Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FLOTEK INDUSTRIES INC/CN/ | |
Entity Central Index Key | 928,054 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 56,862,935 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 2,865 | $ 4,584 |
Accounts receivable, net of allowance for doubtful accounts of $694 and $733 at March 31, 2018 and December 31, 2017, respectively | 45,331 | 46,018 |
Inventories, net | 82,085 | 75,759 |
Income taxes receivable | 2,809 | 2,826 |
Other current assets | 7,972 | 9,264 |
Total current assets | 141,062 | 138,451 |
Property and equipment, net | 73,108 | 73,833 |
Goodwill | 56,660 | 56,660 |
Deferred tax assets, net | 20,373 | 12,713 |
Other intangible assets, net | 47,619 | 48,231 |
TOTAL ASSETS | 338,822 | 329,888 |
Current liabilities: | ||
Accounts payable | 23,233 | 22,048 |
Accrued liabilities | 8,629 | 14,589 |
Interest payable | 6 | 43 |
Long-term debt, classified as current | 39,741 | 27,950 |
Total current liabilities and total liabilities | 71,609 | 64,630 |
Commitments and contingencies | ||
Equity: | ||
Cumulative convertible preferred stock, $0.0001 par value, 100,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value, 80,000,000 shares authorized; 61,161,291 shares issued and 56,784,694 shares outstanding at March 31, 2018; 60,622,986 shares issued and 56,755,293 shares outstanding at December 31, 2017 | 6 | 6 |
Additional paid-in capital | 338,137 | 336,067 |
Accumulated other comprehensive income (loss) | (1,063) | (884) |
Retained earnings (accumulated deficit) | (37,158) | (37,225) |
Treasury stock, at cost; 3,599,267 and 3,621,435 shares at March 31, 2018 and December 31, 2017, respectively | (33,067) | (33,064) |
Flotek Industries, Inc. stockholders’ equity | 266,855 | 264,900 |
Noncontrolling interests | 358 | 358 |
Total equity | 267,213 | 265,258 |
TOTAL LIABILITIES AND EQUITY | $ 338,822 | $ 329,888 |
Unaudited Condensed Consolidat3
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 694 | $ 733 |
Cumulative convertible preferred stock, at par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Cumulative convertible preferred stock, shares authorized (in shares) | 100,000 | 100,000 |
Cumulative convertible preferred stock, shares issued (in shares) | 0 | 0 |
Cumulative convertible preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, shares issued (in shares) | 61,161,291 | 60,622,986 |
Common stock, shares outstanding (in shares) | 56,784,694 | 56,755,293 |
Treasury stock, shares (in shares) | 3,599,267 | 3,621,435 |
Unaudited Condensed Consolidat4
Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue | $ 60,516 | $ 79,954 |
Costs and expenses: | ||
Cost of revenue (excluding depreciation and amortization) | 45,701 | 51,625 |
Depreciation and amortization | 3,002 | 3,032 |
Research and development | 2,924 | 3,141 |
Loss on disposal of long-lived assets | 57 | 198 |
Total costs and expenses | 67,301 | 80,577 |
Loss from operations | (6,785) | (623) |
Other (expense) income: | ||
Interest expense | (516) | (594) |
Other (expense) income, net | (285) | 154 |
Total other expense | (801) | (440) |
Loss before income taxes | (7,586) | (1,063) |
Income tax benefit | 7,653 | 320 |
Income (loss) from continuing operations | 67 | (743) |
Loss from discontinued operations, net of tax | 0 | (11,235) |
Net income (loss) | $ 67 | $ (11,978) |
Basic earnings (loss) per common share: | ||
Continuing operations (in dollars per share) | $ 0 | $ (0.01) |
Discontinued operations, net of tax (in dollars per share) | 0 | (0.19) |
Basic earnings (loss) per common share (in dollars per share) | 0 | (0.20) |
Diluted earnings (loss) per common share: | ||
Continuing operations (in dollars per share) | 0 | (0.01) |
Discontinued operations, net of tax (in dollars per share) | 0 | (0.19) |
Diluted earnings (loss) per common share (in dollars per share) | $ 0 | $ (0.20) |
Weighted average common shares: | ||
Weighted average common shares used in computing basic earnings (loss) per common share (in shares) | 57,259 | 57,673 |
Weighted average common shares used in computing diluted earnings (loss) per common share (in shares) | 57,259 | 57,673 |
Corporate | ||
Costs and expenses: | ||
General, selling and administrative | $ 8,493 | $ 12,272 |
Loss from operations | (9,057) | (12,876) |
Operating Segments | ||
Costs and expenses: | ||
General, selling and administrative | $ 7,124 | $ 10,309 |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Income (loss) from continuing operations | $ 67 | $ (743) |
Loss from discontinued operations, net of tax | 0 | (11,235) |
Net income (loss) | 67 | (11,978) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | (179) | (8) |
Comprehensive income (loss) | $ (112) | $ (11,986) |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 67 | $ (11,978) |
Loss from discontinued operations, net of tax | 0 | (11,235) |
Income (loss) from continuing operations | 67 | (743) |
Adjustments to reconcile income (loss) from continuing operations to net cash used in operating activities: | ||
Depreciation and amortization | 3,002 | 3,032 |
Amortization of deferred financing costs | 96 | 130 |
Provision for excess and obsolete inventory | 1,175 | 89 |
Loss on sale of assets | 57 | 198 |
Stock compensation expense | 1,963 | 3,011 |
Deferred income tax benefit | (7,662) | (7,403) |
Reduction in tax benefit related to share-based awards | 3 | 66 |
Changes in current assets and liabilities: | ||
Accounts receivable, net | 668 | (15,788) |
Inventories | (7,548) | (6,462) |
Income taxes receivable | (1) | 332 |
Other current assets | 350 | 13,923 |
Accounts payable | 1,132 | 5,671 |
Accrued liabilities | (5,018) | 1,265 |
Income taxes payable | 0 | 97 |
Interest payable | (37) | 25 |
Net cash used in operating activities | (11,753) | (2,557) |
Cash flows from investing activities: | ||
Capital expenditures | (1,787) | (1,877) |
Proceeds from sale of assets | 80 | 158 |
Purchase of patents and other intangible assets | (137) | (84) |
Net cash used in investing activities | (1,844) | (1,803) |
Cash flows from financing activities: | ||
Repayments of indebtedness | 0 | (750) |
Borrowings on revolving credit facility | 76,266 | 98,863 |
Repayments on revolving credit facility | (64,475) | (96,826) |
Debt issuance costs | (8) | (106) |
Purchase of treasury stock related to share-based awards | (3) | (102) |
Proceeds from sale of common stock | 146 | 251 |
Proceeds from exercise of stock options | 0 | 7 |
Net cash provided by financing activities | 11,926 | 1,337 |
Discontinued operations: | ||
Net cash used in operating activities | 0 | (353) |
Net cash provided by investing activities | 0 | 353 |
Net cash flows provided by discontinued operations | 0 | 0 |
Effect of changes in exchange rates on cash and cash equivalents | (48) | 26 |
Net decrease in cash and cash equivalents | (1,719) | (2,997) |
Cash and cash equivalents at the beginning of period | 4,584 | 4,823 |
Cash and cash equivalents at the end of period | $ 2,865 | $ 1,826 |
Unaudited Condensed Consolidat7
Unaudited Condensed Consolidated Statement of Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Non-controlling Interests |
Beginning balance (in shares) at Dec. 31, 2017 | 60,623,000 | 3,621,000 | |||||
Beginning balance at Dec. 31, 2017 | $ 265,258 | $ 6 | $ (33,064) | $ 336,067 | $ (884) | $ (37,225) | $ 358 |
Increase (Decrease) in Equity [Roll Forward] | |||||||
Net income | 67 | 67 | |||||
Foreign currency translation adjustment | (179) | (179) | |||||
Stock issued under employee stock purchase plan (in shares) | (28,000) | ||||||
Stock issued under employee stock purchase plan | $ 146 | 146 | |||||
Restricted stock granted (in shares) | 538,305 | 538,000 | |||||
Restricted stock forfeited (in shares) | 5,000 | ||||||
Treasury stock purchased (in shares) | 1,000 | ||||||
Treasury stock purchased | $ (3) | $ (3) | |||||
Stock compensation expense | 1,924 | 1,924 | |||||
Ending balance (in shares) at Mar. 31, 2018 | 61,161,000 | 3,599,000 | |||||
Ending balance at Mar. 31, 2018 | $ 267,213 | $ 6 | $ (33,067) | $ 338,137 | $ (1,063) | $ (37,158) | $ 358 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Significant Accounting Policies | Organization and Significant Accounting Policies Organization and Nature of Operations Flotek Industries, Inc. (“Flotek” or the “Company”) is a global, diversified, technology-driven company that develops and supplies chemistries and services to the oil and gas industries, and high value compounds to companies that make food and beverages, cleaning products, cosmetics, and other products that are sold in consumer and industrial markets. The Company’s oilfield business includes specialty chemistries and logistics which enable its customers in pursuing improved efficiencies in the drilling and completion of their wells. The Company also provides automated bulk material handling, loading facilities, and blending capabilities. The Company processes citrus oil to produce (1) high value compounds used as additives by companies in the flavors and fragrances markets and (2) environmentally friendly chemistries for use in numerous industries around the world, including the oil and gas (“O&G”) industry. Flotek operates in over 20 domestic and international markets. Customers include major integrated O&G companies, oilfield services companies, independent O&G companies, pressure-pumping service companies, national and state-owned oil companies, and international supply chain management companies. The Company also serves customers who purchase non-energy-related citrus oil and related products, including household and commercial cleaning product companies, fragrance and cosmetic companies, and food manufacturing companies. Flotek was initially incorporated under the laws of the Province of British Columbia on May 17, 1985. On October 23, 2001, Flotek changed its corporate domicile to the state of Delaware. Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements and accompanying footnotes (collectively the “Financial Statements”) reflect all adjustments, in the opinion of management, necessary for fair presentation of the financial condition and results of operations for the periods presented. All such adjustments are normal and recurring in nature. The Financial Statements, including selected notes, have been prepared in accordance with applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and do not include all information and disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for comprehensive financial statement reporting. These interim Financial Statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (“Annual Report”). A copy of the Annual Report is available on the SEC’s website, www.sec.gov , under the Company’s ticker symbol (“FTK”) or on Flotek’s website, www.flotekind.com . The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 . During the fourth quarter of 2016, the Company classified the Drilling Technologies and Production Technologies segments as held for sale based on management’s intention to sell these businesses. The Company’s historical financial statements have been revised to present the operating results of the Drilling Technologies and Production Technologies segments as discontinued operations. The results of operations of Drilling Technologies and Production Technologies are presented as “Loss from discontinued operations” in the statement of operations and the related cash flows of these segments has been reclassified to discontinued operations for all periods presented. The assets and liabilities of the Drilling Technologies and Production Technologies segments have been reclassified to “Assets held for sale” and “Liabilities held for sale,” respectively, in the consolidated balance sheets for all periods presented. During 2017, the Company completed the sale or disposal of the assets and transfer or liquidation of liabilities and obligations of each of the Drilling Technologies and Production Technologies segments. Revenue Recognition The Company recognizes revenues to depict the transfer of control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Refer to Note 4 — “Revenue from Contracts with Customers” for further discussion on Revenue. The Company recognizes revenue based on the Accounting Standards Codification (“ASC”) 606 five-step model when all of the following criteria have been met: (i) a contract with a customer exists, (ii) performance obligations have been identified, (iii) the price to the customer has been determined, (iv) the price to the customer has been allocated to the performance obligations, and (v) performance obligations are satisfied. Products and services are sold with fixed or determinable prices. Certain sales include right of return provisions, which are considered when recognizing revenue and deferred accordingly. Deposits and other funds received in advance of delivery are deferred until the transfer of control is complete. For certain contracts, the Company recognizes revenue under the percentage-of-completion method of accounting, measured by the percentage of “costs incurred to date” to the “total estimated costs of completion.” This percentage is applied to the “total estimated revenue at completion” to calculate proportionate revenue earned to date. For the three months ended March 31, 2018 and March 31, 2017 , the percentage-of-completion revenue accounted for less than 0.1% of total revenue during the respective time periods. This resulted in immaterial unfulfilled performance obligations and immaterial contract assets and/or liabilities for which the Company did not record adjustments to opening retained earnings as of December 31, 2015 or for any periods previously presented. As an accounting policy election, the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications did not impact net income (loss). |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Application of New Accounting Standards Effective January 1, 2018, the Company adopted the accounting guidance in Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers .” This standard supersedes most of the existing revenue recognition requirements in U.S. GAAP under Accounting Standards Codification (“ASC”) 605 and establishes a new revenue standard, ASC 606. This new standard requires entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASC 606 using the full retrospective method. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Refer to Note 4 — “Revenue from Contracts with Customers” for further information surrounding adoption of this new standard. Effective January 1, 2018, the Company adopted the accounting guidance in ASU No. 2016-15, “ Classification of Certain Cash Receipts and Cash Payments. ” This standard addressed eight specific cash flow issues with the objective of reducing the existing diversity in practice. Implementation of this standard did not have a material effect on the consolidated financial statements and related disclosures. The Company applied this standard prospectively, where applicable, as there were no historical transactions affected by this implementation. Effective January 1, 2018, the Company adopted the accounting guidance in ASU No. 2017-01, “ Clarifying the Definition of a Business. ” This standard provided additional guidance on whether an integrated set of assets and activities constitutes a business. Implementation of this standard did not have a material effect on the consolidated financial statements and related disclosures. The Company applied this standard prospectively and, therefore, prior periods were not adjusted. In addition, the Company had no activity during the three months ended March 31, 2018 that was required to be treated differently under this ASU than previously issued guidance. Effective January 1, 2018, the Company adopted the accounting guidance in ASU No. 2017-09, “ Scope of Modification Accounting .” This standard provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. Implementation of this standard did not have a material effect on the consolidated financial statements and related disclosures. The Company applied this standard prospectively and, therefore, prior periods presented were not adjusted. There were no changes to the terms or conditions of current share-based payment awards during the three months ended March 31, 2018 . New Accounting Requirements and Disclosures In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “ Leases .” This standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The pronouncement is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and should be applied using a modified retrospective transition approach, with early application permitted. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, “ Measurement of Credit Losses on Financial Instruments .” This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The pronouncement is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption for the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, “ Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .” This standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The pronouncement is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted in any interim period. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations During the fourth quarter of 2016, the Company initiated a strategic restructuring of its business to enable a greater focus on its core businesses in energy chemistry and consumer and industrial chemistry. The Company executed a plan to sell or otherwise dispose of the Drilling Technologies and Production Technologies segments. An investment banking advisory services firm was engaged and actively marketed these segments. Disposal of the Drilling Technologies and Production Technologies reporting segments represented a strategic shift that would have a major effect on the Company’s operations and financial results. The Company met all of the criteria to classify the Drilling Technologies and Production Technologies segments’ assets and liabilities as held for sale in the fourth quarter of 2016. Effective December 31, 2016, the Company classified the assets, liabilities, and results of operations for these two segments as “Discontinued Operations” for all periods presented. On May 22, 2017 , the Company completed the sale of substantially all of the assets and transfer of certain specified liabilities and obligations of the Company’s Drilling Technologies segment to National Oilwell Varco, L.P. (“NOV”) for $17.0 million in cash consideration, subject to normal working capital adjustments, with $1.5 million held back by NOV for up to 18 months to satisfy potential indemnification claims. On May 23, 2017 , the Company completed the sale of substantially all of the assets and transfer of certain specified liabilities and obligations of the Company’s Production Technologies segment to Raptor Lift Solutions, LLC (“Raptor Lift”) for $2.9 million in cash consideration, with $0.4 million held back by Raptor Lift to satisfy potential indemnification claims. On August 16, 2017 , the Company completed the sale of substantially all of the remaining assets of the Company’s Drilling Technologies segment to Galleon Mining Tools, Inc. for $1.0 million in cash consideration and a note receivable of $1.0 million due in one year . The sale or disposal of the assets and transfer or liquidation of liabilities and obligations of these segments was completed in 2017. The Company has no continuing involvement with the discontinued operations. The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months ended March 31, 2017 (in thousands): Drilling Technologies Revenue $ 6,797 Cost of revenue (4,655 ) Selling, general and administrative (3,031 ) Gain on disposal of long-lived assets 73 Loss from operations (816 ) Other expense (71 ) Loss on write-down of assets held for sale (6,560 ) Loss before income taxes (7,447 ) Income tax benefit 2,713 Net loss from discontinued operations $ (4,734 ) Production Technologies Revenue $ 3,153 Cost of revenue (2,483 ) Selling, general and administrative (873 ) Research and development (271 ) Loss from operations (474 ) Other expense (36 ) Loss on write-down of assets held for sale (9,717 ) Loss before income taxes (10,227 ) Income tax benefit 3,726 Net loss from discontinued operations $ (6,501 ) Drilling Technologies and Production Technologies Loss from discontinued operations, net of tax $ (11,235 ) At December 31, 2017 , all remaining assets and liabilities of the discontinued operations were assumed by the Company’s continuing operations. These balances included $0.3 million of net accounts receivable, $1.4 million of sales price hold-back that will be received during 2018, and $1.4 million of accrued liabilities to be settled in 2018. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers Effective January 1, 2018, the Company adopted ASC 606 using the full retrospective method applied to those contracts which were not completed as of December 31, 2015. As a result of electing the full retrospective adoption approach, results for reporting periods beginning after December 31, 2015 are presented under ASC 606. There was no material impact upon the adoption of ASC 606. As revenue is primarily related to product sales accounted for at a point in time and service contracts that are primarily short-term in nature (typically less than 30 days), the Company did not record any adjustments to opening retained earnings at December 31, 2015 or for any periods previously presented. Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. In recognizing revenue for products and services, the Company determines the transaction price of purchase orders or contracts with customers, which may consist of fixed and variable consideration. Determining the transaction price may require significant judgment by management, which includes identifying performance obligations, estimating variable consideration to include in the transaction price, and determining whether promised goods or services can be distinguished in the context of the contract. Variable consideration typically consists of product returns and is estimated based on the amount of consideration the Company expects to receive. Revenue accruals are recorded on an ongoing basis to reflect updated variable consideration information. For certain contracts, the Company recognizes revenue under the percentage-of-completion method of accounting, measured by the percentage of “costs incurred to date” to the “total estimated costs of completion.” This percentage is applied to the “total estimated revenue at completion” to calculate proportionate revenue earned to date. For the three months ended March 31, 2018 and March 31, 2017 , the percentage-of-completion revenue accounted for less than 0.1% of total revenue during the respective time periods. This resulted in immaterial unfulfilled performance obligations and immaterial contract assets and/or liabilities, for which the Company did not record adjustments to opening retained earnings as of December 31, 2015 or for any periods previously presented. The vast majority of the Company’s products are sold at a point in time and service contracts are short-term in nature. Sales are billed on a monthly basis with payment terms customarily 30 days from invoice receipt. In addition, sales taxes are excluded from revenues. Disaggregation of Revenue The Company has disaggregated revenues by product sales (point-in-time revenue recognition) and service revenue (over-time revenue recognition), where product sales accounted for over 95% of total revenue for the three months ended March 31, 2018 and March 31, 2017 . The Company differentiates revenue and cost of revenue (excluding depreciation and amortization) based on whether the source of revenue is attributable to products or services. Revenue and cost of revenue (excluding depreciation and amortization) disaggregated by revenue source are as follows (in thousands): Three months ended March 31, 2018 2017 Revenue: Products $ 59,250 $ 78,514 Services 1,266 1,440 $ 60,516 $ 79,954 Cost of revenue (excluding depreciation and amortization): Products $ 44,514 $ 50,691 Services 1,187 934 $ 45,701 $ 51,625 Arrangements with Multiple Performance Obligations The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. Standalone selling prices are generally determined based on the prices charged to customers (“observable standalone price”) or an expected cost plus a margin approach. For combined products and services within a contract, the Company accounts for individual products and services separately if they are distinct (i.e. if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration is allocated between separate products and services within a contract based on the prices at the observable standalone price. For items that are not sold separately, the expected cost plus a margin approach is used to estimate the standalone selling price of each performance obligation. Contract Balances Under revenue contracts for both products and services, customers are invoiced once the performance obligations have been satisfied, at which point payment is unconditional. Accordingly, no revenue contracts give rise to contract assets or liabilities under ASC 606. Practical Expedients and Exemptions The Company has elected to apply several practical expedients as discussed below: • Sales commissions are expensed when incurred because the amortization period would have been one year or less. These costs are recorded within segment selling and administrative expenses. • The majority of the Company’s services are short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient in ASC 606-10-50-14, exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. • The Company’s payment terms are short-term in nature with settlements of one year or less. The Company has utilized the practical expedient in ASC 606-10-32-18, exempting the Company from adjusting the promised amount of consideration for the effects of a significant financing component given that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. • In most service contracts, the Company has the right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. For these contracts, the Company has utilized the practical expedient in ASC 606-10-55-18, allowing the Company to recognize revenue in the amount to which it has a right to invoice. Accordingly, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Supplemental cash flow information is as follows (in thousands): Three months ended March 31, 2018 2017 Supplemental non-cash investing and financing activities: Value of common stock issued in payment of accrued liability $ — $ 188 Exercise of stock options by common stock surrender — 7 Supplemental cash payment information: Interest paid $ 457 $ 553 Income taxes paid, net of refunds (received, net of payments) 71 (114 ) |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are as follows (in thousands): March 31, 2018 December 31, 2017 Raw materials $ 44,754 $ 42,750 Work-in-process 3,459 3,284 Finished goods 35,415 30,293 Inventories 83,628 76,327 Less reserve for excess and obsolete inventory (1,543 ) (568 ) Inventories, net $ 82,085 $ 75,759 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment are as follows (in thousands): March 31, 2018 December 31, 2017 Land $ 6,724 $ 6,724 Buildings and leasehold improvements 43,611 43,899 Machinery and equipment 41,506 41,548 Fixed assets in progress 5,605 4,298 Furniture and fixtures 1,719 2,002 Transportation equipment 2,364 2,200 Computer equipment and software 12,105 12,181 Property and equipment 113,634 112,852 Less accumulated depreciation (40,526 ) (39,019 ) Property and equipment, net $ 73,108 $ 73,833 Depreciation expense totaled $2.3 million and $2.3 million for the three months ended March 31, 2018 and 2017 , respectively. During the three months ended March 31, 2018 and 2017 , no impairments were recognized related to property and equipment. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Changes in the carrying value of goodwill for each reporting unit are as follows (in thousands): Energy Chemistry Technologies Consumer and Industrial Chemistry Technologies Total Balance at December 31, 2017 $ 37,180 $ 19,480 $ 56,660 Goodwill impairment recognized — — — Balance at March 31, 2018 $ 37,180 $ 19,480 $ 56,660 During the three months ended March 31, 2018 and 2017 , no impairments of goodwill were recognized. |
Other Intangible Assets
Other Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets | Other Intangible Assets Other intangible assets are as follows (in thousands): March 31, 2018 December 31, 2017 Cost Accumulated Amortization Cost Accumulated Amortization Finite-lived intangible assets: Patents and technology $ 17,457 $ 5,850 $ 17,310 $ 5,586 Customer lists 30,877 8,509 30,877 8,127 Trademarks and brand names 1,545 1,129 1,549 1,117 Total finite-lived intangible assets acquired 49,879 15,488 49,736 14,830 Deferred financing costs 1,791 193 1,791 96 Total amortizable intangible assets 51,670 $ 15,681 51,527 $ 14,926 Indefinite-lived intangible assets: Trademarks and brand names 11,630 11,630 Total other intangible assets $ 63,300 $ 63,157 Carrying value: Other intangible assets, net $ 47,619 $ 48,231 Finite-lived intangible assets acquired are amortized on a straight-line basis over two to 20 years . Amortization of finite-lived intangible assets acquired totaled $0.7 million and $0.7 million for the three months ended March 31, 2018 and 2017 , respectively. Amortization of deferred financing costs totaled $0.1 million and $0.1 million for the three months ended March 31, 2018 and 2017 , respectively. |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facility | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Credit Facility | Long-Term Debt and Credit Facility Long-term debt is as follows (in thousands): March 31, 2018 December 31, 2017 Long-term debt, classified as current: Borrowings under revolving credit facility $ 39,741 $ 27,950 Borrowing under the revolving credit agreement is classified as current debt as a result of the required lockbox arrangement and the subjective acceleration clause. Credit Facility On May 10, 2013 , the Company and certain of its subsidiaries (the “Borrowers”) entered into an Amended and Restated Revolving Credit, Term Loan and Security Agreement (as amended, the “Credit Facility”) with PNC Bank, National Association (“PNC Bank”). The Company may borrow under the Credit Facility for working capital, permitted acquisitions, capital expenditures and other corporate purposes. The Credit Facility continues in effect until May 10, 2022 . Under terms of the Credit Facility, the Company has total borrowing availability of $75 million under a revolving credit facility. A term loan was repaid in May 2017 and may not be re-borrowed. The Credit Facility is secured by substantially all of the Company’s domestic real and personal property, including accounts receivable, inventory, land, buildings, equipment and other intangible assets. The Credit Facility contains customary representations, warranties, and both affirmative and negative covenants. The Company was in compliance with all debt covenants at March 31, 2018 . In the event of default, PNC Bank may accelerate the maturity date of any outstanding amounts borrowed under the Credit Facility. The Credit Facility contains financial covenants to maintain a fixed charge coverage ratio and a leverage ratio, as well as establishes an annual limit on capital expenditures. The fixed charge coverage ratio is the ratio of (a) earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted for non-cash stock-based compensation and the loss from discontinued operations, less cash paid for taxes during the period to (b) all debt payments during the period. The fixed charge coverage ratio requirement began for the quarter ended March 31, 2017 at 1.00 to 1.00 and increased to 1.10 to 1.00 for the year ended December 31, 2017, and for each fiscal quarter thereafter. The leverage ratio (funded debt to adjusted EBITDA) requirement began for the six months ended June 30, 2017, at not greater than 5.50 to 1.00 and reduces to not greater than 3.00 to 1.00 for the year ending September 30, 2018, and thereafter. The annual limit on capital expenditures for 2018 and each fiscal year thereafter is $26 million . The annual limit on capital expenditures is reduced if the undrawn availability under the revolving credit facility falls below $15 million at any month-end. The Credit Facility restricts the payment of cash dividends on common stock and limits the amount that may be used to repurchase common stock and preferred stock. Beginning with fiscal year 2017, the Credit Facility includes a provision that 25% of EBITDA minus cash paid for taxes, dividends, debt payments, and unfunded capital expenditures, not to exceed $3.0 million for any fiscal year, be paid on the outstanding balance within 75 days of the fiscal year end. For the year ended December 31, 2017 , there was no additional payment required based on this provision. Each of the Company’s domestic subsidiaries is fully obligated for Credit Facility indebtedness as a borrower or as a guarantor. (a) Revolving Credit Facility Under the revolving credit facility, the Company may borrow up to $75 million through May 10, 2022 . This includes a sublimit of $10 million that may be used for letters of credit. The revolving credit facility is secured by substantially all of the Company’s domestic accounts receivable and inventory. At March 31, 2018 , eligible accounts receivable and inventory securing the revolving credit facility provided total borrowing capacity of $74.9 million under the revolving credit facility. Available borrowing capacity, net of outstanding borrowings, was $35.2 million at March 31, 2018 . The interest rate on advances under the revolving credit facility varies based on the fixed charge coverage ratio. Rates range (a) between PNC Bank’s base lending rate plus 1.5% to 2.0% or (b) between the London Interbank Offered Rate (LIBOR) plus 2.5% to 3.0% . PNC Bank’s base lending rate was 4.75% at March 31, 2018 . The Company is required to pay a monthly facility fee of 0.25% per annum, on any unused amount under the commitment based on daily averages. At March 31, 2018 , $39.7 million was outstanding under the revolving credit facility, with $0.7 million borrowed as base rate loans at an interest rate of 6.25% and $39.0 million borrowed as LIBOR loans at an interest rate of 4.38% . (b) Term Loan The amount borrowed under the term loan was reset to $10 million effective as of September 30, 2016 . Monthly principal payments of $0.2 million were required. On May 22, 2017 , the Company repaid the outstanding balance of the term loan. No additional amount may be re-borrowed under the term loan. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive. Potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2017 , since including them would have an anti-dilutive effect on loss per share due to the net loss incurred during the period. Securities convertible into shares of common stock that were not considered in the diluted loss per share calculation were 0.7 million stock options and 1.2 million restricted stock units for the three months ended March 31, 2017 . Basic and diluted earnings (loss) per common share are as follows (in thousands, except per share data): Three months ended March 31, 2018 2017 Income (loss) from continuing operations $ 67 $ (743 ) Loss from discontinued operations, net of tax — (11,235 ) Net income (loss) - Basic and Diluted $ 67 $ (11,978 ) Weighted average common shares outstanding - Basic 57,259 57,673 Assumed conversions: Incremental common shares from stock options — — Incremental common shares from restricted stock units — — Weighted average common shares outstanding - Diluted 57,259 57,673 Basic earnings (loss) per common share: Continuing operations $ — $ (0.01 ) Discontinued operations, net of tax — (0.19 ) Basic earnings (loss) per common share $ — $ (0.20 ) Diluted earnings (loss) per common share: Continuing operations $ — $ (0.01 ) Discontinued operations, net of tax — (0.19 ) Diluted earnings (loss) per common share $ — $ (0.20 ) |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement. • Level 1 — Quoted prices in active markets for identical assets or liabilities; • Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs. Fair Value of Other Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate fair value due to the short-term nature of these accounts. The Company had no cash equivalents at March 31, 2018 or December 31, 2017 . The carrying amount and estimated fair value of the Company’s long-term debt are as follows (in thousands): March 31, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value Borrowings under revolving credit facility 39,741 39,741 27,950 27,950 The carrying amount of borrowings under the revolving credit facility approximates its fair value because the interest rates are variable. Assets Measured at Fair Value on a Nonrecurring Basis The Company’s non-financial assets, including property and equipment, goodwill, and other intangible assets are measured at fair value on a non-recurring basis and are subject to fair value adjustment in certain circumstances. No impairments of any of these assets were recognized during the three months ended March 31, 2018 and 2017 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows: Three months ended March 31, 2018 2017 U.S. federal statutory tax rate (21.0 )% (35.0 )% State income taxes, net of federal benefit (37.0 ) (2.2 ) Non-U.S. income taxed at different rates 102.0 0.5 Reduction in tax benefit related to stock-based awards (217.7 ) 6.2 Non-deductible expenses (44.2 ) (0.7 ) Research and development credit 132.1 1.1 Other (15.1 ) — Effective income tax rate (100.9 )% (30.1 )% Fluctuations in effective tax rates have historically been impacted by permanent tax differences with no associated income tax impact, changes in state apportionment factors, including the effect on state deferred tax assets and liabilities, and non-U.S. income taxed at different rates. Comprehensive tax reform legislation enacted in December 2017, commonly referred to as the Tax Cuts and Jobs Acts (“2017 Tax Act”), made significant changes to U.S. federal income tax laws. The 2017 Tax Act, among other things, reduced the corporate income tax rate from 35% to 21% , partially limited the deductibility of business interest expense and net operating losses, provided additional limitations on the deductibility of executive compensation, imposed a one-time tax on unrepatriated earnings from certain foreign subsidiaries, taxed offshore earnings at reduced rates regardless of whether they are repatriated, and allowed the immediate deduction of certain new investments instead of deductions for depreciation expense over time. The Company has not completed its determination of the impacts of the 2017 Tax Act and recorded provisional amounts in its financial statements as of December 31, 2017. The Company has continued to evaluate the 2017 Tax Act and will adjust the provisional amounts as additional information is obtained. The ultimate impact of the 2017 Tax Act may differ from the provisional amounts recorded due to additional information becoming available, changes in interpretation of the 2017 Tax Act, and additional regulatory guidance that may be issued. No adjustments to the provisional amounts were recorded during the three months ended March 31, 2018 . In January 2017, the Internal Revenue Service notified the Company that it will examine the Company’s federal tax returns for the year ended December 31, 2014. No adjustments have been asserted, and management believes that sustained adjustments, if any, would not have a material effect on the Company’s financial position, results of operations, or liquidity. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Common Stock | Common Stock The Company’s Certificate of Incorporation, as amended November 9, 2009, authorizes the Company to issue up to 80 million shares of common stock, par value $0.0001 per share, and 100,000 shares of one or more series of preferred stock, par value $0.0001 per share. A reconciliation of changes in common shares issued during the three months ended March 31, 2018 is as follows: Shares issued at December 31, 2017 60,622,986 Issued as restricted stock award grants 538,305 Shares issued at March 31, 2018 61,161,291 Stock Repurchase Program In November 2012, the Company’s Board of Directors authorized the repurchase of up to $25 million of the Company’s common stock. Repurchases may be made in the open market or through privately negotiated transactions. Through March 31, 2018 , the Company has repurchased all $25.0 million of its common stock under this authorization. In June 2015, the Company’s Board of Directors authorized the repurchase of up to an additional $50 million of the Company’s common stock. Repurchases may be made in the open market or through privately negotiated transactions. Through March 31, 2018 , the Company has repurchased $0.3 million of its common stock under this authorization. During the three months ended March 31, 2018 and 2017 , the Company did not repurchase any shares of its outstanding common stock. At March 31, 2018 , the Company has $49.7 million remaining under its share repurchase programs. A covenant under the Company’s Credit Facility limits the amount that may be used to repurchase the Company’s common stock. At March 31, 2018 , this covenant limits additional share repurchases to $9.7 million . |
Business Segment, Geographic an
Business Segment, Geographic and Major Customer Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Business Segment, Geographic and Major Customer Information | Business Segment, Geographic and Major Customer Information Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by chief operating decision-makers in deciding how to allocate resources and assess performance. The operations of the Company are categorized into two reportable segments: Energy Chemistry Technologies and Consumer and Industrial Chemistry Technologies. • Energy Chemistry Technologies designs, develops, manufactures, packages, and markets specialty chemistries used in oil and natural gas well drilling, cementing, completion, and stimulation. In addition, the Company’s chemistries are used in specialized enhanced and improved oil recovery markets. Activities in this segment also include construction and management of automated material handling facilities and management of loading facilities and blending operations for oilfield services companies. • Consumer and Industrial Chemistry Technologies designs, develops, and manufactures products that are sold to companies in the flavor and fragrance industry and the specialty chemical industry. These technologies are used by beverage and food companies, fragrance companies, and companies providing household and industrial cleaning products. The Company evaluates performance based upon a variety of criteria. The primary financial measure is segment operating income. Various functions, including certain sales and marketing activities and general and administrative activities, are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, and income taxes are not allocated to reportable segments. Summarized financial information of the reportable segments is as follows (in thousands): For the three months ended March 31, Energy Chemistry Technologies Consumer and Industrial Chemistry Technologies Corporate and Other Total 2018 Net revenue from external customers $ 41,069 $ 19,447 $ — $ 60,516 Income (loss) from operations (166 ) 2,438 (9,057 ) (6,785 ) Depreciation and amortization 1,769 669 564 3,002 Capital expenditures 1,011 410 366 1,787 2017 Net revenue from external customers $ 60,765 $ 19,189 $ — $ 79,954 Income (loss) from operations 8,548 3,705 (12,876 ) (623 ) Depreciation and amortization 1,849 579 604 3,032 Capital expenditures 514 500 863 1,877 Assets of the Company by reportable segments are as follows (in thousands): March 31, 2018 December 31, 2017 Energy Chemistry Technologies $ 169,170 $ 177,797 Consumer and Industrial Chemistry Technologies 130,702 116,600 Corporate and Other 38,950 35,491 Total assets $ 338,822 $ 329,888 Geographic Information Revenue by country is based on the location where services are provided and products are used. No individual country other than the United States (“U.S.”) accounted for more than 10% of revenue. Revenue by geographic location is as follows (in thousands): Three months ended March 31, 2018 2017 U.S. $ 46,044 $ 64,649 Other countries 14,472 15,305 Total $ 60,516 $ 79,954 Long-lived assets held in countries other than the U.S. are not considered material to the consolidated financial statements. Major Customers Revenue from major customers, as a percentage of consolidated revenue, is as follows: Three months ended March 31, 2018 2017 Customer A * 12.1 % * This customer did not account for more than 10% of revenue. Over 95% of the revenue from this customer was for sales in the Energy Chemistry Technologies segment in 2017. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Class Action Litigation On March 30, 2017, the U.S. District Court for the Southern District of Texas granted the Company’s motion to dismiss the four consolidated putative securities class action lawsuits that were filed in November 2015, against the Company and certain of its officers. The lawsuits were previously consolidated into a single case, and a consolidated amended complaint had been filed. The consolidated amended complaint asserted that the Company made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. The complaint sought an award of damages in an unspecified amount on behalf of a putative class consisting of persons who purchased the Company’s common stock between October 23, 2014 and November 9, 2015, inclusive. The lead plaintiff has appealed the District Court’s decision granting the motion to dismiss. In January 2016, three derivative lawsuits were filed, two in the District Court of Harris County, Texas (which have since been consolidated into one case) and one in the United States District Court for the Southern District of Texas, on behalf of the Company against certain of its officers and its current directors. The lawsuits allege violations of law, breaches of fiduciary duty, and unjust enrichment against the defendants. The Company believes the lawsuits are without merit and intends to vigorously defend against all claims asserted. Discovery has not yet commenced. At this time, the Company is unable to reasonably estimate the outcome of this litigation. In addition, as previously disclosed, the U.S. Securities and Exchange Commission had opened an inquiry related to similar issues to those raised in the above-described litigation. On August 21, 2017, the Company received a letter from the staff of the SEC stating that the inquiry has been concluded and that the staff does not intend to recommend an enforcement action against the Company. Other Litigation The Company is subject to routine litigation and other claims that arise in the normal course of business. Management is not aware of any pending or threatened lawsuits or proceedings that are expected to have a material effect on the Company’s financial position, results of operations or liquidity. Concentrations and Credit Risk The majority of the Company’s revenue is derived from the oil and gas industry. Customers include major oilfield services companies, major integrated oil and natural gas companies, independent oil and natural gas companies, pressure pumping service companies, and state-owned national oil companies. This concentration of customers in one industry increases credit and business risks. The Company is subject to concentrations of credit risk within trade accounts receivable, as the Company does not generally require collateral as support for trade receivables. In addition, the majority of the Company’s cash is maintained at a major financial institution and balances often exceed insurable amounts. |
Organization and Significant 24
Organization and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements and accompanying footnotes (collectively the “Financial Statements”) reflect all adjustments, in the opinion of management, necessary for fair presentation of the financial condition and results of operations for the periods presented. All such adjustments are normal and recurring in nature. The Financial Statements, including selected notes, have been prepared in accordance with applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and do not include all information and disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for comprehensive financial statement reporting. These interim Financial Statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (“Annual Report”). A copy of the Annual Report is available on the SEC’s website, www.sec.gov , under the Company’s ticker symbol (“FTK”) or on Flotek’s website, www.flotekind.com . The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 . |
Discontinued Operations | During the fourth quarter of 2016, the Company classified the Drilling Technologies and Production Technologies segments as held for sale based on management’s intention to sell these businesses. The Company’s historical financial statements have been revised to present the operating results of the Drilling Technologies and Production Technologies segments as discontinued operations. The results of operations of Drilling Technologies and Production Technologies are presented as “Loss from discontinued operations” in the statement of operations and the related cash flows of these segments has been reclassified to discontinued operations for all periods presented. The assets and liabilities of the Drilling Technologies and Production Technologies segments have been reclassified to “Assets held for sale” and “Liabilities held for sale,” respectively, in the consolidated balance sheets for all periods presented. |
Revenue Recognition | Revenue Recognition The Company recognizes revenues to depict the transfer of control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Refer to Note 4 — “Revenue from Contracts with Customers” for further discussion on Revenue. The Company recognizes revenue based on the Accounting Standards Codification (“ASC”) 606 five-step model when all of the following criteria have been met: (i) a contract with a customer exists, (ii) performance obligations have been identified, (iii) the price to the customer has been determined, (iv) the price to the customer has been allocated to the performance obligations, and (v) performance obligations are satisfied. Products and services are sold with fixed or determinable prices. Certain sales include right of return provisions, which are considered when recognizing revenue and deferred accordingly. Deposits and other funds received in advance of delivery are deferred until the transfer of control is complete. For certain contracts, the Company recognizes revenue under the percentage-of-completion method of accounting, measured by the percentage of “costs incurred to date” to the “total estimated costs of completion.” This percentage is applied to the “total estimated revenue at completion” to calculate proportionate revenue earned to date. For the three months ended March 31, 2018 and March 31, 2017 , the percentage-of-completion revenue accounted for less than 0.1% of total revenue during the respective time periods. This resulted in immaterial unfulfilled performance obligations and immaterial contract assets and/or liabilities for which the Company did not record adjustments to opening retained earnings as of December 31, 2015 or for any periods previously presented. As an accounting policy election, the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications did not impact net income (loss). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Application of New Accounting Standards Effective January 1, 2018, the Company adopted the accounting guidance in Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers .” This standard supersedes most of the existing revenue recognition requirements in U.S. GAAP under Accounting Standards Codification (“ASC”) 605 and establishes a new revenue standard, ASC 606. This new standard requires entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASC 606 using the full retrospective method. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Refer to Note 4 — “Revenue from Contracts with Customers” for further information surrounding adoption of this new standard. Effective January 1, 2018, the Company adopted the accounting guidance in ASU No. 2016-15, “ Classification of Certain Cash Receipts and Cash Payments. ” This standard addressed eight specific cash flow issues with the objective of reducing the existing diversity in practice. Implementation of this standard did not have a material effect on the consolidated financial statements and related disclosures. The Company applied this standard prospectively, where applicable, as there were no historical transactions affected by this implementation. Effective January 1, 2018, the Company adopted the accounting guidance in ASU No. 2017-01, “ Clarifying the Definition of a Business. ” This standard provided additional guidance on whether an integrated set of assets and activities constitutes a business. Implementation of this standard did not have a material effect on the consolidated financial statements and related disclosures. The Company applied this standard prospectively and, therefore, prior periods were not adjusted. In addition, the Company had no activity during the three months ended March 31, 2018 that was required to be treated differently under this ASU than previously issued guidance. Effective January 1, 2018, the Company adopted the accounting guidance in ASU No. 2017-09, “ Scope of Modification Accounting .” This standard provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. Implementation of this standard did not have a material effect on the consolidated financial statements and related disclosures. The Company applied this standard prospectively and, therefore, prior periods presented were not adjusted. There were no changes to the terms or conditions of current share-based payment awards during the three months ended March 31, 2018 . New Accounting Requirements and Disclosures In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “ Leases .” This standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The pronouncement is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and should be applied using a modified retrospective transition approach, with early application permitted. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, “ Measurement of Credit Losses on Financial Instruments .” This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The pronouncement is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption for the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, “ Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .” This standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The pronouncement is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted in any interim period. The Company is currently evaluating the impact the pronouncement will have on the consolidated financial statements and related disclosures. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive. Potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2017 , since including them would have an anti-dilutive effect on loss per share due to the net loss incurred during the period. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement. • Level 1 — Quoted prices in active markets for identical assets or liabilities; • Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by chief operating decision-makers in deciding how to allocate resources and assess performance. The operations of the Company are categorized into two reportable segments: Energy Chemistry Technologies and Consumer and Industrial Chemistry Technologies. • Energy Chemistry Technologies designs, develops, manufactures, packages, and markets specialty chemistries used in oil and natural gas well drilling, cementing, completion, and stimulation. In addition, the Company’s chemistries are used in specialized enhanced and improved oil recovery markets. Activities in this segment also include construction and management of automated material handling facilities and management of loading facilities and blending operations for oilfield services companies. • Consumer and Industrial Chemistry Technologies designs, develops, and manufactures products that are sold to companies in the flavor and fragrance industry and the specialty chemical industry. These technologies are used by beverage and food companies, fragrance companies, and companies providing household and industrial cleaning products. The Company evaluates performance based upon a variety of criteria. The primary financial measure is segment operating income. Various functions, including certain sales and marketing activities and general and administrative activities, are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, and income taxes are not allocated to reportable segments. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of financial information has been segregated from continuing operations | The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months ended March 31, 2017 (in thousands): Drilling Technologies Revenue $ 6,797 Cost of revenue (4,655 ) Selling, general and administrative (3,031 ) Gain on disposal of long-lived assets 73 Loss from operations (816 ) Other expense (71 ) Loss on write-down of assets held for sale (6,560 ) Loss before income taxes (7,447 ) Income tax benefit 2,713 Net loss from discontinued operations $ (4,734 ) Production Technologies Revenue $ 3,153 Cost of revenue (2,483 ) Selling, general and administrative (873 ) Research and development (271 ) Loss from operations (474 ) Other expense (36 ) Loss on write-down of assets held for sale (9,717 ) Loss before income taxes (10,227 ) Income tax benefit 3,726 Net loss from discontinued operations $ (6,501 ) Drilling Technologies and Production Technologies Loss from discontinued operations, net of tax $ (11,235 ) |
Revenue from Contracts with C26
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Revenue and cost of revenue (excluding depreciation and amortization) disaggregated by revenue source are as follows (in thousands): Three months ended March 31, 2018 2017 Revenue: Products $ 59,250 $ 78,514 Services 1,266 1,440 $ 60,516 $ 79,954 Cost of revenue (excluding depreciation and amortization): Products $ 44,514 $ 50,691 Services 1,187 934 $ 45,701 $ 51,625 |
Supplemental Cash Flow Inform27
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Components of supplemental cash flow information | Supplemental cash flow information is as follows (in thousands): Three months ended March 31, 2018 2017 Supplemental non-cash investing and financing activities: Value of common stock issued in payment of accrued liability $ — $ 188 Exercise of stock options by common stock surrender — 7 Supplemental cash payment information: Interest paid $ 457 $ 553 Income taxes paid, net of refunds (received, net of payments) 71 (114 ) |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Components of inventory | Inventories are as follows (in thousands): March 31, 2018 December 31, 2017 Raw materials $ 44,754 $ 42,750 Work-in-process 3,459 3,284 Finished goods 35,415 30,293 Inventories 83,628 76,327 Less reserve for excess and obsolete inventory (1,543 ) (568 ) Inventories, net $ 82,085 $ 75,759 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Components of property and equipment | Property and equipment are as follows (in thousands): March 31, 2018 December 31, 2017 Land $ 6,724 $ 6,724 Buildings and leasehold improvements 43,611 43,899 Machinery and equipment 41,506 41,548 Fixed assets in progress 5,605 4,298 Furniture and fixtures 1,719 2,002 Transportation equipment 2,364 2,200 Computer equipment and software 12,105 12,181 Property and equipment 113,634 112,852 Less accumulated depreciation (40,526 ) (39,019 ) Property and equipment, net $ 73,108 $ 73,833 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying value of goodwill | Changes in the carrying value of goodwill for each reporting unit are as follows (in thousands): Energy Chemistry Technologies Consumer and Industrial Chemistry Technologies Total Balance at December 31, 2017 $ 37,180 $ 19,480 $ 56,660 Goodwill impairment recognized — — — Balance at March 31, 2018 $ 37,180 $ 19,480 $ 56,660 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of other intangible assets | Other intangible assets are as follows (in thousands): March 31, 2018 December 31, 2017 Cost Accumulated Amortization Cost Accumulated Amortization Finite-lived intangible assets: Patents and technology $ 17,457 $ 5,850 $ 17,310 $ 5,586 Customer lists 30,877 8,509 30,877 8,127 Trademarks and brand names 1,545 1,129 1,549 1,117 Total finite-lived intangible assets acquired 49,879 15,488 49,736 14,830 Deferred financing costs 1,791 193 1,791 96 Total amortizable intangible assets 51,670 $ 15,681 51,527 $ 14,926 Indefinite-lived intangible assets: Trademarks and brand names 11,630 11,630 Total other intangible assets $ 63,300 $ 63,157 Carrying value: Other intangible assets, net $ 47,619 $ 48,231 |
Long-Term Debt and Credit Fac32
Long-Term Debt and Credit Facility (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Components of long-term debt | Long-term debt is as follows (in thousands): March 31, 2018 December 31, 2017 Long-term debt, classified as current: Borrowings under revolving credit facility $ 39,741 $ 27,950 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Components of basic and diluted earnings per common share | Basic and diluted earnings (loss) per common share are as follows (in thousands, except per share data): Three months ended March 31, 2018 2017 Income (loss) from continuing operations $ 67 $ (743 ) Loss from discontinued operations, net of tax — (11,235 ) Net income (loss) - Basic and Diluted $ 67 $ (11,978 ) Weighted average common shares outstanding - Basic 57,259 57,673 Assumed conversions: Incremental common shares from stock options — — Incremental common shares from restricted stock units — — Weighted average common shares outstanding - Diluted 57,259 57,673 Basic earnings (loss) per common share: Continuing operations $ — $ (0.01 ) Discontinued operations, net of tax — (0.19 ) Basic earnings (loss) per common share $ — $ (0.20 ) Diluted earnings (loss) per common share: Continuing operations $ — $ (0.01 ) Discontinued operations, net of tax — (0.19 ) Diluted earnings (loss) per common share $ — $ (0.20 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Carrying value and estimated fair value of long-term debt | The carrying amount and estimated fair value of the Company’s long-term debt are as follows (in thousands): March 31, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value Borrowings under revolving credit facility 39,741 39,741 27,950 27,950 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of effective tax rate to the U.S. federal statutory tax rate | A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows: Three months ended March 31, 2018 2017 U.S. federal statutory tax rate (21.0 )% (35.0 )% State income taxes, net of federal benefit (37.0 ) (2.2 ) Non-U.S. income taxed at different rates 102.0 0.5 Reduction in tax benefit related to stock-based awards (217.7 ) 6.2 Non-deductible expenses (44.2 ) (0.7 ) Research and development credit 132.1 1.1 Other (15.1 ) — Effective income tax rate (100.9 )% (30.1 )% |
Common Stock (Tables)
Common Stock (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of reconciliation of changes in common shares issued | A reconciliation of changes in common shares issued during the three months ended March 31, 2018 is as follows: Shares issued at December 31, 2017 60,622,986 Issued as restricted stock award grants 538,305 Shares issued at March 31, 2018 61,161,291 |
Business Segment, Geographic 37
Business Segment, Geographic and Major Customer Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Financial information regarding reportable segments | Summarized financial information of the reportable segments is as follows (in thousands): For the three months ended March 31, Energy Chemistry Technologies Consumer and Industrial Chemistry Technologies Corporate and Other Total 2018 Net revenue from external customers $ 41,069 $ 19,447 $ — $ 60,516 Income (loss) from operations (166 ) 2,438 (9,057 ) (6,785 ) Depreciation and amortization 1,769 669 564 3,002 Capital expenditures 1,011 410 366 1,787 2017 Net revenue from external customers $ 60,765 $ 19,189 $ — $ 79,954 Income (loss) from operations 8,548 3,705 (12,876 ) (623 ) Depreciation and amortization 1,849 579 604 3,032 Capital expenditures 514 500 863 1,877 Assets of the Company by reportable segments are as follows (in thousands): March 31, 2018 December 31, 2017 Energy Chemistry Technologies $ 169,170 $ 177,797 Consumer and Industrial Chemistry Technologies 130,702 116,600 Corporate and Other 38,950 35,491 Total assets $ 338,822 $ 329,888 |
Revenue by geographic location | Revenue by geographic location is as follows (in thousands): Three months ended March 31, 2018 2017 U.S. $ 46,044 $ 64,649 Other countries 14,472 15,305 Total $ 60,516 $ 79,954 |
Revenue by major customer | Revenue from major customers, as a percentage of consolidated revenue, is as follows: Three months ended March 31, 2018 2017 Customer A * 12.1 % * This customer did not account for more than 10% of revenue. |
Organization and Significant 38
Organization and Significant Accounting Policies (Details) - country | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of countries Flotek actively markets products and services, over 20 countries (country) | 20 | |
Percentage of total revenue accounted for percentage-of-completion revenue, less than | 0.10% | 0.10% |
Discontinued Operations - Addit
Discontinued Operations - Additional Disclosures (Details) $ in Millions | Aug. 16, 2017USD ($) | May 22, 2017USD ($) | Dec. 31, 2016segment | Dec. 31, 2017USD ($) | May 23, 2017USD ($) |
Discontinued Operations and Disposal Groups [Abstract] | |||||
Number of segments with assets and liabilities classified as discontinued operations (segment) | segment | 2 | ||||
Discontinued Operations, Disposed of by Sale | Drilling Technologies | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash consideration | $ 1 | ||||
Note receivables | $ 1 | ||||
Notes receivable due, period | 1 year | ||||
Discontinued Operations, Disposed of by Sale | Production Technologies | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash consideration | $ 2.9 | ||||
Escrow deposit | $ 0.4 | ||||
Discontinued Operations, Disposed of by Sale | National Oilwell Varco, L.P. | Drilling Technologies | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash consideration | $ 17 | ||||
Escrow deposit | $ 1.5 | ||||
Term of escrow deposit | 18 months | ||||
Drilling Technologies And Production Technologies | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Accounts receivable | $ 0.3 | ||||
Sales price hold-back | 1.4 | ||||
Accrued liabilities | $ 1.4 |
Discontinued Operations - Summa
Discontinued Operations - Summary Of Financial Information That Has Been Segregated From Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Discontinued Operations: | ||
Net loss from discontinued operations | $ 0 | $ (11,235) |
Discontinued Operations, Held-for-sale | Drilling Technologies | ||
Discontinued Operations: | ||
Revenue | 6,797 | |
Cost of revenue | (4,655) | |
Selling, general and administrative | (3,031) | |
Gain on disposal of long-lived assets | 73 | |
Loss from operations | (816) | |
Other expense | (71) | |
Loss on write-down of assets held for sale | (6,560) | |
Loss before income taxes | (7,447) | |
Income tax benefit | 2,713 | |
Net loss from discontinued operations | (4,734) | |
Discontinued Operations, Held-for-sale | Production Technologies | ||
Discontinued Operations: | ||
Revenue | 3,153 | |
Cost of revenue | (2,483) | |
Selling, general and administrative | (873) | |
Research and development | (271) | |
Loss from operations | (474) | |
Other expense | (36) | |
Loss on write-down of assets held for sale | (9,717) | |
Loss before income taxes | (10,227) | |
Income tax benefit | 3,726 | |
Net loss from discontinued operations | (6,501) | |
Discontinued Operations, Held-for-sale | Drilling Technologies And Production Technologies | ||
Discontinued Operations: | ||
Gain (loss) from discontinued operations | $ (11,235) |
Revenue from Contracts with C41
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, excluding assessed tax | $ 60,516 | $ 79,954 |
Products | 44,514 | 50,691 |
Services | 1,187 | 934 |
Cost of revenue (excluding depreciation and amortization) | $ 45,701 | $ 51,625 |
Percentage of total revenue accounted for percentage-of-completion revenue, less than | 0.10% | 0.10% |
Product sales as a percentage of total revenue | 95.00% | 95.00% |
Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, excluding assessed tax | $ 59,250 | $ 78,514 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer, excluding assessed tax | $ 1,266 | $ 1,440 |
Supplemental Cash Flow Inform42
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Supplemental non-cash investing and financing activities: | ||
Value of common stock issued in payment of accrued liability | $ 0 | $ 188 |
Exercise of stock options by common stock surrender | 0 | 7 |
Supplemental cash payment information: | ||
Interest paid | 457 | 553 |
Income taxes paid, net of refunds (received, net of payments) | $ 71 | $ (114) |
Inventories - Components of Inv
Inventories - Components of Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Components of Inventory | ||
Raw materials | $ 44,754 | $ 42,750 |
Work-in-process | 3,459 | 3,284 |
Finished goods | 35,415 | 30,293 |
Inventories | 83,628 | 76,327 |
Less reserve for excess and obsolete inventory | (1,543) | (568) |
Inventories, net | $ 82,085 | $ 75,759 |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Components of Property, Plant and Equipment | ||
Property and equipment | $ 113,634 | $ 112,852 |
Less accumulated depreciation | (40,526) | (39,019) |
Property and equipment, net | 73,108 | 73,833 |
Land | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 6,724 | 6,724 |
Buildings and leasehold improvements | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 43,611 | 43,899 |
Machinery and equipment | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 41,506 | 41,548 |
Fixed assets in progress | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 5,605 | 4,298 |
Furniture and fixtures | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 1,719 | 2,002 |
Transportation equipment | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 2,364 | 2,200 |
Computer equipment and software | ||
Components of Property, Plant and Equipment | ||
Property and equipment | $ 12,105 | $ 12,181 |
Property and Equipment - Additi
Property and Equipment - Additional Disclosures (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense, inclusive of expense captured in cost of revenue | $ 2,300,000 | $ 2,300,000 |
Impairment of property and equipment | $ 0 | $ 0 |
Goodwill - Carrying Value of Go
Goodwill - Carrying Value of Goodwill (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill [Roll Forward] | ||
Balance, beginning of period | $ 56,660,000 | |
Goodwill impairment recognized | 0 | $ 0 |
Balance, end of period | 56,660,000 | |
Energy Chemistry Technologies | ||
Goodwill [Roll Forward] | ||
Balance, beginning of period | 37,180,000 | |
Goodwill impairment recognized | 0 | |
Balance, end of period | 37,180,000 | |
Consumer and Industrial Chemistry Technologies | ||
Goodwill [Roll Forward] | ||
Balance, beginning of period | 19,480,000 | |
Goodwill impairment recognized | 0 | |
Balance, end of period | $ 19,480,000 |
Goodwill - Additional Disclosur
Goodwill - Additional Disclosures (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairments of goodwill | $ 0 | $ 0 |
Other Intangible Assets - Sched
Other Intangible Assets - Schedule of other intangible assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | $ 51,670 | $ 51,527 |
Finite-lived intangible assets, accumulated amortization | 15,681 | 14,926 |
Total other intangible assets | 63,300 | 63,157 |
Other intangible assets, net | 47,619 | 48,231 |
Trademarks and brand names | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, cost | 11,630 | 11,630 |
Acquired Intangible Assets | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 49,879 | 49,736 |
Finite-lived intangible assets, accumulated amortization | 15,488 | 14,830 |
Patents and technology | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 17,457 | 17,310 |
Finite-lived intangible assets, accumulated amortization | 5,850 | 5,586 |
Customer lists | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 30,877 | 30,877 |
Finite-lived intangible assets, accumulated amortization | 8,509 | 8,127 |
Trademarks and brand names | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 1,545 | 1,549 |
Finite-lived intangible assets, accumulated amortization | 1,129 | 1,117 |
Deferred financing costs | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, cost | 1,791 | 1,791 |
Finite-lived intangible assets, accumulated amortization | $ 193 | $ 96 |
Other Intangible Assets - Addit
Other Intangible Assets - Additional Disclosures (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Amortization of finite-lived intangible assets | $ 700 | $ 700 |
Amortization of deferred financing costs | $ 96 | $ 130 |
Minimum | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 2 years | |
Maximum | ||
Schedule of Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Amortization period | 20 years |
Long-Term Debt and Credit Fac50
Long-Term Debt and Credit Facility - Components of Long-term debt (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Borrowings under revolving credit facility | ||
Long-term debt: | ||
Long-term debt | $ 39,741 | $ 27,950 |
Long-Term Debt and Credit Fac51
Long-Term Debt and Credit Facility - Additional Disclosures (Details) | Sep. 30, 2016USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2017 | May 10, 2013USD ($) |
Credit Facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Limit on capital expenditures | $ 26,000,000 | |||||
Covenant, percent of adjusted EBITDA which must be prepaid | 25.00% | |||||
Credit facility ceiling value applicable to 25% of adjusting EBITDA which must be paid | $ 3,000,000 | |||||
Covenant, maximum number of days from year end by which prepayment of 25% of adjusted EBITDA is due | 75 days | |||||
Credit Facility | Line of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 75,000,000 | |||||
Credit Facility | Line of Credit | Borrowings under revolving credit facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Fixed coverage charge ratio requirement | 1 | 1.10 | ||||
Leverage ratio requirement | 3 | 5.5 | ||||
Undrawn availability required | $ 15,000,000 | |||||
Credit facility, availability | 74,900,000 | |||||
Credit facility, available borrowing capacity, net of outstanding borrowings | $ 35,200,000 | |||||
Credit facility, commitment fee percentage | 0.25% | |||||
Credit facility, amount outstanding | $ 39,700,000 | |||||
Credit Facility | Line of Credit | Borrowings under revolving credit facility | PNC Bank Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Base lending rate | 4.75% | |||||
Credit facility, amount outstanding | $ 700,000 | |||||
Credit facility, interest rate at period end | 6.25% | |||||
Credit Facility | Line of Credit | Borrowings under revolving credit facility | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, amount outstanding | $ 39,000,000 | |||||
Credit facility, interest rate at period end | 4.38% | |||||
Credit Facility | Line of Credit | Borrowings under revolving credit facility | Minimum | PNC Bank Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, variable percentage rate spread | 1.50% | |||||
Credit Facility | Line of Credit | Borrowings under revolving credit facility | Minimum | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, variable percentage rate spread | 2.50% | |||||
Credit Facility | Line of Credit | Borrowings under revolving credit facility | Maximum | PNC Bank Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, variable percentage rate spread | 2.00% | |||||
Credit Facility | Line of Credit | Borrowings under revolving credit facility | Maximum | LIBOR | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, variable percentage rate spread | 3.00% | |||||
Credit Facility | Letter of Credit | Borrowings under revolving credit facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | 10,000,000 | |||||
Credit Facility | Term loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt, face amount | $ 10,000,000 | |||||
Monthly principal payments | $ 200,000 | |||||
Tenth Amendment to the Credit Facility | Line of Credit | Borrowings under revolving credit facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 75,000,000 |
Earnings (Loss) Per Share - Add
Earnings (Loss) Per Share - Additional Disclosures (Details) shares in Millions | 3 Months Ended |
Mar. 31, 2017shares | |
Restricted Stock Units | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Anti-dilutive securities excluded from calculation of earnings per share (in shares) | 1.2 |
Stock Options | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Anti-dilutive securities excluded from calculation of earnings per share (in shares) | 0.7 |
Earnings (Loss) Per Share - Bas
Earnings (Loss) Per Share - Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Class of Stock [Line Items] | ||
Income (loss) from continuing operations | $ 67 | $ (743) |
Loss from discontinued operations, net of tax | 0 | (11,235) |
Net income (loss) | $ 67 | $ (11,978) |
Weighted average common shares outstanding - Basic (in shares) | 57,259 | 57,673 |
Assumed conversions: | ||
Weighted average common shares outstanding - Diluted (in shares) | 57,259 | 57,673 |
Basic earnings (loss) per common share: | ||
Continuing operations (in dollars per share) | $ 0 | $ (0.01) |
Discontinued operations, net of tax (in dollars per share) | 0 | (0.19) |
Basic earnings (loss) per common share (in dollars per share) | 0 | (0.20) |
Diluted earnings (loss) per common share: | ||
Continuing operations (in dollars per share) | 0 | (0.01) |
Discontinued operations, net of tax (in dollars per share) | 0 | (0.19) |
Diluted earnings (loss) per common share (in dollars per share) | $ 0 | $ (0.20) |
Stock Options | ||
Assumed conversions: | ||
Incremental common shares from stock options and restricted stock units (in shares) | 0 | 0 |
Restricted Stock Units | ||
Assumed conversions: | ||
Incremental common shares from stock options and restricted stock units (in shares) | 0 | 0 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Disclosures (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |||
Cash equivalents | $ 0 | $ 0 | |
Impairments of goodwill | $ 0 | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Other Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Borrowings under revolving credit facility | $ 39,741 | $ 27,950 |
Fair Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Borrowings under revolving credit facility | $ 39,741 | $ 27,950 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Effective Tax Rate (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory tax rate | (21.00%) | (35.00%) |
State income taxes, net of federal benefit | (37.00%) | (2.20%) |
Non-U.S. income taxed at different rates | 102.00% | 0.50% |
Reduction in tax benefit related to stock-based awards | (217.70%) | 6.20% |
Non-deductible expenses | (44.20%) | (0.70%) |
Research and development credit | 132.10% | 1.10% |
Other | (15.10%) | (0.00%) |
Effective income tax rate | (100.90%) | (30.10%) |
Common Stock - Reconciliation o
Common Stock - Reconciliation of Changes in Common Shares Issued and Additional Disclosures (Details) | Nov. 09, 2009series$ / sharesshares | Mar. 31, 2018$ / sharesshares | Dec. 31, 2017$ / sharesshares |
Stockholders' Equity, Number of Shares, Par Value and Other Disclosures [Abstract] | |||
Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 | 80,000,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 100,000 | 100,000 | 100,000 |
Preferred stock, minimum number of series authorized (series) | series | 1 | ||
Preferred stock, at par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Reconciliation of changes in common shares issued | |||
Shares issued, beginning balance (in shares) | 60,622,986 | ||
Issued as restricted stock award grants (in shares) | 538,305 | ||
Shares issued, ending balance (in shares) | 61,161,291 |
Common Stock - Stock Repurchase
Common Stock - Stock Repurchase Program (Details) - USD ($) | 3 Months Ended | 34 Months Ended | 65 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2018 | Jun. 30, 2015 | Nov. 30, 2012 | |
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock repurchase program, remaining amount | $ 49,700,000 | $ 49,700,000 | $ 49,700,000 | |||
Credit Facility | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Share repurchase covenant | $ 9,700,000 | |||||
Share Repurchase Program, November 2012 | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock repurchase program, authorized amount (up to) | $ 25,000,000 | |||||
Repurchase of common stock | $ 25,000,000 | |||||
Repurchase of common stock during period (in shares) | 0 | 0 | ||||
Share Repurchase Program, June 2015 | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock repurchase program, authorized amount (up to) | $ 50,000,000 | |||||
Repurchase of common stock | $ 300,000 |
Business Segment, Geographic 59
Business Segment, Geographic and Major Customer Information - Additional Disclosures (Details) - segment | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments (segment) | 2 | |
Customer Concentration Risk | Sales | Major Customers | Energy Chemistry Technologies | ||
Segment Reporting Information [Line Items] | ||
Percentage of revenue by major customers | 95.00% |
Business Segment, Geographic 60
Business Segment, Geographic and Major Customer Information - Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Sep. 30, 2017 | Mar. 31, 2017 | |
Summarized financial information regarding reportable segments | |||
Net revenue from external customers | $ 60,516 | $ 79,954 | |
Income (loss) from operations | (6,785) | $ (6,785) | (623) |
Depreciation and amortization | 3,002 | 3,032 | |
Capital expenditures | 1,787 | 1,877 | |
Operating Segments | Energy Chemistry Technologies | |||
Summarized financial information regarding reportable segments | |||
Net revenue from external customers | 41,069 | 60,765 | |
Income (loss) from operations | (166) | 8,548 | |
Depreciation and amortization | 1,769 | 1,849 | |
Capital expenditures | 1,011 | 514 | |
Operating Segments | Consumer and Industrial Chemistry Technologies | |||
Summarized financial information regarding reportable segments | |||
Net revenue from external customers | 19,447 | 19,189 | |
Income (loss) from operations | 2,438 | 3,705 | |
Depreciation and amortization | 669 | 579 | |
Capital expenditures | 410 | 500 | |
Corporate and Other | |||
Summarized financial information regarding reportable segments | |||
Net revenue from external customers | 0 | 0 | |
Income (loss) from operations | (9,057) | (12,876) | |
Depreciation and amortization | 564 | 604 | |
Capital expenditures | $ 366 | $ 863 |
Business Segment, Geographic 61
Business Segment, Geographic and Major Customer Information - Assets by Reportable Segments (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | ||
Assets | $ 338,822 | $ 329,888 |
Operating Segments | Energy Chemistry Technologies | ||
Segment Reporting Information [Line Items] | ||
Assets | 169,170 | 177,797 |
Operating Segments | Consumer and Industrial Chemistry Technologies | ||
Segment Reporting Information [Line Items] | ||
Assets | 130,702 | 116,600 |
Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 38,950 | $ 35,491 |
Business Segment, Geographic 62
Business Segment, Geographic and Major Customer Information - Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue | $ 60,516 | $ 79,954 |
U.S. | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue | 46,044 | 64,649 |
Other countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue | $ 14,472 | $ 15,305 |
Business Segment, Geographic 63
Business Segment, Geographic and Major Customer Information - Major Customers (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Customer Concentration Risk | Sales | Customer A | |
Segment Reporting Information [Line Items] | |
Percentage of revenue by major customers | 12.10% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - lawsuit | Mar. 30, 2017 | Jan. 31, 2016 | Mar. 31, 2018 |
Punitive Lawsuits Filed in the United States District Court for the Southern District of Texas | |||
Loss Contingencies [Line Items] | |||
Number of lawsuits dismissed (lawsuit) | 4 | ||
Number of lawsuits filed (lawsuit) | 1 | ||
Derivative Lawsuit Against Officers and Directors | |||
Loss Contingencies [Line Items] | |||
Number of lawsuits filed (lawsuit) | 3 | ||
Derivative Lawsuit Filed in District Court of Harris County, Texas | |||
Loss Contingencies [Line Items] | |||
Number of lawsuits filed (lawsuit) | 2 | 1 |