Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 02, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
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 $0.01 per share | |
Trading Symbol | WTTR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001693256 | |
Amendment Flag | false | |
Class A common stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 105,563,415 | |
Class B common stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 16,221,101 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 6,028 | $ 7,322 |
Accounts receivable trade, net of allowance for credit losses of $6,009 and $4,918, respectively | 492,613 | 429,983 |
Accounts receivable, related parties | 607 | 5,087 |
Inventories | 40,846 | 41,164 |
Prepaid expenses and other current assets | 39,774 | 34,380 |
Total current assets | 579,868 | 517,936 |
Property and equipment | 1,112,899 | 1,084,005 |
Accumulated depreciation | (597,861) | (584,451) |
Total property and equipment, net | 515,038 | 499,554 |
Right-of-use assets, net | 44,562 | 47,662 |
Other intangible assets, net | 125,799 | 138,800 |
Other long-term assets, net | 19,985 | 18,901 |
Total assets | 1,285,252 | 1,222,853 |
Current liabilities | ||
Accounts payable | 77,585 | 61,539 |
Accrued accounts payable | 75,625 | 67,462 |
Accounts payable and accrued expenses, related parties | 4,469 | 3,305 |
Accrued salaries and benefits | 15,431 | 28,686 |
Accrued insurance | 23,503 | 26,180 |
Sales tax payable | 4,036 | 3,056 |
Accrued expenses and other current liabilities | 19,783 | 23,292 |
Current operating lease liabilities | 16,898 | 17,751 |
Current portion of finance lease obligations | 19 | 19 |
Total current liabilities | 237,349 | 231,290 |
Long-term operating lease liabilities | 43,372 | 46,388 |
Long-term debt | 75,500 | 16,000 |
Other long-term liabilities | 45,696 | 45,447 |
Total liabilities | 401,917 | 339,125 |
Commitments and contingencies (Note 9) | ||
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding as of March 31, 2023 and December 31, 2022 | ||
Additional paid-in capital | 1,063,149 | 1,075,915 |
Accumulated deficit | (298,847) | (311,194) |
Total stockholders' equity | 765,554 | 765,977 |
Noncontrolling interests | 117,781 | 117,751 |
Total equity | 883,335 | 883,728 |
Total liabilities and equity | 1,285,252 | 1,222,853 |
Class A common stock | ||
Current liabilities | ||
Common stock | 1,090 | 1,094 |
Class A-2 Common Stock | ||
Current liabilities | ||
Common stock | ||
Class B common stock | ||
Current liabilities | ||
Common stock | $ 162 | $ 162 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Allowance for doubtful accounts | $ 6,009 | $ 4,918 |
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 | 108,981,323 | 109,389,528 |
Common Stock, Shares, Outstanding | 108,981,323 | 109,389,528 |
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 | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue | ||
Total revenue | $ 416,592 | $ 294,769 |
Costs of revenue | ||
Depreciation and amortization | 32,943 | 26,500 |
Total costs of revenue | 356,927 | 270,087 |
Gross profit | 59,665 | 24,682 |
Operating expenses | ||
Selling, general and administrative | 35,829 | 28,315 |
Depreciation and amortization | 595 | 567 |
Impairments and abandonments | 11,166 | |
Lease abandonment costs | 76 | 91 |
Total operating expenses | 47,666 | 28,973 |
Income (loss) from operations | 11,999 | (4,291) |
Other income (expense) | ||
Gain on sales of property and equipment and divestitures, net | 2,911 | 1,653 |
Interest expense, net | (1,483) | (720) |
Foreign currency (loss) gain, net | (4) | 3 |
Bargain purchase gain | 11,434 | |
Other | 846 | 249 |
Income before income tax expense | 14,269 | 8,328 |
Income tax expense | (198) | (214) |
Equity in losses of unconsolidated entities | (366) | (129) |
Net income | 13,705 | 7,985 |
Less: net income attributable to noncontrolling interests | (1,358) | (1,183) |
Net income attributable to Select Energy Services, Inc. | 12,347 | 6,802 |
Water Services | ||
Revenue | ||
Total revenue | 228,597 | 163,606 |
Costs of revenue | ||
Costs of revenue | 181,699 | 137,046 |
Water Infrastructure | ||
Revenue | ||
Total revenue | 101,547 | 58,554 |
Costs of revenue | ||
Costs of revenue | 72,576 | 44,378 |
Oilfield Chemicals | ||
Revenue | ||
Total revenue | 86,448 | 72,609 |
Costs of revenue | ||
Costs of revenue | 69,709 | 62,163 |
Class A common stock | ||
Other income (expense) | ||
Net income attributable to Select Energy Services, Inc. | $ 12,347 | $ 6,802 |
Net income per share attributable to common stockholders (Note 15): | ||
Basic | $ 0.12 | $ 0.07 |
Diluted | $ 0.12 | $ 0.07 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 13,705 | $ 7,985 |
Other comprehensive income | ||
Comprehensive income | 13,705 | 7,985 |
Less: comprehensive income attributable to noncontrolling interests | (1,358) | (1,183) |
Comprehensive income attributable to Select Energy Services, Inc. | $ 12,347 | $ 6,802 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Class A common stock Total Stockholders' Equity | Class A common stock Common Stock | Class A common stock Additional Paid-In Capital | Class A common stock | Unvested restricted stock Total Stockholders' Equity | Unvested restricted stock Additional Paid-In Capital | Unvested restricted stock | Class B common stock Common Stock | Class B common stock Noncontrolling Interests. | Class B common stock | Total Stockholders' Equity | Additional Paid-In Capital | Accumulated Deficit. | Noncontrolling Interests. | Total |
Beginning balance at Dec. 31, 2021 | $ 942 | $ 162 | $ 592,096 | $ 950,464 | $ (359,472) | $ 103,078 | $ 695,174 | ||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 94,172,920 | 16,221,101 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
ESPP shares issued | 11 | 11 | 1 | 12 | |||||||||||
ESPP shares issued (in shares) | 1,549 | ||||||||||||||
Equity-based compensation | 2,805 | 2,805 | 470 | 3,275 | |||||||||||
Issuance of restricted shares | $ 23 | 2,072 | 2,049 | (2,072) | |||||||||||
Issuance of restricted shares (in shares) | 2,337,795 | ||||||||||||||
Stock options exercised | $ 1 | 584 | 583 | 24 | 608 | ||||||||||
Stock options exercised (in shares) | 70,000 | ||||||||||||||
Issuance of shares for acquisitions | $ 42 | 34,498 | 34,456 | 1,356 | 35,854 | ||||||||||
Issuance of shares for acquisition (in shares) | 4,203,323 | ||||||||||||||
Repurchase of common stock | $ (27) | (19,107) | (19,080) | (409) | (19,516) | ||||||||||
Repurchase of common stock ( in shares) | (2,660,328) | ||||||||||||||
Restricted shares forfeited | (13) | (13) | 13 | ||||||||||||
Restricted shares forfeited (in shares) | (14,140) | ||||||||||||||
NCI income tax adjustment | 7 | 7 | (7) | ||||||||||||
Net income | 6,802 | 6,802 | 1,183 | 7,985 | |||||||||||
Ending balance at Mar. 31, 2022 | $ 981 | $ 162 | 619,755 | 971,282 | (352,670) | 103,637 | 723,392 | ||||||||
Ending balance (in shares) at Mar. 31, 2022 | 98,111,119 | 16,221,101 | |||||||||||||
Beginning balance at Dec. 31, 2022 | $ 1,094 | $ 162 | 765,977 | 1,075,915 | (311,194) | 117,751 | 883,728 | ||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 109,389,528 | 16,221,101 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Equity-based compensation | 2,581 | 2,581 | 383 | 2,964 | |||||||||||
Issuance of restricted shares | $ 13 | 1,168 | 1,155 | (1,168) | |||||||||||
Issuance of restricted shares (in shares) | 1,275,859 | ||||||||||||||
Repurchase of common stock | $ (17) | (11,036) | (11,019) | 101 | (10,935) | ||||||||||
Repurchase of common stock ( in shares) | (1,657,203) | ||||||||||||||
Restricted shares forfeited | (25) | (25) | 25 | ||||||||||||
Restricted shares forfeited (in shares) | (26,861) | ||||||||||||||
Distributions to noncontrolling interests | (800) | ||||||||||||||
Contributions from noncontrolling interests | 153 | 153 | |||||||||||||
NCI income tax adjustment | 11 | 11 | (11) | ||||||||||||
Dividend and distribution declared | $ (5,258) | $ (5,258) | $ (5,258) | $ (211) | $ (211) | $ (211) | $ (811) | $ (811) | |||||||
Net income | 12,347 | 12,347 | 1,358 | 13,705 | |||||||||||
Ending balance at Mar. 31, 2023 | $ 1,090 | $ 162 | $ 765,554 | $ 1,063,149 | $ (298,847) | $ 117,781 | $ 883,335 | ||||||||
Ending balance (in shares) at Mar. 31, 2023 | 108,981,323 | 16,221,101 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) | Mar. 31, 2023 $ / shares |
Class A common stock | |
Dividends, per share | $ 0.05 |
Unvested restricted stock | |
Dividends, per share | 0.05 |
Class B common stock | |
Dividends, per share | $ 0.05 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Cash flows from operating activities | |||
Net income | $ 13,705 | $ 7,985 | |
Adjustments to reconcile net income to net cash used in operating activities | |||
Depreciation and amortization | 33,538 | 27,067 | |
Gain on disposal of property and equipment and divestitures | (2,911) | (1,653) | |
Equity in losses of unconsolidated entities | 366 | 129 | |
Bad debt expense | 1,975 | 571 | |
Amortization of debt issuance costs | 122 | 294 | |
Inventory adjustments | 75 | 0 | |
Equity-based compensation | 2,964 | 3,275 | |
Abandonment | 11,166 | ||
Bargain purchase gain | (11,434) | ||
Unrealized loss on short-term investment | 40 | ||
Other operating items, net | (442) | 99 | |
Changes in operating assets and liabilities | |||
Accounts receivable | (64,922) | (46,622) | |
Prepaid expenses and other assets | (5,431) | 4,554 | |
Accounts payable and accrued liabilities | (8,221) | (2,855) | |
Net cash used in operating activities | (18,016) | (18,550) | |
Cash flows from investing activities | |||
Purchase of property and equipment | (27,885) | (15,463) | |
Purchase of equity-method investments | (3,467) | ||
Collection of note receivable | 184 | ||
Distribution from cost method investment | 20 | ||
Acquisitions, net of cash and restricted cash received | (9,418) | 6,941 | |
Proceeds received from sales of property and equipment | 6,724 | 12,123 | |
Other | (429) | ||
Net cash used in investing activities | (30,579) | (91) | |
Cash flows from financing activities | |||
Borrowings from revolving line of credit | 76,750 | 20,000 | |
Payments on revolving line of credit | (17,250) | (20,000) | |
Payments on current and long-term debt | (18,780) | ||
Payments of finance lease obligations | (5) | (61) | |
Payment of debt issuance costs | (2,031) | ||
Dividends and distributions paid | (6,206) | ||
Proceeds from share issuance | 12 | ||
Contributions from noncontrolling interests | 4,950 | ||
Repurchase of common stock | (10,935) | (18,908) | |
Net cash provided by (used in) financing activities | 47,304 | (39,768) | |
Effect of exchange rate changes on cash | (3) | 7 | |
Net decrease in cash, cash equivalents and restricted cash | (1,294) | (58,402) | |
Cash, cash equivalents and restricted cash, beginning of period | 7,322 | 85,801 | $ 85,801 |
Cash, cash equivalents and restricted cash, end of period | 6,028 | 27,399 | $ 7,322 |
Supplemental cash flow disclosure: | |||
Cash paid for interest | 1,119 | 402 | |
Cash refunds received for income taxes, net | (721) | ||
Supplemental disclosure of noncash investing activities: | |||
Issuance of shares for acquisitions | 35,854 | ||
Capital expenditures included in accounts payable and accrued liabilities | $ 31,398 | $ 14,922 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2023 | |
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”). On February 21, 2023, the Company announced its intent to rebrand itself under the new name Select Water Solutions, Inc. during the first half of 2023. We are a leading provider of sustainable water-management and chemical solutions to the energy industry in the United States (“U.S.”). As a leader in the water solutions industry, we place the utmost importance on safe, environmentally responsible management of oilfield water throughout the lifecycle of a well. Additionally, we believe that responsibly managing water resources through our operations to help conserve and protect the environment in the communities in which we operate is paramount to our continued success. Class A and Class B common stock: Exchange rights: 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 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 months ended March 31, 2023 (the “Current Quarter”) and the three months ended March 31, 2022 (the “Prior Quarter”). The Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), filed with the SEC on February 22, 2023, 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 may not be indicative of the results to be expected for the full year. 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 in which the Company exercises significant influence over operating and financial policies are accounted for using the equity-method, and investments in entities for which the Company does not have significant control or influence are accounted for using the cost method or other appropriate basis as applicable. As of March 31, 2023, the Company had three equity-method investments. 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. Our investments in unconsolidated entities are summarized below and are included in the assets of our Water Services segment: Year As of March 31, As of December 31, Type of Investment attained Accounting method Balance Sheet Location 2023 2022 (in thousands) 21% minority interest 2020 Equity-method Other long-term assets, net 4,484 4,686 40% minority interest 2021 Equity-method Other long-term assets, net 4,732 4,985 48% minority interest 2021 Equity-method Other long-term assets, net 3,535 3,446 Dividends : Segment reporting : The Company has The Water Services segment consists of the Company’s services businesses, including water transfer, flowback and well testing, fluids hauling, water monitoring, water containment and water network automation, primarily serving exploration and production (“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 our produced water gathering systems and saltwater disposal wells, as well as solids disposal facilities, primarily serving E&P companies. The Oilfield Chemicals segment provides technical solutions, products and expertise related to chemical applications in the oil and gas industry. We develop, manufacture, manage logistics and provide a full suite of chemicals used in hydraulic fracturing, stimulation, cementing and well completions for customers ranging from pressure pumpers to major integrated and independent oil and gas producers. This segment also utilizes its chemical experience and lab testing capabilities to customize tailored water treatment solutions designed to optimize the fracturing fluid system in conjunction with the quality of water used in well completions. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
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, 2022, included in the 2022 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 reserve, income taxes, self-insurance liabilities, share-based compensation, contingent liabilities, lease-related reasonably certain option exercise assessments, 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 change in the allowance for credit losses is as follows: Three months ended March 31, 2023 (in thousands) Balance as of December 31, 2022 $ 4,918 Increase to allowance based on a percentage of revenue 835 Adjustment based on aged receivable analysis 1,140 Charge-offs (886) Recoveries 2 Balance as of March 31, 2023 $ 6,009 Asset retirement obligations: Three months ended March 31, 2023 (in thousands) Balance as of December 31, 2022 $ 43,576 Accretion expense, included in depreciation and amortization expense 256 Acquired AROs 975 Divested (222) Payments (1,602) Balance as of March 31, 2023 $ 42,983 Short-term ARO liability 2,725 Long-term ARO liability 40,258 Balance as of March 31, 2023 $ 42,983 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 March 31, 2023 2022 (in thousands) Category Classification Lessor income Costs of revenue $ 77 $ 116 Sublease income Lease abandonment costs and Costs of revenue 384 346 The Company also generates short-term equipment rental revenue. See “Note 4—Revenue” for a discussion of revenue recognition for the accommodations and rentals business. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 31, 2023 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 3—ACQUISITIONS Business combinations Asset Acquisitions During the Current Quarter, Select acquired certain assets, revenue-producing contracts and associated liabilities in the Midland Basin from multiple entities for $9.4 million inclusive of $0.2 million of acquisition-related costs. The allocation of the purchase price for these assets was a combined $7.5 million in property and equipment, $1.0 million in water inventory, $1.9 million in customer relationships and $1.0 million in asset retirement obligations and other liabilities. Many of the assets acquired are adjacent to the Big Spring Recycling System (“BSRS”), with connectivity into BSRS providing future revenue and cost synergies. Breakwater Acquisition On November 1, 2022, the Company completed the acquisition of Breakwater Energy Services, LLC. (“Breakwater”) in a stock-for-stock transaction for total consideration of $105.3 million based on the closing price of the Company’s shares of Class A common stock on October 31, 2022 (the “Breakwater Acquisition”). The consideration transferred consisted of 9,181,144 shares of Class A common stock, $10.5 million of debt that was paid off at closing as part of consideration exchanged, $3.8 million in change-of-control payments and $2.4 million in seller transaction costs. The acquisition strengthened Select’s geographic footprint with a unique set of water logistics and infrastructure assets, particularly in the Permian region. The Breakwater 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 estimates, judgments and assumptions. The Company has engaged third-party valuation experts to assist in the purchase price allocation. These estimates, judgments and assumptions and valuation of the property and equipment acquired, intangible assets, current assets, current liabilities and long-term liabilities have not been finalized as of March 31, 2023. The business combination accounting is preliminary due to the continuing efforts to validate the working capital acquired, the existence and condition of the property and equipment acquired as well as the value assigned to the intangible assets. The assets acquired and liabilities assumed are included in the Company’s Water Services and Water Infrastructure segments. The Company incurred $1.4 million of transaction-related costs related to this acquisition in the Current Quarter and such costs are included in selling, general and administrative within the consolidated statements of operations. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed as of the date of acquisition: Preliminary purchase price allocation As Reported as of December 31, 2022 Current Quarter Adjustment Amount Consideration transferred (in thousands) Class A common stock (9,181,144 shares) (1) $ 88,598 $ (410) $ 88,188 Cash paid 16,701 — 16,701 Total consideration transferred 105,299 (410) 104,889 Less: identifiable assets acquired and liabilities assumed Working capital 22,633 (410) 22,223 Property and equipment 78,912 — 78,912 Right-of-use assets 180 — 180 Customer relationships 35,558 — 35,558 Other long-term assets 120 — 120 Long-term debt (1,979) — (1,979) Long-term lease liabilities (125) — (125) Noncontrolling interest (2) (30,000) — (30,000) Total identifiable net assets acquired 105,299 (410) 104,889 Fair value allocated to net assets acquired $ 105,299 $ (410) $ 104,889 (1) The parties agreed in April 2023 that 48,688 shares will be returned to Select and cancelled during the second quarter of 2023 related to working capital adjustments. (2) The noncontrolling interests acquired on November 1, 2022 were subsequently purchased on December 2, 2022, thereby giving the Company 100% ownership of BSRS. Cypress Acquisition On November 1, 2022, the Company completed the acquisition of certain saltwater disposal assets from Cypress Environmental Solutions, LLC (“Cypress”) for total consideration of $9.2 million based on the closing price of the Company’s shares of Class A common stock on October 31, 2022 (the “Cypress Acquisition”). The consideration transferred consisted of 952,753 shares of Class A common stock. The acquired Cypress operations consist of eight saltwater disposal facilities with daily permitted capacity of 85,000 barrels per day across North Dakota. The acquisition strengthened Select’s geographic footprint with a portfolio of strategic wastewater disposal facilities in the Bakken region, with the majority of Cypress’s volumes being delivered through high-volume contracted gathering pipeline infrastructure. The Cypress 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 estimates, judgments and assumptions. These estimates, judgments and assumptions and valuation of the property and equipment acquired, current assets, current liabilities and long-term liabilities have been finalized as of March 31, 2023. The assets acquired and liabilities assumed are included in the Company’s Water Infrastructure segment. The Company incurred less than $0.1 million of transaction-related costs related to this acquisition in the Current Quarter and such costs are included in selling, general and administrative within the consolidated statements of operations. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed as of the date of acquisition: Purchase price allocation As Reported as of March 31, 2023 and December 31, 2022 Consideration transferred (in thousands) Class A common stock (952,753 shares) $ 9,194 Total consideration transferred 9,194 Less: identifiable assets acquired and liabilities assumed Working capital (42) Property and equipment 8,192 Customer relationships 3,894 Long-term ARO (2,850) Total identifiable net assets acquired 9,194 Fair value allocated to net assets acquired $ 9,194 |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE | |
REVENUE | NOTE 4—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 Current Quarter and Prior Quarter, 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. ● Taxes assessed by government authorities included on customer invoices are excluded from revenue. 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. Mobilization and demobilization are factored into the pricing for services. Billings and costs related to mobilization and demobilization are not material for customer agreements that start in one period and end in another. As of March 31, 2023, the Company had fourteen revenue-producing contracts lasting over one year that include enforceable rights and obligations to fall within the scope of the model in the Topic 606 standard in place for these segments. As of March 31, 2023 and December 31, 2022, the Company had no contract assets or contract liabilities. Accommodations and rentals revenue is included in the Water Services segment and 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 March 31, 2023, there were no material rental agreements in effect lasting more than one year. During the Current Quarter and Prior Quarter, approximately $21.7 million and $15.6 million, respectively, of accommodations and rentals revenue was accounted for under ASC 842 lease guidance, with the remainder accounted for under ASC 606 revenue guidance. 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 March 31, 2023, lasting greater 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 March 31, 2023 2022 (in thousands) Geographic Region Permian Basin $ 198,030 $ 136,484 Eagle Ford 47,653 32,854 Rockies 47,547 33,478 Marcellus/Utica 42,173 23,829 Bakken 31,211 13,451 Mid-Continent 28,021 29,264 Haynesville/E. Texas 24,695 26,475 Eliminations and other regions (2,738) (1,066) Total $ 416,592 $ 294,769 In the Water Services segment, the most recent top three revenue-producing regions are the Permian Basin, Marcellus/Utica and Rockies, which collectively comprised 69% and 70% of segment revenue for the Current Quarter and Prior Quarter, respectively. In the Water Infrastructure segment, the most recent top three revenue-producing regions are the Permian Basin, Bakken and Haynesville/E. Texas which collectively comprised 86% and 87% of segment revenue for the Current Quarter and Prior Quarter, respectively. In the Oilfield Chemicals segment, the most recent top three revenue-producing regions are the Permian Basin, Rockies and Eagle Ford, which collectively comprised 87% and 63% of segment revenue for the Current Quarter and Prior Quarter, respectively. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2023 | |
INVENTORIES | |
INVENTORIES | NOTE 5—INVENTORIES Inventories, which are comprised of chemicals and raw 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: March 31, 2023 December 31, 2022 (in thousands) Raw materials $ 21,680 $ 20,518 Finished goods 19,166 20,646 Total $ 40,846 $ 41,164 During the Current Quarter and Prior Quarter, the Company recorded net charges to the reserve for excess and obsolete inventory of $0.1 million and zero, respectively, which were recognized within costs of revenue on the accompanying consolidated statements of operations. The Company’s inventory reserve was $3.2 million and $3.1 million as of March 31, 2023 and December 31, 2022, 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 | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY AND EQUIPMENT. | |
PROPERTY AND EQUIPMENT | NOTE 6—PROPERTY AND EQUIPMENT Property and equipment are stated at cost less accumulated depreciation. Depreciation (and amortization of finance lease assets) is calculated on a straight-line basis over the estimated useful life of each asset. Property and equipment consists of the following as of March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 (in thousands) Machinery and equipment $ 678,818 $ 675,505 Buildings and leasehold improvements 148,282 145,223 Gathering and disposal infrastructure 87,848 87,568 Pipelines 72,829 72,829 Vehicles and equipment 26,187 27,850 Land 24,049 24,159 Computer equipment and software 7,472 6,765 Office furniture and equipment 894 1,183 Machinery and equipment - finance lease 519 519 Vehicles and equipment - finance lease 47 58 Computer equipment and software - finance lease 56 56 Construction in progress 65,898 42,290 1,112,899 1,084,005 Less accumulated depreciation (1) (597,861) (584,451) Total property and equipment, net $ 515,038 $ 499,554 (1) Includes $0.6 million of accumulated depreciation related to finance leases as of both March 31, 2023 and December 31, 2022. 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 7— Other Intangible Assets” is as follows: Three months ended March 31, 2023 2022 (in thousands) Category Depreciation expense from property and equipment $ 29,516 $ 23,953 Amortization expense from finance leases 5 60 Amortization expense from intangible assets 3,761 2,725 Accretion expense from asset retirement obligations 256 329 Total depreciation and amortization $ 33,538 $ 27,067 |
OTHER INTANGIBLE ASSETS
OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
OTHER INTANGIBLE ASSETS | |
OTHER INTANGIBLE ASSETS | NOTE 7—OTHER INTANGIBLE ASSETS On February 21, 2023, the Company announced a rebranding initiative that is expected to occur during the first half of 2023. As a result of this initiative, our existing trademarks will no longer be considered indefinite-lived and will be measured for abandonment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. The rebranding announcement qualifies as a triggering event, and the Company tested the existing trademarks for abandonment. This evaluation included significant judgment, including discount rates based on our weighted-average cost of capital and the royalty rate. This resulted in $11.1 million of abandonment expense to trademarks using the relief-from-royalty method, which was recorded in the Oilfield Chemicals segment . The components of other intangible assets, net as of March 31, 2023 and December 31, 2022 are as follows: As of March 31, 2023 As of December 31, 2022 Gross Accumulated Net Gross Accumulated Net Value Abandonment Amortization Value Value Amortization Value (in thousands) (in thousands) Definite-lived Customer relationships $ 160,098 $ — $ (51,178) $ 108,920 $ 158,232 $ (48,123) $ 110,109 Patents and other intellectual property 12,772 — (6,048) 6,724 12,772 (5,701) 7,071 Trademarks 14,360 (11,106) (325) 2,929 — — — Other 2,803 — (2,608) 195 2,803 (2,574) 229 Total definite-lived 190,033 (11,106) (60,159) 118,768 173,807 (56,398) 117,409 Indefinite-lived Water rights 7,031 — — 7,031 7,031 — 7,031 Trademarks — — — — 14,360 — 14,360 Total indefinite-lived 7,031 — — 7,031 21,391 — 21,391 Total other intangible assets, net $ 197,064 $ (11,106) $ (60,159) $ 125,799 $ 195,198 $ (56,398) $ 138,800 The weighted-average amortization period for customer relationships, patents and other intellectual property, other definite-lived assets and trademarks was 9.6 years, 5.3 years, 1.4 years and 0.8 years, respectively, as of March 31, 2023. See “Note 6—Property and Equipment” for the amortization expense during the Current Quarter and Prior Quarter, respectively. The indefinite-lived water trademarks five Amount (in thousands) Remainder of 2023 $ 13,761 Year ending December 31, 2024 14,376 Year ending December 31, 2025 14,213 Year ending December 31, 2026 14,125 Year ending December 31, 2027 13,623 Thereafter 48,670 Total $ 118,768 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
DEBT | |
DEBT | NOTE 8—DEBT Sustainability-linked credit facility and revolving line of credit On March 17, 2022 (the “Restatement Date”), SES Holdings and Select Energy Services, LLC (“Select LLC”), a wholly-owned subsidiary of SES Holdings, entered into a $270.0 million amended and restated senior secured sustainability-linked revolving credit facility (the “Sustainability-Linked Credit Facility”), 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”) (which amended and restated the Credit Agreement dated November 1, 2017 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 the Administrative Agent (the “Prior Credit Agreement”)). Refer to “Note 10—Debt” in the Company’s Annual Report on Form 10-K for a discussion of the Prior Credit Agreement. The Sustainability-Linked Credit Facility also has a sublimit of $40.0 million for letters of credit and $27.0 million for swingline loans, respectively. Subject to obtaining commitments from existing or new lenders, Select LLC has the option to increase the maximum amount under the senior secured credit facility by $135.0 million during the first three years following the Restatement Date. The Sustainability-Linked Credit Facility permits extensions of credit up to the lesser of $270.0 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 Sustainability-Linked Credit Facility), plus (ii) 75% of Eligible Unbilled Receivables (as defined in the Sustainability-Linked Credit Facility), 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 Sustainability-Linked Credit Facility) at such time and (B) the product of 85% multiplied by the Net Recovery Percentage (as defined in the Sustainability-Linked Credit Facility) identified in the most recent Acceptable Appraisal of Inventory (as defined in the Sustainability-Linked Credit Facility), 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 Sustainability-Linked Credit Facility), if any, established by the Administrative Agent from time to time, including, if any, the amount of the Dilution Reserve (as defined in the Sustainability-Linked Credit Facility). 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 Sustainability-Linked Credit Facility bear interest, at Select LLC’s election, at either the (a) one- or three-month Term SOFR (as defined in the Sustainability-Linked Credit Facility) or (b) the greatest of (i) the federal funds rate plus 0.5%, (ii) one-month Term SOFR plus 1% and (iii) the Administrative Agent’s prime rate (the “Base Rate”), in each case plus an applicable margin, and interest shall be payable monthly in arrears. The applicable margin for Term SOFR loans ranges from 1.75% to 2.25% and the applicable margin for Base Rate loans ranges from 0.75% to 1.25%, in each case, depending on Select LLC’s average excess availability under the Sustainability-Linked Credit Facility, as set forth in the table below. 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 Sustainability-Linked Credit Facility will bear interest at 2.00% plus the otherwise applicable interest rate. The Sustainability-Linked Credit Facility is scheduled to mature on the fifth anniversary of the Restatement Date. Level Average Excess Availability Base Rate Margin SOFR Margin I < 33.33% of the commitments 1.25% 2.25% II < 66.67% of the commitments and ≥ 33.33% of the commitments 1.00% 2.00% III ≥ 66.67% of the commitments 0.75% 1.75% Level Average Revolver Usage Unused Line Fee Percentage I ≥ 50% of the commitments 0.250% II < 50% of the commitments 0.375% Under the Sustainability-Linked Credit Facility, the interest rate margin and the facility fee rates are also subject to adjustments based on Select LLC’s performance of specified sustainability target thresholds with respect to (i) total recordable incident rate, as the Employee Health and Safety Metric and (ii) barrels of produced water recycled at permanent or semi-permanent water treatment and recycling facilities owned or operated, as the Water Stewardship Metric, in each case, subject to limited assurance verification by a qualified independent external reviewer. The adjustment for the interest rate margin is a range of plus and minus 2.5 basis points for each of the Employee Health and Safety Metric and the Water Stewardship Metric and the adjustment for the fee margin is a range of plus and minus 0.5 basis points for each of the Employee Health and Safety Metric and the Water Stewardship Metric, subject to the mechanics under the Sustainability-Linked Credit Facility. The obligations under the Sustainability-Linked Credit Facility 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 Sustainability-Linked Credit Facility 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 Sustainability-Linked Credit Facility to be immediately due and payable. In addition, the Sustainability-Linked Credit Facility 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 Sustainability-Linked Credit Facility 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) $33.75 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) $27.0 million. Additionally, the Sustainability-Linked Credit Facility generally permits Select LLC to make distributions required under its existing Tax Receivable Agreements. See “Note 12—Related Party Transactions—Tax Receivable Agreements” for further discussion of the Tax Receivable Agreements. The Sustainability-Linked Credit Facility 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 Sustainability-Linked Credit Facility 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 Sustainability-Linked Credit Facility 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 Sustainability-Linked Credit Facility 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 $75.5 million outstanding under the Sustainability-Linked Credit Facility as of March 31, 2023 and $16.0 million outstanding as of December 31, 2022. The interest rate applied to our outstanding borrowings under the Sustainability-Linked Credit Facility as of March 31, 2023 was . letters of credit have a variable interest rate between 1.75% and 2.25% based on the Company’s average excess availability as outlined above. The unused portion of the available borrowings under the Sustainability-Linked Credit Facility was $159.2 million as of March 31, 2023. The principal maturities of debt outstanding on March 31, 2023 were as follows: Year Ending December 31, Debt Maturities (in thousands) 2023 $ — 2024 — 2025 — 2026 — 2027 75,500 Total $ 75,500 In connection with the entry into the Sustainability-Linked Credit Facility, the Company incurred $2.1 million of debt issuance costs during the year ended December 31, 2022. 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 March 31, 2023 and December 31, 2022, were $1.9 million and $2.1 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 $0.1 million and $0.3 million for the Current Quarter and Prior Quarter, respectively. The Company was in compliance with all debt covenants as of March 31, 2023. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 9—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. Retentions We are self-insured up to certain retention limits with respect to workers’ compensation, general liability and vehicle liability matters, and 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 | 3 Months Ended |
Mar. 31, 2023 | |
EQUITY-BASED COMPENSATION | |
EQUITY-BASED COMPENSATION | NOTE 10—EQUITY-BASED COMPENSATION The SES Holdings 2011 Equity Incentive Plan (the “2011 Plan”) was approved by the board of managers of SES Holdings in April 2011. In conjunction with the private placement of 16,100,000 shares of the Company’s Class A common stock on December 20, 2016 (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 May 8, 2020, the Company’s stockholders approved an amendment to the 2016 Plan to increase 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 and to make certain other administrative changes. The 2016 Plan includes share recycling provisions that allow shares subject to an award that are withheld or surrendered to the Company in payment of any exercise price or taxes or an award that expires or is cancelled, forfeited or otherwise terminated without actual delivery of the underlying shares of Class A common stock to be considered not delivered and thus available to be granted as new awards under the 2016 Plan. Currently, the maximum number of shares reserved for issuance under the 2016 Plan is approximately 13.3 million shares, with approximately 2.0 million shares available to be issued as of March 31, 2023. For all share-based compensation award types, the Company accounts for forfeitures as they occur. On February 23, 2022, the Company assumed the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the “2017 Plan”), and the Nuverra Environmental Solutions, Inc. 2018 Restricted Stock Plan for Directors (the “2018 Plan” and, together with the 2017 Plan, the “Assumed Plans”) and certain equity awards outstanding under the Assumed Plans in connection with the Nuverra Acquisition. Under the 2017 Plan, the Company may grant to certain eligible participants who were employees, directors or other service providers of Nuverra prior to the Nuverra Acquisition options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards, substitute awards, performance awards, or any combination of the foregoing, with respect to up to The aggregate number of shares of the Company’s Class A common stock available for issuance under the Assumed Plans will be reduced by Stock Option Awards The Company has outstanding stock option awards as of March 31, 2023 but there have been no option grants since 2018. The 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. The expected life of the options at the time of the grant was based on the vesting period and term of the options awarded, which was ten years. A summary of the Company’s stock option activity and related information as of and for the Current Quarter is as follows: For the three months ended March 31, 2023 Weighted-average Weighted-average Grant Date Value Aggregate Intrinsic Stock Options Exercise Price Term (Years) Value (in thousands) (a) Beginning balance, outstanding 1,666,872 $ 17.10 4.2 $ 353 Exercised — — — Forfeited — — Expired (2,900) 34.41 Ending balance, outstanding 1,663,972 $ 17.07 3.9 $ — Ending balance, exercisable 1,663,972 $ 17.07 3.9 $ — Nonvested as of March 31, 2023 — $ — (a) As of March 31, 2021, all equity-based compensation expense related to stock options had been recognized. Restricted Stock Awards The value of the restricted stock awards 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 over three years from the applicable date of grant. The Company recognized compensation expense of $3.9 million and $2.8 million related to the restricted stock awards for the Current Quarter and Prior Quarter, respectively. As of March 31, 2023, there was $24.5 million of unrecognized compensation expense with a weighted-average remaining life of 2.0 years related to unvested restricted stock awards. A summary of the Company’s restricted stock awards activity and related information for the Current Quarter is as follows: For the three months ended March 31, 2023 Weighted-average Restricted Stock Awards Grant Date Fair Value Nonvested as of December 31, 2022 4,237,715 $ 7.36 Granted 1,275,859 7.39 Vested (1,380,264) 7.50 Forfeited (26,861) 7.25 Nonvested as of March 31, 2023 4,106,449 $ 7.32 Performance Share Units (PSUs) During 2021, 2022 and 2023, 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 applicable period from either January 1, 2021 through December 31, 2023, January 1, 2022 through December 31, 2024 or January 1, 2023 through December 31, 2025. The target number of shares of Class A common stock subject to each remaining PSU granted in 2021, 2022 and 2023 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, 2024 for the 2021 PSU grants, June 30, 2025 for the 2022 PSU grants, and June 30, 2026, for the 2023 PSU grants, assuming the applicable minimum performance metrics are achieved. The target PSUs granted in 2021, 2022 and 2023 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 the Company must have a positive Total Shareholder Return (as defined in the applicable PSU agreement) over the performance period. As a result of this market condition, the 2021, 2022 and 2023 PSUs will be valued each reporting period utilizing a Black-Scholes model. 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 2023, 2022 and 2021 was $4.8 million, $5.0 million and $4.4 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. The Company recognized a credit to compensation expense of $0.9 million and compensation expense of $0.5 million related to the PSUs for the Current Quarter and Prior Quarter, respectively. As of March 31, 2023, the unrecognized compensation cost related to our unvested PSUs is estimated to be $6.7 million and is expected to be recognized over a weighted-average period of 2.4 years. However, this compensation cost will be adjusted as appropriate throughout the applicable performance periods. The following table summarizes the information about the PSUs outstanding as of March 31, 2023: PSUs Nonvested as of December 31, 2022 1,860,734 Target shares granted 751,980 Target shares forfeited (1) (695,488) Target shares outstanding as of March 31, 2023 1,917,226 (1) All PSUs granted in 2020 did not achieve the respective performance targets and were forfeited. 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 On November 3, 2022, our board of directors approved an amendment to the ESPP, which suspended all offerings on or after December 1, 2022. Our board of directors reserves the right to recommence offerings pursuant to its discretion and the terms of the ESPP. Share Repurchases During the Current Quarter, the Company repurchased 1,231,996 shares of Class A common stock in the open market and 425,207 shares of Class A common stock in connection with employee minimum tax withholding requirements for shares 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 $10.9 million and a decrease to Class A common stock of less than $17,000. In the Prior Quarter, the Company repurchased 2,297,985 shares of Class A common stock in the open market and repurchased 362,343 shares of Class A common stock in connection with employee minimum tax withholding requirements. The IRA 2022 provides for, among other things, the imposition of a new 1% U.S. federal excise tax on certain repurchases of stock by publicly traded U.S. corporations such as us after December 31, 2022. Accordingly, this excise tax will apply to our share repurchase program in 2023 and in subsequent taxable years. The Biden administration has proposed increasing the amount of the excise tax from 1% to 4%; however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 3 Months Ended |
Mar. 31, 2023 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 11—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 or to measure the value of securities marked to market. 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 the 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 three months ended March 31, 2023 or the year ended December 31, 2022. The following table presents information about the Company’s assets measured at fair value on a non-recurring basis as of March 31, 2023: Fair Value Measurements Using Carrying Level 1 Level 2 Level 3 Value (1) Abandonment (2) (in thousands) Three Months Ended March 31, 2023 Trademark Non-recurring March 31 $ — $ — $ 2,929 $ 14,360 $ 11,106 (1) Amount represents carrying value at the date of assessment. (2) See “Note 7—Other Intangible Assets” for a discussion of the Trademark abandonment recorded in the Current Quarter. Other fair value considerations The carrying values of the Company’s current financial instruments, which include cash and cash equivalents, accounts receivable trade and accounts payable, approximate their fair value as of March 31, 2023 and December 31, 2022, due to the short-term nature of these instruments. The carrying value of debt as of March 31, 2023 and December 31, 2022 approximates fair value due to variable market rates of interest. 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. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 12—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, an investment in a company that is significantly influenced by another related party, and cost-method and equity-method investees. 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. During the Current Quarter, sales to related parties were $0.3 million and purchases from related-party vendors were $3.8 million. These purchases consisted of $3.0 million relating to the rental of certain equipment or other services used in operations, $0.6 million relating to property and equipment and $0.2 million relating to management, consulting and other services. During the Prior Quarter, sales to related parties were $0.3 million and purchases from related-party vendors were $2.6 million. These purchases consisted of $2.2 million relating to the rental of certain equipment or other services used in operations, $0.3 million relating to management, consulting and other services and $0.1 million relating to property and equipment, inventory and consumables. Tax Receivable Agreements In connection with the Select 144A Offering, the Company 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”). 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 Legacy Owner Holdco 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. The Company has not recognized a liability associated with the Tax Receivable Agreements as of March 31, 2023 or December 31, 2022. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 13—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 March 31, 2023 2022 (in thousands) Current income tax expense $ 204 $ 241 Deferred income tax benefit (6) (27) Total income tax expense $ 198 $ 214 Effective Tax Rate 1.4% 2.6% |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2023 | |
NONCONTROLLING INTERESTS | |
NONCONTROLLING INTERESTS | NOTE 14—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 March 31, 2023 December 31, 2022 (in thousands) Noncontrolling interests attributable to joint ventures formed for water-related services $ 3,834 $ 4,167 Noncontrolling interests attributable to holders of Class B common stock 113,947 113,584 Total noncontrolling interests $ 117,781 $ 117,751 During the Current Quarter, the Company received a $5.0 million cash contribution from a noncontrolling interest for business development. Further, for all periods presented, there were changes in Select Inc.’s ownership interest in SES Holdings. The effects of the changes in Select Inc.’s ownership interest in SES Holdings are as follows: Three months ended March 31, 2023 2022 (in thousands) Net income attributable to Select Energy Services, Inc. $ 12,347 $ 6,802 Transfers from (to) noncontrolling interests: Decrease in additional paid-in capital as a result of issuing shares for business combinations — (1,356) Decrease in additional paid-in capital as a result of stock option exercises — (24) Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures 1,143 2,059 (Decrease) increase in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units (101) 409 Decrease in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued — (1) Change to equity from net income attributable to Select Energy Services, Inc. and transfers from noncontrolling interests $ 13,389 $ 7,889 |
INCOME PER SHARE
INCOME PER SHARE | 3 Months Ended |
Mar. 31, 2023 | |
INCOME PER SHARE | |
INCOME PER SHARE | NOTE 15—INCOME PER SHARE Income per share is based on the amount of loss 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 1,663,972 and 1,903,486 shares of Class A common stock are not included in the calculation of diluted weighted-average shares outstanding for the Current Quarter and Prior Quarter, respectively, as their effect is antidilutive. The following tables present the Company’s calculation of basic and diluted loss per share for the Current and Prior Quarter (dollars in thousands, except share and per share amounts): Three months ended March 31, 2023 Three months ended March 31, 2022 Select Energy Select Energy Services, Inc. Class A Class B Services, Inc. Class A Class B Numerator: Net income $ 13,705 $ 7,985 Net income attributable to noncontrolling interests (1,358) (1,183) Net income attributable to Select Energy Services, Inc. — basic $ 12,347 $ 12,347 $ — $ 6,802 $ 6,802 $ — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock (14) (14) — 14 14 — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of performance units (9) (9) — 2 2 — Net income attributable to Select Energy Services, Inc. — diluted $ 12,324 $ 12,324 $ — $ 6,818 $ 6,818 $ — Denominator: Weighted-average shares of common stock outstanding — basic 105,403,461 16,221,101 91,821,906 16,221,101 Dilutive effect of restricted stock 914,862 — 1,324,947 — Dilutive effect of performance share units 570,490 — 169,578 — Dilutive effect of ESPP — — 77 — Weighted-average shares of common stock outstanding — diluted 106,888,813 16,221,101 93,316,508 16,221,101 Income per share: Basic $ 0.12 $ — $ 0.07 $ — Diluted $ 0.12 $ — $ 0.07 $ — |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2023 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 16—SEGMENT INFORMATION Select Inc. is a leading provider of comprehensive water-management and chemical 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 Financial information by segment for the Current and Prior Quarter is as follows: For the three months ended March 31, 2023 Impairments and Income Depreciation and Capital Revenue abandonments before taxes Amortization Expenditures (in thousands) Water Services $ 229,840 $ 60 $ 18,030 $ 18,136 $ 20,188 Water Infrastructure 102,674 — 12,652 12,725 18,338 Oilfield Chemicals 86,598 11,106 (358) 2,083 2,406 Other — — (4) — — Eliminations (2,520) — — — — Income from operations 30,320 Corporate — — (18,321) 594 562 Interest expense, net — — (1,483) — — Other income, net — — 3,753 — — $ 416,592 $ 11,166 $ 14,269 $ 33,538 $ 41,494 For the three months ended March 31, 2022 Income Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 164,686 $ 2,565 $ 15,562 $ 5,631 Water Infrastructure 59,198 3,427 8,431 11,072 Oilfield Chemicals 72,681 4,166 2,507 573 Other — (2) — — Eliminations (1,796) — — — Income from operations 10,156 Corporate — (14,447) 567 989 Interest expense, net — (720) — — Bargain purchase gain — 11,434 — — Other income, net — 1,905 — — $ 294,769 $ 8,328 $ 27,067 $ 18,265 Total assets by segment as of March 31, 2023 and December 31, 2022, is as follows: As of As of March 31, 2023 December 31, 2022 (in thousands) Water Services $ 633,230 $ 608,616 Water Infrastructure 460,410 420,233 Oilfield Chemicals 180,101 183,469 Other 11,511 10,535 $ 1,285,252 $ 1,222,853 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
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 reserve, income taxes, self-insurance liabilities, share-based compensation, contingent liabilities, lease-related reasonably certain option exercise assessments, 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 change in the allowance for credit losses is as follows: Three months ended March 31, 2023 (in thousands) Balance as of December 31, 2022 $ 4,918 Increase to allowance based on a percentage of revenue 835 Adjustment based on aged receivable analysis 1,140 Charge-offs (886) Recoveries 2 Balance as of March 31, 2023 $ 6,009 |
Asset retirement obligations | Asset retirement obligations: Three months ended March 31, 2023 (in thousands) Balance as of December 31, 2022 $ 43,576 Accretion expense, included in depreciation and amortization expense 256 Acquired AROs 975 Divested (222) Payments (1,602) Balance as of March 31, 2023 $ 42,983 Short-term ARO liability 2,725 Long-term ARO liability 40,258 Balance as of March 31, 2023 $ 42,983 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 March 31, 2023 2022 (in thousands) Category Classification Lessor income Costs of revenue $ 77 $ 116 Sublease income Lease abandonment costs and Costs of revenue 384 346 The Company also generates short-term equipment rental revenue. See “Note 4—Revenue” for a discussion of revenue recognition for the accommodations and rentals business. |
BUSINESS AND BASIS OF PRESENT_2
BUSINESS AND BASIS OF PRESENTATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
BUSINESS AND BASIS OF PRESENTATION | |
Schedule of investments in unconsolidated entities | Year As of March 31, As of December 31, Type of Investment attained Accounting method Balance Sheet Location 2023 2022 (in thousands) 21% minority interest 2020 Equity-method Other long-term assets, net 4,484 4,686 40% minority interest 2021 Equity-method Other long-term assets, net 4,732 4,985 48% minority interest 2021 Equity-method Other long-term assets, net 3,535 3,446 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of change in allowance for doubtful accounts | Three months ended March 31, 2023 (in thousands) Balance as of December 31, 2022 $ 4,918 Increase to allowance based on a percentage of revenue 835 Adjustment based on aged receivable analysis 1,140 Charge-offs (886) Recoveries 2 Balance as of March 31, 2023 $ 6,009 |
Summary of change in asset retirement obligations | Three months ended March 31, 2023 (in thousands) Balance as of December 31, 2022 $ 43,576 Accretion expense, included in depreciation and amortization expense 256 Acquired AROs 975 Divested (222) Payments (1,602) Balance as of March 31, 2023 $ 42,983 Short-term ARO liability 2,725 Long-term ARO liability 40,258 Balance as of March 31, 2023 $ 42,983 |
Schedule of financial impact of leases | Three months ended March 31, 2023 2022 (in thousands) Category Classification Lessor income Costs of revenue $ 77 $ 116 Sublease income Lease abandonment costs and Costs of revenue 384 346 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Breakwater Energy Services LLC | |
Schedule of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Preliminary purchase price allocation As Reported as of December 31, 2022 Current Quarter Adjustment Amount Consideration transferred (in thousands) Class A common stock (9,181,144 shares) (1) $ 88,598 $ (410) $ 88,188 Cash paid 16,701 — 16,701 Total consideration transferred 105,299 (410) 104,889 Less: identifiable assets acquired and liabilities assumed Working capital 22,633 (410) 22,223 Property and equipment 78,912 — 78,912 Right-of-use assets 180 — 180 Customer relationships 35,558 — 35,558 Other long-term assets 120 — 120 Long-term debt (1,979) — (1,979) Long-term lease liabilities (125) — (125) Noncontrolling interest (2) (30,000) — (30,000) Total identifiable net assets acquired 105,299 (410) 104,889 Fair value allocated to net assets acquired $ 105,299 $ (410) $ 104,889 |
Cypress Environmental Solutions LLC | |
Schedule of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Purchase price allocation As Reported as of March 31, 2023 and December 31, 2022 Consideration transferred (in thousands) Class A common stock (952,753 shares) $ 9,194 Total consideration transferred 9,194 Less: identifiable assets acquired and liabilities assumed Working capital (42) Property and equipment 8,192 Customer relationships 3,894 Long-term ARO (2,850) Total identifiable net assets acquired 9,194 Fair value allocated to net assets acquired $ 9,194 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE | |
Schedule of disaggregation of revenue by geographic location | Three months ended March 31, 2023 2022 (in thousands) Geographic Region Permian Basin $ 198,030 $ 136,484 Eagle Ford 47,653 32,854 Rockies 47,547 33,478 Marcellus/Utica 42,173 23,829 Bakken 31,211 13,451 Mid-Continent 28,021 29,264 Haynesville/E. Texas 24,695 26,475 Eliminations and other regions (2,738) (1,066) Total $ 416,592 $ 294,769 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
INVENTORIES | |
Schedule of inventory | March 31, 2023 December 31, 2022 (in thousands) Raw materials $ 21,680 $ 20,518 Finished goods 19,166 20,646 Total $ 40,846 $ 41,164 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY AND EQUIPMENT. | |
Schedule of property and equipment | March 31, 2023 December 31, 2022 (in thousands) Machinery and equipment $ 678,818 $ 675,505 Buildings and leasehold improvements 148,282 145,223 Gathering and disposal infrastructure 87,848 87,568 Pipelines 72,829 72,829 Vehicles and equipment 26,187 27,850 Land 24,049 24,159 Computer equipment and software 7,472 6,765 Office furniture and equipment 894 1,183 Machinery and equipment - finance lease 519 519 Vehicles and equipment - finance lease 47 58 Computer equipment and software - finance lease 56 56 Construction in progress 65,898 42,290 1,112,899 1,084,005 Less accumulated depreciation (1) (597,861) (584,451) Total property and equipment, net $ 515,038 $ 499,554 (1) Includes $0.6 million of accumulated depreciation related to finance leases as of both March 31, 2023 and December 31, 2022. |
Schedule of amortization of intangible assets | Three months ended March 31, 2023 2022 (in thousands) Category Depreciation expense from property and equipment $ 29,516 $ 23,953 Amortization expense from finance leases 5 60 Amortization expense from intangible assets 3,761 2,725 Accretion expense from asset retirement obligations 256 329 Total depreciation and amortization $ 33,538 $ 27,067 |
OTHER INTANGIBLE ASSETS (Tables
OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
OTHER INTANGIBLE ASSETS | |
Summary of components of other intangible assets | As of March 31, 2023 As of December 31, 2022 Gross Accumulated Net Gross Accumulated Net Value Abandonment Amortization Value Value Amortization Value (in thousands) (in thousands) Definite-lived Customer relationships $ 160,098 $ — $ (51,178) $ 108,920 $ 158,232 $ (48,123) $ 110,109 Patents and other intellectual property 12,772 — (6,048) 6,724 12,772 (5,701) 7,071 Trademarks 14,360 (11,106) (325) 2,929 — — — Other 2,803 — (2,608) 195 2,803 (2,574) 229 Total definite-lived 190,033 (11,106) (60,159) 118,768 173,807 (56,398) 117,409 Indefinite-lived Water rights 7,031 — — 7,031 7,031 — 7,031 Trademarks — — — — 14,360 — 14,360 Total indefinite-lived 7,031 — — 7,031 21,391 — 21,391 Total other intangible assets, net $ 197,064 $ (11,106) $ (60,159) $ 125,799 $ 195,198 $ (56,398) $ 138,800 |
Summary of future estimated amortization expense for other intangible assets | Amount (in thousands) Remainder of 2023 $ 13,761 Year ending December 31, 2024 14,376 Year ending December 31, 2025 14,213 Year ending December 31, 2026 14,125 Year ending December 31, 2027 13,623 Thereafter 48,670 Total $ 118,768 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
DEBT | |
Summary of Company's leverage ratio | Level Average Excess Availability Base Rate Margin SOFR Margin I < 33.33% of the commitments 1.25% 2.25% II < 66.67% of the commitments and ≥ 33.33% of the commitments 1.00% 2.00% III ≥ 66.67% of the commitments 0.75% 1.75% |
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% |
Summary of debt maturities | Year Ending December 31, Debt Maturities (in thousands) 2023 $ — 2024 — 2025 — 2026 — 2027 75,500 Total $ 75,500 |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Schedule of equity option activity and related information | For the three months ended March 31, 2023 Weighted-average Weighted-average Grant Date Value Aggregate Intrinsic Stock Options Exercise Price Term (Years) Value (in thousands) (a) Beginning balance, outstanding 1,666,872 $ 17.10 4.2 $ 353 Exercised — — — Forfeited — — Expired (2,900) 34.41 Ending balance, outstanding 1,663,972 $ 17.07 3.9 $ — Ending balance, exercisable 1,663,972 $ 17.07 3.9 $ — Nonvested as of March 31, 2023 — $ — (a) |
Restricted Stock | |
Schedule of restricted stock activity | For the three months ended March 31, 2023 Weighted-average Restricted Stock Awards Grant Date Fair Value Nonvested as of December 31, 2022 4,237,715 $ 7.36 Granted 1,275,859 7.39 Vested (1,380,264) 7.50 Forfeited (26,861) 7.25 Nonvested as of March 31, 2023 4,106,449 $ 7.32 |
Performance share units | |
Schedule of percentage of target PSUs earned | 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 | PSUs Nonvested as of December 31, 2022 1,860,734 Target shares granted 751,980 Target shares forfeited (1) (695,488) Target shares outstanding as of March 31, 2023 1,917,226 (1) All PSUs granted in 2020 did not achieve the respective performance targets and were forfeited. |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
FAIR VALUE MEASUREMENT | |
Summary of assets and liabilities measured at fair value on a non-recurring basis | Fair Value Measurements Using Carrying Level 1 Level 2 Level 3 Value (1) Abandonment (2) (in thousands) Three Months Ended March 31, 2023 Trademark Non-recurring March 31 $ — $ — $ 2,929 $ 14,360 $ 11,106 (1) Amount represents carrying value at the date of assessment. (2) See “Note 7—Other Intangible Assets” for a discussion of the Trademark abandonment recorded in the Current Quarter. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
Summary of components of the federal and state income tax (benefit) expense | Three months ended March 31, 2023 2022 (in thousands) Current income tax expense $ 204 $ 241 Deferred income tax benefit (6) (27) Total income tax expense $ 198 $ 214 Effective Tax Rate 1.4% 2.6% |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
NONCONTROLLING INTERESTS | |
Schedule of Non Controlling Interests Categories | As of As of March 31, 2023 December 31, 2022 (in thousands) Noncontrolling interests attributable to joint ventures formed for water-related services $ 3,834 $ 4,167 Noncontrolling interests attributable to holders of Class B common stock 113,947 113,584 Total noncontrolling interests $ 117,781 $ 117,751 |
Summary of the effects of changes in noncontrolling interests | Three months ended March 31, 2023 2022 (in thousands) Net income attributable to Select Energy Services, Inc. $ 12,347 $ 6,802 Transfers from (to) noncontrolling interests: Decrease in additional paid-in capital as a result of issuing shares for business combinations — (1,356) Decrease in additional paid-in capital as a result of stock option exercises — (24) Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures 1,143 2,059 (Decrease) increase in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units (101) 409 Decrease in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued — (1) Change to equity from net income attributable to Select Energy Services, Inc. and transfers from noncontrolling interests $ 13,389 $ 7,889 |
INCOME PER SHARE (Tables)
INCOME PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
INCOME 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 per share for the Current and Prior Quarter (dollars in thousands, except share and per share amounts): Three months ended March 31, 2023 Three months ended March 31, 2022 Select Energy Select Energy Services, Inc. Class A Class B Services, Inc. Class A Class B Numerator: Net income $ 13,705 $ 7,985 Net income attributable to noncontrolling interests (1,358) (1,183) Net income attributable to Select Energy Services, Inc. — basic $ 12,347 $ 12,347 $ — $ 6,802 $ 6,802 $ — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock (14) (14) — 14 14 — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of performance units (9) (9) — 2 2 — Net income attributable to Select Energy Services, Inc. — diluted $ 12,324 $ 12,324 $ — $ 6,818 $ 6,818 $ — Denominator: Weighted-average shares of common stock outstanding — basic 105,403,461 16,221,101 91,821,906 16,221,101 Dilutive effect of restricted stock 914,862 — 1,324,947 — Dilutive effect of performance share units 570,490 — 169,578 — Dilutive effect of ESPP — — 77 — Weighted-average shares of common stock outstanding — diluted 106,888,813 16,221,101 93,316,508 16,221,101 Income per share: Basic $ 0.12 $ — $ 0.07 $ — Diluted $ 0.12 $ — $ 0.07 $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
SEGMENT INFORMATION | |
Summary of financial information by segment | For the three months ended March 31, 2023 Impairments and Income Depreciation and Capital Revenue abandonments before taxes Amortization Expenditures (in thousands) Water Services $ 229,840 $ 60 $ 18,030 $ 18,136 $ 20,188 Water Infrastructure 102,674 — 12,652 12,725 18,338 Oilfield Chemicals 86,598 11,106 (358) 2,083 2,406 Other — — (4) — — Eliminations (2,520) — — — — Income from operations 30,320 Corporate — — (18,321) 594 562 Interest expense, net — — (1,483) — — Other income, net — — 3,753 — — $ 416,592 $ 11,166 $ 14,269 $ 33,538 $ 41,494 For the three months ended March 31, 2022 Income Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water Services $ 164,686 $ 2,565 $ 15,562 $ 5,631 Water Infrastructure 59,198 3,427 8,431 11,072 Oilfield Chemicals 72,681 4,166 2,507 573 Other — (2) — — Eliminations (1,796) — — — Income from operations 10,156 Corporate — (14,447) 567 989 Interest expense, net — (720) — — Bargain purchase gain — 11,434 — — Other income, net — 1,905 — — $ 294,769 $ 8,328 $ 27,067 $ 18,265 |
Revenue from External Customers by Products and Services | As of As of March 31, 2023 December 31, 2022 (in thousands) Water Services $ 633,230 $ 608,616 Water Infrastructure 460,410 420,233 Oilfield Chemicals 180,101 183,469 Other 11,511 10,535 $ 1,285,252 $ 1,222,853 |
BUSINESS AND BASIS OF PRESENT_3
BUSINESS AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Millions | 3 Months Ended | ||||
Apr. 25, 2023 $ / shares | Jan. 27, 2023 $ / shares | Feb. 23, 2022 | Mar. 31, 2023 USD ($) item Vote segment $ / shares | Dec. 31, 2022 $ / shares | |
Number of vote per share | Vote | 1 | ||||
Number of equity method investee | item | 3 | ||||
Number of operating segments | segment | 3 | ||||
Ratio | 1 | ||||
Reduction of additional paid-in capital | $ | $ 5.3 | ||||
Distributions to noncontrolling interests, net | $ | 0.8 | ||||
Reduction of accrued interest and other current liabilities | $ | 0.1 | ||||
Dividends payable | $ | $ 0.3 | ||||
Class A common stock | |||||
Par value | $ / shares | $ 0.01 | $ 0.01 | |||
Ratio | 1 | 1 | |||
Cash Dividend declared per share | $ / shares | $ 0.05 | $ 0.05 | |||
Class B common stock | |||||
Par value | $ / shares | $ 0.01 | $ 0.01 | |||
Cash Dividend declared per share | $ / shares | $ 0.05 | $ 0.05 |
BUSINESS AND BASIS OF PRESENT_4
BUSINESS AND BASIS OF PRESENTATION - Investments in Unconsolidated (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Investment in Joint Venture One | ||
Percentage of interest in a joint venture | 21% | |
Investment in Joint Venture One | Other long-term assets, net | ||
Equity method investment | $ 4,484 | $ 4,686 |
Investment in Joint Venture Two | ||
Percentage of interest in a joint venture | 40% | |
Investment in Joint Venture Two | Other long-term assets, net | ||
Equity method investment | $ 4,732 | 4,985 |
Investment In Joint Venture Three | ||
Percentage of interest in a joint venture | 48% | |
Investment In Joint Venture Three | Other long-term assets, net | ||
Equity method investment | $ 3,535 | $ 3,446 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Allowance activity (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at beginning of the period | $ 4,918 |
Increase to allowance based on a percentage of revenue | 835 |
Adjustment based on aged receivable analysis | 1,140 |
Charge-offs | (886) |
Recoveries | 2 |
Balance at end of the period | $ 6,009 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Asset retirement obligations and Lessor Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Balance at beginning of period | $ 43,576 | |
Accretion expense, included in depreciation and amortization expense | 256 | |
Acquires ARO's | 975 | |
Divested | (222) | |
Payments | (1,602) | |
Balance at end of period | 42,983 | |
Short-term ARO liability | 2,725 | |
Long-term ARO liability | 40,258 | |
Lessor Income | ||
Lessor income | 77 | $ 116 |
Sublease Income | $ 384 | $ 346 |
ACQUISITION - Asset Acquisition
ACQUISITION - Asset Acquisition (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Asset Acquisition [Line Items] | ||
Property and equipment, net | $ 515,038 | $ 499,554 |
Other intangible assets, net | 125,799 | 138,800 |
Asset retirement obligation | 42,983 | 43,576 |
Inventories | 40,846 | $ 41,164 |
Asset Acquisition | ||
Asset Acquisition [Line Items] | ||
Acquisition Costs | 9,400 | |
Transaction cots | 200 | |
Property and equipment, net | 7,500 | |
Asset retirement obligation | 1,000 | |
Inventories | 1,000 | |
Asset Acquisition | Customer relationships | ||
Asset Acquisition [Line Items] | ||
Other intangible assets, net | $ 1,900 |
ACQUISITIONS - Breakwater Acqui
ACQUISITIONS - Breakwater Acquisition (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Nov. 01, 2022 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 02, 2022 | |
Big Spring Recycling System | |||||
Less: identifiable assets acquired and liabilities assumed | |||||
Noncontrolling Interest | 100% | ||||
Breakwater Energy Services LLC | |||||
Business Acquisition [Line Items] | |||||
Change-of-control payments | $ 3,800 | ||||
Transaction-related costs | $ 1,400 | ||||
Transaction cots | 2,400 | ||||
Consideration transferred | |||||
Cash paid | 16,701 | $ 16,701 | |||
Total consideration transferred | $ 105,300 | 104,889 | 105,299 | ||
Less: identifiable assets acquired and liabilities assumed | |||||
Working capital | 22,223 | 22,633 | |||
Property and equipment | 78,912 | 78,912 | |||
Right-of-use assets | 180 | 180 | |||
Customer relationships | 35,558 | 35,558 | |||
Other long-term assets | 120 | 120 | |||
Long-term debt | (1,979) | (1,979) | |||
Long-term lease liabilities | (125) | (125) | |||
Non Controlling Interests | (30,000) | (30,000) | |||
Total identifiable net assets acquired | 104,889 | 105,299 | |||
Fair value allocated to net assets acquired | 104,889 | $ 105,299 | |||
Breakwater Energy Services LLC | Restatement Adjustment | |||||
Consideration transferred | |||||
Total consideration transferred | (410) | ||||
Less: identifiable assets acquired and liabilities assumed | |||||
Working capital | (410) | ||||
Total identifiable net assets acquired | (410) | ||||
Fair value allocated to net assets acquired | (410) | ||||
Breakwater Energy Services LLC | Class A common stock | |||||
Business Acquisition [Line Items] | |||||
Number of shares issued in acquisition | 9,181,144 | 9,181,144 | |||
Debt paid off amount | $ 10,500 | ||||
Consideration transferred | |||||
Common stock issued | 88,188 | $ 88,598 | |||
Less: identifiable assets acquired and liabilities assumed | |||||
Number of shares of equity interests issued to acquire | 48,688 | ||||
Breakwater Energy Services LLC | Class A common stock | Restatement Adjustment | |||||
Consideration transferred | |||||
Common stock issued | $ (410) |
ACQUISITION - Cypress Acquisiti
ACQUISITION - Cypress Acquisition (Details) - Cypress Environmental Solutions LLC $ in Thousands | 3 Months Ended | 12 Months Ended | |
Nov. 01, 2022 USD ($) item shares bbl | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) shares | |
Business Acquisition [Line Items] | |||
Transaction-related costs | $ 100 | ||
Number of saltwater disposal facilities acquired | item | 8 | ||
Water related asset, production capacity acquired | bbl | 85,000 | ||
Consideration transferred | |||
Total consideration transferred | $ 9,200 | ||
As Reported | |||
Consideration transferred | |||
Total consideration transferred | 9,194 | $ 9,194 | |
Less: identifiable assets acquired and liabilities assumed | |||
Working capital | (42) | (42) | |
Property and equipment | 8,192 | 8,192 | |
Customer relationships | 3,894 | 3,894 | |
Long-term ARO | (2,850) | (2,850) | |
Total identifiable net assets acquired | 9,194 | 9,194 | |
Fair value allocated to net assets acquired | 9,194 | $ 9,194 | |
Class A common stock | |||
Consideration transferred | |||
Number of shares issued in acquisition | shares | 952,753 | 952,753 | |
Class A common stock | As Reported | |||
Consideration transferred | |||
Common stock issued | $ 9,194 | $ 9,194 |
REVENUE (Details)
REVENUE (Details) | 3 Months Ended | ||
Mar. 31, 2023 USD ($) segment item region | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
REVENUE | |||
Number of Reportable Segments | segment | 3 | ||
Contract liability | $ 0 | $ 0 | |
Revenue | $ 416,592,000 | $ 294,769,000 | |
Number of Long-Term Contracts | item | 14 | ||
Accommodations and rentals | ASC 842 | |||
REVENUE | |||
Revenue | $ 21,700,000 | 15,600,000 | |
Permian Basin | |||
REVENUE | |||
Revenue | 198,030,000 | 136,484,000 | |
Eagle Ford | |||
REVENUE | |||
Revenue | 47,653,000 | 32,854,000 | |
Rockies | |||
REVENUE | |||
Revenue | 47,547,000 | 33,478,000 | |
Marcellus/Utica | |||
REVENUE | |||
Revenue | 42,173,000 | 23,829,000 | |
Bakken | |||
REVENUE | |||
Revenue | 31,211,000 | 13,451,000 | |
Mid-Continent | |||
REVENUE | |||
Revenue | 28,021,000 | 29,264,000 | |
Haynesville/E. Texas | |||
REVENUE | |||
Revenue | 24,695,000 | 26,475,000 | |
Eliminations and other regions | |||
REVENUE | |||
Revenue | $ (2,738,000) | $ (1,066,000) | |
Permian Basin, Marcellus/Utica and Rockies | Water Services | |||
REVENUE | |||
Number of revenue producing regions | region | 3 | ||
Percentage of revenue | 69% | 70% | |
Permian Basin, Bakken and Haynesville/E. Texas | Water Infrastructure | |||
REVENUE | |||
Number of revenue producing regions | region | 3 | ||
Percentage of revenue | 86% | 87% | |
Permian Basin, Rockies and Eagle Ford | Oilfield Chemicals | |||
REVENUE | |||
Number of revenue producing regions | region | 3 | ||
Percentage of revenue | 87% | 63% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Significant components of inventory | |||
Raw materials | $ 21,680 | $ 20,518 | |
Finished goods | 19,166 | 20,646 | |
Total | 40,846 | 41,164 | |
Inventory adjustments | 75 | $ 0 | |
Inventory Valuation Reserves | $ 3,200 | $ 3,100 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Property and equipment | |||
Property and equipment | $ 1,112,899 | $ 1,084,005 | |
Less accumulated depreciation | (597,861) | (584,451) | |
Total property and equipment, net | 515,038 | 499,554 | |
Accumulated depreciation related to finance leases | 600 | 600 | |
Depreciation and amortization expense | |||
Depreciation expense from property and equipment | 29,516 | $ 23,953 | |
Amortization expense from finance lease | 5 | 60 | |
Amortization expense from intangible assets | 3,761 | 2,725 | |
Accretion expense from asset retirement obligations | 256 | 329 | |
Total depreciation and amortization | 33,538 | 27,067 | |
Property and Equipment Held-for-Sale and Impairments | |||
Net loss on disposal of property and equipment | 2,911 | $ 1,653 | |
Machinery and equipment | |||
Property and equipment | |||
Property and equipment | 678,818 | 675,505 | |
Buildings and leasehold improvements | |||
Property and equipment | |||
Property and equipment | 148,282 | 145,223 | |
Gathering and disposal infrastructure | |||
Property and equipment | |||
Property and equipment | 87,848 | 87,568 | |
Pipelines | |||
Property and equipment | |||
Property and equipment | 72,829 | 72,829 | |
Vehicles and equipment | |||
Property and equipment | |||
Property and equipment | 26,187 | 27,850 | |
Land | |||
Property and equipment | |||
Property and equipment | 24,049 | 24,159 | |
Computer equipment and software | |||
Property and equipment | |||
Property and equipment | 7,472 | 6,765 | |
Office furniture and equipment | |||
Property and equipment | |||
Property and equipment | 894 | 1,183 | |
Machinery and equipment - finance lease | |||
Property and equipment | |||
Property and equipment | 519 | 519 | |
Vehicles and equipment - finance lease | |||
Property and equipment | |||
Property and equipment | 47 | 58 | |
Computer equipment and software - finance lease | |||
Property and equipment | |||
Property and equipment | 56 | 56 | |
Construction in progress | |||
Property and equipment | |||
Property and equipment | $ 65,898 | $ 42,290 |
OTHER INTANGIBLE ASSETS- Other
OTHER INTANGIBLE ASSETS- Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Feb. 21, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Value, definite-lived | $ 190,033 | $ 173,807 | |
Abandonment | (11,106) | ||
Accumulated Amortization, definite-lived | (60,159) | (56,398) | |
Total | 118,768 | 117,409 | |
Gross Value, Indefinite-lived | 7,031 | 21,391 | |
Net Value, Indefinite-lived | 7,031 | 21,391 | |
Intangible Assets, Gross (Excluding Goodwill) | 197,064 | 195,198 | |
Intangible Assets, Net (Excluding Goodwill) | 125,799 | 138,800 | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Value, definite-lived | 160,098 | 158,232 | |
Accumulated Amortization, definite-lived | (51,178) | (48,123) | |
Total | $ 108,920 | 110,109 | |
Weighted average amortization period | 9 years 7 months 6 days | ||
Patents and other intellectual property | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Value, definite-lived | $ 12,772 | 12,772 | |
Accumulated Amortization, definite-lived | (6,048) | (5,701) | |
Total | $ 6,724 | 7,071 | |
Weighted average amortization period | 5 years 3 months 18 days | ||
Other intangible assets | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Value, definite-lived | $ 2,803 | 2,803 | |
Accumulated Amortization, definite-lived | (2,608) | (2,574) | |
Total | $ 195 | 229 | |
Weighted average amortization period | 1 year 4 months 24 days | ||
Trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted average amortization period | 9 months 18 days | ||
Water rights | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Value, Indefinite-lived | $ 7,031 | 7,031 | |
Net Value, Indefinite-lived | $ 7,031 | 7,031 | |
Water rights | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Renewal term | 5 years | ||
Water rights | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Renewal term | 10 years | ||
Trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Value, definite-lived | $ 14,360 | ||
Abandonment | (11,106) | ||
Accumulated Amortization, definite-lived | (325) | ||
Total | $ 2,929 | ||
Gross Value, Indefinite-lived | 14,360 | ||
Net Value, Indefinite-lived | $ 14,360 | ||
Trademarks | Oilfield Chemicals Segment | |||
Finite-Lived Intangible Assets [Line Items] | |||
Abandonment | $ (11,100) | ||
Trademarks | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Renewal term | 5 years | ||
Trademarks | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Renewal term | 10 years |
OTHER INTANGIBLE ASSETS- Annual
OTHER INTANGIBLE ASSETS- Annual Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Annual amortization of intangible assets | ||
Remainder of 2023 | $ 13,761 | |
Year ending December 31, 2024 | 14,376 | |
Year ending December 31, 2025 | 14,213 | |
Year ending December 31, 2026 | 14,125 | |
Year ending December 31, 2027 | 13,623 | |
Thereafter | 48,670 | |
Total | $ 118,768 | $ 117,409 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 17, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
DEBT | ||||
Variable interest rate (as a percent) | 2.50% | |||
Unused line fee (as a percent) | 0.50% | |||
Debt issuance costs | $ 2,031 | |||
Debt outstanding | $ 75,500 | |||
Amortization of debt issuance costs | $ 122 | $ 294 | ||
Average excess availability, less than 33% of the commitments | Base Rate Advances | ||||
DEBT | ||||
Variable interest rate (as a percent) | 1.25% | |||
Average excess availability, less than 33% of the commitments | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||
DEBT | ||||
Variable interest rate (as a percent) | 2.25% | |||
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) | 1% | |||
Average excess availability, less than 66.67% of the commitments and more than or equal to 33.33% of the commitments | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||
DEBT | ||||
Variable interest rate (as a percent) | 2% | |||
Average excess availability, more than or equal to 66.67% of the commitments | Base Rate Advances | ||||
DEBT | ||||
Variable interest rate (as a percent) | 0.75% | |||
Average excess availability, more than or equal to 66.67% of the commitments | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||
DEBT | ||||
Variable interest rate (as a percent) | 1.75% | |||
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% | |||
Letter of credit | ||||
DEBT | ||||
Amount outstanding | $ 75,500 | $ 16,000 | ||
Interest rate. | 0.0875% | |||
Revolving line of credit | ||||
DEBT | ||||
Maximum borrowing capacity | $ 270,000 | |||
Revolving line of credit | Letter of credit | ||||
DEBT | ||||
Maximum borrowing capacity | $ 257,300 | 245,000 | ||
Senior secured credit facility | ||||
DEBT | ||||
Additional borrowing capacity | $ 135,000 | |||
Percentage of borrowing base allowed | 35% | |||
Margin (as a percent) | 2% | |||
Reduction in borrowing capacity | 22,600 | 22,900 | ||
Unused portion of available borrowing | 159,200 | |||
Debt issuance costs | 2,100 | |||
Unamortized Debt issuance Costs | $ 1,900 | $ 2,100 | ||
Senior secured credit facility | Minimum | ||||
DEBT | ||||
Percentage of borrowing base allowed | 30% | |||
Variable interest rate (as a percent) | 1.75% | |||
Senior secured credit facility | Maximum | ||||
DEBT | ||||
Variable interest rate (as a percent) | 2.25% | |||
Senior secured credit facility | Base Rate Advances | Minimum | ||||
DEBT | ||||
Margin (as a percent) | 0.75% | |||
Senior secured credit facility | Base Rate Advances | Maximum | ||||
DEBT | ||||
Margin (as a percent) | 1.25% | |||
Senior secured credit facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||
DEBT | ||||
Margin (as a percent) | 1% | |||
Senior secured credit facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Minimum | ||||
DEBT | ||||
Margin (as a percent) | 1.75% | |||
Senior secured credit facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Maximum | ||||
DEBT | ||||
Margin (as a percent) | 2.25% | |||
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% | |||
Senior secured credit facility | Eligible inventory | ||||
DEBT | ||||
Borrowing base (as a percent) | 70% | |||
Senior secured credit facility | Net recovery percentage | ||||
DEBT | ||||
Borrowing base (as a percent) | 85% | |||
Senior secured credit facility | Criteria for distributions, scenario one | ||||
DEBT | ||||
Lookback period | 30 days | |||
Percentage outstanding | 25% | |||
Base amount | $ 33,750 | |||
Senior secured credit facility | Criteria for distributions, scenario two | ||||
DEBT | ||||
Lookback period | 30 days | |||
Percentage outstanding | 20% | |||
Base amount | $ 27,000 | |||
Fixed charge coverage ratio | 1% | |||
Senior secured credit facility | Coverage Ratio Criteria | ||||
DEBT | ||||
Lookback period | 60 days | |||
Percentage outstanding | 10% | |||
Base amount | $ 15,000 | |||
Fixed charge coverage ratio | 1% | |||
Senior secured credit facility | Letter of credit | ||||
DEBT | ||||
Maximum borrowing capacity | $ 40,000 | |||
Senior secured credit facility | Swingline loan | ||||
DEBT | ||||
Maximum borrowing capacity | $ 27,000 |
DEBT - Principal Maturities of
DEBT - Principal Maturities of Debt Outstanding (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
DEBT | |
2027 | $ 75,500 |
Total | $ 75,500 |
EQUITY-BASED COMPENSATION (Deta
EQUITY-BASED COMPENSATION (Details) | 3 Months Ended | ||||
Feb. 23, 2022 shares | Dec. 20, 2016 shares | Mar. 31, 2023 shares | May 08, 2020 shares | Nov. 01, 2017 shares | |
EQUITY-BASED COMPENSATION | |||||
Ratio | 1 | ||||
Class A common stock | |||||
EQUITY-BASED COMPENSATION | |||||
Ratio | 1 | 1 | |||
Class A-1 Common Stock | Private Placement | |||||
EQUITY-BASED COMPENSATION | |||||
Shares issued | 16,100,000 | ||||
Nuverra | |||||
EQUITY-BASED COMPENSATION | |||||
Number of shares converted | 1 | 1 | |||
Nuverra | Class A common stock | |||||
EQUITY-BASED COMPENSATION | |||||
Conversion of common stock for resale | 0.2551 | 0.2551 | |||
2016 plan | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 13,300,000 | ||||
Number of shares available for grant | 2,000,000 | ||||
2016 plan | Maximum | |||||
EQUITY-BASED COMPENSATION | |||||
Equity options term | 10 years | ||||
Second Amendment to the 2016 Plan | Class A common stock | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 4,000,000 | ||||
2017 Plan | Class A common stock | |||||
EQUITY-BASED COMPENSATION | |||||
Ratio | 1 | 1 | |||
Number of shares available for grant | 55,769 | 55,769 | |||
2017 Plan | Nuverra | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 1,772,058 | 1,772,058 | |||
2017 Plan | Nuverra | Class A common stock | |||||
EQUITY-BASED COMPENSATION | |||||
Number of shares available for grant | 131,110 | 131,110 | |||
2018 Plan | Class A common stock | |||||
EQUITY-BASED COMPENSATION | |||||
Ratio | 1 | 1 | |||
Number of shares available for grant | 14,736 | 14,736 | |||
2018 Plan | Nuverra | Class A common stock | |||||
EQUITY-BASED COMPENSATION | |||||
Number of shares available for grant | 24,984 | 24,984 | |||
Restricted Stock Awards | 2018 Plan | Nuverra | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 100,000 | 100,000 |
EQUITY-BASED COMPENSATION - Equ
EQUITY-BASED COMPENSATION - Equity Options Changed During Period (Details) - Equity options - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Equity Options | ||
Beginning balance (in shares) | 1,666,872 | |
Granted (in shares) | 0 | |
Expired (in shares) | (2,900) | |
Ending balance (in shares) | 1,663,972 | 1,666,872 |
Ending balance, exercisable (in shares) | 1,663,972 | |
Weighted-average Exercise Price | ||
Beginning balance (in dollars per share) | $ 17.10 | |
Expired (in dollars per share) | 34.41 | |
Ending balance (in dollars per share) | 17.07 | $ 17.10 |
Ending balance, exercisable | $ 17.07 | |
Weighted-average Remaining Contractual Term (Years) | ||
Outstanding | 3 years 10 months 24 days | 4 years 2 months 12 days |
Ending balance, exercisable | 3 years 10 months 24 days | |
Aggregate Intrinsic Value | ||
Beginning balance, outstanding | $ 353 | |
Ending balance, outstanding | $ 353 |
EQUITY-BASED COMPENSATION - E_2
EQUITY-BASED COMPENSATION - Equity Options (Details) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Class A common stock | Equity options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share Price | $ 6.96 | $ 9.24 |
EQUITY-BASED COMPENSATION - Res
EQUITY-BASED COMPENSATION - Restricted stock (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Restricted Stock | Maximum | ||
EQUITY-BASED COMPENSATION | ||
Offering period | 3 years | |
Restricted Stock Awards | ||
EQUITY-BASED COMPENSATION | ||
Compensation expense | $ 3.9 | $ 2.8 |
Unrecognized compensation expense | $ 24.5 | |
Weighted-average remaining life | 2 years | |
Restricted stock | ||
Beginning balance (in shares) | 4,237,715 | |
Granted (in shares) | 1,275,859 | |
Vested (in shares) | (1,380,264) | |
Forfeited (in shares) | (26,861) | |
Ending balance (in shares) | 4,106,449 | |
Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ 7.36 | |
Granted (in dollars per share) | 7.39 | |
Vested (in dollars per share) | 7.50 | |
Forfeited (in dollars per share) | 7.25 | |
Ending balance (in dollars per share) | $ 7.32 |
EQUITY-BASED COMPENSATION - Per
EQUITY-BASED COMPENSATION - Performance share units (Details) - Performance share units $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 USD ($) item | Mar. 31, 2022 USD ($) item | Mar. 31, 2021 USD ($) item | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of times shares issued for each performance share settlement | item | 1 | 1 | 1 |
Grant date fair value of PSUs | $ 4.8 | $ 5 | $ 4.4 |
Compensation expense | (0.9) | $ 0.5 | |
Unrecognized compensation expense | $ 6.7 | ||
Weighted-average remaining life | 2 years 4 months 24 days | ||
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target PSUs that can be earned | 0% | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target PSUs that can be earned | 1.75% | ||
Peer Group Outside of Top 10 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 0% | ||
Peer Group Top 10 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 50% | ||
Peer Group Top 7 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 100% | ||
Peer Group Top 3 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 175% | ||
Adjusted FCF Performance Percentage Less than 70% | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 0% | ||
Adjusted FCF Performance Percentage 70% | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 50% | ||
Adjusted FCF Performance Percentage 100% | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 100% | ||
Adjusted FCF Performance Percentage 130% | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of Target Amount Earned | 175% |
EQUITY-BASED COMPENSATION - P_2
EQUITY-BASED COMPENSATION - Performance share units outstanding (Details) - Performance share units | 3 Months Ended |
Mar. 31, 2023 shares | |
Performance share units | |
Beginning balance (in shares) | 1,860,734 |
Target shares granted | 751,980 |
Target shares forfeited | (695,488) |
Ending balance (in shares) | 1,917,226 |
EQUITY-BASED COMPENSATION - Emp
EQUITY-BASED COMPENSATION - Employee Stock Purchase Plan (ESPP) (Details) - ESPP | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Issue price (percentage) | 95% |
Maximum annual employees contribution | $ 15,000 |
Offering period | 4 years |
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 | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Decrease in paid-in capital | $ 10,935,000 | $ 19,516,000 |
Class A common stock | 2016 plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares repurchased in open market | 1,231,996 | 2,297,985 |
Number of shares repurchased with employee minimum tax withholding requirements | 425,207 | 362,343 |
Decrease in paid-in capital | $ 10,900,000 | |
Class A common stock | 2016 plan | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Decrease in Class A common stock | $ 17,000 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
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 |
Abandonment | 11,166 | |
Nonrecurring | March 31 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Abandonment | 11,106 | |
Nonrecurring | March 31 | Carrying value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trademark | 14,360 | |
Level 3 | Nonrecurring | March 31 | Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trademark | $ 2,929 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
RELATED PARTY TRANSACTIONS | ||
Sales to related parties | $ 0.3 | $ 0.3 |
Purchases from related party vendors | $ 3.8 | 2.6 |
Minimum | Related Parties | ||
RELATED PARTY TRANSACTIONS | ||
Beneficial ownership (as a percent) | 5% | |
Tax Receivable Agreement | Legacy Owner Holdco and Crestview GP | ||
RELATED PARTY TRANSACTIONS | ||
Percentage of net tax savings for payment to TRA Holders | 85% | |
Property and equipment, inventory and consumables | ||
RELATED PARTY TRANSACTIONS | ||
Purchases from related party vendors | $ 0.6 | 0.1 |
Rent of certain equipment or other services | ||
RELATED PARTY TRANSACTIONS | ||
Purchases from related party vendors | 3 | 2.2 |
Management, consulting and other services | ||
RELATED PARTY TRANSACTIONS | ||
Purchases from related party vendors | $ 0.2 | $ 0.3 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INCOME TAXES | ||
Current income tax expense (benefit) | $ 204 | $ 241 |
Deferred income tax benefit | (6) | (27) |
Total income tax expense (benefit) | $ 198 | $ 214 |
Effective Tax Rate (as percent) | 1.40% | 2.60% |
Statutory tax rate (as a percent) | 21% |
NONCONTROLLING INTERESTS (Detai
NONCONTROLLING INTERESTS (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
NONCONTROLLING INTERESTS | ||
Noncontrolling interests attributable to joint ventures formed for water-related services | $ 3,834 | $ 4,167 |
Noncontrolling interests attributable to holders of Class B Common Stock | 113,947 | 113,584 |
Total noncontrolling interests | $ 117,781 | $ 117,751 |
NONCONTROLLING INTERESTS - Effe
NONCONTROLLING INTERESTS - Effect of Changes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Effects of changes in noncontrolling interests on equity | ||
Net income (loss) attributable to Select Energy Services, Inc. | $ 12,347 | $ 6,802 |
Transfers from (to) noncontrolling interests: | ||
Decrease in additional paid-in capital as a result of issuing shares for business combinations | (1,356) | |
Decrease in additional paid-in capital as a result of stock option exercises | (24) | |
Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures | 1,143 | 2,059 |
(Decrease) increase in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units | (101) | 409 |
Decrease in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued | (1) | |
Change to equity from net income attributable to Select Energy Services, Inc. and transfers from noncontrolling interests | 13,389 | $ 7,889 |
Contributions from noncontrolling interests | 153 | |
SES Holdings LLC [Member] | ||
Transfers from (to) noncontrolling interests: | ||
Cash consideration from minority interest | $ 5,000 |
INCOME PER SHARE (Details)
INCOME PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Calculation of basic and diluted earnings per share: | ||
Antidilutive shares | 1,663,972 | 1,903,486 |
Net income | $ 13,705 | $ 7,985 |
Net income (loss) attributable to noncontrolling interests | (1,358) | (1,183) |
Net income attributable to Select Energy Services, Inc. | 12,347 | 6,802 |
Add: Reallocation of net income (loss) attributable to noncontrolling interests for the dilutive effect of restricted stock | (14) | 14 |
Add: Reallocation of net income (loss) attributable to noncontrolling interests for the dilutive effect of performance units | (9) | 2 |
Net income (loss) attributable to Select Energy Services, Inc. - diluted | 12,324 | 6,818 |
Class A common stock | ||
Calculation of basic and diluted earnings per share: | ||
Net income attributable to Select Energy Services, Inc. | 12,347 | 6,802 |
Add: Reallocation of net income (loss) attributable to noncontrolling interests for the dilutive effect of restricted stock | (14) | 14 |
Add: Reallocation of net income (loss) attributable to noncontrolling interests for the dilutive effect of performance units | (9) | 2 |
Net income (loss) attributable to Select Energy Services, Inc. - diluted | $ 12,324 | $ 6,818 |
Weighted-average shares of common stock outstanding - basic | 105,403,461 | 91,821,906 |
Weighted-average shares of common stock outstanding - diluted | 106,888,813 | 93,316,508 |
Income (loss) per share, Basic (in dollars per share) | $ 0.12 | $ 0.07 |
Income (loss) per share, Diluted (in dollars per share) | $ 0.12 | $ 0.07 |
Class A common stock | Restricted Stock | ||
Calculation of basic and diluted earnings per share: | ||
Dilutive effect | 914,862 | 1,324,947 |
Class A common stock | Performance share units | ||
Calculation of basic and diluted earnings per share: | ||
Dilutive effect | 570,490 | 169,578 |
Class A common stock | ESPP | ||
Calculation of basic and diluted earnings per share: | ||
Dilutive effect | 77 | |
Class B common stock | ||
Calculation of basic and diluted earnings per share: | ||
Weighted-average shares of common stock outstanding - basic | 16,221,101 | 16,221,101 |
Weighted-average shares of common stock outstanding - diluted | 16,221,101 | 16,221,101 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
SEGMENT INFORMATION | ||
Number of reportable segments | segment | 3 | |
Segment information | ||
Revenue | $ 416,592 | $ 294,769 |
Impairments and abandonments | 11,166 | |
Income before taxes | 14,269 | 8,328 |
Depreciation and Amortization | 33,538 | 27,067 |
Capital Expenditures | 41,494 | 18,265 |
Income (loss) from operations | 11,999 | (4,291) |
Bargain purchase gain | 11,434 | |
Other income, net | 846 | 249 |
Operating segment | Water Services | ||
Segment information | ||
Revenue | 229,840 | 164,686 |
Impairments and abandonments | 60 | |
Income before taxes | 18,030 | 2,565 |
Depreciation and Amortization | 18,136 | 15,562 |
Capital Expenditures | 20,188 | 5,631 |
Operating segment | Water Infrastructure | ||
Segment information | ||
Revenue | 102,674 | 59,198 |
Income before taxes | 12,652 | 3,427 |
Depreciation and Amortization | 12,725 | 8,431 |
Capital Expenditures | 18,338 | 11,072 |
Operating segment | Oilfield Chemicals | ||
Segment information | ||
Revenue | 86,598 | 72,681 |
Impairments and abandonments | 11,106 | |
Income before taxes | (358) | 4,166 |
Depreciation and Amortization | 2,083 | 2,507 |
Capital Expenditures | 2,406 | 573 |
Operating segment | Other | ||
Segment information | ||
Income before taxes | (4) | (2) |
Eliminations | ||
Segment information | ||
Revenue | (2,520) | (1,796) |
Corporate | ||
Segment information | ||
Income before taxes | (18,321) | (14,447) |
Depreciation and Amortization | 594 | 567 |
Capital Expenditures | 562 | 989 |
Material reconciling items | ||
Segment information | ||
Income (loss) from operations | 30,320 | 10,156 |
Interest expense, net | (1,483) | (720) |
Other income, net | $ 3,753 | $ 1,905 |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Segment Reporting Information [Line Items] | ||
Assets | $ 1,285,252 | $ 1,222,853 |
Operating segment | Water Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 633,230 | 608,616 |
Operating segment | Water Infrastructure | ||
Segment Reporting Information [Line Items] | ||
Assets | 460,410 | 420,233 |
Operating segment | Oilfield Chemicals | ||
Segment Reporting Information [Line Items] | ||
Assets | 180,101 | 183,469 |
Operating segment | Other | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 11,511 | $ 10,535 |