Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Jun. 15, 2020 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Interactive Data Current | Yes | |
Entity Registrant Name | TEAM INC | |
Entity Central Index Key | 0000318833 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 30,627,638 | |
Entity Current Reporting Status | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Current assets: | |||
Cash and cash equivalents | $ 20,523 | $ 12,175 | |
Accounts receivable, net of allowance of $9,674 and $9,990, respectively | [1] | 224,111 | 245,617 |
Inventory | 38,011 | 39,195 | |
Income tax receivable | 15,550 | 316 | |
Prepaid expenses and other current assets | 25,797 | 20,275 | |
Total current assets | 323,992 | 317,578 | |
Property, plant and equipment, net | 184,447 | 191,951 | |
Operating lease right-of-use assets | 64,209 | 67,048 | |
Intangible assets, net of accumulated amortization of $99,899 and $96,797, respectively | 113,535 | 117,019 | |
Goodwill | 88,099 | 282,006 | |
Deferred income taxes | 5,130 | 5,189 | |
Other assets, net | 8,126 | 4,426 | |
Total assets | 787,538 | 985,217 | |
Current liabilities: | |||
Accounts payable | 47,634 | 41,636 | |
Current portion of long-term debt and finance lease obligations | 5,296 | 5,294 | |
Current portion of operating lease obligations | 16,787 | 17,100 | |
Other accrued liabilities | 81,699 | 86,506 | |
Total current liabilities | 151,416 | 150,536 | |
Long-term debt and finance lease obligations | 345,362 | 325,299 | |
Operating lease obligations | 52,027 | 54,436 | |
Defined benefit pension liability | 7,696 | 9,321 | |
Deferred income taxes | 1,821 | 6,996 | |
Other long-term liabilities | 1,787 | 1,959 | |
Total liabilities | 560,109 | 548,547 | |
Commitments and contingencies | |||
Equity: | |||
Preferred stock, 500,000 shares authorized, none issued | 0 | 0 | |
Common stock, par value $0.30 per share, 60,000,000 shares authorized; 30,627,479 and 30,518,793 shares issued, respectively | 9,183 | 9,153 | |
Additional paid-in capital | 410,185 | 409,034 | |
Retained earnings (deficit) | (152,088) | 48,673 | |
Accumulated other comprehensive loss | (39,851) | (30,190) | |
Total equity | 227,429 | 436,670 | |
Total liabilities and equity | $ 787,538 | $ 985,217 | |
[1] | Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Receivables, allowance | $ 9,674 | $ 9,990 |
Intangible assets, accumulated amortization | $ 99,899 | $ 96,797 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.30 | $ 0.30 |
Common stock, shares authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock, shares issued (in shares) | 30,627,479 | 30,518,793 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Income Statement [Abstract] | |||
Revenues | [1] | $ 236,839 | $ 269,599 |
Operating expenses | 179,353 | 203,652 | |
Gross margin | 57,486 | 65,947 | |
Selling, general and administrative expenses | 78,444 | 82,267 | |
Restructuring and other related charges, net | 186 | 208 | |
Goodwill impairment charge | 191,788 | 0 | |
Operating loss | (212,932) | (16,528) | |
Interest expense, net | 6,776 | 7,425 | |
Other expense (income), net | 472 | (58) | |
Loss before income taxes | (220,180) | (23,895) | |
Less: Provision (benefit) for income taxes | (20,453) | 333 | |
Net loss | $ (199,727) | $ (24,228) | |
Loss per common share: | |||
Basic (in dollars per share) | $ (6.54) | $ (0.80) | |
Diluted (in dollars per share) | $ (6.54) | $ (0.80) | |
Weighted-average number of shares outstanding: | |||
Basic (in shares) | 30,540 | 30,228 | |
Diluted (in shares) | 30,540 | 30,228 | |
[1] | Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (199,727) | $ (24,228) |
Other comprehensive income (loss) before tax: | ||
Foreign currency translation adjustment | (9,741) | 1,809 |
Foreign currency hedge | 265 | 279 |
Other comprehensive income (loss), before tax | (9,476) | 2,088 |
Tax (provision) benefit attributable to other comprehensive income (loss) | (185) | (69) |
Other comprehensive income (loss), net of tax | (9,661) | 2,019 |
Total comprehensive loss | $ (209,388) | $ (22,209) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Dec. 31, 2018 | 30,184 | ||||
Beginning balance at Dec. 31, 2018 | $ 457,100 | $ 9,053 | $ 400,989 | $ 81,450 | $ (34,392) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of new accounting principle, net of tax | (767) | (767) | |||
Net loss | (24,228) | (24,228) | |||
Foreign currency translation adjustment, net of tax | 1,809 | 1,809 | |||
Foreign currency hedge, net of tax | 210 | 210 | |||
Non-cash compensation | 2,434 | 2,434 | |||
Net settlement of vested stock awards (in shares) | 63 | ||||
Net settlement of vested stock awards | (341) | $ 19 | (360) | ||
Ending balance (in shares) at Mar. 31, 2019 | 30,247 | ||||
Ending Balance at Mar. 31, 2019 | 436,217 | $ 9,072 | 403,063 | 56,455 | (32,373) |
Beginning balance (in shares) at Dec. 31, 2019 | 30,519 | ||||
Beginning balance at Dec. 31, 2019 | 436,670 | $ 9,153 | 409,034 | 48,673 | (30,190) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of new accounting principle, net of tax | (1,034) | (1,034) | |||
Net loss | (199,727) | (199,727) | |||
Foreign currency translation adjustment, net of tax | (9,861) | (9,861) | |||
Foreign currency hedge, net of tax | 200 | 200 | |||
Non-cash compensation | 1,530 | 1,530 | |||
Net settlement of vested stock awards (in shares) | 109 | ||||
Net settlement of vested stock awards | (349) | $ 30 | (379) | ||
Ending balance (in shares) at Mar. 31, 2020 | 30,628 | ||||
Ending Balance at Mar. 31, 2020 | $ 227,429 | $ 9,183 | $ 410,185 | $ (152,088) | $ (39,851) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (199,727) | $ (24,228) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 11,708 | 12,271 |
Amortization of deferred loan costs and debt discounts | 2,055 | 1,860 |
Provision for doubtful accounts | (45) | 637 |
Foreign currency (gain) loss | 574 | (87) |
Deferred income taxes | (5,764) | (771) |
Loss on asset disposal | 26 | 140 |
Goodwill impairment charge | 191,788 | 0 |
Non-cash compensation cost | 1,530 | 2,434 |
Other, net | (965) | (567) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 14,357 | 24,060 |
Inventory | 713 | (850) |
Prepaid expenses and other current assets | (5,382) | (5,073) |
Accounts payable | 8,297 | 4,493 |
Other accrued liabilities | (3,246) | (7,039) |
Income taxes | (15,002) | 348 |
Net cash provided by operating activities | 917 | 7,628 |
Cash flows from investing activities: | ||
Capital expenditures | (8,305) | (6,610) |
Business acquisitions, net of cash acquired | (1,013) | 0 |
Proceeds from disposal of assets | 0 | 47 |
Other | 6 | 47 |
Net cash used in investing activities | (9,312) | (6,516) |
Cash flows from financing activities: | ||
Net borrowings (payments) under revolving credit agreement | 20,153 | (3,550) |
Borrowings (payments) under term loan, net of debt discount | (1,250) | 0 |
Contingent consideration payments | 0 | (428) |
Taxes paid related to net share settlement of share-based awards | (349) | (342) |
Other | (60) | (72) |
Net cash provided by (used in) financing activities | 18,494 | (4,392) |
Effect of exchange rate changes on cash and cash equivalents | (1,751) | 76 |
Net increase (decrease) in cash and cash equivalents | 8,348 | (3,204) |
Cash and cash equivalents at end of period | 12,175 | 18,288 |
Cash and cash equivalents at beginning of period | $ 20,523 | $ 15,084 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES Description of business. Unless otherwise indicated, the terms “Team, Inc.,” “Team,” “the Company,” “we,” “our” and “us” are used in this report to refer to Team, Inc., to one or more of its consolidated subsidiaries or to all of them taken as a whole. We are a global leading provider of integrated, digitally-enabled asset performance assurance and optimization solutions. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability and operational efficiency for our client’s most critical assets. We conduct operations in three segments, Inspection and Heat Treating (“IHT”), Mechanical Services (“MS”) and Quest Integrity. Through the capabilities and resources in these three segments, we believe that Team is uniquely qualified to provide integrated solutions involving in their most basic form: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the client’s election. In addition, we are capable of escalating with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that Team is unique in its ability to provide services in three distinct client demand profiles: (i) turnaround or project services, (ii) call-out services and (iii) nested or run-and-maintain services. IHT provides integrity management and performance solutions, conventional and advanced non-destructive testing (“NDT”) services, heat treating and thermal services, tank management solutions, and pipeline integrity solutions, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. MS provides machining, bolting, and vapor barrier weld testing services, hot tap and line intervention services, valve management solutions, and emission control services primarily as call-out and turnaround services under both on-stream and off-line/shut down circumstances. On-stream services offered by MS represent the services offered while plants are operating and under pressure. Turnaround services are project-related and demand is a function of the number and scope of scheduled and unscheduled facility turnarounds as well as new industrial facility construction or expansion activities. Quest Integrity provides integrity and reliability management solutions for the process, pipeline and power sectors. These solutions encompass three broadly-defined disciplines including highly specialized in-line inspection services for historically unpiggable process piping and pipelines using proprietary in-line inspection tools and analytical software; advanced engineering and condition assessment services through a multi-disciplined engineering team and related lab support; and advanced digital imaging including remote digital video imaging, laser scanning and laser profilometry-enabled reformer care services. We offer these services globally through approximately 200 locations in 20 countries throughout the world with approximately 6,100 employees. We market our services to companies in a diverse array of heavy industries which include: • Energy (refining, power, renewables, nuclear and LNG) • Manufacturing and Process (chemical, petrochemical, pulp and paper industries, manufacturing, automotive and mining) • Midstream and Others (valves, terminals and storage, pipeline and offshore oil and gas) • Public Infrastructure (amusement parks, bridges, ports, construction and building, roads, dams and railways) • Aerospace and Defense Our stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “TISI”. Recent Developments. In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States. The COVID-19 pandemic and related economic repercussions have created significant volatility and uncertainty in domestic and international markets. Additionally, oil demand has significantly deteriorated as a result of the pandemic and the corresponding preventative measures taken around the world to mitigate the spread of the virus. Further, other macroeconomic events such as the geopolitical tensions between the Organization of the Petroleum Exporting Countries (OPEC) and Russia, resulted in a significant drop in oil prices. Although oil prices have since seen a recovery, this price volatility undermines our client’s confidence in terms of project planning and execution. As such, these negative factors have created significant volatility and uncertainty in the markets in which we operate and, as a result, certain clients have responded with capital spending budget cuts, cost cutting measures, personnel layoffs, limited facility access, and facility closures among other actions. Though the impact of COVID-19 and decline in crude oil prices on our operations has varied by geographic conditions and applicable government mandates, it has adversely affected our workforce and operations, as well as the operations of our clients, suppliers and contractors. The ultimate duration and impact on our global operations is presently unclear. Furthermore, the extent to which we or our clients may successfully mitigate the impact of COVID-19 and the decline in the oil and gas industry, if at all, is not presently known. We expect that our results of operations in future periods may continue to be adversely impacted due to the factors noted above. To successfully navigate through this unprecedented period, we continue to focus on the following key priorities: • the safety of our employees and business continuity; • decisive and aggressive actions taken to align our business with the near-term decrease in demand for our services; and • our end market revenue diversification strategy. To respond to the economic downturn resulting from the COVID-19 pandemic and the drop in oil prices, we have initiated a cost reduction and efficiency program. All named executive officers have voluntarily taken temporary salary reductions ranging from 15% to 20% of their base salary. In addition, we have instituted a reduction for certain other salaried employees, at lower percentages, and suspended our voluntary match under the executive deferred compensation retirement plan and our 401(k) plan. Further, our board of directors voluntarily agreed to a 20% reduction of their cash compensation. These reductions are for the second quarter of 2020. If the economic downturn continues beyond the second quarter and there is no sign of economic recovery for us or the industries we serve, we will assess whether to change these cost saving measures. For additional risks relating to the COVID-19 pandemic and its impact on us and our oil and gas industry clients, see Part II, Item 1A “Risk Factors” of this report. Basis for presentation. These interim condensed consolidated financial statements are unaudited, but in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The condensed consolidated balance sheet at December 31, 2019 is derived from the December 31, 2019 audited consolidated financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 16, 2020 (“the 2019 Form 10-K”). Use of estimates. Our accounting policies conform to Generally Accepted Accounting Principles in the United States (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect our reported financial position and results of operations. We review significant estimates and judgments affecting our consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Estimates and judgments are based on information available at the time such estimates and judgments are made. Adjustments made with respect to the use of these estimates and judgments often relate to information not previously available. Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements. Estimates and judgments are used in, among other things, (1) aspects of revenue recognition, (2) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (3) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical and general liability, (4) establishing an allowance for uncollectible accounts receivable, (5) estimating the useful lives of our assets, (6) assessing future tax exposure and the realization of tax assets, (7) the valuation of the embedded derivative liability in our convertible debt, (8) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans and (9) managing our foreign currency risk with certain debt obligations associated with net investments in foreign operations. Fair value of financial instruments . Our financial instruments consist primarily of cash, cash equivalents, accounts receivable, accounts payable and debt obligations. The carrying amount of cash, cash equivalents, accounts receivable and accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of our banking facility is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the banking facility. The fair value of our convertible senior notes as of March 31, 2020 and December 31, 2019 is $168.2 million and $241.7 million , respectively, (inclusive of the fair value of the conversion option) and is a “Level 2” (as defined in Note 13) measurement, determined based on the observed trading price of these instruments. Allowance for doubtful accounts. In the ordinary course of business, a portion of our accounts receivable are not collected due to billing disputes, customer bankruptcies, dissatisfaction with the services we performed and other various reasons. We establish an allowance to account for those accounts receivable that we estimate will eventually be deemed uncollectible. The allowance for doubtful accounts is based on a combination of our historical experience and management’s review of long outstanding accounts receivable. Concentration of credit risk. No single customer accounts for more than 10% of consolidated revenues. Earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to Team shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) available to Team shareholders by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed conversion of our convertible senior notes under the treasury stock method. Our intent is to settle the principal amount of the convertible senior notes in cash upon conversion. If the conversion value exceeds the principal amount, we may elect to deliver shares of its common stock with respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). Accordingly, the conversion spread is included in the denominator for the computation of diluted earnings per common share using the treasury stock method. Amounts used in basic and diluted earnings (loss) per share, for the three months ended March 31, 2020 and 2019 , are as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) Weighted-average number of basic shares outstanding 30,540 30,228 Stock options, stock units and performance awards — — Convertible Senior Notes — — Total shares and dilutive securities 30,540 30,228 For both the three months ended March 31, 2020 and 2019 , all outstanding share-based compensation awards were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the net loss in those periods. Also, for both the three months ended March 31, 2020 and 2019 , the convertible senior notes were excluded from diluted loss per share because the conversion price exceeded the average price of our common stock during those periods. For information on our convertible senior notes and our share-based compensation awards, refer to Note 10 and Note 14, respectively. Newly Adopted Accounting Principles Topic 326 - Credit Losses. In June 2016, the FASB issued Accounting Standard Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses , which establishes ASC Topic 326, Credit Losses (“ASC 326”), along with subsequent ASUs to clarify certain provisions of ASC 326, introduced a new impairment model for financial instruments that is based on expected credit losses rather than incurred credit losses. The new impairment model applies to most financial assets measured at amortized cost, including trade accounts receivable. We adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts are reported in accordance with previously applicable GAAP based on incurred credit losses. The cumulative effect of adoption on January 1, 2020 resulted in a $1.0 million decrease, net of tax, to beginning retained earnings on our consolidated balance sheet. Refer to Note 3 for further discussion of ASC 326. ASU No. 2018-15. In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), that requires implementation costs incurred in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized in a software licensing arrangement under the internal-use software guidance in Topic 350. ASU 2018-15 requires an entity to disclose the nature of its hosting arrangements that are service contracts and provide disclosures as if the deferred implementation costs were a separate, major depreciable asset class. Our adoption of ASU No. 2018-15 as of January 1, 2020 resulted in a reduction of $4.9 million from property, plant, and equipment with $0.9 million reclassified to other current assets and $4.0 million reclassified to other non-current assets on our consolidated balance sheet. Accounting Principles Not Yet Adopted ASU No. 2019-12. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes , that simplifies the accounting for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes as well as clarifies aspects of existing guidance to promote more consistent application. ASU 2019-12 clarifies and amends existing guidance related to intraperiod tax allocation and calculations, recognition of deferred taxes for change in ownership group, evaluation of a step-up in the tax basis of goodwill and other clarifications. We are currently evaluating the impact this ASU will have on our financial statements and we plan to adopt as of January 1, 2021. ASU No. 2020-04. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The guidance provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently determining whether we will elect the optional expedients as well as evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE In accordance with ASC 606, Revenue from Contracts with Customers , we follow a five-step process to recognize revenue: 1) identify the contract with the customer, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations and 5) recognize revenue when the performance obligations are satisfied. The majority of our contracts with customers are short-term in nature and billed on a time and materials basis, while certain other contracts are at a fixed price. Certain contracts may contain a combination of fixed and variable elements. We act as a principal and have performance obligations to provide the service itself or oversee the services provided by any subcontractors. Revenue is measured based on consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties, such as taxes assessed by governmental authorities. In contracts where the amount of consideration is variable, we consider our experience with similar contracts in estimating the amount to which we will be entitled and recognize revenues accordingly. As most of our contracts contain only one performance obligation, the allocation of a contract’s transaction price to multiple performance obligations is generally not applicable. Customers are generally billed as we satisfy our performance obligations and payment terms typically range from 30 to 90 days from the invoice date. Billings under certain fixed-price contracts may be based upon the achievement of specified milestones, while some arrangements may require advance customer payment. Our contracts do not include significant financing components since the contracts typically span less than one year. Contracts generally include an assurance type warranty clause to guarantee that the services comply with agreed specifications. The warranty period typically is 12 months or less from the date of service. Warranty expenses were not material for the three months ended March 31, 2020 and 2019 . Revenue is recognized as (or when) the performance obligations are satisfied by transferring control over a service or product to the customer. Revenue recognition guidance prescribes two recognition methods (over time or point in time). Most of our performance obligations qualify for recognition over time because we typically perform our services on customer facilities or assets and customers receive the benefits of our services as we perform. Where a performance obligation is satisfied over time, the related revenue is also recognized over time using the method deemed most appropriate to reflect the measure of progress and transfer of control. For our time and materials contracts, we are generally able to elect the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date. For our fixed price contracts, we typically recognize revenue using the cost-to-cost method, which measures the extent of progress towards completion based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Under this method, revenue is recognized proportionately as costs are incurred. For contracts where control is transferred at a point in time, revenue is recognized at the time control of the asset is transferred to the customer, which is typically upon delivery and acceptance by the customer. Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands): Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 (unaudited) (unaudited) United States and Canada Other Countries Total United States and Canada Other Countries Total Revenue: IHT $ 105,304 $ 2,577 $ 107,881 $ 123,620 $ 3,436 $ 127,056 MS 76,582 27,937 104,519 87,452 34,074 121,526 Quest Integrity 12,833 11,606 24,439 14,357 6,660 21,017 Total $ 194,719 $ 42,120 $ 236,839 $ 225,429 $ 44,170 $ 269,599 Three Months Ended March 31, 2020 (unaudited) Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total Revenue: IHT $ 86,407 $ 101 $ 14,146 $ 7,227 $ 107,881 MS — 102,615 479 1,425 104,519 Quest Integrity 24,439 — — — 24,439 Total $ 110,846 $ 102,716 $ 14,625 $ 8,652 $ 236,839 Three Months Ended March 31, 2019 (unaudited) Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total Revenue: IHT $ 102,936 $ 362 $ 18,793 $ 4,965 $ 127,056 MS — 119,489 739 1,298 121,526 Quest Integrity 21,017 — — — 21,017 Total $ 123,953 $ 119,851 $ 19,532 $ 6,263 $ 269,599 For additional information on our reportable operating segments and geographic information, refer to Note 17. Contract balances. The timing of revenue recognition, billings and cash collections results in trade accounts receivable, contract assets and contract liabilities on the consolidated balance sheets. Trade accounts receivable include billed and unbilled amounts currently due from customers and represent unconditional rights to receive consideration. The amounts due are stated at their net estimated realizable value. Refer to Notes 1 and 3 for additional information on the allowance for doubtful accounts and our trade receivables. Contract assets include unbilled amounts typically resulting from sales under fixed-price contracts when the cost-to-cost method of revenue recognition is utilized, the revenue recognized exceeds the amount billed to the customer and the right to payment is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. If we receive advances or deposits from our customers, a contract liability is recorded. Additionally, a contract liability arises if items of variable consideration result in less revenue being recorded than what is billed. Contract assets and contract liabilities are generally classified as current. Trade accounts receivable, contract assets and contract liabilities consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Trade accounts receivable, net 1 $ 224,111 $ 245,617 Contract assets 2 $ 5,810 $ 4,671 Contract liabilities 3 $ 1,076 $ 1,224 _________________ 1 Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. 2 Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheets. 3 Included in the “Other accrued liabilities” line of the condensed consolidated balance sheets. The $1.1 million increase in our contract assets from December 31, 2019 to March 31, 2020 is due to more fixed price contracts in progress at March 31, 2020 as compared to December 31, 2019 . Contract liabilities as of March 31, 2020 have decreased as compared to December 31, 2019 due to our completion of performance obligations during the year ended December 31, 2019 associated with contracts under which customers had paid for all or a portion of the consideration in advance of the work being performed. Due to the short-term nature of our contracts, contract liability balances as of the end of any period are generally recognized as revenue in the following quarter. Accordingly, essentially all of the contract liability balance at December 31, 2019 was recognized as revenue during the subsequent quarter. Contract costs. We recognize the incremental costs of obtaining contracts as selling, general and administrative expenses when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less. Assets recognized for costs to obtain a contract were not material as of March 31, 2020 . Costs to fulfill a contract are recorded as assets if they relate directly to a contract or a specific anticipated contract, the costs generate or enhance resources that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. Costs to fulfill a contract recognized as assets primarily consist of labor and materials costs and generally relate to engineering and set-up costs incurred prior to the satisfaction of performance obligations. Assets recognized for costs to fulfill a contract are included in the “Prepaid expenses and other current assets” line of the condensed consolidated balance sheets and were not material as of March 31, 2020 . Such assets are recognized as expenses as we transfer the related goods or services to the customer. All other costs to fulfill a contract are expensed as incurred. Remaining performance obligations. As of March 31, 2020 , there were no material amounts of remaining performance obligations that are required to be disclosed. As permitted by ASC 606, we have elected not to disclose information about remaining performance obligations where i) the performance obligation is part of a contract that has an original expected duration of one year or less or ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient. |
RECEIVABLES
RECEIVABLES | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
RECEIVABLES | RECEIVABLES Accounts receivable consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Trade accounts receivable $ 167,409 $ 192,743 Unbilled receivables 66,376 62,864 Allowance for doubtful accounts (9,674 ) (9,990 ) Total $ 224,111 $ 245,617 ASC 326 applies to financial assets measured at amortized cost, including trade and unbilled accounts receivable, and requires immediate recognition of lifetime expected credit losses. Significant factors that affect the expected collectability of our receivables include macroeconomic trends and forecasts in the oil and gas, refining, power, and petrochemical markets and changes in our results of operations and forecasts. For unbilled receivables, we consider them as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate. We have identified the following factors that primarily impact the collectability of our receivables and therefore determine the pools utilized to calculate expected credit losses: (i) the aging of the receivable, (ii) any identification of known collectability concerns with specific receivables and (iii) variances in economic risk characteristics across geographic regions. For trade receivables, customers typically are provided with payment due date terms of 30 days upon issuance of an invoice. We have tracked historical loss information for our trade receivables and compiled historical credit loss percentages for different aging categories. We believe that the historical loss information we have compiled is a reasonable basis on which to determine expected credit losses for trade receivables because the composition of the trade receivables is consistent with that used in developing the historical credit-loss percentages as typically our customers and payment terms do not change significantly. Generally, a longer outstanding receivable equates to a higher percentage of the outstanding balance as current expected credit losses. We update the historical loss information for current conditions and reasonable and supportable forecasts that affect the expected collectability of the trade receivable using a loss-rate approach. We have not seen a negative trend in the current economic environment that significantly impacts our historical credit-loss percentages however we will continue to monitor for changes that would indicate the historical loss information is no longer a reasonable basis for the determination of our expected credit losses. Our forecasted loss rates inherently incorporate expected macroeconomic trends. A loss-rate method for estimating expected credit losses on a pooled basis is applied for each aging category for receivables that continue to exhibit similar risk characteristics. To measure expected credit losses for individual receivables with specific collectability risk, we identify specific factors based on customer-specific facts and circumstances that are unique to each customer. Customer accounts with different risk characteristics are separately identified and a specific reserve is determined for these accounts based on the assessed credit risk. We have also identified the following geographic regions in which to distinguish our trade receivables: the (i) United States, (ii) Canada, (iii) the European Union, (iv) the United Kingdom, and (v) other countries. These geographic regions are considered appropriate as they each operate in different economic environments with different foreign currencies, and therefore share similar economic risk characteristics. For each geographic region we evaluate the historical loss information and determine credit-loss percentages to apply to each aging category and individual receivable with specific risk characteristics. We estimate future expected credit losses based on forecasted changes in gross domestic product and oil demand for each region. We consider one year from the financial statement reporting date as representing a reasonable forecast period as this period aligns with the expected collectability of our trade receivables. Financial distress experienced by our customers could have an adverse impact on us in the event our customers are unable to remit payment for the products or services we provide or otherwise fulfill their obligations to us. In determining the current expected credit losses, we review macroeconomic conditions, market specific conditions, and internal forecasts to identify potential changes in our assessment. The following table shows a rollforward of the allowance for credit losses: March 31, 2020 (unaudited) Balance at beginning of period 1 $ (11,400 ) Provision for expected credit losses 45 Write-offs 1,441 Foreign exchange effects 240 Balance at end of period $ (9,674 ) _________________ 1 Includes $1.4 million due to the initial adoption of ASC 326 as of January 1, 2020. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Raw materials $ 7,916 $ 7,555 Work in progress 3,021 2,851 Finished goods 27,074 28,789 Total $ 38,011 $ 39,195 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Land $ 6,343 $ 6,380 Buildings and leasehold improvements 58,500 59,177 Machinery and equipment 282,640 284,020 Furniture and fixtures 10,903 10,946 Capitalized Enterprise Resource Planning system development costs 46,637 46,637 Computers and computer software 18,430 22,906 Vehicles 4,426 4,642 Construction in progress 14,452 13,088 Total 442,331 447,796 Accumulated depreciation and amortization (257,884 ) (255,845 ) Property, plant and equipment, net $ 184,447 $ 191,951 Included in the table above are assets under finance leases of $5.6 million and $5.6 million as of March 31, 2020 and December 31, 2019 , respectively, and accumulated amortization of $0.6 million and $0.5 million as of March 31, 2020 and December 31, 2019 , respectively. Depreciation expense for the three months ended March 31, 2020 and 2019 was $8.1 million and $8.6 million , respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Intangible assets consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 174,725 $ (66,555 ) $ 108,170 $ 174,940 $ (63,727 ) $ 111,213 Non-compete agreements 5,343 (5,263 ) 80 5,466 (5,306 ) 160 Trade names 24,691 (21,267 ) 3,424 24,724 (21,146 ) 3,578 Technology 7,830 (6,159 ) 1,671 7,838 (5,976 ) 1,862 Licenses 845 (655 ) 190 848 (642 ) 206 Total $ 213,434 $ (99,899 ) $ 113,535 $ 213,816 $ (96,797 ) $ 117,019 Amortization expense on intangible assets for the three months ended March 31, 2020 and March 31, 2019 was $3.6 million and $3.6 million , respectively. |
GOODWILL AND IMPAIRMENT CHARGES
GOODWILL AND IMPAIRMENT CHARGES | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOOWILL AND IMPAIRMENT CHARGES | GOODWILL AND IMPAIRMENT CHARGES The COVID-19 pandemic and subsequent mitigation efforts, which included global business and societal shutdowns and the implementation of mandatory social distancing requirements, created an unprecedented disruption to our business during the first quarter of 2020. These mitigation efforts coupled with the negative economic impacts to the oil and gas industry caused by the substantial decline in the global demand for oil and the concurrent surplus in the supply of oil resulting from geopolitical tensions between the Organization of Petroleum Exporting Countries and Russia regarding limits on production of oil have significantly impacted our business. Even though our services are primarily related to infrastructure support, the oil and gas industry is one of the key industries we serve and our clients have been significantly impacted as a result of these events. As our clients continue to adjust spending levels in immediate response to the lower commodity prices, we have experienced current activity reductions and pricing pressure for our products and services, primarily in our IHT and MS reporting units, which we expect to continue. In line with these rapidly changing market conditions, our market capitalization also deteriorated during the first quarter of 2020 and most significantly in late March 2020. In response to these events and the related decline in our forecasts from the COVID-19 pandemic, we announced cost-cutting measures to offset the expected impact to our business. We determined the totality of these events constituted a triggering event that required us to perform an interim goodwill impairment assessment as of March 31, 2020 . We determined the fair value for each reporting unit in our goodwill impairment assessment using both a discounted cash flow analysis and a multiples based market approach for comparable companies. We utilized third-party valuation advisors to assist us with these valuations. These analyses included significant judgment, including short-term and long-term forecast of operating performance, discount rates based on our weighted average cost of capital, revenue growth rates, profitability margins, capital expenditures and the timing of future cash flows. These impairment assessments incorporate inherent uncertainties, including supply and demand for our services, utilization forecasts, pricing forecasts and future market conditions, which are difficult to predict in volatile economic environments and could result in impairment charges in future periods if actual results materially differ from the assumptions utilized in our forecasts. Based upon our impairment assessment, we determined the carrying amount of our IHT reporting unit exceeded the fair value. As a result, we recorded $191.8 million in goodwill impairment charges on our IHT segment. The fair value of the MS and Quest Integrity reporting units exceeded their respective carrying values. We will continue to evaluate our goodwill and long-lived assets for potential triggering events as conditions warrant. There was $88.1 million of goodwill at March 31, 2020 and $282.0 million at December 31, 2019 . The following table presents a rollforward of goodwill for the three months ended March 31, 2020 as follows (in thousands): Three Months Ended (unaudited) IHT MS Quest Integrity Total Balance, December 31, 2019 $ 193,216 $ 55,409 $ 33,381 $ 282,006 Acquisitions — — 496 496 Foreign currency adjustments (1,428 ) (418 ) (769 ) (2,615 ) Impairment charge (191,788 ) — — (191,788 ) Balance, March 31, 2020 $ — $ 54,991 $ 33,108 $ 88,099 |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES Other accrued liabilities consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Personnel accruals $ 52,610 $ 45,934 Insurance accruals 12,394 14,289 Property, sales and other non-income related taxes 4,582 8,593 Accrued commission 2,458 3,299 Accrued interest 2,053 5,015 Other 7,602 9,376 Total $ 81,699 $ 86,506 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES We recorded an income tax benefit of $20.5 million for the three months ended March 31, 2020 compared to a provision of $0.3 million for the three months ended March 31, 2019. The effective tax rate, including discrete items, was a benefit of 9.3% for the three months ended March 31, 2020, compared to a provision of 1.4% for the three months ended March 31, 2019. Our effective tax rate differed substantially from the statutory tax rate primarily due to additional tax benefits recognized related to the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") enacted on March 27, 2020, the goodwill impairment loss taken during the quarter, and an increase to the valuation allowance. The CARES Act, among other things, includes modifications for net operating loss carryovers and carrybacks, an immediate refund of alternative minimum tax credit carryovers, and modification of the business interest deduction limitation for tax years beginning in 2019 and 2020 from 30% of adjusted taxable income ("ATI") to 50% of ATI. The CARES Act also includes a technical correction to the Tax Cuts and Jobs Act of 2017 (the "2017 Act") for qualified improvement property, which we do not expect to have a material impact on the Company. As a result of these modifications, a tax benefit in the amount of $7.3 million was recorded during the quarter related to the carryback of net operating losses generated in certain tax years, which were previously only allowed to be carried forward, to recover income taxes paid at a higher statutory tax rate than the rate under current law. The goodwill impairment charge taken during the quarter, a portion of which is not deductible for tax purposes, resulted in a tax benefit of $30.5 million for the three months ended March 31, 2020. An increase to the valuation allowance of $23.2 million related to the goodwill impairment and the Company’s U.S. net operating loss deferred tax assets was also recorded during the quarter. |
LONG-TERM DEBT, LETTERS OF CRED
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES | LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES Long-term debt consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Credit Facility revolver $ 93,513 $ 73,876 Credit Facility term loan 1 48,530 49,735 Total Credit Facility 142,043 123,611 Convertible debt 2 203,326 201,619 Finance lease obligations 5,289 5,363 Total long-term debt and finance lease obligations 350,658 330,593 Less: current portion of long-term debt and finance lease obligations 5,296 5,294 Total long-term debt and finance lease obligations, less current portion $ 345,362 $ 325,299 _________________ 1 Comprised of principal amount outstanding, less unamortized discount and issuance costs. 2 Comprised of principal amount outstanding, less unamortized discount and issuance costs. See Convertible Debt section below for additional information. Credit Facility On August 30, 2019, we renewed our banking credit facility (the “Credit Facility”) under the eighth amendment (the “Eighth Amendment”) to the Third Amended and Restated Credit Agreement. The Eighth Amendment amends and restates certain portions of the Third Amended and Restated Credit Agreement, dated as of July 7, 2015 (the “Credit Agreement”). In accordance with the Eighth Amendment, the Credit Facility has a borrowing capacity of up to $275.0 million and consists of a $225.0 million revolving loan facility and a $50.0 million term loan facility. The entire $50.0 million term loan amount was used to pay the outstanding principal amount borrowed under the Credit Facility prior to the effectiveness of the Eighth Amendment. The Credit Facility allows for an increase in total commitments of up to an additional $100.0 million if certain conditions are met. The swing line facility is $35.0 million . The Credit Facility matures in July 2021. Both the revolving loan facility and term loan bear interest based on a variable Eurodollar rate option (LIBOR plus 2.75% margin at March 31, 2020 ) and has commitment fees on unused borrowing capacity ( 0.50% at March 31, 2020 ). The Credit Facility limits our ability to pay cash dividends. Our obligations under the Credit Facility are guaranteed by our material direct and indirect domestic subsidiaries and are secured by a lien on substantially all of ours and the guarantors’ tangible and intangible property (subject to certain specified exclusions) and by a pledge of all of the equity interests in our material direct and indirect domestic subsidiaries and 65% of the equity interests in our material first-tier foreign subsidiaries. The Eighth Amendment amended the financial covenants in the Credit Facility by eliminating the ratio of consolidated EBITDA to consolidated interest charges (the “Interest Coverage Ratio,” as defined in the Credit Facility agreement), adding the ratio of consolidated funded indebtedness to consolidated EBITDA (the "Net Leverage Ratio," as defined in the Credit Facility agreement), adding the ratio of the sum of consolidated EBITDA less taxes and capital expenditures paid in cash to consolidated debt service (the "Debt Service Coverage Ratio," as defined in the Credit Facility agreement) and modifying the ratio of senior secured debt to consolidated EBITDA (the “Senior Secured Leverage Ratio,” as defined in the Credit Facility agreement). The financial covenant requirements under the Eighth Amendment are summarized in the table below. Fiscal Quarter Ending Maximum Senior Secured Leverage Ratio March 31, 2020, June 30, 2020 and September 30, 2020 2.75 to 1.00 December 31, 2020 and each Fiscal Quarter thereafter 2.50 to 1.00 Fiscal Quarter Ending Maximum Net Leverage Ratio March 31, 2020 5.50 to 1.00 June 30, 2020 5.25 to 1.00 September 30, 2020 5.00 to 1.00 December 31, 2020 and each Fiscal Quarter thereafter 4.50 to 1.00 Fiscal Quarter Ending Minimum Debt Service Coverage Ratio March 31, 2020, June 30, 2020 and September 30, 2020 1.25 to 1.00 December 31, 2020 and each Fiscal Quarter thereafter 1.50 to 1.00 As of March 31, 2020 , we are in compliance with the covenants in effect as of such date. At March 31, 2020 , we had $20.5 million of cash on hand. As of March 31, 2020 , we had $1.7 million of unamortized debt issuance costs and debt discount that are being amortized over the life of the Credit Facility. Our ability to maintain compliance with the financial covenants is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties. The effects of the COVID-19 pandemic and decline in oil and gas end markets could have a significant adverse effect on our financial position and business condition, as well as our clients and suppliers. Additionally, it may, among other factors, impact our ability to generate cash flows from operations, access the capital markets on acceptable terms or at all, and affect our future need or ability to borrow under our Credit Facility. In addition to our current sources of funding our business, the effects of such events may impact our liquidity or our need to revise our allocation or sources of capital, implement further cost reduction measures and/or change our business strategy. Although the COVID-19 pandemic and decline in the oil and gas end markets could have a broad range of effects on our liquidity sources, the effects will depend on future developments and cannot be predicted at this time. In order to secure our casualty insurance programs we are required to post letters of credit generally issued by a bank as collateral. A letter of credit commits the issuer to remit specified amounts to the holder, if the holder demonstrates that we failed to meet our obligations under the letter of credit. If this were to occur, we would be obligated to reimburse the issuer for any payments the issuer was required to remit to the holder of the letter of credit. We were contingently liable for outstanding stand-by letters of credit totaling $18.3 million at March 31, 2020 and $20.5 million at December 31, 2019 . Outstanding letters of credit reduce amounts available under our Credit Facility and are considered as having been funded for purposes of calculating our financial covenants under the Credit Facility. Subsequent Event On June 17, 2020, we entered into an amendment and extension of our Credit Facility evidenced by that certain Ninth Amendment to Third Amended and Restated Credit Agreement (the “Ninth Amendment”), dated June 17, 2020. Due to the impact of the COVID-19 pandemic and the uncertainty around the timing of economic recovery, we determined that we needed to modify the financial covenants in the Credit Facility for the upcoming quarters to maintain compliance. As such, the Ninth Amendment modifies our financial covenants as well as certain other provisions under the Credit Facility, including, without limitation, extending the term of the Credit Facility to January 15, 2022. Specifically, the Ninth Amendment amends and restates certain portions of the Credit Agreement, including, without limitation, (i) increasing the Senior Secured Leverage Ratio starting June 30, 2020 to 3.50 to 1, with step-downs to 3.25 to 1 for the quarter ending September 30, 2020, 2.75 to 1 for the quarter ending December 31, 2020 and 2.50 to 1 for the quarter ending March 31, 2021 and thereafter; (ii) eliminating the Maximum Net Leverage Ratio until March 31, 2021 at which time it is set at a ratio of 5.50 to 1 for the quarter ending March 31, 2021 with a step-down to 4.50 to 1 for the quarter ending June 30, 2021 and thereafter; (iii) postponing and decreasing the Minimum Debt Service Coverage Ratio to 1.00 to 1 for the quarter ending September 30, 2020 with a step-up to 1.25 to 1 for the quarter ending December 31, 2020 and thereafter; (iv) adding a Minimum Consolidated EBITDA measured cumulatively with Consolidated EBITDA generated from April 1, 2020 through June 30, 2020 of $6.5 million as of June 30, 2020, April 1, 2020 through September 30, 2020 of $18.5 million as of September 30, 2020 and April 1, 2020 through December 31, 2020 of $50.5 million as of December 31, 2020; and (v) reducing the size of the availability under the revolving portion of the Credit Facility from $225 million to $200 million . Both the revolving loan facility and term loan bear interest based on a variable Eurodollar rate option and the revolving loan commitment have commitment fees on unused borrowing capacity. The Eurodollar rate applicable margin range was modified to a range of 2.75% to 4.25% (the Eurodollar rate is also subject to a 1.00% floor). The commitment fee range was also revised to a range of 0.35% to 0.55% . We believe that we will be able to comply with the financial covenants in the Credit Facility as modified by the Ninth Amendment and that sufficient credit remains available under the Credit Facility to meet our liquidity needs. However, due to the uncertainties being caused by the COVID-19 pandemic and the significant drop in oil prices, such matters cannot be predicted with certainty. Accordingly, there can be no assurance that we will be able to maintain compliance with our financial covenants as of any future date. In the event we are unable to maintain compliance with our financial covenants, we would seek to enter into another amendment to the Credit Facility with our bank group in order to modify and/or to provide relief from the financial covenants for an additional period of time. Although we have entered into amendments in the past, there can be no assurance that any future amendments would be available on terms acceptable to us, if at all. Convertible Debt Description of the Notes On July 31, 2017, we issued $230.0 million principal amount of 5.00% Convertible Senior Notes due 2023 (the “Notes”). The Notes, which are senior unsecured obligations of the Company, bear interest at a rate of 5.0% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2018. The Notes will mature on August 1, 2023 unless repurchased, redeemed or converted in accordance with their terms prior to such date. The Notes will be convertible at an initial conversion rate of 46.0829 shares of our common stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $21.70 per share. The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the indenture governing the Notes. Holders may convert their Notes at their option prior to the close of business on the business day immediately preceding May 1, 2023, but only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of such measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on such trading day; • if we call any or all of the Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or • upon the occurrence of specified corporate events described in the indenture governing the Notes. On or after May 1, 2023 until the close of business on the business day immediately preceding the maturity date, holders may, at their option, convert their Notes at any time, regardless of the foregoing circumstances. The Notes are initially convertible into 10,599,067 shares of common stock. Because the Notes could be convertible in full into more than 19.99% of our outstanding common stock, we were required by the listing rules of the NYSE to obtain the approval of the holders of our outstanding shares of common stock before the Notes could be converted into more than 5,964,858 shares of common stock. The Notes will be convertible into, subject to various conditions, cash or shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, in each case, at the Company’s election. If holders elect to convert the Notes in connection with certain fundamental change transactions described in the indenture governing the Notes, we will, under certain circumstances described in the indenture governing the Notes, increase the conversion rate for the Notes so surrendered for conversion. We may not redeem the Notes prior to August 5, 2021. We will have the option to redeem all or any portion of the Notes on or after August 5, 2021, if certain conditions (including that our common stock is trading at or above 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive)), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Accounting Treatment of the Notes The Notes were recorded in our condensed consolidated balance sheets as follows (in thousands): March 31, 2020 December 31, 2019 (unaudited) Liability component: Principal $ 230,000 $ 230,000 Unamortized issuance costs (4,470 ) (4,756 ) Unamortized discount (22,204 ) (23,625 ) Net carrying amount of the liability component 1 $ 203,326 $ 201,619 Equity component: Carrying amount of the equity component, net of issuance costs 2 $ 13,912 $ 13,912 _________________ 1 Included in the “Long-term debt” line of the condensed consolidated balance sheets. 2 Relates to the portion of the Notes accounted for under ASC 470-20 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets. Under ASC 470-20, Debt with Conversion and Other Options , (“ASC 470-20”), an entity must separately account for the liability and equity components of convertible debt instruments that may be settled entirely or partially in cash upon conversion (such as the Notes) in a manner that reflects the issuer’s economic interest cost. However, entities must first consider the guidance in ASC 815-15, Embedded Derivatives (“ASC 815-15”), to determine if an instrument contains an embedded feature that should be separately accounted for as a derivative. We applied this guidance as of the issuance date of the Notes and concluded that for the conversion feature for a portion of the Notes, we must recognize an embedded derivative under ASC 815-15, while the remainder of the Notes is subject to ASC 470-20. We determined the portions of the Notes subject to ASC 815-15 and ASC 470-20 as follows. While the Notes are initially convertible into 10,599,067 shares of common stock, the occurrence of certain corporate events could increase the conversion rate, which could result in the Notes becoming convertible into a maximum of 14,838,703 shares. As of the issuance date of the Notes, 5,964,858 shares, or approximately 40% of the maximum number of shares, was authorized for issuance without shareholder approval, while 8,873,845 shares, or approximately 60% , would have been required to be settled in cash. Therefore, we concluded that embedded derivative accounting under ASC 815-15 was applicable to approximately 60% of the Notes, while the remaining 40% of the Notes was subject to ASC 470-20. We recorded the change in fair value of the embedded derivative liability in our results of operations through the shareholder approval date of May 17, 2018 and then reclassified the embedded derivative liability to stockholders’ equity at its May 17, 2018 fair value of $45.4 million during the second quarter of 2018. The related income tax effects of the reclassification charged directly to stockholders’ equity were $7.8 million . As a result of the reclassification to stockholders’ equity, the embedded derivative will no longer be marked to fair value each period. The following table sets forth interest expense information related to the Notes (dollars in thousands): Three Months Ended (unaudited) (unaudited) 2020 2019 Coupon interest $ 2,875 $ 2,875 Amortization of debt discount and issuance costs 1,707 1,561 Total interest expense on convertible senior notes $ 4,582 $ 4,436 Effective interest rate 9.12 % 9.12 % As of March 31, 2020 , the remaining amortization period for the debt discount and issuance costs is 40 months. Derivatives and Hedging ASC 815, Derivatives and Hedging (“ASC 815”), requires that derivative instruments be recorded at fair value and included in the balance sheet as assets or liabilities. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation, which is established at the inception date of a derivative. Special accounting for derivatives qualifying as fair value hedges allows derivatives’ gains and losses to offset related results on the hedged item in the statement of operations. For derivative instruments designated as cash flow hedges, changes in fair value, to the extent the hedge is effective, are recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. Hedge effectiveness is measured at least quarterly based on the relative cumulative changes in fair value between the derivative contract and the hedged item over time. Credit risks related to derivatives include the possibility that the counter-party will not fulfill the terms of the contract. We consider counterparty credit risk to our derivative contracts when valuing our derivative instruments. Our borrowing of €12.3 million under the Credit Facility serves as an economic hedge of our net investment in our European operations as fluctuations in the fair value of the borrowing attributable to the U.S. Dollar/Euro spot rate will offset translation gains or losses attributable to our investment in our European operations. At March 31, 2020 , the €12.3 million borrowing had a U.S. Dollar value of $13.5 million . As discussed above, we previously recorded an embedded derivative liability for a portion of the Notes. In accordance with ASC 815-15, the embedded derivative instrument was recorded at fair value each period with changes in fair value reflected in our results of operations. No hedge accounting was applied. As a result of obtaining shareholder approval for the issuance of shares upon conversion of the Notes, we recorded the change in fair value of the embedded derivative liability in our results of operations through the shareholder approval date of May 17, 2018 and then reclassified the embedded derivative liability to stockholders’ equity at its May 17, 2018 fair value of $45.4 million during the second quarter of 2018. As a result of the reclassification to stockholders’ equity, the embedded derivative is no longer marked to fair value each period. The amounts recognized in other comprehensive income (loss), reclassified into income (loss) and the amounts recognized in income (loss) for the three months ended March 31, 2020 and 2019 , are as follows (in thousands): Gain (Loss) Gain (Loss) Three Months Ended Three Months Ended (unaudited) (unaudited) 2020 2019 2020 2019 Derivatives Classified as Hedging Instruments Net investment hedge $ 265 $ 279 $ — $ — The following table presents the fair value totals and balance sheet classification for derivatives designated as hedges and derivatives not designated as hedges under ASC 815 (in thousands): March 31, 2020 December 31, 2019 (unaudited) Classification Balance Sheet Location Fair Value Classification Balance Sheet Location Fair Derivatives Classified as Hedging Instruments Net investment hedge Liability Long-term debt $ (4,451 ) Liability Long-term debt $ (4,186 ) |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
LEASES | LEASES We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “operating lease liabilities” and “current portion of operating lease obligations” on our consolidated balance sheets. Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than 12 months) are expensed as incurred. We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component. We have operating and finance leases primarily for equipment, real estate, and vehicles. Our leases have remaining lease terms of 1 year to 15 years , some of which may include options to extend the leases for up to 10 years , and some of which may include options to terminate the leases within 1 year . The components of lease expense are as follows (in thousands): Three Months Ended March 31, 2020 2019 (unaudited) (unaudited) Operating lease costs $ 7,518 $ 7,858 Variable lease costs 1,493 1,680 Finance lease costs: Amortization of right-of-use assets 108 88 Interest on lease liabilities 81 81 Total lease cost $ 9,200 $ 9,707 Other information related to leases are as follows (in thousands): Three Months Ended March 31, 2020 2019 Supplemental cash flow information: (unaudited) (unaudited) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 5,865 8,144 Operating cash flows from finance leases 83 135 Financing cash flows from finance leases 65 73 Right-of-use assets obtained in exchange for lease obligations Operating leases 1,092 6,468 Finance leases — — Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands): March 31, 2020 December 31, 2019 Operating Leases: (unaudited) Operating lease right-of-use assets $ 64,209 $ 67,048 Current portion of operating lease obligations 16,787 17,100 Operating lease obligations (non-current) 52,027 54,436 Weighted average remaining lease term 5.6 years 5.7 years Weighted average discount rate 8.3 % 8.3 % March 31, 2020 December 31, 2019 Finance Leases: (unaudited) Property, plant and equipment, net $ 5,039 $ 5,156 Current portion of long-term debt and finance lease obligations 296 294 Long-term debt and finance lease obligations 4,993 5,069 Weighted average remaining lease term 13.1 years 13.3 years Weighted average discount rate 6.3 % 6.3 % As of March 31, 2020 , we have no material additional operating and finance leases that have not yet commenced. As of March 31, 2020 , future minimum lease payments under non-cancellable leases (excluding short-term leases) are as follows (in thousands): Operating Leases Finance Lease (unaudited) (unaudited) 2020 (Remainder of the year) 16,207 443 2021 17,117 594 2022 13,397 598 2023 10,966 550 2024 8,748 541 Thereafter 20,294 5,105 Total future minimum lease payments 86,729 7,831 Less: Interest (17,915 ) (2,542 ) Present value of lease liabilities $ 68,814 $ 5,289 |
LEASES | LEASES We determine if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use (‘ROU’) assets”, “operating lease liabilities” and “current portion of operating lease obligations” on our consolidated balance sheets. Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments and short-term lease payments (leases with initial terms less than 12 months) are expensed as incurred. We have lease agreements with lease and non-lease components for certain equipment, office, and vehicle leases. We have elected the practical expedient to not separate lease and non-lease components and account for both as a single lease component. We have operating and finance leases primarily for equipment, real estate, and vehicles. Our leases have remaining lease terms of 1 year to 15 years , some of which may include options to extend the leases for up to 10 years , and some of which may include options to terminate the leases within 1 year . The components of lease expense are as follows (in thousands): Three Months Ended March 31, 2020 2019 (unaudited) (unaudited) Operating lease costs $ 7,518 $ 7,858 Variable lease costs 1,493 1,680 Finance lease costs: Amortization of right-of-use assets 108 88 Interest on lease liabilities 81 81 Total lease cost $ 9,200 $ 9,707 Other information related to leases are as follows (in thousands): Three Months Ended March 31, 2020 2019 Supplemental cash flow information: (unaudited) (unaudited) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 5,865 8,144 Operating cash flows from finance leases 83 135 Financing cash flows from finance leases 65 73 Right-of-use assets obtained in exchange for lease obligations Operating leases 1,092 6,468 Finance leases — — Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands): March 31, 2020 December 31, 2019 Operating Leases: (unaudited) Operating lease right-of-use assets $ 64,209 $ 67,048 Current portion of operating lease obligations 16,787 17,100 Operating lease obligations (non-current) 52,027 54,436 Weighted average remaining lease term 5.6 years 5.7 years Weighted average discount rate 8.3 % 8.3 % March 31, 2020 December 31, 2019 Finance Leases: (unaudited) Property, plant and equipment, net $ 5,039 $ 5,156 Current portion of long-term debt and finance lease obligations 296 294 Long-term debt and finance lease obligations 4,993 5,069 Weighted average remaining lease term 13.1 years 13.3 years Weighted average discount rate 6.3 % 6.3 % As of March 31, 2020 , we have no material additional operating and finance leases that have not yet commenced. As of March 31, 2020 , future minimum lease payments under non-cancellable leases (excluding short-term leases) are as follows (in thousands): Operating Leases Finance Lease (unaudited) (unaudited) 2020 (Remainder of the year) 16,207 443 2021 17,117 594 2022 13,397 598 2023 10,966 550 2024 8,748 541 Thereafter 20,294 5,105 Total future minimum lease payments 86,729 7,831 Less: Interest (17,915 ) (2,542 ) Present value of lease liabilities $ 68,814 $ 5,289 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS We have a defined benefit pension plan covering certain United Kingdom employees (the “U.K. Plan”). Net periodic pension credit includes the following components (in thousands): Three Months Ended March 31, 2020 2019 (unaudited) (unaudited) Interest cost 441 593 Expected return on plan assets (578 ) (607 ) Amortization of prior service cost 8 8 Net periodic pension credit $ (129 ) $ (6 ) The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories for the U.K. Plan as follows: 2.90% overall, 5.30% for equities and 2.10% for debt securities. We expect to contribute $3.7 million to the U.K. Plan for 2020 , of which $1.0 million has been contributed through March 31, 2020 . |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS We apply the provisions of ASC 820, Fair Value Measurement (“ASC 820”) which among other things, requires certain disclosures about assets and liabilities carried at fair value. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information available. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The use of unobservable inputs is intended to allow for fair value determinations in situations in which there is little, if any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy such that “Level 1” measurements include unadjusted quoted market prices for identical assets or liabilities in an active market, “Level 2” measurements include quoted market prices for identical assets or liabilities in an active market which have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets, and “Level 3” measurements include those that are unobservable and of a highly subjective measure. The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 . As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands): March 31, 2020 (unaudited) Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Net investment hedge $ — $ (4,451 ) $ — $ (4,451 ) December 31, 2019 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Net investment hedge $ — $ (4,186 ) $ — $ (4,186 ) There were no transfers in and out of Level 3 during the three months ended March 31, 2020 and 2019 . |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION We have adopted stock incentive plans and other arrangements pursuant to which our Board of Directors (the “Board”) may grant stock options, restricted stock, stock units, stock appreciation rights, common stock or performance awards to officers, directors and key employees. At March 31, 2020 , there were approximately 1.3 million restricted stock units, performance awards and stock options outstanding to officers, directors and key employees. The exercise price, terms and other conditions applicable to each form of share-based compensation under our plans are generally determined by the Compensation Committee of our Board at the time of grant and may vary. Our share-based payments consist primarily of stock units, performance awards, common stock and stock options. In May 2018, our shareholders approved the 2018 Team, Inc. Equity Incentive Plan (the “2018 Plan”), which replaced the 2016 Team, Inc. Equity Incentive Plan (the “2016 Plan”). In May 2019, our shareholders approved an amendment to the 2018 Plan to increase the number of authorized shares available for issuance. The 2018 Plan authorizes the issuance of share-based awards representing up to 1.2 million shares of common stock, plus the number of shares remaining available for issuance under the 2016 Plan, plus the number of shares subject to outstanding awards under specified prior plans that may become available for reissuance in certain circumstances. Shares issued in connection with our share-based compensation are issued out of authorized but unissued common stock. Compensation expense related to share-based compensation totaled $1.5 million and $2.4 million for the three months ended March 31, 2020 and 2019 , respectively. Share-based compensation expense reflects an estimate of expected forfeitures. At March 31, 2020 , $11.9 million of unrecognized compensation expense related to share-based compensation is expected to be recognized over a remaining weighted-average period of 2.5 years . Stock units are settled with common stock upon vesting unless it is not legally feasible to issue shares, in which case the value of the award is settled in cash. We determine the fair value of each stock unit based on the market price on the date of grant. Stock units generally vest in annual installments over four years and the expense associated with the units is recognized over the same vesting period. We also grant common stock to our directors, which typically vests immediately. Compensation expense related to stock units and director stock grants totaled $1.1 million and $1.5 million for the three months ended March 31, 2020 and 2019 . Transactions involving our stock units and director stock grants during the three months ended March 31, 2020 are summarized below: Three Months Ended (unaudited) No. of Stock Units Weighted Average Fair Value (in thousands) Stock and stock units, beginning of period 784 $ 17.35 Changes during the period: Granted — $ — Vested and settled (2 ) $ 18.25 Cancelled (17 ) $ 17.00 Stock and stock units, end of period 765 $ 17.35 We have a performance stock unit award program whereby we grant Long-Term Performance Stock Unit (“LTPSU”) awards to our executive officers. Under this program, we communicate “target awards” to the executive officers at the beginning of a performance period. LTPSU awards cliff vest with the achievement of the performance goals and completion of the required service period. Settlement occurs with common stock as soon as practicable following the vesting date. LTPSU awards granted in 2018 (the “2018 Awards”) and 2019 (the “2019 Awards”) are subject to a two -year performance period and a concurrent two -year service period. For the 2018 and 2019 Awards, the performance goals are separated into two independent performance factors based on (i) relative shareholder return (“RTSR”) as measured against a designated peer group and (ii) results of operations over the two-year performance period, with possible payouts ranging from 0% to 200% of the target awards for each of the two performance factors. The 2018 Awards vested as of March 15, 2020 at the RTSR performance target level of 100% and the results of operations performance metric at 73% of the target level. The RTSR and the stock price milestone factors are considered to be market conditions under GAAP. For performance units subject to market conditions, we determine the fair value of the performance units based on the results of a Monte Carlo simulation, which uses market-based inputs as of the date of grant to simulate future stock returns. Compensation expense for awards with market conditions is recognized on a straight-line basis over the longer of (i) the minimum required service period and (ii) the service period derived from the Monte Carlo simulation, separately for each vesting tranche. For performance units subject to market conditions, because the expected outcome is incorporated into the grant date fair value through the Monte Carlo simulation, compensation expense is not subsequently adjusted for changes in the expected or actual performance outcome. For performance units not subject to market conditions, we determine the fair value of each performance unit based on the market price of our common stock on the date of grant. For these awards, we recognize compensation expense over the vesting term on a straight-line basis based upon the performance target that is probable of being met, subject to adjustment for changes in the expected or actual performance outcome. Compensation expense related to performance awards totaled $0.4 million and $0.9 million for the three months ended March 31, 2020 and 2019 , respectively. Transactions involving our performance awards during the three months ended March 31, 2020 are summarized below: Three Months Ended (unaudited) Performance Units Subject to Market Conditions Performance Units Not Subject to Market Conditions No. of Stock Units 1 Weighted Average Fair Value No. of Stock Units 1 Weighted Average Fair Value (in thousands) (in thousands) Performance stock units, beginning of period 489 $ 16.49 209 $ 17.06 Changes during the period: Granted — $ — — $ — Vested and settled (89 ) $ 17.54 (65 ) $ 15.24 Cancelled — $ — (24 ) $ 15.24 Performance stock units, end of period 400 $ 16.26 120 $ 18.42 _________________ 1 Performance units with variable payouts are shown at target level of performance. We determine the fair value of each stock option at the grant date using a Black-Scholes model and recognize the resulting expense of our stock option awards over the period during which an employee is required to provide services in exchange for the awards, usually the vesting period. Compensation expense related to stock options for the three months ended March 31, 2020 and 2019 was not material. Our options typically vest in equal annual installments over a four -year service period. Expense related to an option grant is recognized on a straight line basis over the specified vesting period for those options. Stock options generally have a ten -year term. At March 31, 2020 , there are approximately 53 thousand exercisable shares outstanding at a weighted average exercise price of $32.55 . Options exercisable at March 31, 2020 had a weighted-average remaining contractual life of 1.5 years and exercise prices ranged from $21.12 to $50.47 . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Balance, beginning of period $ (26,742 ) $ 4,186 $ (8,021 ) $ 387 $ (30,190 ) $ (30,607 ) $ 3,904 $ (7,859 ) $ 170 $ (34,392 ) Other comprehensive income (loss) (9,741 ) 265 — (185 ) (9,661 ) 1,809 279 — (69 ) 2,019 Balance, end of period $ (36,483 ) $ 4,451 $ (8,021 ) $ 202 $ (39,851 ) $ (28,798 ) $ 4,183 $ (7,859 ) $ 101 $ (32,373 ) The following table represents the related tax effects allocated to each component of other comprehensive income (loss) (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Gross Amount Tax Effect Net Amount Gross Amount Tax Effect Net Amount Foreign currency translation adjustments $ (9,741 ) $ (120 ) $ (9,861 ) $ 1,809 $ — $ 1,809 Foreign currency hedge 265 (65 ) 200 279 (69 ) 210 Total $ (9,476 ) $ (185 ) $ (9,661 ) $ 2,088 $ (69 ) $ 2,019 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Patent Infringement Matters —On December 15, 2014, our subsidiary, Quest Integrity Group, LLC (“Quest Integrity”), filed three patent infringement lawsuits against three different defendants, two of the lawsuits were filed in the U.S. District of Delaware (the “Delaware Cases”) and one in the U.S. District of Western Washington (the “Washington Case”). Quest Integrity alleges that the three defendants infringe Quest Integrity’s patent, entitled “2D and 3D Display System and Method for Furnace Tube Inspection.” This Quest Integrity patent generally teaches a system and method for displaying inspection data collected during the inspection of furnace tubes in petroleum and petro-chemical refineries. The subject patent litigation is specific to the visual display of the collected data and does not relate to the underlying advanced inspection technology. In these lawsuits Quest Integrity is seeking injunctive relief, as well as monetary damages. Each of the defendants denied infringement on any valid claim of Quest Integrity’s patent, and asserted declaratory judgment counterclaims that the patent at issue is invalid and/or unenforceable, and not infringed. In June 2015, the U.S. District of Delaware denied Quest Integrity’s motions for preliminary injunctive relief in the Delaware Cases (that is, our request that the defendants stop using Quest Integrity’s patented systems and methods during the pendency of the actions). In March 2017, the judge in the Delaware Cases granted summary judgment against Quest Integrity, finding certain patent claims of the asserted patent invalid. In late 2018 and early 2019, Quest Integrity settled with the defendant in the Washington Case, settled with one of the defendants in the Delaware Cases and appealed the ruling in the other Delaware Case with the remaining defendant. In May 2019, the Court of Appeals for the Federal Circuit issued an opinion reversing and remanding the decisions of invalidity on certain claims and reversing other material aspects of the U.S. District Court of Delaware’s findings. The U.S. District Court ordered mediation between Quest Integrity and the remaining defendant on February 28, 2020, and scheduled the remanded trial for the fourth quarter of 2020. In mediation, Quest Integrity and the remaining Delaware case defendant agreed on the framework for a full and final settlement of all claims. As a result of the mediation in February 2020, we recorded a loss of $1.3 million in the 2019 consolidated financial statements to reflect the impact of this event. Execution of a final settlement agreement and entry of an order of dismissal of the case occurred on April 6, 2020. We are subject to various other lawsuits, various claims and proceedings encountered in the normal conduct of business. We cannot predict with certainty the ultimate resolution of lawsuits, investigation and claims asserted against it. We do not believe that any uninsured losses that might arise from these lawsuits and proceedings will not have a materially adverse effect on our consolidated financial statements. We establish a liability for loss contingencies, when information available to us indicates that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. |
SEGMENT AND GEOGRAPHIC DISCLOSU
SEGMENT AND GEOGRAPHIC DISCLOSURES | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC DISCLOSURES | SEGMENT AND GEOGRAPHIC DISCLOSURES ASC 280, Segment Reporting , requires us to disclose certain information about our operating segments where operating segments are defined as “components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.” We conduct operations in three segments: IHT, MS and Quest Integrity. Segment data for our three operating segments are as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) Revenues: IHT $ 107,881 $ 127,056 MS 104,519 121,526 Quest Integrity 24,439 21,017 Total $ 236,839 $ 269,599 Three Months Ended 2020 2019 (unaudited) (unaudited) Operating income (loss): IHT 1 $ (192,150 ) $ 1,721 MS 1,022 5,534 Quest Integrity 6,106 1,644 Corporate and shared support services (27,910 ) (25,427 ) Total $ (212,932 ) $ (16,528 ) _________________ 1 Includes goodwill impairment charge for IHT as discussed in Note 7 for the three months ended March 31, 2020. Three Months Ended 2020 2019 (unaudited) (unaudited) Capital expenditures 1 : IHT $ 1,041 $ 968 MS 3,617 1,963 Quest Integrity 971 1,328 Corporate and shared support services 1,075 2,351 Total $ 6,704 $ 6,610 _____________ 1 Totals may vary from amounts presented in the condensed consolidated statements of cash flows due to the timing of cash payments. Three Months Ended 2020 2019 (unaudited) (unaudited) Depreciation and amortization: IHT $ 3,983 $ 4,502 MS 5,431 5,414 Quest Integrity 886 921 Corporate and shared support services 1,408 1,434 Total $ 11,708 $ 12,271 Separate measures of Team’s assets by operating segment are not produced or utilized by management to evaluate segment performance. A geographic breakdown of our revenues for the three months ended March 31, 2020 and 2019 is as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) Total Revenues: 1 United States $ 173,510 $ 206,108 Canada 21,209 19,321 Europe 28,546 28,496 Other foreign countries 13,574 15,674 Total $ 236,839 $ 269,599 ___________ 1 Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. |
RESTRUCTURING AND OTHER RELATED
RESTRUCTURING AND OTHER RELATED CHARGES | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING AND OTHER RELATED CHARGES | RESTRUCTURING AND OTHER RELATED CHARGES Our restructuring and other related charges (credits), net are summarized by program and by segment as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) OneTEAM Program Severance and related costs IHT $ 8 $ 102 MS 130 85 Corporate and shared support services 48 21 Subtotal 186 208 Grand Total $ 186 $ 208 OneTEAM Program In the fourth quarter of 2017, we engaged outside consultants to assess all aspects of our business for improvement and cost saving opportunities. In the first quarter of 2018, we completed the design phase of the project, known as OneTEAM, for our domestic operations, and entered in the deployment phase starting in the second quarter of 2018. In the third quarter of 2019, we began the design phase of OneTEAM for our international operations which was deployed in the fourth quarter of 2019. During the first quarter of 2020, in response to COVID-19 and decline in the oil and gas end markets, we expanded and accelerated the operations and center led pillars from the OneTEAM program in order to implement permanent cost savings and identify further opportunities to optimize our organization. As part of the OneTEAM program, we decided to eliminate certain employee positions. For the three months ended March 31, 2020 , we incurred severance charges of $0.2 million . We have incurred $8.6 million of OneTEAM severance charges cumulatively to date. As the OneTEAM program continues, we expect some additional employee positions may be identified and impacted, resulting in additional severance costs. In addition to the impacted employee positions, certain locations may be shut down or consolidated during this process. We expect the program-related expenses to continue through the end of 2020. A rollforward of our accrued severance liability associated with this program is presented below (in thousands): Three Months Ended (unaudited) Balance, beginning of period $ 971 Charges 186 Payments (520 ) Balance, end of period $ 637 For the three months ended March 31, 2020 and 2019 , we also incurred professional fees of $1.8 million and $3.2 million , respectively, associated with OneTEAM. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis for presentation | Basis for presentation. These interim condensed consolidated financial statements are unaudited, but in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The condensed consolidated balance sheet at December 31, 2019 is derived from the December 31, 2019 audited consolidated financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 16, 2020 (“the 2019 Form 10-K”). |
Use of estimates | Use of estimates. Our accounting policies conform to Generally Accepted Accounting Principles in the United States (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect our reported financial position and results of operations. We review significant estimates and judgments affecting our consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Estimates and judgments are based on information available at the time such estimates and judgments are made. Adjustments made with respect to the use of these estimates and judgments often relate to information not previously available. Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements. Estimates and judgments are used in, among other things, (1) aspects of revenue recognition, (2) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (3) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical and general liability, (4) establishing an allowance for uncollectible accounts receivable, (5) estimating the useful lives of our assets, (6) assessing future tax exposure and the realization of tax assets, (7) the valuation of the embedded derivative liability in our convertible debt, (8) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans and (9) managing our foreign currency risk with certain debt obligations associated with net investments in foreign operations. |
Fair value of financial instruments | Fair value of financial instruments . Our financial instruments consist primarily of cash, cash equivalents, accounts receivable, accounts payable and debt obligations. The carrying amount of cash, cash equivalents, accounts receivable and accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of our banking facility is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the banking facility. |
Allowance for doubtful accounts | Allowance for doubtful accounts. In the ordinary course of business, a portion of our accounts receivable are not collected due to billing disputes, customer bankruptcies, dissatisfaction with the services we performed and other various reasons. We establish an allowance to account for those accounts receivable that we estimate will eventually be deemed uncollectible. The allowance for doubtful accounts is based on a combination of our historical experience and management’s review of long outstanding accounts receivable. |
Concentration of credit risk | Concentration of credit risk. No single customer accounts for more than 10% of consolidated revenues. |
Earnings (loss) per share | Earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to Team shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) available to Team shareholders by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed conversion of our convertible senior notes under the treasury stock method. Our intent is to settle the principal amount of the convertible senior notes in cash upon conversion. If the conversion value exceeds the principal amount, we may elect to deliver shares of its common stock with respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). Accordingly, the conversion spread is included in the denominator for the computation of diluted earnings per common share using the treasury stock method. |
Newly Adopted Accounting Principles | Newly Adopted Accounting Principles Topic 326 - Credit Losses. In June 2016, the FASB issued Accounting Standard Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses , which establishes ASC Topic 326, Credit Losses (“ASC 326”), along with subsequent ASUs to clarify certain provisions of ASC 326, introduced a new impairment model for financial instruments that is based on expected credit losses rather than incurred credit losses. The new impairment model applies to most financial assets measured at amortized cost, including trade accounts receivable. We adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts are reported in accordance with previously applicable GAAP based on incurred credit losses. The cumulative effect of adoption on January 1, 2020 resulted in a $1.0 million decrease, net of tax, to beginning retained earnings on our consolidated balance sheet. Refer to Note 3 for further discussion of ASC 326. ASU No. 2018-15. In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), that requires implementation costs incurred in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized in a software licensing arrangement under the internal-use software guidance in Topic 350. ASU 2018-15 requires an entity to disclose the nature of its hosting arrangements that are service contracts and provide disclosures as if the deferred implementation costs were a separate, major depreciable asset class. Our adoption of ASU No. 2018-15 as of January 1, 2020 resulted in a reduction of $4.9 million from property, plant, and equipment with $0.9 million reclassified to other current assets and $4.0 million reclassified to other non-current assets on our consolidated balance sheet. Accounting Principles Not Yet Adopted ASU No. 2019-12. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes , that simplifies the accounting for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes as well as clarifies aspects of existing guidance to promote more consistent application. ASU 2019-12 clarifies and amends existing guidance related to intraperiod tax allocation and calculations, recognition of deferred taxes for change in ownership group, evaluation of a step-up in the tax basis of goodwill and other clarifications. We are currently evaluating the impact this ASU will have on our financial statements and we plan to adopt as of January 1, 2021. ASU No. 2020-04. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The guidance provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently determining whether we will elect the optional expedients as well as evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of rollforward goodwill | There was $88.1 million of goodwill at March 31, 2020 and $282.0 million at December 31, 2019 . The following table presents a rollforward of goodwill for the three months ended March 31, 2020 as follows (in thousands): Three Months Ended (unaudited) IHT MS Quest Integrity Total Balance, December 31, 2019 $ 193,216 $ 55,409 $ 33,381 $ 282,006 Acquisitions — — 496 496 Foreign currency adjustments (1,428 ) (418 ) (769 ) (2,615 ) Impairment charge (191,788 ) — — (191,788 ) Balance, March 31, 2020 $ — $ 54,991 $ 33,108 $ 88,099 |
Amounts used in basic and diluted earnings (loss) per share | Amounts used in basic and diluted earnings (loss) per share, for the three months ended March 31, 2020 and 2019 , are as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) Weighted-average number of basic shares outstanding 30,540 30,228 Stock options, stock units and performance awards — — Convertible Senior Notes — — Total shares and dilutive securities 30,540 30,228 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands): Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 (unaudited) (unaudited) United States and Canada Other Countries Total United States and Canada Other Countries Total Revenue: IHT $ 105,304 $ 2,577 $ 107,881 $ 123,620 $ 3,436 $ 127,056 MS 76,582 27,937 104,519 87,452 34,074 121,526 Quest Integrity 12,833 11,606 24,439 14,357 6,660 21,017 Total $ 194,719 $ 42,120 $ 236,839 $ 225,429 $ 44,170 $ 269,599 Three Months Ended March 31, 2020 (unaudited) Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total Revenue: IHT $ 86,407 $ 101 $ 14,146 $ 7,227 $ 107,881 MS — 102,615 479 1,425 104,519 Quest Integrity 24,439 — — — 24,439 Total $ 110,846 $ 102,716 $ 14,625 $ 8,652 $ 236,839 Three Months Ended March 31, 2019 (unaudited) Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total Revenue: IHT $ 102,936 $ 362 $ 18,793 $ 4,965 $ 127,056 MS — 119,489 739 1,298 121,526 Quest Integrity 21,017 — — — 21,017 Total $ 123,953 $ 119,851 $ 19,532 $ 6,263 $ 269,599 |
Contract with Customer, Asset and Liability | Trade accounts receivable, contract assets and contract liabilities consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Trade accounts receivable, net 1 $ 224,111 $ 245,617 Contract assets 2 $ 5,810 $ 4,671 Contract liabilities 3 $ 1,076 $ 1,224 _________________ 1 Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. 2 Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheets. 3 Included in the “Other accrued liabilities” line of the condensed consolidated balance sheets. |
RECEIVABLES (Tables)
RECEIVABLES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Summary of Accounts Receivable | Accounts receivable consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Trade accounts receivable $ 167,409 $ 192,743 Unbilled receivables 66,376 62,864 Allowance for doubtful accounts (9,674 ) (9,990 ) Total $ 224,111 $ 245,617 |
Allowance for Credit Loss | The following table shows a rollforward of the allowance for credit losses: March 31, 2020 (unaudited) Balance at beginning of period 1 $ (11,400 ) Provision for expected credit losses 45 Write-offs 1,441 Foreign exchange effects 240 Balance at end of period $ (9,674 ) _________________ 1 Includes $1.4 million due to the initial adoption of ASC 326 as of January 1, 2020. |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Summary of Inventory | Inventory consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Raw materials $ 7,916 $ 7,555 Work in progress 3,021 2,851 Finished goods 27,074 28,789 Total $ 38,011 $ 39,195 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | Property, plant and equipment consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Land $ 6,343 $ 6,380 Buildings and leasehold improvements 58,500 59,177 Machinery and equipment 282,640 284,020 Furniture and fixtures 10,903 10,946 Capitalized Enterprise Resource Planning system development costs 46,637 46,637 Computers and computer software 18,430 22,906 Vehicles 4,426 4,642 Construction in progress 14,452 13,088 Total 442,331 447,796 Accumulated depreciation and amortization (257,884 ) (255,845 ) Property, plant and equipment, net $ 184,447 $ 191,951 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Intangible assets consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 174,725 $ (66,555 ) $ 108,170 $ 174,940 $ (63,727 ) $ 111,213 Non-compete agreements 5,343 (5,263 ) 80 5,466 (5,306 ) 160 Trade names 24,691 (21,267 ) 3,424 24,724 (21,146 ) 3,578 Technology 7,830 (6,159 ) 1,671 7,838 (5,976 ) 1,862 Licenses 845 (655 ) 190 848 (642 ) 206 Total $ 213,434 $ (99,899 ) $ 113,535 $ 213,816 $ (96,797 ) $ 117,019 |
GOODWILL AND IMPAIRMENT CHARG_2
GOODWILL AND IMPAIRMENT CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of rollforward goodwill | There was $88.1 million of goodwill at March 31, 2020 and $282.0 million at December 31, 2019 . The following table presents a rollforward of goodwill for the three months ended March 31, 2020 as follows (in thousands): Three Months Ended (unaudited) IHT MS Quest Integrity Total Balance, December 31, 2019 $ 193,216 $ 55,409 $ 33,381 $ 282,006 Acquisitions — — 496 496 Foreign currency adjustments (1,428 ) (418 ) (769 ) (2,615 ) Impairment charge (191,788 ) — — (191,788 ) Balance, March 31, 2020 $ — $ 54,991 $ 33,108 $ 88,099 |
OTHER ACCRUED LIABILITIES (Tabl
OTHER ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Summary of Other Accrued Liabilities | Other accrued liabilities consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Personnel accruals $ 52,610 $ 45,934 Insurance accruals 12,394 14,289 Property, sales and other non-income related taxes 4,582 8,593 Accrued commission 2,458 3,299 Accrued interest 2,053 5,015 Other 7,602 9,376 Total $ 81,699 $ 86,506 |
LONG-TERM DEBT, LETTERS OF CR_2
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consisted of the following (in thousands): March 31, 2020 December 31, 2019 (unaudited) Credit Facility revolver $ 93,513 $ 73,876 Credit Facility term loan 1 48,530 49,735 Total Credit Facility 142,043 123,611 Convertible debt 2 203,326 201,619 Finance lease obligations 5,289 5,363 Total long-term debt and finance lease obligations 350,658 330,593 Less: current portion of long-term debt and finance lease obligations 5,296 5,294 Total long-term debt and finance lease obligations, less current portion $ 345,362 $ 325,299 _________________ 1 Comprised of principal amount outstanding, less unamortized discount and issuance costs. 2 Comprised of principal amount outstanding, less unamortized discount and issuance costs. See Convertible Debt section below for additional information. |
Credit Facility Financial Covenant Requirements | Fiscal Quarter Ending Maximum Senior Secured Leverage Ratio March 31, 2020, June 30, 2020 and September 30, 2020 2.75 to 1.00 December 31, 2020 and each Fiscal Quarter thereafter 2.50 to 1.00 Fiscal Quarter Ending Maximum Net Leverage Ratio March 31, 2020 5.50 to 1.00 June 30, 2020 5.25 to 1.00 September 30, 2020 5.00 to 1.00 December 31, 2020 and each Fiscal Quarter thereafter 4.50 to 1.00 Fiscal Quarter Ending Minimum Debt Service Coverage Ratio March 31, 2020, June 30, 2020 and September 30, 2020 1.25 to 1.00 December 31, 2020 and each Fiscal Quarter thereafter 1.50 to 1.00 |
Convertible Debt | The Notes were recorded in our condensed consolidated balance sheets as follows (in thousands): March 31, 2020 December 31, 2019 (unaudited) Liability component: Principal $ 230,000 $ 230,000 Unamortized issuance costs (4,470 ) (4,756 ) Unamortized discount (22,204 ) (23,625 ) Net carrying amount of the liability component 1 $ 203,326 $ 201,619 Equity component: Carrying amount of the equity component, net of issuance costs 2 $ 13,912 $ 13,912 _________________ 1 Included in the “Long-term debt” line of the condensed consolidated balance sheets. 2 Relates to the portion of the Notes accounted for under ASC 470-20 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets. The following table sets forth interest expense information related to the Notes (dollars in thousands): Three Months Ended (unaudited) (unaudited) 2020 2019 Coupon interest $ 2,875 $ 2,875 Amortization of debt discount and issuance costs 1,707 1,561 Total interest expense on convertible senior notes $ 4,582 $ 4,436 Effective interest rate 9.12 % 9.12 % |
Amounts Recognized In Other Comprehensive Income, Reclassified Into Income (Loss) and Amounts Recognized in Income (Loss) | The amounts recognized in other comprehensive income (loss), reclassified into income (loss) and the amounts recognized in income (loss) for the three months ended March 31, 2020 and 2019 , are as follows (in thousands): Gain (Loss) Gain (Loss) Three Months Ended Three Months Ended (unaudited) (unaudited) 2020 2019 2020 2019 Derivatives Classified as Hedging Instruments Net investment hedge $ 265 $ 279 $ — $ — |
Fair Value Totals and Balance Sheet Classification for Derivatives Designated As Hedges and Derivatives Not Designated as Hedges | The following table presents the fair value totals and balance sheet classification for derivatives designated as hedges and derivatives not designated as hedges under ASC 815 (in thousands): March 31, 2020 December 31, 2019 (unaudited) Classification Balance Sheet Location Fair Value Classification Balance Sheet Location Fair Derivatives Classified as Hedging Instruments Net investment hedge Liability Long-term debt $ (4,451 ) Liability Long-term debt $ (4,186 ) |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lease, Cost | The components of lease expense are as follows (in thousands): Three Months Ended March 31, 2020 2019 (unaudited) (unaudited) Operating lease costs $ 7,518 $ 7,858 Variable lease costs 1,493 1,680 Finance lease costs: Amortization of right-of-use assets 108 88 Interest on lease liabilities 81 81 Total lease cost $ 9,200 $ 9,707 |
Schedule of Other Information Related to Leases | Other information related to leases are as follows (in thousands): Three Months Ended March 31, 2020 2019 Supplemental cash flow information: (unaudited) (unaudited) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 5,865 8,144 Operating cash flows from finance leases 83 135 Financing cash flows from finance leases 65 73 Right-of-use assets obtained in exchange for lease obligations Operating leases 1,092 6,468 Finance leases — — |
Amounts Recognized in Balance Sheet for Leases | Amounts recognized in the condensed consolidated balance sheet are as follows (in thousands): March 31, 2020 December 31, 2019 Operating Leases: (unaudited) Operating lease right-of-use assets $ 64,209 $ 67,048 Current portion of operating lease obligations 16,787 17,100 Operating lease obligations (non-current) 52,027 54,436 Weighted average remaining lease term 5.6 years 5.7 years Weighted average discount rate 8.3 % 8.3 % March 31, 2020 December 31, 2019 Finance Leases: (unaudited) Property, plant and equipment, net $ 5,039 $ 5,156 Current portion of long-term debt and finance lease obligations 296 294 Long-term debt and finance lease obligations 4,993 5,069 Weighted average remaining lease term 13.1 years 13.3 years Weighted average discount rate 6.3 % 6.3 % |
Schedule of Finance Lease Liability | As of March 31, 2020 , future minimum lease payments under non-cancellable leases (excluding short-term leases) are as follows (in thousands): Operating Leases Finance Lease (unaudited) (unaudited) 2020 (Remainder of the year) 16,207 443 2021 17,117 594 2022 13,397 598 2023 10,966 550 2024 8,748 541 Thereafter 20,294 5,105 Total future minimum lease payments 86,729 7,831 Less: Interest (17,915 ) (2,542 ) Present value of lease liabilities $ 68,814 $ 5,289 |
Schedule of Operating Lease Liability | As of March 31, 2020 , future minimum lease payments under non-cancellable leases (excluding short-term leases) are as follows (in thousands): Operating Leases Finance Lease (unaudited) (unaudited) 2020 (Remainder of the year) 16,207 443 2021 17,117 594 2022 13,397 598 2023 10,966 550 2024 8,748 541 Thereafter 20,294 5,105 Total future minimum lease payments 86,729 7,831 Less: Interest (17,915 ) (2,542 ) Present value of lease liabilities $ 68,814 $ 5,289 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of Net Periodic Pension Cost (Credit) | Net periodic pension credit includes the following components (in thousands): Three Months Ended March 31, 2020 2019 (unaudited) (unaudited) Interest cost 441 593 Expected return on plan assets (578 ) (607 ) Amortization of prior service cost 8 8 Net periodic pension credit $ (129 ) $ (6 ) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 . As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands): March 31, 2020 (unaudited) Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Net investment hedge $ — $ (4,451 ) $ — $ (4,451 ) December 31, 2019 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Net investment hedge $ — $ (4,186 ) $ — $ (4,186 ) |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Transactions Involving Stock Units and Director Stock Grants | Transactions involving our stock units and director stock grants during the three months ended March 31, 2020 are summarized below: Three Months Ended (unaudited) No. of Stock Units Weighted Average Fair Value (in thousands) Stock and stock units, beginning of period 784 $ 17.35 Changes during the period: Granted — $ — Vested and settled (2 ) $ 18.25 Cancelled (17 ) $ 17.00 Stock and stock units, end of period 765 $ 17.35 |
Summary of Transactions Involving Performance Awards | Transactions involving our performance awards during the three months ended March 31, 2020 are summarized below: Three Months Ended (unaudited) Performance Units Subject to Market Conditions Performance Units Not Subject to Market Conditions No. of Stock Units 1 Weighted Average Fair Value No. of Stock Units 1 Weighted Average Fair Value (in thousands) (in thousands) Performance stock units, beginning of period 489 $ 16.49 209 $ 17.06 Changes during the period: Granted — $ — — $ — Vested and settled (89 ) $ 17.54 (65 ) $ 15.24 Cancelled — $ — (24 ) $ 15.24 Performance stock units, end of period 400 $ 16.26 120 $ 18.42 _________________ 1 Performance units with variable payouts are shown at target level of performance. |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Loss Included Within Shareholders' Equity | A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Balance, beginning of period $ (26,742 ) $ 4,186 $ (8,021 ) $ 387 $ (30,190 ) $ (30,607 ) $ 3,904 $ (7,859 ) $ 170 $ (34,392 ) Other comprehensive income (loss) (9,741 ) 265 — (185 ) (9,661 ) 1,809 279 — (69 ) 2,019 Balance, end of period $ (36,483 ) $ 4,451 $ (8,021 ) $ 202 $ (39,851 ) $ (28,798 ) $ 4,183 $ (7,859 ) $ 101 $ (32,373 ) |
Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) | The following table represents the related tax effects allocated to each component of other comprehensive income (loss) (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Gross Amount Tax Effect Net Amount Gross Amount Tax Effect Net Amount Foreign currency translation adjustments $ (9,741 ) $ (120 ) $ (9,861 ) $ 1,809 $ — $ 1,809 Foreign currency hedge 265 (65 ) 200 279 (69 ) 210 Total $ (9,476 ) $ (185 ) $ (9,661 ) $ 2,088 $ (69 ) $ 2,019 |
SEGMENT AND GEOGRAPHIC DISCLO_2
SEGMENT AND GEOGRAPHIC DISCLOSURES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Data for our Three Operating Segments | Segment data for our three operating segments are as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) Revenues: IHT $ 107,881 $ 127,056 MS 104,519 121,526 Quest Integrity 24,439 21,017 Total $ 236,839 $ 269,599 Three Months Ended 2020 2019 (unaudited) (unaudited) Operating income (loss): IHT 1 $ (192,150 ) $ 1,721 MS 1,022 5,534 Quest Integrity 6,106 1,644 Corporate and shared support services (27,910 ) (25,427 ) Total $ (212,932 ) $ (16,528 ) _________________ 1 Includes goodwill impairment charge for IHT as discussed in Note 7 for the three months ended March 31, 2020. Three Months Ended 2020 2019 (unaudited) (unaudited) Capital expenditures 1 : IHT $ 1,041 $ 968 MS 3,617 1,963 Quest Integrity 971 1,328 Corporate and shared support services 1,075 2,351 Total $ 6,704 $ 6,610 _____________ 1 Totals may vary from amounts presented in the condensed consolidated statements of cash flows due to the timing of cash payments. Three Months Ended 2020 2019 (unaudited) (unaudited) Depreciation and amortization: IHT $ 3,983 $ 4,502 MS 5,431 5,414 Quest Integrity 886 921 Corporate and shared support services 1,408 1,434 Total $ 11,708 $ 12,271 |
Geographic Breakdown of Revenues | A geographic breakdown of our revenues for the three months ended March 31, 2020 and 2019 is as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) Total Revenues: 1 United States $ 173,510 $ 206,108 Canada 21,209 19,321 Europe 28,546 28,496 Other foreign countries 13,574 15,674 Total $ 236,839 $ 269,599 ___________ 1 Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. |
RESTRUCTURING AND OTHER RELAT_2
RESTRUCTURING AND OTHER RELATED CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | Our restructuring and other related charges (credits), net are summarized by program and by segment as follows (in thousands): Three Months Ended 2020 2019 (unaudited) (unaudited) OneTEAM Program Severance and related costs IHT $ 8 $ 102 MS 130 85 Corporate and shared support services 48 21 Subtotal 186 208 Grand Total $ 186 $ 208 |
Schedule of Accrued Severance Liability | A rollforward of our accrued severance liability associated with this program is presented below (in thousands): Three Months Ended (unaudited) Balance, beginning of period $ 971 Charges 186 Payments (520 ) Balance, end of period $ 637 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Additional Information (Details) | 3 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2020employeecountrysegmentLocationcustomer | |
Accounting Policies [Abstract] | ||
Number of operating segments | segment | 3 | |
Number of locations in which company operates (more than) | Location | 200 | |
Number of countries in which the company operates | country | 20 | |
Number of employees | employee | 6,100 | |
Sales Revenue, Net | Customer Concentration Risk | ||
Significant Accounting Policies [Line Items] | ||
Number of customers accounted for more than specified percentage of consolidated revenues | customer | 0 | |
Executive Officer | Subsequent Event | Minimum | ||
Significant Accounting Policies [Line Items] | ||
Temporary salary reduction (percent) | 0.15 | |
Executive Officer | Subsequent Event | Maximum | ||
Significant Accounting Policies [Line Items] | ||
Temporary salary reduction (percent) | 0.20 | |
Board Of Directors | Subsequent Event | ||
Significant Accounting Policies [Line Items] | ||
Related party, increase (decrease) in cash retainer | (0.20) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Fair Value Measurements (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Convertible debt | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of our convertible senior notes | $ 168.2 | $ 241.7 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Amounts Used In Basic and Diluted Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounting Policies [Abstract] | ||
Weighted-average number of basic shares outstanding (in shares) | 30,540 | 30,228 |
Stock options, stock units and performance awards (in shares) | 0 | 0 |
Convertible Senior Notes (in shares) | 0 | 0 |
Total shares and dilutive securities (in shares) | 30,540 | 30,228 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - New Accounting Standards - Effects of Adoption (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Property, plant and equipment, net | $ 184,447 | $ 191,951 | |
Other noncurrent assets | $ 8,126 | $ 4,426 | |
Accounting Standards Update 2018-15 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Property, plant and equipment, net | $ (4,900) | ||
Other current assets | 900 | ||
Other noncurrent assets | 4,000 | ||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Deficit) | Accounting Standards Update 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Decrease, net of tax, to beginning retained earnings | $ 1,000 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Disaggregation of Revenue [Line Items] | |||
Revenues | [1] | $ 236,839 | $ 269,599 |
Non-Destructive Evaluation and Testing Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 110,846 | 123,953 | |
Repair and Maintenance Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 102,716 | 119,851 | |
Heat Treating | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 14,625 | 19,532 | |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 8,652 | 6,263 | |
United States and Canada | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 194,719 | 225,429 | |
Other Countries | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 42,120 | 44,170 | |
IHT | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 107,881 | 127,056 | |
IHT | Non-Destructive Evaluation and Testing Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 86,407 | 102,936 | |
IHT | Repair and Maintenance Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 101 | 362 | |
IHT | Heat Treating | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 14,146 | 18,793 | |
IHT | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 7,227 | 4,965 | |
IHT | United States and Canada | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 105,304 | 123,620 | |
IHT | Other Countries | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 2,577 | 3,436 | |
MS | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 104,519 | 121,526 | |
MS | Non-Destructive Evaluation and Testing Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | 0 | |
MS | Repair and Maintenance Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 102,615 | 119,489 | |
MS | Heat Treating | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 479 | 739 | |
MS | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 1,425 | 1,298 | |
MS | United States and Canada | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 76,582 | 87,452 | |
MS | Other Countries | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 27,937 | 34,074 | |
Quest Integrity | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 24,439 | 21,017 | |
Quest Integrity | Non-Destructive Evaluation and Testing Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 24,439 | 21,017 | |
Quest Integrity | Repair and Maintenance Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | 0 | |
Quest Integrity | Heat Treating | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | 0 | |
Quest Integrity | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | 0 | |
Quest Integrity | United States and Canada | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 12,833 | 14,357 | |
Quest Integrity | Other Countries | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 11,606 | $ 6,660 | |
[1] | Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | ||
Revenue from Contract with Customer [Abstract] | |||
Trade accounts receivable, net | [1] | $ 224,111 | $ 245,617 |
Contract assets | [2] | 5,810 | 4,671 |
Contract liabilities | [3] | 1,076 | $ 1,224 |
Contract asset, increase from beginning of period | $ 1,100 | ||
[1] | Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. | ||
[2] | Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheets. | ||
[3] | Included in the “Other accrued liabilities” line of the condensed consolidated balance sheets. |
RECEIVABLES (Details)
RECEIVABLES (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Receivables [Abstract] | |||
Trade accounts receivable | $ 167,409 | $ 192,743 | |
Unbilled receivables | 66,376 | 62,864 | |
Allowance for doubtful accounts | (9,674) | (9,990) | |
Total | [1] | $ 224,111 | $ 245,617 |
[1] | Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. |
RECEIVABLES - Allowance for Cre
RECEIVABLES - Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Jan. 01, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance at beginning of period | $ (11,400) | |
Provision for expected credit losses | 45 | |
Write-offs | 1,441 | |
Foreign exchange effects | 240 | |
Balance at end of period | (9,674) | |
Allowance for credit loss | $ 9,674 | |
Cumulative Effect, Period of Adoption, Adjustment | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for credit loss | $ 1,400 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 7,916 | $ 7,555 |
Work in progress | 3,021 | 2,851 |
Finished goods | 27,074 | 28,789 |
Total | $ 38,011 | $ 39,195 |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Total | $ 442,331 | $ 447,796 | |
Accumulated depreciation and amortization | (257,884) | (255,845) | |
Property, plant and equipment, net | 184,447 | 191,951 | |
Assets under finance leases | 5,600 | 5,600 | |
Accumulated amortization for assets under finance leases | 600 | 500 | |
Depreciation expense | 8,100 | $ 8,600 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Total | 6,343 | 6,380 | |
Buildings and leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total | 58,500 | 59,177 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total | 282,640 | 284,020 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Total | 10,903 | 10,946 | |
Capitalized Enterprise Resource Planning system development costs | |||
Property, Plant and Equipment [Line Items] | |||
Total | 46,637 | 46,637 | |
Computers and computer software | |||
Property, Plant and Equipment [Line Items] | |||
Total | 18,430 | 22,906 | |
Vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Total | 4,426 | 4,642 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Total | $ 14,452 | $ 13,088 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 213,434 | $ 213,816 |
Accumulated Amortization | (99,899) | (96,797) |
Net Carrying Amount | 113,535 | 117,019 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 174,725 | 174,940 |
Accumulated Amortization | (66,555) | (63,727) |
Net Carrying Amount | 108,170 | 111,213 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,343 | 5,466 |
Accumulated Amortization | (5,263) | (5,306) |
Net Carrying Amount | 80 | 160 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 24,691 | 24,724 |
Accumulated Amortization | (21,267) | (21,146) |
Net Carrying Amount | 3,424 | 3,578 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 7,830 | 7,838 |
Accumulated Amortization | (6,159) | (5,976) |
Net Carrying Amount | 1,671 | 1,862 |
Licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 845 | 848 |
Accumulated Amortization | (655) | (642) |
Net Carrying Amount | $ 190 | $ 206 |
INTANGIBLE ASSETS - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense on intangible assets | $ 3.6 | $ 3.6 |
GOODWILL AND IMPAIRMENT CHARG_3
GOODWILL AND IMPAIRMENT CHARGES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Goodwill [Line Items] | |||
Goodwill | $ 88,099 | $ 282,006 | |
Goodwill impairment charge | 191,788 | $ 0 | |
IHT | |||
Goodwill [Line Items] | |||
Goodwill | 0 | 193,216 | |
Goodwill impairment charge | 191,788 | ||
MS | |||
Goodwill [Line Items] | |||
Goodwill | 54,991 | $ 55,409 | |
Goodwill impairment charge | $ 0 |
GOODWILL AND IMPAIRMENT CHARG_4
GOODWILL AND IMPAIRMENT CHARGES - Goodwill Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill [Roll Forward] | ||
Balance at beginning of period | $ 282,006 | |
Acquisitions | 496 | |
Foreign currency adjustments | (2,615) | |
Goodwill impairment loss | (191,788) | $ 0 |
Balance at end of period | 88,099 | |
IHT | ||
Goodwill [Roll Forward] | ||
Balance at beginning of period | 193,216 | |
Acquisitions | 0 | |
Foreign currency adjustments | (1,428) | |
Goodwill impairment loss | (191,788) | |
Balance at end of period | 0 | |
MS | ||
Goodwill [Roll Forward] | ||
Balance at beginning of period | 55,409 | |
Acquisitions | 0 | |
Foreign currency adjustments | (418) | |
Goodwill impairment loss | 0 | |
Balance at end of period | 54,991 | |
Quest Integrity | ||
Goodwill [Roll Forward] | ||
Balance at beginning of period | 33,381 | |
Acquisitions | 496 | |
Foreign currency adjustments | (769) | |
Goodwill impairment loss | 0 | |
Balance at end of period | $ 33,108 |
OTHER ACCRUED LIABILITIES (Deta
OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Personnel accruals | $ 52,610 | $ 45,934 |
Insurance accruals | 12,394 | 14,289 |
Property, sales and other non-income related taxes | 4,582 | 8,593 |
Accrued commission | 2,458 | 3,299 |
Accrued interest | 2,053 | 5,015 |
Other | 7,602 | 9,376 |
Total | $ 81,699 | $ 86,506 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Provision (benefit) for income taxes | $ (20,453) | $ 333 |
Effective tax rate (benefit) provision | (9.30%) | 1.40% |
CARES ACT tax benefit | $ 7,300 | |
Goodwill impairment loss, non-deductible for tax purposes | 30,500 | |
Valuation allowance related to goodwill impairment and net operating loss deferred tax assets | $ 23,200 |
LONG-TERM DEBT, LETTERS OF CR_3
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Long-Term Debt Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||
Total long-term debt and finance lease obligations | $ 350,658 | $ 330,593 | |
Less: current portion of long-term debt and finance lease obligations | 5,296 | 5,294 | |
Total long-term debt and finance lease obligations, less current portion | 345,362 | 325,299 | |
Finance lease obligations | 5,289 | 5,363 | |
Total Credit Facility | |||
Debt Instrument [Line Items] | |||
Total long-term debt and finance lease obligations | 142,043 | 123,611 | |
Convertible debt | |||
Debt Instrument [Line Items] | |||
Total long-term debt and finance lease obligations | [1] | 203,326 | 201,619 |
Credit Facility revolver | Total Credit Facility | |||
Debt Instrument [Line Items] | |||
Total long-term debt and finance lease obligations | 93,513 | 73,876 | |
Credit Facility term loan | Total Credit Facility | |||
Debt Instrument [Line Items] | |||
Total long-term debt and finance lease obligations | [2] | $ 48,530 | $ 49,735 |
[1] | Comprised of principal amount outstanding, less unamortized discount and issuance costs. See Convertible Debt section below for additional information. | ||
[2] | Comprised of principal amount outstanding, less unamortized discount and issuance costs. |
LONG-TERM DEBT, LETTERS OF CR_4
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Credit Facility Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Aug. 30, 2019 | |
Debt Instrument [Line Items] | |||
Borrowing capacity | $ 275,000,000 | ||
Additional borrowing capacity (up to) | 100,000,000 | ||
Commitment fee percentage | 0.50% | ||
Percentage of equity interests of material first-tier foreign subsidiaries guaranteed to the line of credit facility | 65.00% | ||
Cash and cash equivalents | $ 20,523,000 | $ 12,175,000 | |
LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.75% | ||
Credit Facility term loan | |||
Debt Instrument [Line Items] | |||
Borrowing capacity | 50,000,000 | ||
Total Credit Facility | |||
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs and debt discount | $ 1,700,000 | ||
Credit Facility revolver | |||
Debt Instrument [Line Items] | |||
Borrowing capacity | 225,000,000 | ||
Swing Line Facility | |||
Debt Instrument [Line Items] | |||
Borrowing capacity | $ 35,000,000 | ||
Standby Letters of Credit | |||
Debt Instrument [Line Items] | |||
Outstanding letters of credit | $ 18,300,000 | $ 20,500,000 |
LONG-TERM DEBT, LETTERS OF CR_5
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Credit Facility Financial Covenant Requirements (Details) | Mar. 31, 2020 |
March 31, 2020 | |
Debt Instrument [Line Items] | |
Maximum Senior Secured Leverage Ratio | 2.75 |
Maximum Net Leverage Ratio | 5.50 |
Minimum Debt Service Coverage Ratio | 1.25 |
June 30, 2020 | |
Debt Instrument [Line Items] | |
Maximum Senior Secured Leverage Ratio | 2.75 |
Maximum Net Leverage Ratio | 5.25 |
Minimum Debt Service Coverage Ratio | 1.25 |
September 30, 2020 | |
Debt Instrument [Line Items] | |
Maximum Senior Secured Leverage Ratio | 2.75 |
Maximum Net Leverage Ratio | 5 |
Minimum Debt Service Coverage Ratio | 1.25 |
December 31, 2020 and thereafter | |
Debt Instrument [Line Items] | |
Maximum Senior Secured Leverage Ratio | 2.50 |
Maximum Net Leverage Ratio | 4.50 |
Minimum Debt Service Coverage Ratio | 1.50 |
LONG-TERM DEBT, LETTERS OF CR_6
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Subsequent Event Narrative (Details) | Jun. 17, 2020USD ($) | Mar. 31, 2020 | Jun. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Jun. 30, 2021 | Mar. 31, 2021 | Aug. 30, 2019USD ($) |
Debt Instrument [Line Items] | ||||||||
Borrowing capacity | $ 275,000,000 | |||||||
LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.75% | |||||||
Subsequent Event | ||||||||
Debt Instrument [Line Items] | ||||||||
Senior secured leverage ratio | 3.50 | 3.25 | 2.75 | 2.50 | ||||
Net leverage ratio | 4.50 | 5.50 | ||||||
Debt service coverage ratio | 1 | 1.25 | ||||||
Minimum consolidated EBITDA | $ 6,500,000 | $ 18,500,000 | $ 50,500,000 | |||||
Subsequent Event | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.35% | |||||||
Subsequent Event | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.55% | |||||||
Subsequent Event | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate, floor | 0.01 | |||||||
Subsequent Event | LIBOR | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.75% | |||||||
Subsequent Event | LIBOR | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 4.25% | |||||||
Credit Facility revolver | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing capacity | $ 225,000,000 | |||||||
Credit Facility revolver | Subsequent Event | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing capacity | $ 200,000,000 |
LONG-TERM DEBT, LETTERS OF CR_7
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Convertible Debt Narrative (Details) | May 17, 2018USD ($) | Mar. 31, 2020sharesdays$ / shares | Jul. 31, 2017USD ($) |
Debt Instrument [Line Items] | |||
Debt instrument, convertible, threshold percentage of stock price trigger for redemption | 130.00% | ||
Debt instrument, convertible, threshold trading days for redemption | days | 20 | ||
Threshold consecutive trading days for redemption | 30 days | ||
Percentage of the maximum number of shares authorized for issuance | 40.00% | ||
Percentage of maximum number of shares that would require cash settlement | 60.00% | ||
Tax impact of convertible debt embedded derivative liability reclassification to equity | $ | $ 7,800,000 | ||
Remaining amortization period of convertible debt | 40 months | ||
Convertible debt | |||
Debt Instrument [Line Items] | |||
Principal amount, long-term debt issued | $ | $ 230,000,000 | ||
Interest rate on convertible debt | 5.00% | 5.00% | |
Initial conversion rate, convertible debt | 46.0829 | ||
Initial conversion price, convertible debt (in dollars per share) | $ / shares | $ 21.70 | ||
Threshold trading days | days | 20 | ||
Threshold consecutive trading days | days | 30 | ||
Threshold percentage of stock price trigger | 130.00% | ||
Number of business days after the specified trading price criteria met that notes may be converted | days | 5 | ||
Consecutive trading days, trading price criteria | 5 days | ||
Convertible debt, threshold percentage, product of common stock price and conversion price | 98.00% | ||
Number of shares into which debt is convertible (in shares) | shares | 10,599,067 | ||
Shares outstanding, percentage threshold (more than) | 19.99% | ||
Convertible debt, threshold shares, approval of shareholders | shares | 5,964,858 | ||
Redemption price, percentage (equal to) | 100.00% | ||
Convertible debt | Maximum | |||
Debt Instrument [Line Items] | |||
Number of shares into which debt is convertible (in shares) | shares | 14,838,703 | ||
Number of shares that would require cash settlement | shares | 8,873,845 | ||
Long-term debt | Not Designated as Hedging Instrument | |||
Debt Instrument [Line Items] | |||
Embedded derivative liability | $ | $ 45,400,000 |
LONG-TERM DEBT, LETTERS OF CR_8
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Detail of Convertible Debt Carrying Amount (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||
Carrying amount of the equity component, net of issuance costs | [1] | $ 13,912 | $ 13,912 |
Convertible debt | |||
Debt Instrument [Line Items] | |||
Principal | 230,000 | 230,000 | |
Unamortized issuance costs | (4,470) | (4,756) | |
Unamortized discount | (22,204) | (23,625) | |
Net carrying amount of the liability component | [2] | $ 203,326 | $ 201,619 |
[1] | Relates to the portion of the Notes accounted for under ASC 470-20 (defined below) and is included in the “Additional paid-in capital” line of the condensed consolidated balance sheets. | ||
[2] | Included in the “Long-term debt” line of the condensed consolidated balance sheets. |
LONG-TERM DEBT, LETTERS OF CR_9
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Components of Convertible Debt Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Instrument [Line Items] | ||
Amortization of debt discount and issuance costs | $ 2,055 | $ 1,860 |
Interest expense, net | 6,776 | 7,425 |
Convertible debt | ||
Debt Instrument [Line Items] | ||
Coupon interest | 2,875 | 2,875 |
Amortization of debt discount and issuance costs | 1,707 | 1,561 |
Interest expense, net | $ 4,582 | $ 4,436 |
Effective interest rate | 9.12% | 9.12% |
LONG-TERM DEBT, LETTERS OF C_10
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Derivatives and Hedging Narrative (Details) € in Millions, $ in Millions | Mar. 31, 2020USD ($) | Mar. 31, 2020EUR (€) | May 17, 2018USD ($) |
Not Designated as Hedging Instrument | Long-term debt | |||
Derivative [Line Items] | |||
Embedded derivative liability | $ 45.4 | ||
Net Investment Hedge | |||
Derivative [Line Items] | |||
Borrowing under credit facility | $ 13.5 | € 12.3 |
LONG-TERM DEBT, LETTERS OF C_11
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Amounts Recognized in Other Comprehensive Income (Loss), and Reclassified Into Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ 265 | $ 279 |
Net Investment Hedge | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Recognized in Other Comprehensive Income (Loss) | 265 | 279 |
Gain (Loss) Reclassified from Other Comprehensive Income (Loss) to Earnings | $ 0 | $ 0 |
LONG-TERM DEBT, LETTERS OF C_12
LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES - Fair Value Totals and Balance Sheet Classification for Derivatives Designated as Hedges (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Long-term debt | Designated as Hedging Instrument | Net Investment Hedge | ||
Derivatives, Fair Value [Line Items] | ||
Fair value liability | $ (4,451) | $ (4,186) |
LEASES - Additional Information
LEASES - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Operating Leased Assets [Line Items] | |
Options to extend leases (up to) | 10 years |
Options to terminate leases | 1 year |
Minimum | |
Operating Leased Assets [Line Items] | |
Operating and finance leases, remaining lease term | 1 year |
Maximum | |
Operating Leased Assets [Line Items] | |
Operating and finance leases, remaining lease term | 15 years |
LEASES - Components of Lease Ex
LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 7,518 | $ 7,858 |
Variable lease costs | 1,493 | 1,680 |
Finance lease costs: | ||
Amortization of right-of-use assets | 108 | 88 |
Interest on lease liabilities | 81 | 81 |
Total lease costs | $ 9,200 | $ 9,707 |
LEASES - Other Information Rela
LEASES - Other Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 5,865 | $ 8,144 |
Operating cash flows from finance leases | 83 | 135 |
Financing cash flows from finance leases | 65 | 73 |
Right-of-use assets obtained in exchange for lease obligations | ||
Operating leases | 1,092 | 6,468 |
Finance leases | $ 0 | $ 0 |
LEASES - Amounts Recognized in
LEASES - Amounts Recognized in the Balance Sheet for Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Operating Leases: | ||
Operating lease right-of-use assets | $ 64,209 | $ 67,048 |
Current portion of operating lease obligations | 16,787 | 17,100 |
Operating lease obligations (non-current) | $ 52,027 | $ 54,436 |
Weighted average remaining lease term, operating leases | 5 years 7 months 6 days | 5 years 8 months 12 days |
Weighted average discount rate, operating leases | 8.30% | 8.30% |
Finance Leases: | ||
Property, plant and equipment, net | $ 5,039 | $ 5,156 |
Current portion of long-term debt and finance lease obligations | 296 | 294 |
Long-term debt and finance lease obligations | $ 4,993 | $ 5,069 |
Weighted average remaining lease term | 13 years 1 month 6 days | 13 years 3 months 19 days |
Weighted average discount rate | 6.30% | 6.30% |
LEASES - Operating and Finance
LEASES - Operating and Finance Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2020 (Remainder of the year) | $ 16,207 | |
2021 | 17,117 | |
2022 | 13,397 | |
2023 | 10,966 | |
2024 | 8,748 | |
Thereafter | 20,294 | |
Total future minimum lease payments | 86,729 | |
Less: Interest | (17,915) | |
Present value of lease liabilities | 68,814 | |
Finance Lease, Liability, Payment, Due [Abstract] | ||
2020 (Remainder of the year) | 443 | |
2021 | 594 | |
2022 | 598 | |
2023 | 550 | |
2024 | 541 | |
Thereafter | 5,105 | |
Total future minimum lease payments | 7,831 | |
Less: Interest | (2,542) | |
Present value of lease liabilities | $ 5,289 | $ 5,363 |
EMPLOYEE BENEFIT PLANS - Net Pe
EMPLOYEE BENEFIT PLANS - Net Periodic Pension Cost (Credit) (Details) - U.K. Plan - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Interest cost | $ 441 | $ 593 |
Expected return on plan assets | (578) | (607) |
Amortization of prior service cost | 8 | 8 |
Net periodic pension credit | $ (129) | $ (6) |
EMPLOYEE BENEFIT PLANS - Additi
EMPLOYEE BENEFIT PLANS - Additional Information (Details) - U.K. Plan - Pension Plan $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |
Weighted-average of expected returns on asset investment, percentage | 2.90% |
Expected contributions for current year | $ 3.7 |
Total contributions to date | $ 1 |
Equities | |
Defined Benefit Plan Disclosure [Line Items] | |
Weighted-average of expected returns on asset investment, percentage | 5.30% |
Debt Security | |
Defined Benefit Plan Disclosure [Line Items] | |
Weighted-average of expected returns on asset investment, percentage | 2.10% |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value of Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Measurements, Recurring - Net investment hedge - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Net liabilities | $ (4,451) | $ (4,186) |
Quoted Prices in Active Markets for Identical Items (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Net liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Net liabilities | (4,451) | (4,186) |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Net liabilities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | ||
Transfer in to Level 3 measurement | $ 0 | $ 0 |
Transfer out of Level 3 measurement | $ 0 | $ 0 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional Information (Details) $ / shares in Units, $ in Millions | Mar. 15, 2020 | Mar. 31, 2020USD ($)perfconditions$ / sharesshares | Mar. 31, 2019USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awards outstanding to officers, directors and key employees (in shares) | shares | 1,300,000 | ||
Share-based compensation | $ 1.5 | $ 2.4 | |
Unrecognized compensation expense related to share-based compensation | $ 11.9 | ||
Remaining weighted-average period | 2 years 6 months | ||
Exercisable stock option shares outstanding (in shares) | shares | 53,000 | ||
Exercise price of stock options (in dollars per share) | $ / shares | $ 32.55 | ||
Weighted-average remaining contractual life of options exercisable | 1 year 6 months | ||
Range of prices, lower limit (in dollars per share) | $ / shares | $ 21.12 | ||
Range of prices, upper limit (in dollars per share) | $ / shares | $ 50.47 | ||
Total number of shares authorized to be issued under 2018 Equity Incentive Plan (up to) (in shares) | shares | 1,200,000 | ||
Stock and stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation | $ 1.1 | 1.5 | |
Award vesting period | 4 years | ||
Long-term performance stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation | $ 0.4 | $ 0.9 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award contractual term | 10 years | ||
2018 and 2019 | Long-term performance stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 2 years | ||
Performance period | 2 years | ||
Share-based compensation award, number of performance conditions | perfconditions | 2 | ||
2018 and 2019 | Long-term performance stock units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Possible payouts | 0.00% | ||
2018 and 2019 | Long-term performance stock units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Possible payouts | 200.00% | ||
2018 | Long-term performance stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vested award performance target level, percentage | 100.00% | ||
Award vesting rights, performance metric, percentage | 73.00% |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary of Transactions Involving Stock Units and Director Stock Grants (Details) - Stock and stock units shares in Thousands | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
No. of Stock Units | |
Stock and stock units, beginning of period (in shares) | shares | 784 |
Changes during the period: | |
Granted (in shares) | shares | 0 |
Vested and settled (in shares) | shares | (2) |
Cancelled (in shares) | shares | (17) |
Stock and stock units, end of period (in shares) | shares | 765 |
Weighted Average Fair Value | |
Stock and stock units, beginning of period (in dollars per share) | $ / shares | $ 17.35 |
Changes during the period: | |
Granted (in dollars per share) | $ / shares | 0 |
Vested and settled (in dollars per share) | $ / shares | 18.25 |
Cancelled (in dollars per share) | $ / shares | 17 |
Stock and stock units, end of period (in dollars per share) | $ / shares | $ 17.35 |
SHARE-BASED COMPENSATION - Su_2
SHARE-BASED COMPENSATION - Summary of Transactions Involving Performance Awards (Details) - Long-term performance stock units shares in Thousands | 3 Months Ended | |
Mar. 31, 2020$ / sharesshares | ||
Performance Units Subject to Market Conditions | ||
No. of Units/Awards | ||
Stock and stock units, beginning of period (in shares) | shares | 489 | [1] |
Changes during the period: | ||
Granted (in shares) | shares | 0 | [1] |
Vested and settled (in shares) | shares | (89) | [1] |
Cancelled (in shares) | shares | 0 | [1] |
Stock and stock units, end of period (in shares) | shares | 400 | [1] |
Weighted Average Fair Value | ||
Stock and stock units, beginning of period (in dollars per share) | $ / shares | $ 16.49 | |
Changes during the period: | ||
Granted (in dollars per share) | $ / shares | 0 | |
Vested and settled (in dollars per share) | $ / shares | 17.54 | |
Cancelled (in dollars per share) | $ / shares | 0 | |
Stock and stock units, end of period (in dollars per share) | $ / shares | $ 16.26 | |
Performance Units Not Subject to Market Conditions | ||
No. of Units/Awards | ||
Stock and stock units, beginning of period (in shares) | shares | 209 | [1] |
Changes during the period: | ||
Granted (in shares) | shares | 0 | [1] |
Vested and settled (in shares) | shares | (65) | [1] |
Cancelled (in shares) | shares | (24) | [1] |
Stock and stock units, end of period (in shares) | shares | 120 | [1] |
Weighted Average Fair Value | ||
Stock and stock units, beginning of period (in dollars per share) | $ / shares | $ 17.06 | |
Changes during the period: | ||
Granted (in dollars per share) | $ / shares | 0 | |
Vested and settled (in dollars per share) | $ / shares | 15.24 | |
Cancelled (in dollars per share) | $ / shares | 15.24 | |
Stock and stock units, end of period (in dollars per share) | $ / shares | $ 18.42 | |
[1] | Performance units with variable payouts are shown at target level of performance. |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS - Summary of Changes in Accumulated Other Comprehensive Loss Included Within Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | $ 436,670 | |
Other comprehensive income (loss) | (9,476) | $ 2,088 |
Tax Provision | (185) | (69) |
Other comprehensive income (loss), net of tax | (9,661) | 2,019 |
Balance, end of period | 227,429 | |
Total | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | (30,190) | (34,392) |
Balance, end of period | (39,851) | (32,373) |
Foreign Currency Translation Adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | (26,742) | (30,607) |
Other comprehensive income (loss) | (9,741) | 1,809 |
Tax Provision | (120) | 0 |
Balance, end of period | (36,483) | (28,798) |
Foreign Currency Hedge | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | 4,186 | 3,904 |
Other comprehensive income (loss) | 265 | 279 |
Tax Provision | (65) | (69) |
Balance, end of period | 4,451 | 4,183 |
Defined Benefit Pension Plans | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | (8,021) | (7,859) |
Other comprehensive income (loss) | 0 | 0 |
Balance, end of period | (8,021) | (7,859) |
Tax Provision | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance, beginning of period | 387 | 170 |
Tax Provision | (185) | (69) |
Balance, end of period | $ 202 | $ 101 |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE LOSS - Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Loss [Line Items] | ||
Gross Amount | $ (9,476) | $ 2,088 |
Tax (provision) benefit attributable to other comprehensive income (loss) | (185) | (69) |
Other comprehensive income (loss), net of tax | (9,661) | 2,019 |
Foreign currency translation adjustments | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Gross Amount | (9,741) | 1,809 |
Tax (provision) benefit attributable to other comprehensive income (loss) | (120) | 0 |
Other comprehensive income (loss), net of tax | (9,861) | 1,809 |
Foreign Currency Hedge | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Gross Amount | 265 | 279 |
Tax (provision) benefit attributable to other comprehensive income (loss) | (65) | (69) |
Other comprehensive income (loss), net of tax | $ 200 | $ 210 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended |
Dec. 31, 2014patentdefendant | Mar. 31, 2020defendant | Dec. 31, 2019USD ($) | |
Loss Contingencies [Line Items] | |||
Number of defendants with cases settled | 1 | ||
Litigation settlement, amount awarded to other party | $ | $ 1.3 | ||
Quest Integrity | |||
Loss Contingencies [Line Items] | |||
Number of patents allegedly infringed upon | patent | 3 | ||
Number of defendants | 3 | ||
Delaware Cases | Quest Integrity | |||
Loss Contingencies [Line Items] | |||
Number of defendants | 2 | ||
Washington Case | Quest Integrity | |||
Loss Contingencies [Line Items] | |||
Number of defendants | 1 |
SEGMENT AND GEOGRAPHIC DISCLO_3
SEGMENT AND GEOGRAPHIC DISCLOSURES - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2020segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
SEGMENT AND GEOGRAPHIC DISCLO_4
SEGMENT AND GEOGRAPHIC DISCLOSURES - Segment Data for our Three Operating Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Segment Reporting Information [Line Items] | ||||
Goodwill impairment charge | $ 191,788 | $ 0 | ||
Revenues | [1] | 236,839 | 269,599 | |
Operating income (loss) | (212,932) | (16,528) | ||
Capital expenditures | [2] | 6,704 | 6,610 | |
Depreciation and amortization | 11,708 | 12,271 | ||
IHT | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill impairment charge | 191,788 | |||
Revenues | 107,881 | 127,056 | ||
MS | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill impairment charge | 0 | |||
Revenues | 104,519 | 121,526 | ||
Quest Integrity | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill impairment charge | 0 | |||
Revenues | 24,439 | 21,017 | ||
Operating segments | IHT | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 107,881 | 127,056 | ||
Operating income (loss) | (192,150) | [3] | 1,721 | |
Capital expenditures | [2] | 1,041 | 968 | |
Depreciation and amortization | 3,983 | 4,502 | ||
Operating segments | MS | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 104,519 | 121,526 | ||
Operating income (loss) | 1,022 | 5,534 | ||
Capital expenditures | [2] | 3,617 | 1,963 | |
Depreciation and amortization | 5,431 | 5,414 | ||
Operating segments | Quest Integrity | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 24,439 | 21,017 | ||
Operating income (loss) | 6,106 | 1,644 | ||
Capital expenditures | [2] | 971 | 1,328 | |
Depreciation and amortization | 886 | 921 | ||
Corporate and shared support services | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | (27,910) | (25,427) | ||
Capital expenditures | [2] | 1,075 | 2,351 | |
Depreciation and amortization | $ 1,408 | $ 1,434 | ||
[1] | Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. | |||
[2] | Totals may vary from amounts presented in the condensed consolidated statements of cash flows due to the timing of cash payments. | |||
[3] | Includes goodwill impairment charge for IHT as discussed in Note 7 for the three months ended March 31, 2020. |
SEGMENT AND GEOGRAPHIC DISCLO_5
SEGMENT AND GEOGRAPHIC DISCLOSURES - Geographic Breakdown of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Revenues from External Customers [Line Items] | |||
Revenues | [1] | $ 236,839 | $ 269,599 |
United States | |||
Revenues from External Customers [Line Items] | |||
Revenues | [1] | 173,510 | 206,108 |
Canada | |||
Revenues from External Customers [Line Items] | |||
Revenues | [1] | 21,209 | 19,321 |
Europe | |||
Revenues from External Customers [Line Items] | |||
Revenues | [1] | 28,546 | 28,496 |
Other foreign countries | |||
Revenues from External Customers [Line Items] | |||
Revenues | [1] | $ 13,574 | $ 15,674 |
[1] | Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. |
RESTRUCTURING AND OTHER RELAT_3
RESTRUCTURING AND OTHER RELATED CHARGES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other related charges, net | $ 186 | $ 208 |
OneTEAM Program | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other related charges, net | 186 | 208 |
Professional fees | 1,800 | 3,200 |
OneTEAM Program | Severance and related costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other related charges, net | 186 | |
Severance charges incurred cumulatively to date | 8,600 | |
IHT | OneTEAM Program | Severance and related costs | Operating segments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other related charges, net | 8 | 102 |
MS | OneTEAM Program | Severance and related costs | Operating segments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other related charges, net | 130 | 85 |
Corporate and shared support services | OneTEAM Program | Severance and related costs | Operating segments | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other related charges, net | $ 48 | $ 21 |
RESTRUCTURING AND OTHER RELAT_4
RESTRUCTURING AND OTHER RELATED CHARGES Rollforward of Liability - OneTEAM Program (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Reserve [Roll Forward] | ||
Charges | $ 186 | $ 208 |
OneTEAM Program | ||
Restructuring Reserve [Roll Forward] | ||
Charges | 186 | $ 208 |
Severance and related costs | OneTEAM Program | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 971 | |
Charges | 186 | |
Payments | (520) | |
Balance, end of period | $ 637 |