes on cash | 14 | 127 |
Net increase in cash and cash equivalents | 106,170 | 25,762 |
Cash and cash equivalents, beginning of period | 79,268 | 17,237 |
Cash and cash equivalents, end of period | 185,438 | 42,999 |
Supplemental cash flow disclosure: | ||
Cash paid for interest | 1,413 | 2,421 |
Cash paid for income taxes, net | 544 | 1,675 |
Supplemental disclosure of noncash operating activities: | ||
Noncash asset exchange | 1,578 | |
Supplemental disclosure of noncash investing activities: | ||
Capital expenditures included in accounts payable and accrued liabilities | 2,061 | $ 13,442 |
Noncash proceeds received from sale of interest in a formerly consolidated joint venture | $ 367 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
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 common units (“SES Holdings LLC Units”) in SES Holdings, LLC (“SES Holdings”). We are a leading provider of comprehensive water-management solutions to the oil and gas industry in the United States (“U.S.”). We also develop, manufacture and deliver a full suite of chemical solutions for use in oil and gas well completion and production operations. Through a combination of organic growth and acquisitions over the last decade, we have developed a leading position in the water solutions industry. We believe we are the only company in the oilfield services industry that combines comprehensive water-management services with related chemical products. Furthermore, we believe we are one of the few large oilfield services companies whose primary focus is on the management and treatment of water and water resources in the oil and gas production industry. Accordingly, the importance of responsibly managing water resources through our operations to help conserve fresh water and protect the environment is paramount to our continued success. Select 144A Offering and Initial Public Offering. 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, which were converted into shares of Class A common stock, par value $0.01 per share (“Class A Common Stock”) following the Company’s initial public offering (“IPO”). 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. On April 26, 2017, the Company completed its IPO of 8,700,000 shares of Class A Common Stock. Holders 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. 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. 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. During the year ended December 31, 2019, a total of 9,805,742 SES Holdings LLC Units were exchanged for 9,805,742 shares of Class A Common Stock, and 9,805,742 shares of Class B Common Stock were cancelled. There were no exchanges during the Current Period (as defined below). Basis of presentation : The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with GAAP. This Quarterly Report relates to the three and nine months ended September 30, 2020 (the “Current Quarter” and the “Current Period”, respectively) and the three and nine months ended September 30, 2019 (the “Prior Quarter” and the “Prior Period”, respectively). The Company’s annual report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) filed with the SEC on February 25, 2020 includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report. All material adjustments (consisting solely of normal recurring adjustments) which, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been reflected. The results for the Current Quarter and Current Period may not be indicative of the results to be expected for the full year, in part due to the COVID-19 pandemic. The unaudited interim 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 for which the Company does not have significant control or influence are accounted for using the cost method. As of September 30, 2020, the Company had one cost-method investment. 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. Segment reporting: The Company has three reportable segments. Reportable 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. The Company’s current reportable segments are Water Services, Water Infrastructure, and Oilfield Chemicals. The Water Services segment consists of the Company’s services businesses, including water transfer, flowback and well testing, fluids hauling, water containment and water network automation, primarily serving E&P companies. Additionally, this segment includes the operations of our accommodations and rentals business. The Water Infrastructure segment consists of the Company’s infrastructure assets, including operations associated with our water sourcing and pipeline infrastructure, our water recycling solutions and infrastructure, and our produced water gathering systems and saltwater disposal wells, primarily serving E&P companies. The Oilfield Chemicals segment develops, manufactures and provides a full suite of chemicals used in hydraulic fracturing, stimulation, cementing, and well completion and production services, including polymer slurries, crosslinkers, friction reducers, biocides, dry and liquid scale inhibitors, corrosion inhibitors, buffers, breakers and other chemical technologies. This segment also provides chemicals needed by our customers to increase oil and gas production and lower production costs over the life of a well. Given the breadth of chemicals and application expertise we provide, our Oilfield Chemicals customers are primarily pressure pumpers, but also include major integrated and independent oil and gas producers. The results of service lines divested during 2019, including the operations of our Affirm Oilfield Services, LLC subsidiary (“Affirm”), our sand hauling operations and our Canadian operations, are combined in the “Other” category. Reclassifications |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies : The Company’s significant accounting policies are disclosed in Note 2 of the consolidated financial statements for the year ended December 31, 2019, included in the 2019 Form 10-K. 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, inventory, income taxes, self-insurance liabilities, share-based compensation, contingent liabilities and the incremental borrowing rate for leases. 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. Allowance for credit losses: The following table presents the changes to the allowance for the Current Period: Nine months ended September 30, 2020 (in thousands) Balance at December 31, 2019 $ 5,773 Increase to allowance based on a percentage of Current Period revenue 943 Adjustment based on aged receivable analysis 5,165 Charge-offs (2,150) Balance at September 30, 2020 $ 9,731 Asset retirement obligations: Nine months ended September 30, 2020 (in thousands) Balance at December 31, 2019 $ 1,527 Accretion expense, included in depreciation and amortization expense 92 Disposals (219) Payments (163) Balance at September 30, 2020 $ 1,237 We review the adequacy of our ARO liabilities whenever indicators suggest that the estimated cash flows underlying the liabilities have changed. The Company’s ARO liabilities are included in accrued expenses and other current liabilities and other long-term liabilities in the accompanying consolidated balance sheets. Lessor Income: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) (in thousands) Category Classification Lessor income Cost of sales $ 67 $ 184 $ 279 $ 364 Sublease income Lease abandonment costs and Cost of sales 355 393 1,091 1,155 The Company also generates short-term equipment rental revenue. See Note 5—Revenue for a discussion of revenue recognition for the accommodations and rentals business. Operating leases: lease liabilities on the consolidated balance sheets during the second quarter of 2020. Additionally, the Company has successfully negotiated certain lease payment deferrals as well as lease payment reductions that are being accounted for as modifications, with no impact to straight-line lease expense from lease payment deferrals and a reduction in straight-line rent expense from lease payment reductions. Defined Contribution Plan: Payroll Tax Deferral: Recent accounting pronouncements : In June 2016, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments modified retrospective transition approach. After reviewing the new standard and reexamining current and prior year bad debt expense from trade receivables, as well as updating future expectations, the adoption of the new standard in the first quarter of 2020 did not have a material impact to the Company’s financial statements. In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
IMPAIRMENTS AND OTHER COSTS
IMPAIRMENTS AND OTHER COSTS | 9 Months Ended |
Sep. 30, 2020 | |
IMPAIRMENTS AND OTHER COSTS | |
IMPAIRMENTS AND OTHER COSTS | NOTE 3—IMPAIRMENTS AND OTHER COSTS Significant challenges that emerged during the Current Period, and that are expected to continue, have had and will likely continue to have a negative impact on our results of operations. The COVID-19 pandemic has caused a worldwide slowdown in economic activity, resulting in a sharp decline in global oil demand and therefore, lower oil and natural gas prices. Global oil demand is expected to remain challenged at least until the COVID-19 pandemic can be contained. In response to lower oil and gas prices, our E&P customers have cut capital spending, resulting in a sharp drop in the number of wells drilled and completed in all of our markets. Reduced demand for our services has had a material, negative impact on our Current Quarter and Current Period financial results. While oil prices and U.S. unconventional completions activity have partially recovered from the recent lows, given the continued uncertainty around the COVID-19 pandemic and the associated impact on oil demand, we are unable to predict if, when, and by how much the demand for our services and therefore our financial performance will improve. Because the magnitude and duration of the COVID-19 pandemic is unknown, we cannot forecast with reasonable certainty its impact on our business, financial condition or near or longer-term financial or operational results. However, we currently expect that our 2020 net income will be negative. During the Current Period, we have taken actions to protect our balance sheet and maintain our liquidity, including significantly decreasing our operating expenses by reducing headcount, reducing salaries and director compensation, idling facilities, closing yard locations, reducing third-party expenses and streamlining operations, as well as reducing capital expenditures. We are also deferring employer payroll tax payments for the remainder of 2020, in accordance with the provisions of the CARES Act, and may take advantage of future legislation passed by the United States Congress in response to the COVID-19 pandemic. As a result of the downturn in our business, we recorded impairment expenses in the first half of 2020 related to goodwill, property and equipment and other intangible assets. There is no assurance that we will not have additional impairments in subsequent quarters. A summary of impairment, severance, yard closure and lease abandonment costs for the Current Quarter, Prior Quarter, Current Period and Prior Period were as follows: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Impairment of goodwill and trademark Water Services $ — $ — $ 186,468 $ — Water Infrastructure — — 80,466 — Oilfield Chemicals — — 9,082 — Other — — — 4,396 Total impairment of goodwill and trademark $ — $ — $ 276,016 $ 4,396 For a discussion of the impairments to goodwill and trademark, See Note 8—Goodwill and Other Intangible Assets. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Impairment and abandonment of property and equipment Water Services $ — $ — $ 3,894 $ — Water Infrastructure — — 4,016 — Other — 49 — 942 Total impairment and abandonment of property and equipment $ — $ 49 $ 7,910 $ 942 During the Current Period, the Company recorded an impairment of $7.9 million related to certain equipment that was determined to be obsolete. During the Prior Quarter and Prior Period, the Company recorded an impairment of a nominal amount and $0.9 million, respectively, of Canadian property and equipment to write down the carrying value based on the expected future sale proceeds at that time. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Severance Water Services $ — $ — $ 4,569 $ — Water Infrastructure — — 500 — Oilfield Chemicals — — 813 — Other — — 1,286 1,680 Total severance expense $ — $ — $ 7,168 $ 1,680 Yard closure costs Water Services $ — $ — $ 2,645 $ — Oilfield Chemicals — — 316 — Total yard closure costs $ — $ — $ 2,961 $ — Lease abandonment costs Water Services $ 673 $ 173 $ 2,456 $ 620 Water Infrastructure — — 51 — Oilfield Chemicals — 4 42 11 Other (1) 61 (56) 863 Total lease abandonment costs $ 672 $ 238 $ 2,493 $ 1,494 During the Current Period, the Company recorded exit-disposal costs including $7.2 million of severance costs, with $1.1 million of accrued severance at September 30, 2020, $3.0 million in accrued yard closure costs recognized within costs of revenue on the accompanying consolidated statements of operations with $0.4 million accrued yard closure costs at September 30, 2020, and $2.5 million of lease abandonment costs. Severance costs of $4.0 million and $3.2 million are recognized within costs of revenue and selling, general and administrative expenses, respectively, on the accompanying consolidated statements of operations. During the Prior Period, the Company recorded exit-disposal costs including $1.7 million of severance recognized within selling, general and administrative expenses on the accompanying consolidated statements of operations, and $1.5 million of lease abandonment costs, both of which primarily related to the Company’s divested service lines. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2020 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 4—Acquisitions Business combinations Well Chemical Services Acquisition On September 30, 2019, the Company acquired a well chemical services business (“WCS”), formerly a division of Baker Hughes Company, for $10.0 million, funded with cash on hand (the “WCS Acquisition”). WCS provides advanced water treatment solutions, specialized stimulation flow assurance and integrity additives and post-treatment monitoring service in the U.S. This acquisition expands the Company’s service offerings in oilfield water treatment across the full lifecycle of water, from pre-fracturing treatment through reuse and recycling. The WCS 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. These estimates, judgments and assumptions and valuation of the inventory and property and equipment acquired, customer relationships, and current liabilities were finalized as of December 31, 2019. The assets acquired and liabilities assumed are included in the Company’s Oilfield Chemicals 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 $ 10,000 Total consideration transferred 10,000 Less: identifiable assets acquired and liabilities assumed Inventory 5,221 Property and equipment 4,473 Customer relationships 476 Current liabilities (170) Total identifiable net assets acquired 10,000 Fair value allocated to net assets acquired $ 10,000 |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2020 | |
REVENUE | |
REVENUE | NOTE 5—REVENUE The Company follows ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Leases The following factors are applicable to all three of the Company’s segments for the first nine months of 2020 and 2019, respectively: ● 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 services rendered and 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 minimal volume discounts. ● There are no service-type warranties. ● There is no long-term customer financing. In the Water Services and Water Infrastructure 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 job sites. As a multi-job site organization, contract terms, including pricing for the Company’s services, are negotiated on a job site level on a per-job basis. Most jobs are 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 credit losses. 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 are 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 September 30, 2020, the Company had five contracts in place for these segments lasting over one 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 credit losses. Customer returns are rare and immaterial and there were no material in-process customer agreements for this segment as of September 30, 2020, lasting greater than one 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 three months and as of September 30, 2020, no material rental agreements lasted more than one year. The following table sets forth certain financial information with respect to the Company’s disaggregation of revenues by geographic location: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Geographic Region Permian Basin $ 38,804 $ 158,609 $ 213,440 $ 469,391 Eagle Ford 10,089 44,694 56,425 124,453 Haynesville/E. Texas 21,096 18,322 54,819 53,918 MidCon 11,579 45,522 44,277 152,500 Marcellus/Utica 11,021 21,330 44,111 79,781 Rockies 4,488 21,045 30,284 64,981 Bakken 4,938 20,052 30,040 66,195 All other/eliminations (773) (606) (1,630) 4,282 Total $ 101,242 $ 328,968 $ 471,766 $ 1,015,501 In the Water Services segment, the top three revenue-producing regions are the Permian Basin, Eagle Ford and Marcellus/Utica, which collectively comprised 66%, 72%, 71% and 72% of segment revenue for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. In the Water Infrastructure segment, the top two revenue-producing regions are the Permian Basin and Bakken, which collectively comprised 87%, 84%, 86% and 83% of segment revenue for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. In the Oilfield Chemicals segment, the top three revenue-producing regions are the Permian Basin, Haynesville/E. Texas and MidCon, which collectively comprised 96%, 90%, 86% and 88% of segment revenue for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2020 | |
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: September 30, 2020 December 31, 2019 (in thousands) Raw materials $ 16,898 $ 12,365 Finished goods 17,468 24,724 Materials and supplies — 453 Total $ 34,366 $ 37,542 During the Current Quarter, Prior Quarter, Current Period and Prior Period, the Company recorded charges to the reserve for excess and obsolete inventory for $0.2 million, a nominal amount, $0.8 million, and $0.2 million, respectively, which were recognized within costs of revenue on the accompanying consolidated statements of operations. The Company’s inventory reserve was $4.2 million and $4.1 million as of September 30, 2020 and December 31, 2019, respectively. 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 | 9 Months Ended |
Sep. 30, 2020 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 7—PROPERTY AND EQUIPMENT Property and equipment consists of the following as of September 30, 2020 and December 31, 2019: September 30, 2020 December 31, 2019 (in thousands) Land $ 14,013 $ 16,030 Buildings and leasehold improvements 92,232 97,426 Vehicles and equipment 31,665 53,819 Vehicles and equipment - finance lease 784 1,291 Machinery and equipment 617,066 659,835 Machinery and equipment - finance lease 612 162 Pipelines 72,111 69,327 Computer equipment and software 6,697 8,051 Computer equipment and software - finance lease 356 356 Office furniture and equipment 962 1,157 Disposal wells 49,965 64,149 Other — 497 Construction in progress 21,517 43,279 907,980 1,015,379 Less accumulated depreciation (1) (538,380) (562,986) Property and equipment held-for-sale, net — 885 Total property and equipment, net $ 369,600 $ 453,278 (1) Includes $1.4 million and $1.6 million of accumulated depreciation related to finance leases as of September 30, 2020 and December 31, 2019, respectively. Total depreciation and amortization expense related to property and equipment and finance leases presented in the table above, as well as amortization of intangible assets presented in Note 8 is as follows: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Category Depreciation expense from property and equipment $ 21,449 $ 26,163 $ 68,720 $ 81,698 Amortization expense from finance leases 123 54 239 791 Amortization expense from intangible assets 2,960 2,969 8,939 8,907 Accretion expense from asset retirement obligations 30 29 (127) 86 Total depreciation and amortization $ 24,562 $ 29,215 $ 77,771 $ 91,482 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. See Note 3 for impairment and abandonment of property and equipment during the Current Quarter and Prior Quarter. During the Current Period, the Company sold the remaining Canadian assets that were previously designated as held for sale at a loss of $0.1 million recognized within gains (losses) on sales of property, equipment and divestitures, net on the accompanying consolidated statements of operations. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2020 | |
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 annual impairment tests are based on Level 3 inputs (see Note 12). During the first quarter of 2020, the Company had triggering events in connection with the resulting significant adverse change to the demand for the Company’s services in connection with a significant decline in the price of oil and the related global economic impacts resulting from the OPEC+ disputes as well as the COVID-19 pandemic. This included uncertainty regarding oil prices and the length of the recovery following the significant market disruption in the oil and gas industry. Given the volatile market environment at March 31, 2020, the Company utilized third-party valuation advisors to assist with these evaluations. These evaluations included significant judgment, including management’s short-term and long-term forecast of operating performance, discount rates based on our weighted-average cost of capital, revenue growth rates, profitability margins, capital expenditures, the timing of future cash flows based on an eventual recovery of the oil and gas industry, and in the case of long-lived assets, the remaining useful life and service potential of the asset. The Company performed quantitative tests for reporting units in both the Water Services and Water Infrastructure segments using the income and market approaches, resulting in a full impairment to goodwill in both segments. The changes in the carrying amounts of goodwill by reportable segment as of September 30, 2020 and December 31, 2019 are as follows: Water Water Services Infrastructure Total Balance as of December 31, 2019 186,468 80,466 266,934 Impairment (186,468) (80,466) (266,934) Balance as of September 30, 2020 $ — $ — $ — The components of other intangible assets, net as of September 30, 2020 and December 31, 2019 are as follows: As of September 30, 2020 As of December 31, 2019 Gross Accumulated Net Gross Accumulated Net Value Impairment Amortization Value Value Amortization Value (in thousands) (in thousands) Definite-lived Customer relationships $ 116,554 $ — $ (27,036) $ 89,518 $ 116,554 $ (20,233) $ 96,321 Patents 9,741 — (2,923) 6,818 10,110 (2,420) 7,690 Other 7,234 — (6,160) 1,074 7,234 (4,766) 2,468 Total definite-lived 133,529 — (36,119) 97,410 133,898 (27,419) 106,479 Indefinite-lived Water rights 7,031 — — 7,031 7,031 — 7,031 Trademarks 23,442 (9,082) — 14,360 23,442 — 23,442 Total indefinite-lived 30,473 (9,082) — 21,391 30,473 — 30,473 Total other intangible assets, net $ 164,002 $ (9,082) $ (36,119) $ 118,801 $ 164,371 $ (27,419) $ 136,952 Due to the triggering events discussed above, the Company also tested all intangible assets for impairment during the first quarter of 2020. These evaluations included significant judgment, including discount rates based on our weighted-average cost of capital and the royalty rate. This resulted in $9.1 million of impairment to trademarks using the relief from royalty method, which was recorded in the Oilfield Chemicals segment. The weighted-average amortization period for customer relationships, patents, and other definite lived assets was 9.9 years, 7.0 years, and 2.6 years, respectively, as of September 30, 2020. See Note 7 for the amortization expense during the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. The indefinite lived water rights and trademarks are generally subject to renewal every five Amount (in thousands) Remainder of 2020 $ 2,722 Year ending December 31, 2021 10,466 Year ending December 31, 2022 10,252 Year ending December 31, 2023 10,180 Year ending December 31, 2024 10,111 Thereafter 53,679 Total $ 97,410 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2020 | |
DEBT | |
DEBT | NOTE 9—DEBT Credit facility and revolving line of credit On November 1, 2017, SES Holdings and Select Energy Services, LLC (“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 1.00% 2.00% II < 66.67% of the commitments and ≥ 33.33% of the commitments 0.75% 1.75% III ≥ 66.67% of the commitments 0.50% 1.50% Level Average Revolver Usage Unused Line Fee Percentage I ≥ 50% of the commitments 0.250% II < 50% of the commitments 0.375% 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. See “Note 13—Related-Party Transactions” for further discussion of the 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. The Company had no borrowings outstanding under the Credit Agreement as of September 30, 2020 and December 31, 2019. As of September 30, 2020 and December 31, 2019, the borrowing base under the Credit Agreement was $63.6 million and $214.6 million, respectively. The significant reduction in our borrowing base since December 31, 2019 was driven primarily by the meaningful reductions during the Current Period in our accounts receivable, which represent the primary collateral for the borrowing base. 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 September 30, 2020 and December 31, 2019, were $1.4 million and $2.0 million, respectively. As these debt issuance costs relate to a revolving line of credit, they are presented as a deferred charge within other assets on the consolidated balance sheets. Amortization expense related to debt issuance costs was $0.2 million, $0.2 million, $0.5 million and $0.5 million for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. The Company was in compliance with all debt covenants as of September 30, 2020. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 10—COMMITMENTS AND CONTINGENCIES 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. As previously disclosed, 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 less than 5% of the vehicles in the fleet in violation of the Clean Air Act. The Company is continuing to cooperate with the relevant authorities to resolve the matter, and while at this time no administrative, civil or criminal charges have been brought against the Company, the Company accrued $4.3 million related to the settlement of this investigation prior to the Current Quarter and made an initial payment of $1.2 million related to this accrual during the Current Quarter. The Company does not believe that the ultimate resolution of this matter will be material to the Company’s financial statements. Self-Insured Reserves We are self-insured up to certain retention limits with respect to workers’ compensation, general liability and vehicle liability matters, and effective June 1, 2020, health insurance. We maintain accruals for self-insurance retentions that we estimate using third-party data and claims history. |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
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, 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 Company’s board of directors approved the First Amendment to the 2016 Plan (the “ First Equity Plan Amendment”), which clarified the treatment of substitute awards under the 2016 Plan (including substitute awards that may be granted in connection with the Rockwater merger which occurred on November 1, 2017) 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 the Company’s Class A Common Stock is listed. The effectiveness of the First 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. Stockholders holding a majority of the Company’s outstanding common stock approved the First Equity Plan Amendment on July 18, 2017, and such amendment became effective on November 1, 2017 upon the consummation of the Rockwater merger. On February 28, 2020, the Company’s board of directors approved the Second Amendment to the 2016 Plan (the “Second Equity Plan Amendment”), which increases the number of shares of the Company’s Class A Common Stock that may be issued under the 2016 Plan by 4,000,000 shares. The effectiveness of the Second Equity Plan Amendment was subject to approval by the Company's stockholders. Stockholders holding a majority of the Company’s outstanding common stock approved the Second Equity Plan Amendment on May 8, 2020, and such amendment became immediately effective. Currently, the maximum number of shares reserved for issuance under the 2016 Plan, taking into account the Second Equity Plan Amendment, is approximately 13.3 million shares. For all share-based compensation award types, the Company accounts for forfeitures as they occur. 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. 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 option pricing 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. No stock options were granted in 2019 or in the Current Period. A summary of the Company’s stock option activity and related information as of and for the Current Period is as follows: For the nine months ended September 30, 2020 Weighted-average Weighted-average Grant Date Value Aggregate Intrinsic Stock Options Exercise Price Term (Years) Value (in thousands) (a) Beginning balance, outstanding 3,797,319 $ 15.95 4.2 $ 509 Forfeited (22,437) 18.52 Expired (238,104) 14.05 Ending balance, outstanding 3,536,778 $ 16.06 3.6 $ — Ending balance, exercisable 3,533,403 $ 16.06 3.6 $ — Nonvested at September 30, 2020 3,375 $ 22.22 (a) The Company recognized a nominal Restricted Stock Awards and Restricted Stock Units The value of the restricted stock awards and restricted stock units granted 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 A summary of the Company’s restricted stock awards activity and related information for the Current Period is as follows: For the nine months ended September 30, 2020 Weighted-average Restricted Stock Awards Grant Date Fair Value Nonvested at December 31, 2019 1,518,193 $ 10.08 Granted 1,477,488 5.80 Vested (578,281) 11.79 Forfeited (398,550) 7.50 Nonvested at September 30, 2020 2,018,850 $ 6.97 A summary of the Company’s restricted stock unit activity and related information for the Current Period is as follows: For the nine months ended September 30, 2020 Weighted-average Restricted Stock Units Grant Date Fair Value Nonvested at December 31, 2019 1,250 $ 19.00 Vested (625) 20.00 Forfeited (625) 18.00 Nonvested at September 30, 2020 — $ — Performance Share Units (PSUs) During 2018 and 2019, 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, and January 1, 2019 through December 31, 2021 performance periods, respectively. The target number of shares of Class A Common Stock subject to each PSU granted in 2018 and 2019 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 for the 2018 PSU grants, and June 30, 2022 for the 2019 PSU grants, 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% During 2020, the Company approved grants of PSUs that are subject to both performance-based and service-based vesting provisions related to (i) return on asset performance (“ROA”) in comparison to thirteen peer companies and (ii) Adjusted Free Cash Flow (“FCF”) performance percentage. The number of shares of Class A Common Stock issued to a recipient upon vesting of the PSUs will be calculated based on ROA and FCF performance over the period from January 1, 2020 through December 31, 2022. The target number of shares of Class A Common Stock subject to each PSU granted in 2020 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, 2023 for the 2020 PSU grants, assuming the minimum performance metrics are achieved. The target PSUs that become earned connected with the ROA in comparison to other companies will be determined based on the Company’s Average Return on Assets (as defined in the applicable PSU agreement) relative to the Average Return on Assets of the peer companies (as defined in the applicable PSU agreement) in accordance with the following table, but only if the Company’s Average Return on Assets is equal to or greater than 5% during the performance period: Ranking Among Peer Group Percentage of Target Amount Earned Outside of Top 10 0% Top 10 50% Top 7 100% Top 3 175% The target PSUs that become earned in connection with the adjusted FCF performance percentage will be determined (as defined in the applicable PSU agreement) in accordance with the following table: Adjusted FCF Performance Percentage Percentage of Target Amount Earned Less than 70% 0% 70% 50% 100% 100% 130% 175% The fair value on the date the PSUs were granted during 2020, 2019 and 2018 was $4.4 million, $7.0 million and $5.9 million, respectively. 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. During the Current Period, the Company revised the estimates for the PSUs granted in 2018 and 2019 and expected to vest to 0%. The Company recognized compensation expense of $0.2 million, compensation expense of $0.1 million, a reduction to compensation expense of $2.0 million and compensation expense of $1.8 million related to the PSUs for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. As of September 30, 2020, the unrecognized compensation cost related to our unvested PSUs is estimated to be $2.3 million and is expected to be recognized over a weighted-average period of 2.3 years. However, this compensation cost will be adjusted as appropriate throughout the applicable performance periods. The following table summarizes the information about the performance share units outstanding as of September 30, 2020: Performance Share Units Nonvested as of December 31, 2019 1,014,990 Target shares granted 753,378 Target shares outstanding as of September 30, 2020 1,768,368 Stock-Settled Incentive Awards Effective May 17, 2018, the Company approved grants of stock-settled incentive awards to certain key employees under the 2016 Plan that were subject to both market-based and service-based vesting provisions. These awards vested after a two-year service period and, if earned, would have settled in shares of Class A Common Stock. The ultimate amount earned was based on the achievement of the market metrics, which was based on the stock price of the Class A Common Stock at the vesting date, for which payout could range from 0% to 200%. Any award not earned on the vesting date was forfeited. The target amount that became earned during the performance period was 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 equaled the greater of (i) the fair market value of a share of the Class A Common Stock on the vesting date, or (ii) the volume weighted-average closing price of a share of the Class A Common Stock, as reported on the New York Stock Exchange, 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 was in shares of Class A Common Stock with a fair market value equal to the earned amount, which could have ranged from 0% to 200% of the target amount depending on the stock price at vesting date. The earned amount was 0% and no shares of Class A Common Stock were issued. Compensation expense associated with the stock-settled incentive awards was 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. The Company recognized stock compensation expense related to stock-settled incentive awards of $0.1 million, $0.1 million and $0.4 million in the Prior Quarter, Current Period and Prior Period, respectively. The following table summarizes the information about the stock-settled incentive awards as of June 30, 2020: Award Value Value at Target Being Recognized Nonvested as of December 31, 2019 $ 2,937 $ 1,122 Forfeited during 2020 (410) (157) Awards earned and forfeited as market condition not satisfied as of vesting date (2,527) — Cumulative expense recognized $ — $ 965 Employee Stock Purchase Plan (ESPP) The Company has an Employee Stock Purchase Plan (“ESPP”) under which employees that have been continuously employed for at least one year may purchase shares of Class A Common Stock at a discount. The plan provides for four The following table summarizes ESPP activity (in thousands, except shares): For the nine months ended September 30, 2020 Cash received for shares issued $ 59 Shares issued 10,834 Share Repurchases During the Current Quarter and the Current Period, the Company repurchased zero and 1,989,440 shares, respectively, of Class A Common Stock in the open market and repurchased 43,923 and 210,384 shares, respectively, of Class A Common Stock in connection with employee minimum tax withholding requirements for units vested under the 2016 Plan. All repurchased shares were retired. During the Current Quarter, the repurchases were accounted for as a decrease to paid-in-capital of $0.2 million and a decrease to Class A Common Stock of approximately $400. During the Current Period, the repurchases were accounted for as a decrease to paid-in-capital of $10.9 million and a decrease to Class A Common Stock of approximately $22,000. In the Prior Quarter, the Company repurchased 1,443,409 shares in the open market and repurchased 1,239 shares in connection with employee minimum tax withholding requirements. In the Prior Period, the Company repurchased 1,525,501 shares in the open market and repurchased 71,649 shares in connection with employee minimum tax withholding requirements. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 9 Months Ended |
Sep. 30, 2020 | |
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 and abandonment 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 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 Level 2 Level 3 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 nine months ended September 30, 2020 or the year ended December 31, 2019. The following table presents information about the Company’s assets measured at fair value on a recurring and non-recurring basis as of March 31, 2020, June 30, 2020 and September 30, 2020: Fair Value Measurements Using Carrying Frequency Measurement Date Level 1 Level 2 Level 3 Value (1) Impairment (in thousands) Nine Months Ended September 30, 2020 Goodwill Non-recurring March 31 $ — $ — $ — $ 266,934 $ 266,934 Trademark Non-recurring March 31 — — 14,360 23,442 9,082 Property and equipment Non-recurring March 31 — — 176 3,360 3,184 Property and equipment Non-recurring June 30 — — — 4,726 4,726 Prepaid expenses and other current assets Recurring September 30 — 1,768 — 1,768 — (1) Amount represents carrying value at the date of assessment. See Note 3 – Impairments and Other Costs, for a discussion of the impairment to goodwill, trademark and property and equipment presented in the table above. Other fair value considerations The carrying values of the Company’s current financial instruments, which include cash and cash equivalents, accounts receivable trade, short-term investments and accounts payable, approximate their fair value as of September 30, 2020 and December 31, 2019, due to the short-term maturity of these instruments. The Company did not have any debt as of September 30, 2020 or December 31, 2019. 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. Nonmonetary transaction |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
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 number of transactions with related parties. In accordance with the Company’s related persons transactions policy, the audit committee of 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. For more information regarding the Company’s policies and procedures for review of related-party transactions, see the Company’s Definitive Proxy Statement for the 2020 Annual Meeting of Stockholders filed with the SEC on March 27, 2020. During the Current Quarter, sales to related parties were $0.2 million and purchases from related-party vendors were $0.5 million. These purchases consisted of $0.4 million relating to the rental of certain equipment or other services used in operations and $0.1 million relating to management, consulting and other services. During the Prior Quarter, sales to related parties were $3.5 million and purchases from related-party vendors were $3.2 million. These purchases consisted of $2.3 million relating to the rental of certain equipment or other services used in operations, $0.6 million relating to purchases of property and equipment and $0.3 million relating to management, consulting and other services. During the Current Period, sales to related parties were $2.7 million and purchases from related-party vendors were $6.2 million. These purchases consisted of $5.5 million relating to the rental of certain equipment or other services used in operations, $0.3 million relating to purchases of property and equipment, $0.3 million relating to management, consulting and other services and $0.1 million related to inventory and consumables. During the Prior Period, sales to related parties were $10.8 million and purchases from related-party vendors were $15.6 million. These purchases consisted of $11.8 million relating to the rental of certain equipment or other services used in operations, $2.5 million relating to purchases of property and equipment and $1.3 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. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14—INCOME TAXES The Company’s income tax information is presented in the table below. The effective tax rate is different than the 21% standard Federal rate due to net income allocated to noncontrolling interests, state income taxes and valuation allowances. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Current income tax (benefit) expense $ (157) $ 2,115 $ (836) $ 2,698 Deferred income tax (benefit) expense (44) 386 341 552 Total income tax (benefit) expense $ (201) $ 2,501 $ (495) $ 3,250 Effective Tax Rate 0.6% 25.9% 0.1% 16.3% On March 27, 2020, the CARES Act was enacted. The CARES Act includes, among other things, certain income tax provisions for businesses. The Company recognized an income tax benefit of $0.5 million during the Current Period, as a result of the net operating loss carryback and interest expense limitation provisions of the CARES Act. |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 9 Months Ended |
Sep. 30, 2020 | |
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 Common Stock. As of As of September 30, 2020 December 31, 2019 (in thousands) Noncontrolling interests attributable to joint ventures formed for water-related services $ 1,908 $ 2,674 Noncontrolling interests attributable to holders of Class B Common Stock 113,890 172,961 Total noncontrolling interests $ 115,798 $ 175,635 For all periods presented, there were no changes to Select’s ownership interest in joint ventures formed for water-related services, with the exception of a divestiture of a 50% owned joint venture during the Current Period that eliminated $0.1 million of noncontrolling interest. Additionally, for all periods presented, 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 are as follows: For the nine months ended September 30, 2020 2019 (in thousands) Net (loss) income attributable to Select Energy Services, Inc. $ (320,701) $ 12,714 Transfers (to) from noncontrolling interests: Increase in additional paid-in capital as a result of stock option exercises — 54 Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures 1,891 3,568 Increase in additional paid-in capital as a result of issuance of common stock due to vesting of restricted stock units 1 4 Decrease in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units (1,416) (2,501) 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 — 82,706 Increase (decrease) in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued 6 (1) Change to equity from net (loss) income attributable to Select Energy Services, Inc. and transfers from noncontrolling interests $ (320,219) $ 96,544 |
(LOSS) EARNINGS PER SHARE
(LOSS) EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
(LOSS) EARNINGS PER SHARE | |
(LOSS) EARNINGS PER SHARE | NOTE 16—(LOSS) EARNINGS PER SHARE (Loss) earnings per share are based on the amount of (loss) income allocated to the stockholders and the weighted-average number of shares outstanding during the period for each class of common stock. Outstanding options to purchase 3,536,778, 2,956,610, 3,536,778 and 2,956,837 shares of Class A Common Stock are not included in the calculation of diluted weighted-average shares outstanding for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively, as the effect is antidilutive. The following tables present the Company’s calculation of basic and diluted (loss) earnings per share for the Current and Prior Quarter and the Current and Prior Period (dollars in thousands, except share and per share amounts): Three months ended September 30, 2020 Three months ended September 30, 2019 Select Energy Select Energy Services, Inc. Class A Class B Services, Inc. Class A Class B Numerator: Net (loss) income $ (36,260) $ 7,172 Net loss (income) attributable to noncontrolling interests 5,719 (1,793) Net (loss) income attributable to Select Energy Services, Inc. — basic (30,541) $ (30,541) $ — 5,379 $ 5,379 $ — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of restricted stock — — — 7 7 — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of stock options — — — 1 1 — Net (loss) income attributable to Select Energy Services, Inc. — diluted $ (30,541) $ (30,541) $ — $ 5,387 $ 5,387 $ — Denominator: Weighted-average shares of common stock outstanding — basic 84,794,286 16,221,101 79,468,991 24,513,654 Dilutive effect of restricted stock — — 339,911 — Dilutive effect of stock options — — 28,575 — Dilutive effect of ESPP — — 104 — Weighted-average shares of common stock outstanding — diluted 84,794,286 16,221,101 79,837,581 24,513,654 (Loss) earnings per share: Basic $ (0.36) $ — $ 0.07 $ — Diluted $ (0.36) $ — $ 0.07 $ — Nine months ended September 30, 2020 Nine months ended September 30, 2019 Select Energy Select Energy Services, Inc. Class A Class B Services, Inc. Class A Class B Numerator: Net (loss) income $ (380,524) $ 16,640 Net loss (income) attributable to noncontrolling interests 59,823 (3,926) Net (loss) income attributable to Select Energy Services, Inc. — basic (320,701) $ (320,701) $ — 12,714 $ 12,714 $ — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of restricted stock — — — 15 15 — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of stock options — — — 3 3 — Net (loss) income attributable to Select Energy Services, Inc. — diluted $ (320,701) $ (320,701) $ — $ 12,732 $ 12,732 $ — Denominator: Weighted-average shares of common stock outstanding — basic 85,276,951 16,221,101 78,848,939 25,516,904 Dilutive effect of restricted stock — — 358,503 — Dilutive effect of stock options — — 60,174 — Dilutive effect of ESPP — — 299 — Weighted-average shares of common stock outstanding — diluted 85,276,951 16,221,101 79,267,915 25,516,904 (Loss) earnings per share: Basic $ (3.76) $ — $ 0.16 $ — Diluted $ (3.76) $ — $ 0.16 $ — |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2020 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 17—SEGMENT INFORMATION Select Inc. is a leading provider of comprehensive water-management solutions to the oil and gas industry in the U.S. The Company’s services are offered through three reportable segments. Reportable 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 or Other. The Company’s CODM assesses performance and allocates resources on the basis of the following three reportable segments: Water Services Water Infrastructure Oilfield Chemicals The results of our service lines divested during 2019, including the operations of our Affirm subsidiary, our sand hauling operations and our Canadian operations, are combined in the “Other” category. Financial information by segment for the Current and Prior Quarter and the Current and Prior Period is as follows: For the three months ended September 30, 2020 Loss Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 54,665 $ (18,682) $ 14,888 $ 332 Water Infrastructure 16,255 (4,843) 6,556 149 Oilfield Chemicals 31,064 (2,951) 2,433 1,796 Other — (21) — 1 Eliminations (742) — — — Loss from operations (26,497) Corporate — (7,715) 685 — Interest expense, net — (789) — — Other expense, net — (1,460) — — $ 101,242 $ (36,461) $ 24,562 $ 2,278 For the three months ended September 30, 2019 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 196,772 $ 13,787 $ 19,418 $ 10,061 Water Infrastructure 63,953 8,234 6,410 13,873 Oilfield Chemicals 67,933 5,514 2,435 3,162 Other 310 (2,347) — — Eliminations — — — — Income from operations 25,188 Corporate — (12,713) 952 — Interest expense, net — (438) — — Other expense, net — (2,364) — — $ 328,968 $ 9,673 $ 29,215 $ 27,096 For the nine months ended September 30, 2020 Loss Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 260,907 $ (237,100) $ 47,924 $ 1,551 Water Infrastructure 89,578 (97,957) 20,608 2,512 Oilfield Chemicals 123,266 (13,063) 7,035 6,300 Other — (34) — 326 Eliminations (1,985) — — — Loss from operations (348,154) Corporate — (24,694) 2,204 — Interest expense, net — (1,633) — — Other expense, net — (6,538) — — $ 471,766 $ (381,019) $ 77,771 $ 10,689 For the nine months ended September 30, 2019 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 620,649 $ 53,681 $ 61,704 $ 32,676 Water Infrastructure 169,288 15,237 18,571 42,653 Oilfield Chemicals 198,049 11,951 6,635 6,514 Other 33,383 (8,197) 1,714 64 Eliminations (5,868) — — — Income from operations 72,672 Corporate — (42,385) 2,858 — Interest expense, net — (2,370) — — Other expense, net — (8,027) — — $ 1,015,501 $ 19,890 $ 91,482 $ 81,907 Total assets by segment as of September 30, 2020 and December 31, 2019, is as follows: As of As of September 30, 2020 December 31, 2019 (in thousands) Water Services $ 548,652 $ 831,123 Water Infrastructure 178,967 314,026 Oilfield Chemicals 145,069 192,224 Other 7,945 10,247 $ 880,633 $ 1,347,620 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
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, inventory, income taxes, self-insurance liabilities, share-based compensation, contingent liabilities and the incremental borrowing rate for leases. 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. |
Allowance for credit losses | Allowance for credit losses: The following table presents the changes to the allowance for the Current Period: Nine months ended September 30, 2020 (in thousands) Balance at December 31, 2019 $ 5,773 Increase to allowance based on a percentage of Current Period revenue 943 Adjustment based on aged receivable analysis 5,165 Charge-offs (2,150) Balance at September 30, 2020 $ 9,731 |
Asset retirement obligations | Asset retirement obligations: Nine months ended September 30, 2020 (in thousands) Balance at December 31, 2019 $ 1,527 Accretion expense, included in depreciation and amortization expense 92 Disposals (219) Payments (163) Balance at September 30, 2020 $ 1,237 We review the adequacy of our ARO liabilities whenever indicators suggest that the estimated cash flows underlying the liabilities have changed. The Company’s ARO liabilities are included in accrued expenses and other current liabilities and other long-term liabilities in the accompanying consolidated balance sheets. |
Lessor income | Lessor Income: Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) (in thousands) Category Classification Lessor income Cost of sales $ 67 $ 184 $ 279 $ 364 Sublease income Lease abandonment costs and Cost of sales 355 393 1,091 1,155 The Company also generates short-term equipment rental revenue. See Note 5—Revenue for a discussion of revenue recognition for the accommodations and rentals business. |
Operating leases | Operating leases: lease liabilities on the consolidated balance sheets during the second quarter of 2020. Additionally, the Company has successfully negotiated certain lease payment deferrals as well as lease payment reductions that are being accounted for as modifications, with no impact to straight-line lease expense from lease payment deferrals and a reduction in straight-line rent expense from lease payment reductions. |
Defined contribution plan | Defined Contribution Plan: |
Payroll Tax Deferral | Payroll Tax Deferral: |
Recent accounting pronouncements: | Recent accounting pronouncements : In June 2016, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments modified retrospective transition approach. After reviewing the new standard and reexamining current and prior year bad debt expense from trade receivables, as well as updating future expectations, the adoption of the new standard in the first quarter of 2020 did not have a material impact to the Company’s financial statements. In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of change in allowance for doubtful accounts | Nine months ended September 30, 2020 (in thousands) Balance at December 31, 2019 $ 5,773 Increase to allowance based on a percentage of Current Period revenue 943 Adjustment based on aged receivable analysis 5,165 Charge-offs (2,150) Balance at September 30, 2020 $ 9,731 |
Summary of change in asset retirement obligations | Nine months ended September 30, 2020 (in thousands) Balance at December 31, 2019 $ 1,527 Accretion expense, included in depreciation and amortization expense 92 Disposals (219) Payments (163) Balance at September 30, 2020 $ 1,237 |
Schedule of lessor income | Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) (in thousands) Category Classification Lessor income Cost of sales $ 67 $ 184 $ 279 $ 364 Sublease income Lease abandonment costs and Cost of sales 355 393 1,091 1,155 |
IMPAIRMENTS AND OTHER COSTS (Ta
IMPAIRMENTS AND OTHER COSTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
IMPAIRMENTS AND OTHER COSTS | |
Schedule of impairment, severance, yard closure and lease abandonment costs | Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Impairment of goodwill and trademark Water Services $ — $ — $ 186,468 $ — Water Infrastructure — — 80,466 — Oilfield Chemicals — — 9,082 — Other — — — 4,396 Total impairment of goodwill and trademark $ — $ — $ 276,016 $ 4,396 For a discussion of the impairments to goodwill and trademark, See Note 8—Goodwill and Other Intangible Assets. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Impairment and abandonment of property and equipment Water Services $ — $ — $ 3,894 $ — Water Infrastructure — — 4,016 — Other — 49 — 942 Total impairment and abandonment of property and equipment $ — $ 49 $ 7,910 $ 942 During the Current Period, the Company recorded an impairment of $7.9 million related to certain equipment that was determined to be obsolete. During the Prior Quarter and Prior Period, the Company recorded an impairment of a nominal amount and $0.9 million, respectively, of Canadian property and equipment to write down the carrying value based on the expected future sale proceeds at that time. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Severance Water Services $ — $ — $ 4,569 $ — Water Infrastructure — — 500 — Oilfield Chemicals — — 813 — Other — — 1,286 1,680 Total severance expense $ — $ — $ 7,168 $ 1,680 Yard closure costs Water Services $ — $ — $ 2,645 $ — Oilfield Chemicals — — 316 — Total yard closure costs $ — $ — $ 2,961 $ — Lease abandonment costs Water Services $ 673 $ 173 $ 2,456 $ 620 Water Infrastructure — — 51 — Oilfield Chemicals — 4 42 11 Other (1) 61 (56) 863 Total lease abandonment costs $ 672 $ 238 $ 2,493 $ 1,494 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Well Chemical Services 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 $ 10,000 Total consideration transferred 10,000 Less: identifiable assets acquired and liabilities assumed Inventory 5,221 Property and equipment 4,473 Customer relationships 476 Current liabilities (170) Total identifiable net assets acquired 10,000 Fair value allocated to net assets acquired $ 10,000 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
REVENUE | |
Schedule of disaggregation of revenue by geographic location | Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Geographic Region Permian Basin $ 38,804 $ 158,609 $ 213,440 $ 469,391 Eagle Ford 10,089 44,694 56,425 124,453 Haynesville/E. Texas 21,096 18,322 54,819 53,918 MidCon 11,579 45,522 44,277 152,500 Marcellus/Utica 11,021 21,330 44,111 79,781 Rockies 4,488 21,045 30,284 64,981 Bakken 4,938 20,052 30,040 66,195 All other/eliminations (773) (606) (1,630) 4,282 Total $ 101,242 $ 328,968 $ 471,766 $ 1,015,501 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INVENTORIES | |
Schedule of inventory | September 30, 2020 December 31, 2019 (in thousands) Raw materials $ 16,898 $ 12,365 Finished goods 17,468 24,724 Materials and supplies — 453 Total $ 34,366 $ 37,542 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | September 30, 2020 December 31, 2019 (in thousands) Land $ 14,013 $ 16,030 Buildings and leasehold improvements 92,232 97,426 Vehicles and equipment 31,665 53,819 Vehicles and equipment - finance lease 784 1,291 Machinery and equipment 617,066 659,835 Machinery and equipment - finance lease 612 162 Pipelines 72,111 69,327 Computer equipment and software 6,697 8,051 Computer equipment and software - finance lease 356 356 Office furniture and equipment 962 1,157 Disposal wells 49,965 64,149 Other — 497 Construction in progress 21,517 43,279 907,980 1,015,379 Less accumulated depreciation (1) (538,380) (562,986) Property and equipment held-for-sale, net — 885 Total property and equipment, net $ 369,600 $ 453,278 (1) Includes $1.4 million and $1.6 million of accumulated depreciation related to finance leases as of September 30, 2020 and December 31, 2019, respectively. |
Schedule of amortization of intangible assets | Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Category Depreciation expense from property and equipment $ 21,449 $ 26,163 $ 68,720 $ 81,698 Amortization expense from finance leases 123 54 239 791 Amortization expense from intangible assets 2,960 2,969 8,939 8,907 Accretion expense from asset retirement obligations 30 29 (127) 86 Total depreciation and amortization $ 24,562 $ 29,215 $ 77,771 $ 91,482 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
Schedule of changes in the carrying amounts of goodwill by reportable segment | Water Water Services Infrastructure Total Balance as of December 31, 2019 186,468 80,466 266,934 Impairment (186,468) (80,466) (266,934) Balance as of September 30, 2020 $ — $ — $ — |
Summary of components of other intangible assets | As of September 30, 2020 As of December 31, 2019 Gross Accumulated Net Gross Accumulated Net Value Impairment Amortization Value Value Amortization Value (in thousands) (in thousands) Definite-lived Customer relationships $ 116,554 $ — $ (27,036) $ 89,518 $ 116,554 $ (20,233) $ 96,321 Patents 9,741 — (2,923) 6,818 10,110 (2,420) 7,690 Other 7,234 — (6,160) 1,074 7,234 (4,766) 2,468 Total definite-lived 133,529 — (36,119) 97,410 133,898 (27,419) 106,479 Indefinite-lived Water rights 7,031 — — 7,031 7,031 — 7,031 Trademarks 23,442 (9,082) — 14,360 23,442 — 23,442 Total indefinite-lived 30,473 (9,082) — 21,391 30,473 — 30,473 Total other intangible assets, net $ 164,002 $ (9,082) $ (36,119) $ 118,801 $ 164,371 $ (27,419) $ 136,952 |
Summary of future estimated amortization expense for other intangible assets | Amount (in thousands) Remainder of 2020 $ 2,722 Year ending December 31, 2021 10,466 Year ending December 31, 2022 10,252 Year ending December 31, 2023 10,180 Year ending December 31, 2024 10,111 Thereafter 53,679 Total $ 97,410 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DEBT | |
Summary of Company's leverage ratio | Level Average Excess Availability Base Rate Margin Eurocurrency Rate Margin I < 33% of the commitments 1.00% 2.00% II < 66.67% of the commitments and ≥ 33.33% of the commitments 0.75% 1.75% III ≥ 66.67% of the commitments 0.50% 1.50% |
Schedule of fee Percentage on unused credit facility | Level Average Revolver Usage Unused Line Fee Percentage I ≥ 50% of the commitments 0.250% II < 50% of the commitments 0.375% |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of equity option activity and related information | For the nine months ended September 30, 2020 Weighted-average Weighted-average Grant Date Value Aggregate Intrinsic Stock Options Exercise Price Term (Years) Value (in thousands) (a) Beginning balance, outstanding 3,797,319 $ 15.95 4.2 $ 509 Forfeited (22,437) 18.52 Expired (238,104) 14.05 Ending balance, outstanding 3,536,778 $ 16.06 3.6 $ — Ending balance, exercisable 3,533,403 $ 16.06 3.6 $ — Nonvested at September 30, 2020 3,375 $ 22.22 (a) |
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 equaled the greater of (i) the fair market value of a share of the Class A Common Stock on the vesting date, or (ii) the volume weighted-average closing price of a share of the Class A Common Stock, as reported on the New York Stock Exchange, for the 30 trading days preceding the vesting date. |
Schedule of stock-settled incentive awards outstanding | Award Value Value at Target Being Recognized Nonvested as of December 31, 2019 $ 2,937 $ 1,122 Forfeited during 2020 (410) (157) Awards earned and forfeited as market condition not satisfied as of vesting date (2,527) — Cumulative expense recognized $ — $ 965 |
summary of ESPP activity | The following table summarizes ESPP activity (in thousands, except shares): For the nine months ended September 30, 2020 Cash received for shares issued $ 59 Shares issued 10,834 |
Restricted Stock | |
Schedule of restricted stock activity | For the nine months ended September 30, 2020 Weighted-average Restricted Stock Awards Grant Date Fair Value Nonvested at December 31, 2019 1,518,193 $ 10.08 Granted 1,477,488 5.80 Vested (578,281) 11.79 Forfeited (398,550) 7.50 Nonvested at September 30, 2020 2,018,850 $ 6.97 |
Restricted Stock Units | |
Schedule of restricted stock activity | For the nine months ended September 30, 2020 Weighted-average Restricted Stock Units Grant Date Fair Value Nonvested at December 31, 2019 1,250 $ 19.00 Vested (625) 20.00 Forfeited (625) 18.00 Nonvested at September 30, 2020 — $ — |
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% Ranking Among Peer Group Percentage of Target Amount Earned Outside of Top 10 0% Top 10 50% Top 7 100% Top 3 175% Adjusted FCF Performance Percentage Percentage of Target Amount Earned Less than 70% 0% 70% 50% 100% 100% 130% 175% |
Summary of activity related to the units outstanding | Performance Share Units Nonvested as of December 31, 2019 1,014,990 Target shares granted 753,378 Target shares outstanding as of September 30, 2020 1,768,368 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE MEASUREMENT | |
Summary of assets and liabilities measured at fair value on a non-recurring basis | Fair Value Measurements Using Carrying Frequency Measurement Date Level 1 Level 2 Level 3 Value (1) Impairment (in thousands) Nine Months Ended September 30, 2020 Goodwill Non-recurring March 31 $ — $ — $ — $ 266,934 $ 266,934 Trademark Non-recurring March 31 — — 14,360 23,442 9,082 Property and equipment Non-recurring March 31 — — 176 3,360 3,184 Property and equipment Non-recurring June 30 — — — 4,726 4,726 Prepaid expenses and other current assets Recurring September 30 — 1,768 — 1,768 — (1) Amount represents carrying value at the date of assessment. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
Summary of components of the federal and state income tax expense (benefit) | Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 (in thousands) Current income tax (benefit) expense $ (157) $ 2,115 $ (836) $ 2,698 Deferred income tax (benefit) expense (44) 386 341 552 Total income tax (benefit) expense $ (201) $ 2,501 $ (495) $ 3,250 Effective Tax Rate 0.6% 25.9% 0.1% 16.3% |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
NONCONTROLLING INTERESTS | |
Schedule of Non Controlling Interests Categories | As of As of September 30, 2020 December 31, 2019 (in thousands) Noncontrolling interests attributable to joint ventures formed for water-related services $ 1,908 $ 2,674 Noncontrolling interests attributable to holders of Class B Common Stock 113,890 172,961 Total noncontrolling interests $ 115,798 $ 175,635 |
Summary of the effects of changes in noncontrolling interests | For the nine months ended September 30, 2020 2019 (in thousands) Net (loss) income attributable to Select Energy Services, Inc. $ (320,701) $ 12,714 Transfers (to) from noncontrolling interests: Increase in additional paid-in capital as a result of stock option exercises — 54 Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures 1,891 3,568 Increase in additional paid-in capital as a result of issuance of common stock due to vesting of restricted stock units 1 4 Decrease in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units (1,416) (2,501) 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 — 82,706 Increase (decrease) in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued 6 (1) Change to equity from net (loss) income attributable to Select Energy Services, Inc. and transfers from noncontrolling interests $ (320,219) $ 96,544 |
(LOSS) EARNINGS PER SHARE (Tabl
(LOSS) EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
(LOSS) EARNINGS PER SHARE | |
Summary of calculation of basic and diluted earnings per share | The following tables present the Company’s calculation of basic and diluted (loss) earnings per share for the Current and Prior Quarter and the Current and Prior Period (dollars in thousands, except share and per share amounts): Three months ended September 30, 2020 Three months ended September 30, 2019 Select Energy Select Energy Services, Inc. Class A Class B Services, Inc. Class A Class B Numerator: Net (loss) income $ (36,260) $ 7,172 Net loss (income) attributable to noncontrolling interests 5,719 (1,793) Net (loss) income attributable to Select Energy Services, Inc. — basic (30,541) $ (30,541) $ — 5,379 $ 5,379 $ — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of restricted stock — — — 7 7 — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of stock options — — — 1 1 — Net (loss) income attributable to Select Energy Services, Inc. — diluted $ (30,541) $ (30,541) $ — $ 5,387 $ 5,387 $ — Denominator: Weighted-average shares of common stock outstanding — basic 84,794,286 16,221,101 79,468,991 24,513,654 Dilutive effect of restricted stock — — 339,911 — Dilutive effect of stock options — — 28,575 — Dilutive effect of ESPP — — 104 — Weighted-average shares of common stock outstanding — diluted 84,794,286 16,221,101 79,837,581 24,513,654 (Loss) earnings per share: Basic $ (0.36) $ — $ 0.07 $ — Diluted $ (0.36) $ — $ 0.07 $ — Nine months ended September 30, 2020 Nine months ended September 30, 2019 Select Energy Select Energy Services, Inc. Class A Class B Services, Inc. Class A Class B Numerator: Net (loss) income $ (380,524) $ 16,640 Net loss (income) attributable to noncontrolling interests 59,823 (3,926) Net (loss) income attributable to Select Energy Services, Inc. — basic (320,701) $ (320,701) $ — 12,714 $ 12,714 $ — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of restricted stock — — — 15 15 — Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of stock options — — — 3 3 — Net (loss) income attributable to Select Energy Services, Inc. — diluted $ (320,701) $ (320,701) $ — $ 12,732 $ 12,732 $ — Denominator: Weighted-average shares of common stock outstanding — basic 85,276,951 16,221,101 78,848,939 25,516,904 Dilutive effect of restricted stock — — 358,503 — Dilutive effect of stock options — — 60,174 — Dilutive effect of ESPP — — 299 — Weighted-average shares of common stock outstanding — diluted 85,276,951 16,221,101 79,267,915 25,516,904 (Loss) earnings per share: Basic $ (3.76) $ — $ 0.16 $ — Diluted $ (3.76) $ — $ 0.16 $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SEGMENT INFORMATION | |
Summary of financial information by segment | For the three months ended September 30, 2020 Loss Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 54,665 $ (18,682) $ 14,888 $ 332 Water Infrastructure 16,255 (4,843) 6,556 149 Oilfield Chemicals 31,064 (2,951) 2,433 1,796 Other — (21) — 1 Eliminations (742) — — — Loss from operations (26,497) Corporate — (7,715) 685 — Interest expense, net — (789) — — Other expense, net — (1,460) — — $ 101,242 $ (36,461) $ 24,562 $ 2,278 For the three months ended September 30, 2019 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 196,772 $ 13,787 $ 19,418 $ 10,061 Water Infrastructure 63,953 8,234 6,410 13,873 Oilfield Chemicals 67,933 5,514 2,435 3,162 Other 310 (2,347) — — Eliminations — — — — Income from operations 25,188 Corporate — (12,713) 952 — Interest expense, net — (438) — — Other expense, net — (2,364) — — $ 328,968 $ 9,673 $ 29,215 $ 27,096 For the nine months ended September 30, 2020 Loss Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 260,907 $ (237,100) $ 47,924 $ 1,551 Water Infrastructure 89,578 (97,957) 20,608 2,512 Oilfield Chemicals 123,266 (13,063) 7,035 6,300 Other — (34) — 326 Eliminations (1,985) — — — Loss from operations (348,154) Corporate — (24,694) 2,204 — Interest expense, net — (1,633) — — Other expense, net — (6,538) — — $ 471,766 $ (381,019) $ 77,771 $ 10,689 For the nine months ended September 30, 2019 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 620,649 $ 53,681 $ 61,704 $ 32,676 Water Infrastructure 169,288 15,237 18,571 42,653 Oilfield Chemicals 198,049 11,951 6,635 6,514 Other 33,383 (8,197) 1,714 64 Eliminations (5,868) — — — Income from operations 72,672 Corporate — (42,385) 2,858 — Interest expense, net — (2,370) — — Other expense, net — (8,027) — — $ 1,015,501 $ 19,890 $ 91,482 $ 81,907 Total assets by segment as of September 30, 2020 and December 31, 2019, is as follows: As of As of September 30, 2020 December 31, 2019 (in thousands) Water Services $ 548,652 $ 831,123 Water Infrastructure 178,967 314,026 Oilfield Chemicals 145,069 192,224 Other 7,945 10,247 $ 880,633 $ 1,347,620 |
BUSINESS AND BASIS OF PRESENT_2
BUSINESS AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Millions | Apr. 26, 2017shares | Dec. 20, 2016$ / sharesshares | Sep. 30, 2020itemsegment$ / sharesshares | Sep. 30, 2019segment | Dec. 31, 2019$ / sharesshares | Nov. 01, 2017USD ($) |
Common units issued | 16,100,000 | |||||
Number of tax receivable agreements | 2 | |||||
Common shares exchanged | 0 | |||||
Number of cost-method investee | item | 1 | |||||
Number of reportable segments | segment | 3 | 3 | ||||
Revolving line of credit | ||||||
Maximum borrowing capacity | $ | $ 300 | |||||
Class A-1 Common Stock | ||||||
Par value | $ / shares | $ 0.01 | |||||
Class A-1 Common Stock | Private Placement | ||||||
Shares issued | 16,100,000 | |||||
Conversion rate per share | 1 | |||||
Class A Common Stock | ||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||
Common stock issued | 86,824,127 | 87,893,525 | ||||
Common Stock, Shares, Outstanding | 86,824,127 | 87,893,525 | ||||
Common units exchanged | 9,805,742 | |||||
Common shares exchanged | 9,805,742 | |||||
Class A Common Stock | IPO | ||||||
Shares issued | 8,700,000 | |||||
Class B Common Stock | ||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||
Common stock issued | 38,462,541 | 16,221,101 | 16,221,101 | |||
Common Stock, Shares, Outstanding | 16,221,101 | 16,221,101 | ||||
Shares cancelled | 9,805,742 | |||||
Class A-2 Common Stock | ||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | ||||
Common stock issued | 0 | 0 | ||||
Common Stock, Shares, Outstanding | 0 | 0 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)lease | Sep. 30, 2019USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Balance at beginning of period | $ 5,773 | ||||
Increase to allowance based on a percentage of Current Period revenue | 943 | ||||
Adjustment based on aged receivable analysis | 5,165 | ||||
Charge-offs | (2,150) | ||||
Balance at end of period | $ 9,731 | 9,731 | |||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Balance at beginning of Current Period | 1,527 | ||||
Accretion expense, included in depreciation and amortization expense | 92 | ||||
Disposals | (219) | ||||
Payments | (163) | ||||
Balance at end of Current Period | 1,237 | $ 1,237 | |||
Lessor Income | |||||
Number of owned operating leases | lease | 2 | ||||
Number of subleases | lease | 15 | ||||
Lessor income | 67 | $ 184 | $ 279 | $ 364 | |
Sublease income | 355 | 393 | 1,091 | 1,155 | |
Operating leases | |||||
Gross down, Right of use assets | $ 5,700 | ||||
Gross down, Lease liabilities | $ 5,700 | ||||
Defined Contribution Plan | |||||
401(k) match expense | $ 900 | 0 | $ 3,400 | ||
Payroll Tax Deferral | $ 3,800 | $ 3,800 |
IMPAIRMENTS AND OTHER COSTS (De
IMPAIRMENTS AND OTHER COSTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of goodwill and trademark | $ 276,016 | $ 4,396 | ||
Impairment and abandonment of property and equipment | $ 49 | 7,910 | 942 | |
Severance Costs | 7,168 | 1,680 | ||
Yard closure costs | 2,961 | |||
Lease Abandonment Costs | $ 672 | 238 | 2,493 | 1,494 |
Accrued severance | 1,100 | 1,100 | ||
Water Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of goodwill and trademark | 186,468 | |||
Impairment and abandonment of property and equipment | 3,894 | |||
Severance Costs | 4,569 | |||
Yard closure costs | 2,645 | |||
Lease Abandonment Costs | 673 | 173 | 2,456 | 620 |
Water Infrastructure | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of goodwill and trademark | 80,466 | |||
Impairment and abandonment of property and equipment | 4,016 | |||
Severance Costs | 500 | |||
Lease Abandonment Costs | 51 | |||
Oilfield Chemicals | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of goodwill and trademark | 9,082 | |||
Severance Costs | 813 | |||
Yard closure costs | 316 | |||
Lease Abandonment Costs | 4 | 42 | 11 | |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of goodwill and trademark | 4,396 | |||
Impairment and abandonment of property and equipment | 49 | 942 | ||
Severance Costs | 1,286 | 1,680 | ||
Lease Abandonment Costs | $ (1) | $ 61 | (56) | 863 |
Costs of revenue | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance Costs | 4,000 | |||
Yard closure costs | 400 | |||
Lease Abandonment Costs | 2,500 | |||
Selling, general and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance Costs | $ 3,200 | $ 1,700 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - Well Chemical Services Acquisition $ in Thousands | Sep. 30, 2019USD ($) |
Consideration transferred | |
Cash paid | $ 10,000 |
Total consideration transferred | 10,000 |
Less: identified assets acquired and liabilities assumed | |
Inventory | 5,221 |
Property and equipment | 4,473 |
Intangible assets | 476 |
Current liabilities | (170) |
Total identifiable net assets acquired | 10,000 |
Fair value allocated to net assets acquired | $ 10,000 |
REVENUE (Details)
REVENUE (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($)region | Sep. 30, 2019USD ($)region | Sep. 30, 2020USD ($)regionsegment | Sep. 30, 2019USD ($)regionsegment | |
REVENUE | ||||
Number of Reportable Segments | segment | 3 | 3 | ||
Revenue | $ 101,242 | $ 328,968 | $ 471,766 | $ 1,015,501 |
Permian Basin | ||||
REVENUE | ||||
Revenue | 38,804 | 158,609 | 213,440 | 469,391 |
Eagle Ford | ||||
REVENUE | ||||
Revenue | 10,089 | 44,694 | 56,425 | 124,453 |
Haynesville/E. Texas | ||||
REVENUE | ||||
Revenue | 21,096 | 18,322 | 54,819 | 53,918 |
Marcellus/Utica | ||||
REVENUE | ||||
Revenue | 11,021 | 21,330 | 44,111 | 79,781 |
MidCon | ||||
REVENUE | ||||
Revenue | 11,579 | 45,522 | 44,277 | 152,500 |
Rockies | ||||
REVENUE | ||||
Revenue | 4,488 | 21,045 | 30,284 | 64,981 |
Bakken | ||||
REVENUE | ||||
Revenue | 4,938 | 20,052 | 30,040 | 66,195 |
All other | ||||
REVENUE | ||||
Revenue | $ (773) | $ (606) | $ (1,630) | $ 4,282 |
Permian Basin, Eagle Ford and Marcellus/Utica | Water Services | ||||
REVENUE | ||||
Number of revenue producing regions | region | 3 | 3 | 3 | 3 |
Percentage of revenue | 66.00% | 72.00% | 71.00% | 72.00% |
Permian Basin and Bakken | Water Infrastructure | ||||
REVENUE | ||||
Number of revenue producing regions | region | 2 | 2 | 2 | 2 |
Percentage of revenue | 87.00% | 84.00% | 86.00% | 83.00% |
Permian Basin, Haynesville/E. Texas and MidCon | Oilfield Chemicals | ||||
REVENUE | ||||
Number of revenue producing regions | region | 3 | 3 | 3 | 3 |
Percentage of revenue | 96.00% | 90.00% | 86.00% | 88.00% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Significant components of inventory | |||||
Raw materials | $ 16,898 | $ 16,898 | $ 12,365 | ||
Finished goods | 17,468 | 17,468 | 24,724 | ||
Materials and supplies | 453 | ||||
Total | 34,366 | 34,366 | 37,542 | ||
Inventory write-downs | 200 | $ 0 | 787 | $ 228 | |
Inventory Valuation Reserves | $ 4,200 | $ 4,200 | $ 4,100 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property and equipment | |||||
Property and equipment | $ 907,980 | $ 907,980 | $ 1,015,379 | ||
Accumulated depreciation | (538,380) | (538,380) | (562,986) | ||
Property and equipment held-for-sale, net | 885 | ||||
Total property and equipment, net | 369,600 | 369,600 | 453,278 | ||
Accumulated depreciation related to finance leases | 1,400 | 1,400 | 1,600 | ||
depreciation and amortization expense | |||||
Depreciation expense from property and equipment | 21,449 | $ 26,163 | 68,720 | $ 81,698 | |
Amortization expense from finance lease | 123 | 54 | 239 | 791 | |
Amortization expense from intangible assets | 2,960 | 2,969 | 8,939 | 8,907 | |
Accretion expense from asset retirement obligation | 30 | 29 | (127) | 86 | |
Total depreciation and amortization | 24,562 | $ 29,215 | 77,771 | 91,482 | |
Property and Equipment Held-for-Sale and Impairments | |||||
Net loss on divestitures and sales of property and equipment held-for-sale | 1,316 | $ 4,971 | |||
Canadian Assets | |||||
Property and Equipment Held-for-Sale and Impairments | |||||
Net loss on divestitures and sales of property and equipment held-for-sale | 100 | ||||
Land | |||||
Property and equipment | |||||
Property and equipment | 14,013 | 14,013 | 16,030 | ||
Buildings and leasehold improvements | |||||
Property and equipment | |||||
Property and equipment | 92,232 | 92,232 | 97,426 | ||
Vehicles and equipment | |||||
Property and equipment | |||||
Property and equipment | 31,665 | 31,665 | 53,819 | ||
Vehicles and equipment - finance lease | |||||
Property and equipment | |||||
Property and equipment | 784 | 784 | 1,291 | ||
Machinery and equipment | |||||
Property and equipment | |||||
Property and equipment | 617,066 | 617,066 | 659,835 | ||
Machinery and equipment - finance lease | |||||
Property and equipment | |||||
Property and equipment | 612 | 612 | 162 | ||
Computer equipment and software | |||||
Property and equipment | |||||
Property and equipment | 6,697 | 6,697 | 8,051 | ||
Computer equipment and software - finance lease | |||||
Property and equipment | |||||
Property and equipment | 356 | 356 | 356 | ||
Pipelines | |||||
Property and equipment | |||||
Property and equipment | 72,111 | 72,111 | 69,327 | ||
Office furniture and equipment | |||||
Property and equipment | |||||
Property and equipment | 962 | 962 | 1,157 | ||
Disposal wells | |||||
Property and equipment | |||||
Property and equipment | 49,965 | 49,965 | 64,149 | ||
Other | |||||
Property and equipment | |||||
Property and equipment | 497 | ||||
Construction in progress | |||||
Property and equipment | |||||
Property and equipment | $ 21,517 | $ 21,517 | $ 43,279 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill | |
Balance at the beginning of the period | $ 266,934 |
Impairment | (266,934) |
Water Services | |
Goodwill | |
Balance at the beginning of the period | 186,468 |
Impairment | (186,468) |
Water Infrastructure | |
Goodwill | |
Balance at the beginning of the period | 80,466 |
Impairment | $ (80,466) |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Other intangible assets | |||||
Gross Value, Definite-lived | $ 133,529 | $ 133,529 | $ 133,898 | ||
Accumulated Amortization, Definite-lived | (36,119) | $ (36,119) | (36,119) | $ (36,119) | (27,419) |
Total | 97,410 | 97,410 | 106,479 | ||
Gross Value, Indefinite-lived | 30,473 | 30,473 | 30,473 | ||
Impairment, Indefinite-lived | (9,082) | ||||
Net Value, Indefinite-lived | 21,391 | 21,391 | 30,473 | ||
Intangible Assets, Gross (Excluding Goodwill) | 164,002 | 164,002 | 164,371 | ||
Intangible Assets, Net (Excluding Goodwill) | 118,801 | 118,801 | 136,952 | ||
Amortization of Intangible Assets | 2,960 | $ 2,969 | 8,939 | $ 8,907 | |
Water rights | |||||
Other intangible assets | |||||
Gross Value, Indefinite-lived | 7,031 | 7,031 | 7,031 | ||
Net Value, Indefinite-lived | 7,031 | $ 7,031 | 7,031 | ||
Renewal term | 5 years | ||||
Trademarks | |||||
Other intangible assets | |||||
Gross Value, Indefinite-lived | 23,442 | $ 23,442 | 23,442 | ||
Impairment, Indefinite-lived | (9,082) | ||||
Net Value, Indefinite-lived | 14,360 | $ 14,360 | 23,442 | ||
Renewal term | 10 years | ||||
Customer relationships | |||||
Other intangible assets | |||||
Gross Value, Definite-lived | 116,554 | $ 116,554 | 116,554 | ||
Accumulated Amortization, Definite-lived | (27,036) | (27,036) | (20,233) | ||
Total | 89,518 | $ 89,518 | 96,321 | ||
Weighted average amortization period | 9 years 10 months 24 days | ||||
Patents | |||||
Other intangible assets | |||||
Gross Value, Definite-lived | 9,741 | $ 9,741 | 10,110 | ||
Accumulated Amortization, Definite-lived | (2,923) | (2,923) | (2,420) | ||
Total | 6,818 | $ 6,818 | 7,690 | ||
Weighted average amortization period | 7 years | ||||
Other intangibles | |||||
Other intangible assets | |||||
Gross Value, Definite-lived | 7,234 | $ 7,234 | 7,234 | ||
Accumulated Amortization, Definite-lived | (6,160) | (6,160) | (4,766) | ||
Total | $ 1,074 | $ 1,074 | $ 2,468 | ||
Weighted average amortization period | 2 years 7 months 6 days |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Annual Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Annual amortization of intangible assets | ||
Remainder of 2020 | $ 2,722 | |
Year ending December 31, 2021 | 10,466 | |
Year ending December 31, 2022 | 10,252 | |
Year ending December 31, 2023 | 10,180 | |
Year ending December 31, 2024 | 10,111 | |
Thereafter | 53,679 | |
Total | $ 97,410 | $ 106,479 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Nov. 01, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
DEBT | ||||||
Amortization of debt issuance costs | $ 200 | $ 200 | $ 516 | $ 516 | ||
Average excess availability, less than 33% of the commitments | Base Rate Advances | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 1.00% | 1.00% | ||||
Average excess availability, less than 33% of the commitments | LIBOR | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 2.00% | 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% | 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% | 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% | 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% | 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% | |||||
Eligible unbilled receivables | ||||||
DEBT | ||||||
Borrowing base (as a percent) | 75.00% | |||||
Letter of credit | ||||||
DEBT | ||||||
Amount outstanding | $ 0 | $ 0 | $ 0 | |||
Revolving line of credit | ||||||
DEBT | ||||||
Maximum borrowing capacity | $ 300,000 | |||||
Revolving line of credit | Letter of credit | ||||||
DEBT | ||||||
Maximum borrowing capacity | 63,600 | $ 63,600 | 214,600 | |||
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% | |||||
Reduction in borrowing capacity | 15,600 | $ 15,600 | 19,900 | |||
Unused portion of available borrowing | 48,000 | 48,000 | ||||
Debt issuance costs | $ 1,400 | $ 1,400 | $ 2,000 | |||
Senior secured credit facility | Minimum | ||||||
DEBT | ||||||
Percentage of borrowing base allowed | 30.00% | |||||
Variable interest rate (as a percent) | 1.50% | 1.50% | ||||
Senior secured credit facility | Maximum | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 2.00% | 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 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 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | |
COMMITMENTS AND CONTINGENCIES | ||
Percentage of vehicles in which certain employees at some of the facilities altered emissions controls systems | 5.00% | |
Litigation Settlement Accrual | $ 4.3 | $ 4.3 |
Litigation Payment Accrual | $ 1.2 |
EQUITY-BASED COMPENSATION (Deta
EQUITY-BASED COMPENSATION (Details) - shares | Nov. 01, 2017 | Sep. 30, 2020 | Feb. 28, 2020 |
2016 plan | Maximum | |||
EQUITY-BASED COMPENSATION | |||
Equity options term | 10 years | ||
Rockwater Equity Plan | |||
EQUITY-BASED COMPENSATION | |||
Maximum number of shares | 13,300,000 | ||
Second Amendment to the 2016 Plan [Member] | Class A Common Stock | |||
EQUITY-BASED COMPENSATION | |||
Maximum number of shares | 4,000,000 |
EQUITY-BASED COMPENSATION - Equ
EQUITY-BASED COMPENSATION - Equity Options Changed During Period (Details) - Equity options - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Equity Options | ||
Beginning balance (in shares) | 3,797,319 | |
Granted (in shares) | 0 | 0 |
Forfeited (in shares) | (22,437) | |
Expired (in shares) | (238,104) | |
Ending balance (in shares) | 3,536,778 | 3,797,319 |
Ending balance, exercisable (in shares) | 3,533,403 | |
Nonvested at end of period (in shares) | 3,375 | |
Weighted-average Exercise Price | ||
Beginning balance (in dollars per share) | $ 15.95 | |
Forfeited (in dollars per share) | 18.52 | |
Expired (in dollars per share) | 14.05 | |
Ending balance (in dollars per share) | 16.06 | $ 15.95 |
Ending balance, exercisable | 16.06 | |
Nonvested at end of period (in dollar per share) | $ 22.22 | |
Weighted-average Remaining Contractual Term (Years) | ||
Outstanding | 3 years 7 months 6 days | 4 years 2 months 12 days |
Ending balance, exercisable | 3 years 7 months 6 days | |
Aggregate Intrinsic Value | ||
Beginning balance, outstanding | $ 509 | |
Ending balance, outstanding | $ 509 |
EQUITY BASED COMPENSATION - Roc
EQUITY BASED COMPENSATION - Rockwater awards (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Restricted Stock | |||||
Assumptions for equity options granted: | |||||
Equity-based compensation expense | $ 2.1 | $ 2.3 | $ 5.8 | $ 6.3 | |
Equity options | |||||
Assumptions for equity options granted: | |||||
Equity-based compensation expense | $ 0 | $ 1 | $ 0.2 | $ 3.4 | |
Equity options | Class A Common Stock | |||||
Assumptions for equity options granted: | |||||
Underlying Equity | $ 3.84 | $ 3.84 | $ 9.28 |
EQUITY-BASED COMPENSATION - Res
EQUITY-BASED COMPENSATION - Restricted stock (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restricted Stock | ||||
EQUITY-BASED COMPENSATION | ||||
Compensation expense | $ 2.1 | $ 2.3 | $ 5.8 | $ 6.3 |
Restricted Stock | Minimum | ||||
EQUITY-BASED COMPENSATION | ||||
offering period | 1 year | |||
Restricted Stock | Maximum | ||||
EQUITY-BASED COMPENSATION | ||||
offering period | 3 years | |||
Restricted Stock Awards | ||||
EQUITY-BASED COMPENSATION | ||||
Unrecognized compensation expense | $ 8.9 | $ 8.9 | ||
Weighted-average remaining life | 1 year 10 months 24 days | |||
Restricted stock | ||||
Beginning balance (in shares) | 1,518,193 | |||
Granted (in shares) | 1,477,488 | |||
Vested (in shares) | (578,281) | |||
Forfeited (in shares) | (398,550) | |||
Ending balance (in shares) | 2,018,850 | 2,018,850 | ||
Grant Date Fair Value | ||||
Beginning balance (in dollars per share) | $ 10.08 | |||
Granted (in dollars per share) | 5.80 | |||
Vested (in dollars per share) | 11.79 | |||
Forfeited | 7.50 | |||
Ending balance (in dollars per share) | $ 6.97 | $ 6.97 | ||
Restricted Stock Units | ||||
Restricted stock | ||||
Beginning balance (in shares) | 1,250 | |||
Vested (in shares) | (625) | |||
Forfeited (in shares) | (625) | |||
Grant Date Fair Value | ||||
Beginning balance (in dollars per share) | $ 19 | |||
Vested (in dollars per share) | 20 | |||
Forfeited | $ 18 |
EQUITY-BASED COMPENSATION - Per
EQUITY-BASED COMPENSATION - Performance share units (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)item | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($)item | |
Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of times shares issued for each performance share settlement | item | 1 | 1 | ||||
Grant date fair value of PSUs | $ | $ 4.4 | $ 7 | $ 5.9 | |||
Compensation expense | $ | $ (0.2) | $ 0.1 | (2) | $ 1.8 | ||
Fair value of outstanding shares | $ | $ 2.3 | |||||
Weighted-average remaining life | 2 years 3 months 18 days | |||||
Performance share units | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of times shares issued for each performance share settlement | item | 0 | |||||
Percentage of Target PSUs Earned | 0.00% | 0.00% | ||||
Performance share units | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of times shares issued for each performance share settlement | item | 1.75 | |||||
Percentage of Target PSUs Earned | 175.00% | |||||
Return on assets Less than 9.6% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target PSUs Earned | 0.00% | |||||
Return on assets 9.6% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target PSUs Earned | 50.00% | |||||
Return on assets 12% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target PSUs Earned | 100.00% | |||||
Return on assets 14.4% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target PSUs Earned | 175.00% | |||||
Peer Group Outside of Top 10 | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 0.00% | |||||
Peer Group Top 10 | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 50.00% | |||||
Peer Group Top 7 | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 100.00% | |||||
Peer Group Top 3 | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 175.00% | |||||
Adjusted FCF Performance Percentage Less than 70% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 0.00% | |||||
Adjusted FCF Performance Percentage 70% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 50.00% | |||||
Adjusted FCF Performance Percentage 100% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 100.00% | |||||
Adjusted FCF Performance Percentage 130% | Performance share units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 175.00% | |||||
Return On Assets Five Percent [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of Target Amount Earned | 5.00% |
EQUITY-BASED COMPENSATION - P_2
EQUITY-BASED COMPENSATION - Performance share units outstanding (Details) - Performance share units | 9 Months Ended |
Sep. 30, 2020shares | |
Performance share units | |
Beginning balance (in shares) | 1,014,990 |
Target shares granted | 753,378 |
Ending balance (in shares) | 1,768,368 |
EQUITY-BASED COMPENSATION - Sto
EQUITY-BASED COMPENSATION - Stock-Settled Incentive Awards (Details) - Stock-Settled Incentive Awards - USD ($) $ in Millions | May 17, 2018 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
EQUITY-BASED COMPENSATION | ||||
offering period | 2 years | |||
Percentage of Target Amount Earned | 0.00% | |||
Vesting date | 30 days | |||
Target amount of stock settled incentive awards granted | $ 3.9 | |||
Number of shares issued | 0 | |||
Compensation expense | $ 0.1 | $ 0.1 | $ 0.4 | |
Minimum | ||||
EQUITY-BASED COMPENSATION | ||||
Pay out percentage | 0.00% | |||
Maximum | ||||
EQUITY-BASED COMPENSATION | ||||
Pay out percentage | 200.00% | |||
Less than $20.00 | ||||
EQUITY-BASED COMPENSATION | ||||
Percentage of Target Amount Earned | 0.00% | |||
At least $20.00, but less than $25.00 | ||||
EQUITY-BASED COMPENSATION | ||||
Percentage of Target Amount Earned | 100.00% | |||
$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 shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($)shares | |
Value at Target | |
Non-vested at beginning of period | $ 2,937 |
Forfeited during 2020 | $ (410) |
Awards earned and forfeited as market condition not satisfied as of vesting date | shares | (2,527) |
Award Value Being Recognized | |
Non-vested at beginning of period | $ 1,122 |
Forfeited during 2020 | (157) |
Non-vested at end of period | $ 965 |
EQUITY-BASED COMPENSATION - Emp
EQUITY-BASED COMPENSATION - Employee Stock Purchase Plan (ESPP) (Details) - ESPP | 9 Months Ended |
Sep. 30, 2020USD ($)shares | |
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 | $ 59,000 |
Shares issued | shares | 10,834 |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Employee service period | 1 year |
EQUITY-BASED COMPENSATION - Sha
EQUITY-BASED COMPENSATION - Share-repurchases (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
2016 plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares repurchased in open market | 0 | 1,443,409 | 1,989,440 | 1,525,501 |
Number of shares repurchased with employee minimum tax withholding requirements | 43,923 | 1,239 | 210,384 | 71,649 |
Decrease in paid in-capital | $ 200,000 | $ 10,900,000 | ||
Class A Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares repurchased in open market | 43,923 | 1,444,648 | 2,199,824 | 1,597,150 |
Decrease in Class A common stock | $ 400 | $ 22,000 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Transfers into or out of all levels of the fair value hierarchy | $ 0 | $ 0 | |
Impairment of Goodwill | 266,934 | ||
Impairment of property and equipment | 7,910 | $ 942 | |
Recurring | September 30 | Carrying value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Prepaid expenses and other current assets | 1,768 | ||
Nonrecurring | March 31 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment of Goodwill | 266,934 | ||
Impairment of Trademark | 9,082 | ||
Impairment of property and equipment | 3,184 | ||
Nonrecurring | March 31 | Carrying value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill | 266,934 | ||
Trademark | 23,442 | ||
Property and equipment | 3,360 | ||
Nonrecurring | June 30 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment of property and equipment | 4,726 | ||
Nonrecurring | June 30 | Carrying value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Property and equipment | 4,726 | ||
Level 2 | Recurring | September 30 | Fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Prepaid expenses and other current assets | 1,768 | ||
Level 3 | Nonrecurring | March 31 | Fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Trademark | 14,360 | ||
Property and equipment | $ 176 |
FAIR VALUE MEASUREMENT - Nonmon
FAIR VALUE MEASUREMENT - Nonmonetary transaction (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Exchange for accounts receivable | $ 1.6 |
Prepaid Expenses and Other Current Assets | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
common stock and related securities prepaid expenses | 1.8 |
Other Nonoperating Income (Expense) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Unrealized gains/losses | $ 0.2 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
RELATED PARTY TRANSACTIONS | ||||
Sales to related parties | $ 0.2 | $ 3.5 | $ 2.7 | $ 10.8 |
Purchases from related party vendors | $ 0.5 | 3.2 | $ 6.2 | 15.6 |
Minimum | ||||
RELATED PARTY TRANSACTIONS | ||||
Beneficial ownership (as a percent) | 5.00% | 5.00% | ||
Tax Receivable Agreement | Legacy Owner Holdco and Crestview GP | ||||
RELATED PARTY TRANSACTIONS | ||||
Percentage of net tax savings for payment to TRA Holders | 85.00% | |||
Tax Receivable Agreement | Contributing Legacy Owners | ||||
RELATED PARTY TRANSACTIONS | ||||
Percentage of net tax savings for payment to TRA Holders | 85.00% | |||
Property and equipment | ||||
RELATED PARTY TRANSACTIONS | ||||
Purchases from related party vendors | 0.6 | $ 0.3 | 2.5 | |
Inventory and consumables | ||||
RELATED PARTY TRANSACTIONS | ||||
Purchases from related party vendors | 0.1 | |||
Rent of certain equipment or other services | ||||
RELATED PARTY TRANSACTIONS | ||||
Purchases from related party vendors | $ 0.4 | 2.3 | 5.5 | 11.8 |
Management, consulting and other services | ||||
RELATED PARTY TRANSACTIONS | ||||
Purchases from related party vendors | $ 0.1 | $ 0.3 | $ 0.3 | $ 1.3 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
INCOME TAXES | ||||
Current income tax (benefit) expense | $ (157) | $ 2,115 | $ (836) | $ 2,698 |
Deferred income tax (benefit) expense | (44) | 386 | 341 | 552 |
Total income tax (benefit) expense | $ (201) | $ 2,501 | $ (495) | $ 3,250 |
Effective Income tax (as percent) | 0.60% | 25.90% | 0.10% | 16.30% |
Statutory tax rate (as a percent) | 21.00% | |||
Income tax benefit | $ 500 |
NONCONTROLLING INTERESTS (Detai
NONCONTROLLING INTERESTS (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
NONCONTROLLING INTERESTS | ||
Noncontrolling interests attributable to joint ventures formed for water-related services | $ 1,908 | $ 2,674 |
Noncontrolling interests attributable to holders of Class B Common Stock | 113,890 | 172,961 |
Total noncontrolling interests | $ 115,798 | $ 175,635 |
NONCONTROLLING INTERESTS - Effe
NONCONTROLLING INTERESTS - Effect of Changes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Effects of changes in noncontrolling interests on equity | ||||
Net (loss) income attributable to Select Energy Services, Inc. | $ (30,541) | $ 5,379 | $ (320,701) | $ 12,714 |
Transfers (to) from noncontrolling interests: | ||||
Noncontrolling interest in subsidiary | 133 | |||
Increase in additional paid-in capital as a result of stock option exercises | 54 | |||
Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures | 1,891 | 3,568 | ||
Increase in additional paid-in capital as a result of issuance of common stock due to vesting of restricted stock units | 1 | 4 | ||
Decrease in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units | (1,416) | (2,501) | ||
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 | 82,706 | |||
Increase (decrease) in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued | 6 | (1) | ||
Change to equity from net (loss) income attributable to Select Energy Services, Inc. and transfers from noncontrolling interests | $ (320,219) | $ 96,544 | ||
SES Holdings LLC [Member] | ||||
Transfers (to) from noncontrolling interests: | ||||
Noncontrolling Interest | 50.00% | 50.00% | ||
Noncontrolling interest in subsidiary | $ 100 |
(LOSS) EARNINGS PER SHARE (Deta
(LOSS) EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Calculation of basic and diluted earnings per share: | ||||
Antidilutive shares | 3,536,778 | 2,956,610 | 3,536,778 | 2,956,837 |
Net (loss) income | $ (36,260) | $ 7,172 | $ (380,524) | $ 16,640 |
Net (loss) income attributable to noncontrolling interests | 5,719 | (1,793) | 59,823 | (3,926) |
Net (loss) income attributable to Select Energy Services, Inc. | (30,541) | 5,379 | (320,701) | 12,714 |
Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of restricted stock | 7 | 15 | ||
Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of stock options | 1 | 3 | ||
Net (loss) income attributable to Select Energy Services, Inc. - diluted | (30,541) | 5,387 | (320,701) | 12,732 |
Class A Common Stock | ||||
Calculation of basic and diluted earnings per share: | ||||
Net (loss) income attributable to Select Energy Services, Inc. | (30,541) | 5,379 | (320,701) | 12,714 |
Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of restricted stock | 7 | 15 | ||
Add: Reallocation of net loss (income) attributable to noncontrolling interests for the dilutive effect of stock options | 1 | 3 | ||
Net (loss) income attributable to Select Energy Services, Inc. - diluted | $ (30,541) | $ 5,387 | $ (320,701) | $ 12,732 |
Weighted-average shares of common stock outstanding - basic | 84,794,286 | 79,468,991 | 85,276,951 | 78,848,939 |
Dilutive effect of restricted stock | 339,911 | 358,503 | ||
Dilutive effect of stock options | 28,575 | 60,174 | ||
Dilutive effect of ESPP | 104 | 299 | ||
Weighted-average shares of common stock outstanding - diluted | 84,794,286 | 79,837,581 | 85,276,951 | 79,267,915 |
Earnings (loss) per share, Basic (in dollars per share) | $ (0.36) | $ 0.07 | $ (3.76) | $ 0.16 |
Earnings (loss) per share, Diluted (in dollars per share) | $ (0.36) | $ 0.07 | $ (3.76) | $ 0.16 |
Class B Common Stock | ||||
Calculation of basic and diluted earnings per share: | ||||
Weighted-average shares of common stock outstanding - basic | 16,221,101 | 24,513,654 | 16,221,101 | 25,516,904 |
Weighted-average shares of common stock outstanding - diluted | 16,221,101 | 24,513,654 | 16,221,101 | 25,516,904 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($)segment | |
SEGMENT INFORMATION | ||||
Number of operating segments | segment | 3 | |||
Number of reportable segments | segment | 3 | 3 | ||
Segment information | ||||
Revenue | $ 101,242 | $ 328,968 | $ 471,766 | $ 1,015,501 |
Income (loss) before taxes | (36,461) | 9,673 | (381,019) | 19,890 |
Depreciation and Amortization | 24,562 | 29,215 | 77,771 | 91,482 |
Capital Expenditures | 2,278 | 27,096 | 10,689 | 81,907 |
(Loss) income from operations | (34,212) | 12,475 | (372,848) | 30,287 |
Other expense, net | (2,364) | (272) | (4,805) | (62) |
Operating segment | Water Services | ||||
Segment information | ||||
Revenue | 54,665 | 196,772 | 260,907 | 620,649 |
Income (loss) before taxes | (18,682) | 13,787 | (237,100) | 53,681 |
Depreciation and Amortization | 14,888 | 19,418 | 47,924 | 61,704 |
Capital Expenditures | 332 | 10,061 | 1,551 | 32,676 |
Operating segment | Water Infrastructure | ||||
Segment information | ||||
Revenue | 16,255 | 63,953 | 89,578 | 169,288 |
Income (loss) before taxes | (4,843) | 8,234 | (97,957) | 15,237 |
Depreciation and Amortization | 6,556 | 6,410 | 20,608 | 18,571 |
Capital Expenditures | 149 | 13,873 | 2,512 | 42,653 |
Operating segment | Oilfield Chemicals | ||||
Segment information | ||||
Revenue | 31,064 | 67,933 | 123,266 | 198,049 |
Income (loss) before taxes | (2,951) | 5,514 | (13,063) | 11,951 |
Depreciation and Amortization | 2,433 | 2,435 | 7,035 | 6,635 |
Capital Expenditures | 1,796 | 3,162 | 6,300 | 6,514 |
Operating segment | Other | ||||
Segment information | ||||
Revenue | 310 | 33,383 | ||
Income (loss) before taxes | (21) | (2,347) | (34) | (8,197) |
Depreciation and Amortization | 1,714 | |||
Capital Expenditures | 1 | 326 | 64 | |
Elimination | ||||
Segment information | ||||
Revenue | (742) | (1,985) | (5,868) | |
Corporate | ||||
Segment information | ||||
Income (loss) before taxes | (7,715) | (12,713) | (24,694) | (42,385) |
Depreciation and Amortization | 685 | 952 | 2,204 | 2,858 |
Material reconciling items | ||||
Segment information | ||||
(Loss) income from operations | (26,497) | 25,188 | (348,154) | 72,672 |
Interest expense, net | (789) | (438) | (1,633) | (2,370) |
Other expense, net | $ (1,460) | $ (2,364) | $ (6,538) | $ (8,027) |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Assets | $ 880,633 | $ 1,347,620 |
Operating segment | Water Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 548,652 | 831,123 |
Operating segment | Water Infrastructure | ||
Segment Reporting Information [Line Items] | ||
Assets | 178,967 | 314,026 |
Operating segment | Oilfield Chemicals | ||
Segment Reporting Information [Line Items] | ||
Assets | 145,069 | 192,224 |
Operating segment | Other | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 7,945 | $ 10,247 |