SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑ Quarterly Report Pursuant to Section 13 or 15(d) of
For the quarterly period ended
OR
☐ Transition Report Pursuant to Section 13 or 15(d) of
For the transition period from ______ to ______
Commission file number: 001-36053
FRANK'S INTERNATIONAL N.V.
(Exact name of registrant as specified in its charter)
The Netherlands | 98-1107145 | |||||||||||||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification number) | |||||||||||||
Mastenmakersweg 1 | |||||||||||||||||||||
1786 PB Den Helder | |||||||||||||||||||||
The Netherlands | Not Applicable | ||||||||||||||||||||
(Address of principal executive offices) | (Zip Code) | ||||||||||||||||||||
Registrant’s telephone number, including area code: +31 (0)22 367 0000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, €0.01 par value | FI | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☑ | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
☐ | Emerging growth company | ☐ | |||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of October 27, 2017,July 29, 2021, there were 223,107,260228,397,296 shares of common stock, €0.01 par value per share, outstanding.
Page | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements | |||||||
Condensed Consolidated Balance Sheets (Unaudited) at | ||||||||
Condensed Consolidated Statements of Operations (Unaudited) for the Three and | ||||||||
Condensed Consolidated Statements of Comprehensive | ||||||||
Condensed Consolidated Statements of | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) for the | ||||||||
Notes to the Unaudited Condensed Consolidated Financial Statements | ||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and | |||||||
| Results of Operations | ||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||||||
Item 4. | Controls and Procedures | |||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | |||||||
Item 1A. | Risk Factors | |||||||
Item | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
Item 6. | Exhibits | |||||||
Signatures | ||||||||
Item 1. FRANK’S INTERNATIONAL N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) June 30, December 31, 2021 2020 Assets (Unaudited) Current assets: Cash and cash equivalents Restricted cash Short-term investments Accounts receivables, net Inventories, net Assets held for sale Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets, net Deferred tax assets, net Operating lease right-of-use assets Other assets Total assets Liabilities and Equity Current liabilities: Accounts payable and accrued liabilities Current portion of operating lease liabilities Deferred revenue Other current liabilities Total current liabilities Deferred tax liabilities Non-current operating lease liabilities Other non-current liabilities Total liabilities Commitments and contingencies (Note 14) Stockholders’ equity: Common stock, €0.01 par value, 798,096,000 shares authorized, 231,246,958 and 228,806,301 shares issued and 228,188,566 and 226,324,559 shares outstanding Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Treasury stock (at cost), 3,058,392 and 2,481,742 shares Total stockholders’ equity Total liabilities and equity The accompanying notes are an integral part of these condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Revenue: Services Products Total revenue Operating expenses: Cost of revenue, exclusive of depreciation and amortization Services Products General and administrative expenses Depreciation and amortization Goodwill impairment Severance and other charges, net Gain on disposal of assets Operating loss Other income (expense): Other income, net Interest income (expense), net Foreign currency gain (loss) Total other income (expense) Loss before income taxes Income tax expense (benefit) Net loss Loss per common share: Basic and diluted Weighted average common shares outstanding: Basic and diluted The accompanying notes are an integral part of these condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net loss Other comprehensive income (loss): Foreign currency translation adjustments Total other comprehensive income (loss) Comprehensive loss The accompanying notes are an integral part of these condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) Six Months Ended June 30, 2020 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Treasury Stockholders’ Shares Value Capital Deficit Income (Loss) Stock Equity Balances at December 31, 2019 Cumulative effect of accounting change Net loss Foreign currency translation adjustments Equity-based compensation expense Common shares issued upon vesting of share-based awards Common shares issued for employee stock purchase plan Treasury shares withheld Share repurchase program Balances at March 31, 2020 Net loss Foreign currency translation adjustments Equity-based compensation expense Common shares issued upon vesting of share-based awards Treasury shares withheld Share repurchase program Balances at June 30, 2020 The accompanying notes are an integral part of these condensed consolidated financial statements. FRANK’S INTERNATIONAL N.V. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) Six Months Ended June 30, 2021 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Treasury Stockholders’ Shares Value Capital Deficit Income (Loss) Stock Equity Balances at December 31, 2020 Net loss Foreign currency translation adjustments Equity-based compensation expense Common shares issued upon vesting of share-based awards Common shares issued for employee stock purchase plan Treasury shares withheld Balances at March 31, 2021 Net loss Foreign currency translation adjustments Equity-based compensation expense Common shares issued upon vesting of share-based awards Treasury shares withheld Balances at June 30, 2021 The accompanying notes are an integral part of these condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Six Months Ended June 30, 2021 2020 Cash flows from operating activities Net loss Adjustments to reconcile net loss to cash from operating activities Depreciation and amortization Equity-based compensation expense Goodwill impairment Loss on asset impairments and retirements Amortization of deferred financing costs Deferred tax provision (benefit) Provision for (recovery of) bad debts Gain on disposal of assets Changes in fair value of investments Other Changes in operating assets and liabilities Accounts receivable Inventories Other current assets Other assets Accounts payable and accrued liabilities Deferred revenue Other non-current liabilities Net cash provided by (used in) operating activities Cash flows from investing activities Purchases of property, plant and equipment and intangibles Proceeds from sale of assets Proceeds from sale of investments Purchase of investments Investment in intellectual property Other Net cash used in investing activities Cash flows from financing activities Repayments of borrowings Treasury shares withheld for taxes Treasury share repurchase Proceeds from the issuance of ESPP shares Net cash used in financing activities Effect of exchange rate changes on cash Net decrease in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period The accompanying notes are an integral part of these condensed consolidated financial statements. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note Nature of Business Frank’s International N.V. The impact of the Coronavirus Disease 2019 (“COVID-19”) pandemic and related economic, business and market disruptions continue to evolve, and its future effects are uncertain. The continued impact of COVID-19 on our business will depend on many factors, many of which are beyond management's control and knowledge. It is therefore difficult for management to assess or predict with accuracy the broad future effects of this health crisis on the global economy, the energy industry or the Company. As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows. Pending Merger with Expro Group Holdings International Limited On March 10, 2021, FINV and New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of FINV (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Expro Group Holdings International Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands (“Expro”), pursuant to which Expro will merge with and into Merger Sub, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of FINV (the “Merger”). If the Merger is completed, each ordinary share of Expro common stock, par value $0.01 per share (“Expro Ordinary Shares”), issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”), will be converted into the right to receive a number of shares of Frank’s common stock equal to 7.2720 (subject to certain adjustments under the Merger Agreement, the “Exchange Ratio”). Upon consummation of the transactions contemplated by the Merger Agreement and the Plan of Merger (as defined in the Merger Agreement) (collectively, the “Transactions”), FINV expects that its current shareholders will own approximately 35% of the Company after completion of the Merger and related transactions (such entity, the “Combined Company”), and current Expro shareholders will own approximately 65% of the Combined Company. Following the Merger, the name of FINV will be changed to “Expro Group Holdings N.V.” The closing of the Transactions, which is expected to occur during the third quarter of 2021, is subject to the satisfaction or waiver of closing conditions, including, among others, the requisite approval of the shareholders of each of FINV and Expro pursuant to the terms of the Merger Agreement. The Merger Agreement contains termination rights for each of FINV and Expro, including, among others, a termination right for each party if the consummation of the Merger does not occur on or before 5:00 p.m. Houston, Texas time on October 31, 2021 (the “End Date”), subject to certain exceptions; provided, that if as of the End Date, all of the conditions precedent to closing of the Transactions under the Merger Agreement, other than certain specified conditions, have been satisfied, the End Date will automatically be extended to January 31, 2022. Upon termination of the Merger Agreement under specified circumstances, including, generally, the termination by Expro in the event of FINV's entry into an agreement with respect to an alternative acquisition proposal, or a change of recommendation by the FINV board of supervisory directors and the board of managing directors of FINV (collectively, the “Board”) in each case, prior to the time the FINV shareholder approval is obtained, FINV would be required to pay Expro a termination fee of $37.5 million. Upon termination of the Merger Agreement under specified circumstances, including, generally, the termination by FINV in the event of Expro’s entry into an agreement with respect to an alternative acquisition proposal, or a change of recommendation by Expro’s board of directors (the “Expro Board”), in each case, prior to the time the Expro shareholder approval is obtained, Expro would be required to pay FINV a termination fee of $71.5 million. In connection with the Merger Agreement, FINV, Frank’s International C.V. (“FICV”) and Mosing Holdings, LLC (“Mosing Holdings”) entered into an Amended and Restated Tax Receivable Agreement (the “A&R TRA”). Pursuant to the A&R TRA, FINV, FICV and Mosing Holdings have agreed, among other things to settle the early termination payment obligation that would otherwise be owed to Mosing Holdings under the TRA as a result of the Merger by the payment by FINV to Mosing Holdings of (i) $15 million cash at the closing of the Transactions and (ii) certain other contingent payments in the future in the event the Combined Company realizes cash tax savings from tax attributes covered under the TRA during the ten year period following the Closing Date in excess of $18,057,000, as more fully described in the A&R TRA. The terms of the A&R TRA are conditioned upon and subject to the closing of the Transactions and the payment to Mosing Holdings of the $15 million cash payment at the closing of the Transactions. If such conditions do not occur, the A&R TRA will be terminated and will be null and void and the TRA will remain in effect in accordance with its terms. Basis of Presentation The condensed consolidated financial statements of FINV for the three and Our accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. The consolidated balance sheet at December 31, The condensed consolidated financial statements have been prepared on a historical cost basis using the United States dollar as the reporting currency. Our functional currency is primarily the United States dollar. FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Reclassifications Certain prior-period amounts have been reclassified to conform to the current period’s presentation. These reclassifications Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board We consider the applicability and impact of all In June 2016, the FASB issued new accounting guidance for credit losses on financial instruments. The guidance includes the replacement of the “incurred loss” approach for recognizing credit losses on financial assets, including trade receivables, with a methodology that reflects expected credit losses, which considers historical and current information as well as reasonable and supportable forecasts. Note 2—Cash, Cash Equivalents and Amounts reported in the June 30, December 31, 2021 2020 Cash and cash equivalents Restricted cash Total cash, cash equivalents and restricted cash shown in the statements of cash flows Restricted cash primarily consists of cash deposits that collateralize our credit card program. Cash paid for income taxes, net, was $2.6 million and $8.6 million for the six months ended June 30, 2021 and 2020, respectively. Note 3—Accounts Receivable, net Accounts receivable at June 30, 2021, and December 31, 2020, were as follows (in thousands): June 30, December 31, 2021 2020 Trade accounts receivable, net of allowance for credit losses of $4,333 and $3,857, respectively Unbilled receivables Taxes receivable Affiliated (1) Other receivables Total accounts receivable, net (1) Amounts represent expenditures on behalf of non-consolidated FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note Inventories at June 30, 2021, and December 31, 2020, were as follows (in thousands): June 30, December 31, 2021 2020 Pipe and connectors, net of allowance of $15,662 and $16,819, respectively Finished goods, net of allowance of $84 and $84, respectively Work in progress Raw materials, components and supplies, net of allowance of $106 and none, respectively Total inventories, net The increase in inventories was driven by higher activity levels, particularly in the Western Hemisphere. Note 5—Property, Plant and Equipment The following is a summary of property, plant and equipment at Estimated Useful Lives June 30, December 31, in Years 2021 2020 Land Land improvements Buildings and improvements Rental machinery and equipment Machinery and equipment - other Furniture, fixtures and computers Automobiles and other vehicles Leasehold improvements 7 - 15, or lease term if shorter Construction in progress - machinery and equipment Less: Accumulated depreciation Total property, plant and equipment, net During the FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS During the first quarter of 2021, a building with a net book value of $1.9 million was sold, resulting in a gain of $0.2 million. In addition, a building with a net book value of $2.6 million met the criteria to be classified as held for sale During the second quarter of 2020, we sold a building classified as held for sale for $5.4 million The following table presents the depreciation and amortization expense associated with each line item for the Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Services Products General and administrative expenses Total Note 6—Goodwill and Intangible Assets Goodwill Goodwill is not subject to amortization and is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired. We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then a quantitative impairment test is performed. The quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss. The test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference. We complete our assessment of goodwill impairment as of October 31 each year. As a result of the decline in oil prices due to the ongoing COVID-19 pandemic and the Organization of Petroleum Exporting Countries (“OPEC”) and Russia price war in early 2020, we identified that it was more likely than not that the fair value of goodwill within our Cementing Equipment reporting unit was less than its carrying value. Based on the result of our goodwill impairment test as of March 31, 2020, we recorded a $57.1 million impairment charge to goodwill, which is included in goodwill impairment on the condensed consolidated statements of operations. We used the income approach to estimate the fair value of the Cementing Equipment reporting unit, but also considered the market approach to validate the results. The income approach estimates the fair value by discounting the reporting unit’s estimated future cash flows using an estimated discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results and involves significant judgment in the selection of the appropriate peer group companies and valuation multiples. The inputs used in the determination of fair value are generally level 3 inputs. FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for the reporting unit and the discount rate. We selected the assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions and estimated growth rates. Our estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, actual results may differ from those used in our valuation which could result in additional impairment charges in the future. Assuming all other assumptions and inputs used in the discounted cash flow analysis were held constant, a 50 basis point increase in the discount rate assumption would have increased the goodwill impairment charge by approximately $4.3 million. NaN goodwill impairment was recorded during the three and six months ended June 30, 2021. At June 30, 2021, goodwill is allocated to our reportable segments as follows: Cementing Equipment - approximately $24.1 million; Tubular Running Services - approximately $18.7 million. Intangible Assets Identifiable intangible assets are amortized using the straight-line method over the estimated useful lives of the assets. We evaluate impairment of our intangible assets on an asset group basis whenever circumstances indicate that the carrying value may not be recoverable. Intangible assets deemed to be impaired are written down to their fair value using a discounted cash flow model and, if available, comparable market values. The following table provides information related to our intangible assets as of June 30, 2021, and December 31, 2020 (in thousands): June 30, 2021 December 31, 2020 Gross Carrying Amount Accumulated Amortization Total Gross Carrying Amount Accumulated Amortization Total Customer Relationships Intellectual Property Total intangible assets Our intangible assets are primarily associated with our Cementing Equipment and Tubular Running Services segments. Amortization expense for intangible assets was $1.2 million and $0.9 million for the three months ended June 30, 2021 and 2020, respectively and $2.3 million and $2.6 million for the six months ended June 30, 2021 and 2020, respectively. During the first quarter of 2020, the results of the Company's test for impairment of goodwill in the Cementing Equipment segment as a result of the negative market indicators described above was a triggering event that indicated that our intangible assets in this segment were impaired. Impairment testing performed in the first quarter resulted in the determination that certain intangible assets were not recoverable and that the estimated fair value was below the carrying value. As a result, during the six months ended June 30, 2020, impairment charges of $4.7 million were recorded associated with certain customer relationships and intellectual property intangible assets in our Cementing Equipment segment, which are included in severance and other charges, net on the condensed consolidated statements of operations. No intangible asset impairment were recorded during the three or six months ended June 30, 2021. Please see Note Note 7—Other Assets Other assets at June 30, December 31, 2021 2020 Cash surrender value of life insurance policies (1) Deposits Other Total other assets (1) See Note FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note Accounts payable and June 30, December 31, 2021 2020 Accounts payable Accrued compensation Accrued property and other taxes Accrued severance and other charges Income taxes Affiliated (1) Accrued purchase orders and other Total accounts payable and accrued liabilities (1) Represents amounts owed to non-consolidated affiliates. Note Credit Facility Asset Based Revolving Credit Facility On November 5, 2018, FICV, Frank’s International, LLC and Blackhawk, as borrowers, and FINV, certain of FINV’s subsidiaries, including FICV, Frank’s International, LLC, Blackhawk, Frank’s International GP, LLC, Frank’s International, LP, Frank’s International LP B.V., Frank’s International Partners B.V., Frank’s International Management B.V., Blackhawk Intermediate Holdings, LLC, Blackhawk Specialty Tools, LLC, and Trinity Tool Rentals, L.L.C., as guarantors, entered into a All obligations under the ABL Credit Facility The ABL Credit Facility contains various covenants As of In connection with the FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note We follow fair value measurement authoritative accounting guidance for measuring fair values of assets and liabilities in financial statements. We have consistently used the same valuation techniques for all periods presented. Please see Note A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of Significant Quoted Prices Other Significant in Active Observable Unobservable Markets Inputs Inputs (Level 1) (Level 2) (Level 3) Total June 30, 2021 Assets: Investments: Cash surrender value of life insurance policies - deferred compensation plan Marketable securities - other Liabilities: Deferred compensation plan December 31, 2020 Assets: Investments: Cash surrender value of life insurance policies - deferred compensation plan Marketable securities - other Liabilities: Deferred compensation plan Our investments associated with our deferred compensation plan consist primarily of the cash surrender value of life insurance policies and are included in other assets on the condensed consolidated balance sheets. Our investments change as a result of contributions, payments, and fluctuations in the market. Our liabilities associated with our deferred compensation plan are included in other non-current liabilities on the condensed consolidated balance sheets. Assets and liabilities, measured using significant observable inputs, are reported at fair value based on Assets and Liabilities Measured at Fair Value on a Non-recurring Basis We apply the provisions of the fair value measurement standard to our non-recurring, non-financial measurements including business combinations and assets identified as held for sale, as well as impairment related to goodwill and other long-lived assets. We perform our goodwill impairment assessment for each reporting unit by comparing the When conducting an impairment test on long-lived assets, other The impairment assessments discussed above incorporate inherent uncertainties, including projected commodity pricing, supply and demand for our services and future market conditions, which are difficult to predict in FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Other Fair Value Considerations The carrying values on our condensed consolidated balance Note We have engaged in certain transactions with other companies related to us by common ownership. We have entered into various operating leases to lease facilities from these affiliated companies. Tax Receivable Agreement Mosing Holdings The tax receivable agreement (the The estimation of the The payment obligations under the TRA are Because FINV is a holding company with no operations of its own, its ability to make payments under the TRA is dependent on the ability of In connection with the Merger Agreement, FINV, FICV and Mosing Holdings entered into the A&R TRA, pursuant to which FINV, FICV and Mosing Holdings have agreed, among other things, to settle the early termination payment obligation that would otherwise be owed to Mosing Holdings under the TRA as a result of the Merger by the payment by FINV to Mosing Holdings of (i) $15 million cash at the closing of the Transactions and (ii) certain other contingent payments in the future in the event the Combined Company realizes cash tax savings from tax attributes covered under the TRA during the ten year period following the Closing Date (as defined in the Merger Agreement) in excess of $18,057,000, as more fully described in the A&R TRA. The terms of the A&R TRA are conditioned upon and subject to the closing of the Transactions and the payment to Mosing Holdings of the $15 million cash payment at the closing of the Transactions. If such conditions do not occur, the A&R TRA will be terminated and will be null and void, and the TRA will remain in effect in accordance with its terms. Please see Note 1—Basis of Presentation in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional details regarding the Merger, the Merger Agreement and the Transactions. FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note Basic The following table summarizes the basic and diluted Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Numerator Net loss Denominator Basic and diluted weighted average common shares (1) Loss per common share: Basic and diluted ) (1) Approximate number of unvested restricted stock units and stock to be issued pursuant to the ESPP that have been excluded from the computation of diluted loss per share as the effect would be anti-dilutive when results from operations are at a net loss position. Note For interim financial reporting, we estimate the annual tax rate based on projected pre-tax income (loss) for the full year and record a quarterly income tax provision (benefit) in accordance with accounting guidance for income taxes. As the year progresses, we refine the estimate of the Our effective tax rate We are under audit by certain non-U.S. jurisdictions for the As of FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of We are conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our extensive internal review to the SEC, the As disclosed above, our investigation into possible violations of the Note We recognize severance and other charges for costs associated with workforce reductions, facility closures, exiting or reducing our footprint in certain countries, asset impairments and the retirement of excess machinery and equipment based on economic utility. As a result of the downturn in the industry and its impact on our business outlook, we continue to take actions to adjust our operations and cost structure to reflect current and expected activity levels. Depending on future market conditions, further actions may be necessary to adjust our operations, which may result in additional charges. Our severance and other charges, net are summarized below (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Severance and other costs Mergers and acquisition expense Fixed asset impairments and retirements Inventory write-offs Intangible asset impairments Severance and other costs: We incurred costs due to a continued effort to adjust our cost base, including reducing our workforce to meet the depressed demand in the industry. Mergers and acquisition expense: During the three and six months ended June 30, 2021, we incurred $2.6 million and $9.4 million of costs, respectively, primarily related to legal and consulting services associated with the pending merger with Expro. Fixed asset impairments and retirements: During the six months ended June 30, 2020, we recognized $15.5 million primarily associated with construction in progress in our Cementing Equipment segment. During the six months ended June 30, 2021, we recognized a $0.2 million impairment associated our with construction in progress in our Tubular Running Services segment. Please see Note 5—Property, Plant and Equipment for additional details. Inventory write-offs: During the six months ended June 30, 2020, certain inventories in our Cementing Equipment segment were determined to have costs that exceeded their net realizable values, resulting in a charge of $0.4 million. During the six months ended June 30, 2021, certain inventories in our Tubular Running Services segment were determined to have costs that exceeded their net realizable values, resulting in a charge of $0.2 million. Intangible asset impairments: During the six months ended June 30, 2020, we identified certain intangible assets where the carrying value exceeded the fair value in the Cementing Equipment segment, resulting in an impairment charge of $4.7 million. NaN impairment was recorded during the three and six months ended June 30, 2021. Please see Note 6—Goodwill and Intangible Assets for additional details. Note 16—Segment Information Reporting Segments Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the The FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The The Revenue We disaggregate our revenue from contracts with customers by geography for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Intersegment revenue is immaterial. The following tables presents our revenue disaggregated by geography, based on the location where our services were provided and products sold (in thousands): Three Months Ended June 30, 2021 Tubular Running Services Tubulars Cementing Equipment Consolidated United States International Total Revenue Three Months Ended June 30, 2020 Tubular Running Services Tubulars Cementing Equipment Consolidated United States International Total Revenue Six Months Ended June 30, 2021 Tubular Running Services Tubulars Cementing Equipment Consolidated United States International Total Revenue Six Months Ended June 30, 2020 Tubular Running Services Tubulars Cementing Equipment Consolidated United States International Total Revenue FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Revenue by geographic area were as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 United States Europe/Middle East/Africa Latin America Asia Pacific Other countries Total Revenue Adjusted EBITDA We define Adjusted EBITDA as net income (loss) before interest income, net, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on Our CODM uses Adjusted EBITDA as the primary measure of segment reporting performance. FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table presents a reconciliation of Segment Adjusted EBITDA to net Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Segment Adjusted EBITDA: Tubular Running Services Tubulars Cementing Equipment Corporate (1) Goodwill impairment Severance and other charges, net Interest income (expense), net Depreciation and amortization Income tax (expense) benefit Gain on disposal of assets Foreign currency gain (loss) Charges and credits (2) Net loss (1) Includes certain expenses not attributable to a particular segment, such as costs related to support functions and corporate executives. FRANK’S INTERNATIONAL N.V. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following tables set forth certain financial information with respect to our reportable segments (in thousands): Tubular Running Services Tubulars Cementing Equipment Corporate Total Three Months Ended June 30, 2021 Revenue from external customers Operating income (loss) Adjusted EBITDA Three Months Ended June 30, 2020 Revenue from external customers Operating income (loss) Adjusted EBITDA Six Months Ended June 30, 2021 Revenue from external customers Operating income (loss) Adjusted EBITDA Six Months Ended June 30, 2020 Revenue from external customers Operating income (loss) Adjusted EBITDA * Non-GAAP financial measure not disclosed. This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things: • our business strategy and prospects for growth; the merger with Expro Group Holdings International Limited (“Expro”), (the “Merger”); our cash flows and liquidity; our financial strategy, budget, projections and operating results; the amount, nature and timing of capital expenditures; the availability and terms of capital; competition and government regulations; and general economic conditions. Our forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” continuing uncertainty relating to global crude oil demand and crude oil prices that correspondingly may lead to further significant reductions in domestic oil and gas activity, which in turn could result in further significant declines in demand for our products and services; uncertainty regarding the extent and duration of the remaining restrictions in the United States and globally on various commercial and economic activities due to the COVID-19 virus, including uncertainty regarding the re-imposition of restrictions due to resurgences in infection rates and the emergence of new, more contagious or virulent strains of COVID-19; such restrictions are designed to protect public health but also have the effect of significantly reducing demand for oil and gas, which may correspondingly decrease demand for our products and services; uncertainty regarding the timing, pace and extent of an economic recovery in the United States and elsewhere, which in turn will likely affect demand for crude oil and therefore the demand for the products and services we provide and the commercial opportunities available to us; the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations; unique risks associated with our offshore operations; political, economic and regulatory uncertainties in our international operations; our ability to develop new technologies and products; our ability to protect our intellectual property rights; our ability to employ and retain skilled and qualified workers; the level of competition in our industry; operational safety laws and regulations; international trade laws and sanctions; weather conditions and natural disasters; global or national health concerns, including health epidemics, including COVID-19; policy or regulatory changes domestically in the United States; failure to complete the Merger or changes in the expected timing of the completion of the Merger; completion of the Merger following unforeseen changes in circumstance; uncertainty with respect to integration and realization of expected cost synergies following completion of the Merger; and litigation risk associated with the Merger. These and other important factors that could affect our operating results and performance are described in (1) “Risk Factors” in Part II, Item The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Form 10-Q and the audited consolidated financial statements and notes thereto and This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statement because of various factors, including those described in the sections titled Overview of Business We are a global provider of highly engineered tubular services, tubular fabrication and specialty well construction and well intervention solutions to the oil and gas industry and have been in business for over We conduct our business through • Tubular Running Services. The Tubular Running Services (“TRS”) segment provides tubular running services globally. Internationally, the TRS segment operates in the majority of the offshore oil and gas markets and also in several onshore regions with operations in approximately 40 countries on six continents. In the U.S., the TRS segment provides services in the active onshore oil and gas drilling regions, including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale and Utica Shale, as well as in the U.S. Gulf of Mexico. Our customers in these markets are primarily large exploration and production companies, including international oil and gas companies, national oil and gas companies, major independents and other oilfield service companies. Tubulars. The Tubulars segment designs, manufactures and distributes connectors and casing attachments for large outside diameter (“OD”) heavy wall pipe. Additionally, the Tubulars segment sells large OD pipe originally manufactured by various pipe mills, as plain end or fully fabricated with proprietary welded or thread-direct connector solutions and provides specialized fabrication and welding services in support of offshore deepwater projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long-length tubular assemblies up to 400 feet in length. The Tubulars segment also specializes in the development, manufacture and supply of proprietary drilling tool solutions that focus on improving drilling productivity through eliminating or mitigating traditional drilling operational risks. Cementing Equipment. The Cementing Equipment (“CE”) segment provides specialty equipment to enhance the safety and efficiency of rig operations. It provides specialized equipment, services and products utilized in the construction of the wellbore in both onshore and offshore environments. The product portfolio includes casing accessories that serve to improve the installation of casing, centralization and wellbore zonal isolation, as well as enhance cementing operations through advance wiper plug and float equipment technology. The CE segment also provides services and products utilized in the construction, completion or abandonment of the wellbore. These solutions are primarily used to isolate portions of the wellbore through the setting of barriers downhole to allow for rig evacuation in case of inclement weather, maintenance work on other rig equipment, squeeze cementing, pressure testing within the wellbore, hydraulic fracturing and temporary and permanent abandonments. These offerings improve operational efficiencies and limit non-productive time if unscheduled events are encountered at the wellsite. Merger Agreement with Expro On March 10, 2021, FINV and In Outlook As the recovery from the COVID-19 pandemic continues, uncertainty around the new variants of the virus and potential further lockdowns may create headwinds against additional activity improvements. We believe, however, that the slow but steady drawdown of supply stockpiles will continue over the next several months as current indicators continue to support improved market conditions for the remainder of 2021 as compared to the same period in 2020. Nevertheless, the ultimate duration of the COVID-19 pandemic, governmental restrictions and the related impact on the prices of and demand for crude oil We expect that crude oil demand and associated customer activity will continue to ramp up in the While the Gulf of Mexico We anticipate our U.S. land business will continue to improve through at least 2022, supported by recent commercialization of performance drilling technologies and digital solutions that increase operational efficiency. In international markets, we expect offshore markets to see continued moderate growth in How We Evaluate Our Operations We use a number of financial and operational measures to routinely analyze and evaluate the performance of our business, including revenue, Adjusted EBITDA, Adjusted EBITDA margin and safety performance. Revenue We analyze our revenue growth by comparing actual monthly revenue to our internal projections for each month to assess our performance. We also assess incremental changes in our monthly revenue across our operating segments to identify potential areas for improvement. We define Adjusted EBITDA as net income (loss) before interest income, net, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on The following table presents a reconciliation of net loss to Adjusted EBITDA and Adjusted EBITDA margin Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net loss Goodwill impairment Severance and other charges, net Interest (income) expense, net Depreciation and amortization Income tax expense (benefit) Gain on disposal of assets Foreign currency (gain) loss Charges and credits (1) Adjusted EBITDA Adjusted EBITDA margin (1) For a reconciliation of our Adjusted EBITDA on a segment basis to the most comparable measure calculated in accordance with GAAP, see “Operating Segment Results.” Safety and Quality Performance Safety is one of our primary core values. Maintaining a strong safety record is a critical component of our operational success. Many of our customers have safety standards we must satisfy before we can perform services. As a result, we continually monitor Consolidated Results of Operations The following table presents our consolidated results for the periods presented (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Unaudited) Revenue: Services Products Total revenue Operating expenses: Cost of revenue, exclusive of depreciation and amortization Services Products General and administrative expenses Depreciation and amortization Goodwill impairment Severance and other charges, net Gain on disposal of assets Operating loss Other income (expense): Other income, net Interest income (expense), net Foreign currency gain (loss) Total other income (expense) Loss before income taxes Income tax expense (benefit) Net loss Three Months Ended Revenue. Revenue from external customers, excluding intersegment sales, for the three months ended Cost of General and administrative expenses. General and administrative expenses for the three months ended June 30, 2021 decreased by $5.9 million, or 26.5%, to $16.4 million from $22.3 million for the three months ended June 30, 2020 due to Depreciation and amortization. Severance and other charges, Foreign currency gain (loss) Income tax Six Months Ended Revenue. Revenue from external customers, excluding intersegment sales, for the Cost of General and administrative Depreciation and amortization. Goodwill impairment. We recognized a goodwill impairment of $57.1 million during the six months ended June 30, 2020. No goodwill impairment was recognized during the six months ended June 30, 2021. See Note 6—Goodwill and Intangible Assets in the Notes to Severance and other charges, Foreign currency gain (loss) Income tax expense (benefit). Operating Segment Results The following table presents Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Revenue: Tubular Running Services Tubulars Cementing Equipment Total Segment Adjusted EBITDA (1): Tubular Running Services Tubulars Cementing Equipment Corporate (2) (1) Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. (For a reconciliation of our Adjusted EBITDA, see (2) Includes certain expenses not attributable to a particular segment, such as costs related to support functions and corporate executives. Three Months Ended Tubular Running Services Revenue for the Adjusted EBITDA for the Tubulars Revenue for the Adjusted EBITDA for the Cementing Equipment Revenue for the Adjusted EBITDA for the Corporate Adjusted EBITDA for Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020 Tubular Running Services Revenue for the TRS segment was $138.2 million for the six months ended June 30, 2021, a decrease of $13.6 million, or 9.0%, compared to $151.8 million for the same period in 2020. While current activity levels have Adjusted EBITDA for the Tubulars Revenue for the Tubulars segment was $28.2 million for the six months ended June 30, 2021, an increase of $6.9 million, or 32.4%, compared to $21.3 million for the same period in 2020, primarily as a result of an increase in Gulf of Mexico and international tubular products sales. Adjusted EBITDA for the Tubulars segment Cementing Equipment Revenue for the CE segment was $36.2 million for the six months ended June 30, 2021, relatively flat compared to $36.5 million for the same period in 2020. Adjusted EBITDA for the Corporate Adjusted EBITDA for Corporate was a loss of $13.2 million for the six months ended June 30, 2021, an improvement of $4.3 million, or 24.6%, compared to a loss of $17.5 million for the same period in 2020, primarily due to lower costs as a result of restructuring and cost cutting measures. Liquidity and Capital Resources Liquidity At Our Board of Directors has authorized a program to repurchase our common stock from time to time. Approximately $38,502,322 remained authorized for repurchases as of June 30, 2021; subject to the limitation set in our shareholder authorization for repurchases of our common stock, which is currently 10% of the common stock outstanding as of April 30, 2020. From the inception of this program in February 2020 we repurchased 570,044 shares of our common stock for a total cost of approximately $1.5 million. This program was suspended during the second quarter of 2020 due to the impacts of COVID-19 and commodity price declines and will be revisited when market conditions stabilize sufficiently to provide greater clarity to anticipated business results. We expect that following the Merger, the board of directors of the Combined Company will reevaluate this program. Our total capital expenditures are estimated Credit Facility Asset Based Revolving Credit Facility On November 5, 2018, FICV, Frank’s International, LLC and Blackhawk, as borrowers, and FINV, certain of FINV’s subsidiaries, including FICV, Frank’s International, LLC, Blackhawk, Frank’s International GP, LLC, Frank’s International, LP, Frank’s International LP B.V., Frank’s International Partners B.V., Frank’s International Management B.V., Blackhawk Intermediate Holdings, LLC, Blackhawk Specialty Tools, LLC, and Trinity Tool Rentals, L.L.C., as guarantors, entered into a All obligations under the ABL Credit Facility The ABL Credit Facility contains various covenants As of June 30, 2021, FINV had no borrowings outstanding under the ABL Credit Facility, letters of credit outstanding of $9.4 million and availability of $34.0 million. At this time, due to our expected ability to fund our capital expenditure and liquidity requirements from cash on hand, we do not anticipate a In connection with the Tax Receivable Agreement We entered into The payment obligations under the TRA are If FINV elects to terminate the TRA early, In certain circumstances, In connection with the Merger Agreement, FINV, FICV and Mosing Holdings have entered into the A&R TRA. Pursuant to the A&R TRA, FINV, FICV and Mosing Holdings have agreed, among other things to settle the early termination payment obligation that would otherwise be owed to Mosing Holdings under the TRA as a result of the Merger by the payment by FINV to Mosing Holdings of (i) $15 million cash at the closing of the Transactions and (ii) certain other contingent payments in the future in the event the Combined Company realizes cash tax savings from tax attributes covered under the TRA during the ten year period following the Closing Date in excess of $18,057,000, as more fully described in the A&R TRA. The terms of the A&R TRA are conditioned upon and subject to the closing of the Transactions and the payment to Mosing Holdings of the $15 million cash payment at the closing of the Transactions. If such conditions do not occur, the A&R TRA will be terminated and will be null and void, and the TRA will remain in effect in accordance with its terms. Please see Note Cash flows Six Months Ended June 30, 2021 2020 Operating activities Investing activities Financing activities Effect of exchange rate changes on cash Net decrease in cash, cash equivalents and restricted cash Statements of cash flows for entities with international operations that use the local currency as the functional currency exclude the effects of the changes in foreign currency exchange rates that occur during any given year, as these are noncash changes. As a result, changes reflected in certain accounts on the condensed consolidated statements of cash flows may not reflect the changes in corresponding accounts on the condensed consolidated balance sheets. Operating Activities Cash flow provided by (used in) operating activities was Investing Activities Cash flow used in investing activities was Financing Activities Cash flow used in financing activities was $2.9 million for the six months ended June 30, 2021, compared to $2.0 million in the same period in 2020. The increase in cash flow used in Off-Balance Sheet Arrangements We do not have any material off-balance sheet arrangements with the exception of Critical Accounting Policies There were no changes to our significant accounting policies from those disclosed in our Annual Report. Impact of Recent Accounting Pronouncements Refer to Note For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our (a) Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, and such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of (b) Change in Internal Control Over Financial Reporting. Except as described below, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has determined that there were no changes in During the first quarter of 2021, the Company implemented a new enterprise resource planning (“ERP”) system. In connection with this ERP system, we have updated our internal controls over financial reporting to accommodate modifications to our business processes and accounting procedures. As with all new information systems, this ERP system and the related internal controls over financial reporting will require testing for effectiveness. We do not believe that the transition to this ERP system will have an adverse effect on our internal control over financial reporting. We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of We are conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our extensive internal review to the U.S. Securities and Exchange Commission (“SEC”), the As disclosed above, our investigation into possible violations of the In addition to the other information set forth in this report, you should carefully consider the risks discussed below and under the heading “Risk Factors” in our Annual Report, which risks could materially affect our business, financial condition or future results. These risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations. Risk Factors Relating to the Merger The Exchange Ratio will not be adjusted in the event of any change in the stock price of Frank’s. At the Effective Time, each Expro Ordinary Share outstanding immediately prior to the Effective Time, other than shares owned by Expro, Frank’s, Merger Sub or any subsidiary of Frank’s (but including, for the avoidance of doubt, any such shares held by any wholly-owned subsidiary of Expro), will be converted into the right to receive a number of shares of our common stock equal to the Exchange Ratio. The Exchange Ratio will not be adjusted for changes in the market price of our common stock between the date of signing the Merger Agreement and completion of the Merger. Changes in the price of our common stock prior to the Merger will affect the value of our common stock that Expro shareholders will receive on the date of the Merger. Stock price changes may result from a variety of factors (many of which are out of our control), including the following: ● changes in the respective businesses, operations and prospects of Frank’s and Expro; ● changes in market assessments of the business, operations and prospects of Frank’s and Expro; ● investor behavior and strategies, including market assessments of the likelihood that the Merger will be completed; ● interest rates, general market and economic conditions and other factors generally affecting the price of our common stock; and ● legislation, governmental regulation and legal developments in the businesses in which Frank’s and Expro operate. The price of our common stock on the Closing Date may vary from its price on the date the Merger Agreement was executed, on the date of the proxy statement/prospectus and on the date of the 2021 annual general meeting of our shareholders (the “Annual Meeting”). As a result, the value represented by the Exchange Ratio will also vary, and you will not know or be able to calculate at the time of the Annual Meeting the market value of the merger consideration Expro shareholders will receive upon completion of the Merger. In addition, the Merger might not be completed until a significant period of time has passed after the Annual Meeting. Because the Exchange Ratio will not be adjusted to reflect any changes in the market value of our common stock, the market value of the our common stock issued in connection with the Merger may be higher or lower than the value of those shares on earlier dates. Stock price changes may result from, among other things, changes in the business, operations or prospects of Frank’s and Expro prior to or following the Merger, litigation or regulatory considerations, general business, market, industry or economic conditions and other factors both within and beyond the control of Frank’s. Neither Frank’s nor Expro is permitted to terminate the Merger Agreement solely because of changes in the market price or value of either company’s equity securities. Current Frank’s shareholders will have a reduced ownership and voting interest in the Combined Company after the Merger, and such reduced ownership could have negative Dutch tax consequences. Frank’s will issue approximately 426,146,247 shares of our common stock to Expro shareholders in the Merger. As a result of these issuances, Expro shareholders are expected to hold up to approximately 65% of the Combined Company’s outstanding common stock immediately following completion of the Merger. Frank’s shareholders currently have the right to vote for its directors and on other matters affecting Frank’s. Each Frank’s shareholder will remain a shareholder of Frank’s with a percentage ownership of the Combined Company that will be smaller than the shareholder’s percentage of Frank’s prior to the Merger. As a result of these reduced ownership percentages, Frank’s shareholders will have less voting power in the Combined Company than they now have with respect to Frank’s. As a result of the Merger, the interest held by current Frank’s shareholders in the Combined Company could fall below certain thresholds relevant for Dutch tax purposes, such as the threshold relevant in respect of the Dutch substantial interest rules, which could give rise to Dutch taxes on income and capital gains. In addition, the Merger will impact the average paid-in capital of Frank’s common stock held by current Frank’s shareholders as recognized for purposes of Dutch dividend withholding tax, which may have tax consequences in relation to future liquidation proceeds of redemption of Frank’s common stock or proceeds of repurchases of Frank’s common stock derived by current Frank’s shareholders. For further information, see the “Material Dutch Tax Consequences” section of the Registration Statement on Form S-4 filed with the SEC on April 26, 2021. Each Frank’s shareholder should seek tax advice from his own tax advisors about the potential tax consequences to it of holding and disposing of shares of our common stock (some of which could be material) following the merger. The Merger is subject to conditions, including certain conditions that may not be satisfied, or completed on a timely basis, if at all. The Merger is subject to a number of conditions beyond the control of Frank’s and Expro that may prevent, delay or otherwise materially adversely affect its completion. We cannot predict whether and when these conditions will be satisfied. Any delay in completing the Merger could cause the Combined Company not to realize some or all of the benefits that we expect to achieve if the Merger is successfully completed within its expected time frame. Failure to complete the Merger could negatively impact the future business and financial results of Frank’s. Neither Frank’s nor Expro can make any assurances that it will be able to satisfy all of the conditions to the Merger or succeed in any litigation brought in connection with the Merger. If the Merger is not completed, the financial results of Frank’s may be adversely affected and Frank’s will be subject to several risks, including but not limited to: ● Frank’s being required to pay Expro a termination fee of $37.5 million or Expro being required to pay Frank’s a termination fee of $71.5 million, in each case under certain circumstances provided in the Merger Agreement; ● payment of costs relating to the Merger, such as legal, accounting, financial advisor and printing fees, regardless of whether the Merger is completed; ● the focus of our management team on the Merger instead of the pursuit of other opportunities that could have been beneficial to Frank’s; and ● the potential occurrence of litigation related to any failure to complete the Merger. In addition, if the Merger is not completed, Frank’s may experience negative reactions from the financial markets and from its customers and employees. If the Merger is not completed, Frank’s cannot assure its shareholders that these risks will not materialize and will not materially and adversely affect the business, financial results of Frank’s or the stock price of our common stock. The Merger Agreement contains provisions that limit each party’s ability to pursue alternatives to the Merger, could discourage a potential competing acquiror of either Frank’s or Expro from making a favorable alternative transaction proposal and, in specified circumstances, could require either party to pay a termination fee to the other party. The Merger Agreement contains “non-solicitation” provisions that, subject to limited exceptions, restrict Frank’s or Expro’s ability to, among other things, directly or indirectly initiate, solicit, knowingly encourage or knowingly facilitate or take any action designed to lead to the inquiry, making, or submission of a proposal competing with the transactions contemplated by the Merger Agreement. In addition, while each of the Frank’s Board and the Expro Board has the ability, in certain circumstances, to change its recommendation of the transaction to its shareholders, neither party can terminate the Merger Agreement to accept an alternative proposal, and the other party generally has an opportunity to modify the terms of the Merger and Merger Agreement in response to any alternative proposals that may be made before such board of directors may withdraw or modify its recommendation. Moreover, in certain circumstances, Frank’s or Expro may be required to pay up to $5.5 million of the other party’s expenses, respectively, or a termination fee of $37.5 million or $71.5 million, respectively. These provisions could discourage a potential third party that might have an interest in acquiring all or a significant portion of Frank’s or Expro from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the Merger. In addition, these provisions might result in a potential third party acquirer proposing to pay a lower price to the shareholders than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances. If the Merger Agreement is terminated and either Frank’s or Expro determines to seek another business combination, it may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger. Members of Frank’s management and the Frank’s Board have interests in the Transactions that are different from, or in addition to, those of other Frank’s shareholders. In considering whether to approve the Transactions, holders of our common stock should recognize that members of Frank’s management and the Frank’s Board have interests in the Transactions that differ from, or are in addition to, their interests as shareholders of Frank’s. Frank’s and Expro may be unable to obtain the regulatory clearances and approvals required to complete the Merger or, in order to do so, Frank’s and Expro may be required to comply with material restrictions or conditions. Consummation of the Merger is subject to obtaining approval under certain antitrust and foreign investment laws. Regulatory entities may impose certain requirements or obligations as conditions for their approval or in connection with their review. The Merger Agreement may require Frank’s or Expro to accept conditions from these regulators that could adversely impact the Combined Company without either of them having the right to refuse to close the Merger on the basis of those regulatory conditions. Neither Frank’s nor Expro can provide any assurance that they will obtain the necessary clearances or approvals, or that any required conditions will not have a material adverse effect on the Combined Company following the Merger or result in the abandonment of the Merger. Additionally, even after completion of the Merger, governmental authorities could seek to challenge the Merger. Frank’s or Expro may not prevail and may incur significant costs in defending or settling any action under the antitrust laws. The pendency of the Merger could adversely affect the business and operations of Frank’s. In connection with the pending Merger, some customers or vendors of Frank’s may delay or defer decisions, which could negatively affect the revenues, earnings, cash flows and expenses of Frank’s, regardless of whether the Merger is completed. Similarly, current and prospective employees of Frank’s may experience uncertainty about their future roles with the Combined Company following the Merger, which may materially adversely affect the ability of Frank’s to attract, retain and motivate key personnel during the pendency of the Merger and which may materially adversely divert attention from the daily activities of Frank’s existing employees. In addition, due to operating covenants in the Merger Agreement, Frank’s may be unable, during the pendency of the Merger, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions that are not in the ordinary course of business, even if such actions would prove beneficial to Frank’s. Further, the process of seeking to accomplish the Merger could also divert the focus of management of Frank’s from pursuing other opportunities that could be beneficial to it, without realizing any of the benefits which might have resulted had the Merger been completed. The COVID-19 outbreak may adversely affect Frank’s and Expro’s ability to timely consummate the Merger. COVID-19 and the various precautionary measures attempting to limit its spread taken by many governmental authorities worldwide has had a severe effect on global markets and the global economy. The extent to which the COVID-19 pandemic impacts Frank’s and Expro’s respective business operations will depend on future developments, which are highly uncertain and cannot be predicted, including but not limited to new information which may emerge concerning the severity of COVID-19, new COVID-19 variants which may be more contagious or more virulent such as the B.1.616.2 “Delta” variant, the nature and extent of governmental actions taken to contain it or treat its impact, the availability of effective treatments and vaccines, the ultimate duration of the pandemic, and how quickly and to what extent normal economic and operating conditions can resume. COVID-19 and official actions in response to it have made it more challenging for Frank’s, Expro and relevant third parties to adequately staff their respective businesses and operations, and may cause delay in the companies’ ability to obtain the relevant approvals for the consummation of the Merger. The Merger may be completed even though material adverse changes subsequent to the announcement of the Merger, such as industry-wide changes or other events, may occur. In general, either party can refuse to complete the Merger if there is a material adverse change affecting the other party. However, some types of changes do not permit either party to refuse to complete the Merger, even if such changes would have a material adverse effect on either of the parties. For example, a worsening of Frank’s or Expro’s financial condition or results of operations due to a decrease in commodity prices or general economic conditions would not give the other party the right to refuse to complete the Merger. If adverse changes occur that affect either party but the parties are still required to complete the Merger, Frank’s share price, business and financial results after the Merger may suffer. The opinion obtained by Frank’s Board from Moelis does not and will not reflect changes in circumstances after the date of such opinion. On March 10, 2021, Moelis & Company LLC (“Moelis”), Frank’s financial advisor in connection with the Merger, delivered an opinion to Frank’s Board as to the fairness, as of the date of the opinion and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the opinion, of the Exchange Ratio in the Merger to Frank’s. Changes in the operations and prospects of Frank’s or Expro, general market and economic conditions and other factors that may be beyond the control of Frank’s or Expro, and on which the opinion of Moelis was based, may alter the value of Frank’s or Expro or the price of our common stock by the time the Merger is completed. Frank’s has not obtained, and does not expect to request, an updated opinion from Moelis. Moelis’s opinion does not speak to the time when the Merger will be completed or to any date other than the date of such opinion. As a result, the opinion does not and will not address the fairness, from a financial point of view, of the Exchange Ratio at the time the Merger is completed or at any time other than March 10, 2021. Item 2.Unregistered Sales of Equity Securities and Use of Proceeds Following is a summary of our repurchases of our common stock during the three months ended June 30, 2021. Total Number of Maximum Number (or Shares Purchased as Approximate Dollar Value) Part of Publicly of Shares that may yet Total Number Average Announced Plans or be Purchased Under the Period of Shares Purchased (1) Price Paid per Share Programs (2) Program (2) April 1 - April 30 May 1 - May 31 June 1 - June 30 Total (1) This table excludes shares withheld from employees to satisfy tax withholding requirements on equity-based transactions. The Company administers cashless settlements and does not repurchase stock in connection with cashless settlements. (2) Our board of directors has authorized a program to repurchase our common stock from time to time. Approximately $38,502,322 remained authorized for repurchases as of June 30, 2021; subject to the limitation set in our shareholder authorization for repurchases of our common stock, which is currently 10% of the common stock outstanding as of April 30, 2020. From the inception of this program in February 2020 to date, we repurchased 570,044 shares of our common stock for a total cost of approximately $1.5 million. This program was suspended during the second quarter of 2020. The exhibits required to be filed by Item 6 are set forth in the Exhibit Index EXHIBIT INDEX Exhibit Number Description Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350. Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350. *101.1 The following materials from Frank’s International N.V.’s Quarterly Report on Form 10-Q for the period ended June 30, 2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Loss; (iv) Condensed Consolidated Statements of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements. *104 Cover Page Interactive Data File (embedded within the Inline XBRL document). † Represents management contract or compensatory plan or arrangement. * Filed herewith. ** Furnished herewith. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FRANK’S INTERNATIONAL N.V. Date: August 5, 2021 By: /s/ Melissa Cougle Senior Vice President and Chief Financial Officer (Principal Financial Officer) $ 188,581 $ 209,575 1,776 1,672 2,026 2,252 127,931 110,607 94,680 81,718 3,025 2,939 6,415 7,744 424,434 416,507 244,457 272,707 42,785 42,785 9,909 7,897 16,482 18,030 26,356 28,116 31,081 30,859 $ 795,504 $ 816,901 $ 111,031 $ 99,986 7,625 7,832 585 586 241 1,674 119,482 110,078 0 1,548 19,645 21,208 25,235 22,818 164,362 155,652 2,896 2,866 1,094,447 1,087,733 (413,849 ) (377,346 ) (30,384 ) (31,966 ) (21,968 ) (20,038 ) 631,142 661,249 $ 795,504 $ 816,901 FRANK'S INTERNATIONAL N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) September 30, December 31, 2017 2016 Assets (Unaudited) Current assets: Cash and cash equivalents $ 233,338 $ 319,526 Short-term investments 60,598 — Accounts receivables, net 140,906 167,417 Inventories 132,961 139,079 Assets held for sale 3,792 — Other current assets 6,893 14,027 Total current assets 578,488 640,049 Property, plant and equipment, net 497,784 567,024 Goodwill and intangible assets, net 247,699 256,146 Deferred tax assets — 79,309 Other assets 33,344 45,533 Total assets $ 1,357,315 $ 1,588,061 Liabilities and Equity Current liabilities: Short-term debt $ 87 $ 276 Accounts payable 21,172 16,081 Deferred revenue 9,035 18,072 Accrued and other current liabilities 75,094 64,950 Total current liabilities 105,388 99,379 Deferred tax liabilities 254 20,951 Other non-current liabilities 28,190 156,412 Total liabilities 133,832 276,742 Commitments and contingencies (Note 15) Stockholders' equity: Common stock, €0.01 par value, 798,096,000 shares authorized, 223,906,195 and 223,161,356 shares issued and 223,061,559 and 222,401,427 shares outstanding 2,810 2,802 Additional paid-in capital 1,048,498 1,036,786 Retained earnings 215,793 317,270 Accumulated other comprehensive loss (30,510 ) (32,977 ) Treasury stock (at cost), 844,636 and 759,929 shares (13,108 ) (12,562 ) Total equity 1,223,483 1,311,319 Total liabilities and equity $ 1,357,315 $ 1,588,061 FRANK'S INTERNATIONAL N.V. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenues: Equipment rentals and services $ 92,547 $ 85,698 $ 272,402 $ 312,132 Products 15,536 19,416 64,071 67,414 Total revenue 108,083 105,114 336,473 379,546 Operating expenses: Cost of revenues, exclusive of depreciation and amortization Equipment rentals and services 60,981 57,307 178,865 189,965 Products 10,750 16,029 45,162 51,446 General and administrative expenses 39,963 39,677 125,107 138,586 Depreciation and amortization 30,650 26,545 92,700 84,278 Severance and other charges 1,648 14,534 2,386 18,858 Gain on sale of assets (829 ) (46 ) (2,091 ) (1,095 ) Operating loss (35,080 ) (48,932 ) (105,656 ) (102,492 ) Other income (expense): Derecognition of the tax receivable agreement liability 122,515 — 122,515 — Other income (expense), net (384 ) 984 348 2,145 Interest income, net 1,019 646 2,170 1,050 Mergers and acquisition expense — — (459 ) — Foreign currency gain (loss) 1,839 (1,696 ) 3,184 (5,907 ) Total other income (expense) 124,989 (66 ) 127,758 (2,712 ) Income (loss) before income tax expense (benefit) 89,909 (48,998 ) 22,102 (105,204 ) Income tax expense (benefit) 87,613 (6,800 ) 72,419 (15,311 ) Net income (loss) 2,296 (42,198 ) (50,317 ) (89,893 ) Net loss attributable to noncontrolling interest — (5,216 ) — (20,741 ) Net income (loss) attributable to Frank's International N.V. 2,296 (36,982 ) (50,317 ) (69,152 ) Preferred stock dividends — — — (1 ) Net income (loss) available to Frank's International N.V.
common shareholders$ 2,296 $ (36,982 ) $ (50,317 ) $ (69,153 ) Dividends per common share $ 0.075 $ 0.075 $ 0.225 $ 0.375 Income (loss) per common share: Basic $ 0.01 $ (0.21 ) $ (0.23 ) $ (0.43 ) Diluted $ 0.01 $ (0.21 ) $ (0.23 ) $ (0.43 ) Weighted average common shares outstanding: Basic 223,056 177,125 222,847 162,656 Diluted 223,581 177,125 222,847 162,656 $ 90,520 $ 74,583 $ 172,043 $ 179,666 17,321 11,518 30,609 29,927 107,841 86,101 202,652 209,593 68,619 61,051 132,554 140,431 14,408 8,286 25,322 22,274 16,427 22,286 32,874 48,969 15,332 17,252 31,439 36,970 0 0 0 57,146 3,399 5,162 10,775 25,887 (1,479 ) (650 ) (1,661 ) (590 ) (8,865 ) (27,286 ) (28,651 ) (121,494 ) 404 156 529 2,182 (101 ) 178 (388 ) 711 2,718 1,693 (150 ) (8,199 ) 3,021 2,027 (9 ) (5,306 ) (5,844 ) (25,259 ) (28,660 ) (126,800 ) 6,773 8,986 7,843 (6,577 ) $ (12,617 ) $ (34,245 ) $ (36,503 ) $ (120,223 ) $ (0.06 ) $ (0.15 ) $ (0.16 ) $ (0.53 ) 228,013 225,853 227,519 225,855 FRANK'S INTERNATIONAL N.V. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net income (loss) $ 2,296 $ (42,198 ) $ (50,317 ) $ (89,893 ) Other comprehensive income (loss): Foreign currency translation adjustments 1,488 74 2,809 1,824 Marketable securities: Unrealized gain (loss) on marketable securities (101 ) (50 ) (105 ) 1,066 Reclassification to net income — — (395 ) — Deferred tax asset / liability change — (5 ) 158 (465 ) Unrealized gain (loss) on marketable securities, net of tax (101 ) (55 ) (342 ) 601 Total other comprehensive income 1,387 19 2,467 2,425 Comprehensive income (loss) 3,683 (42,179 ) (47,850 ) (87,468 ) Less: Comprehensive loss attributable to noncontrolling interest — (5,264 ) — (20,180 ) Add: Transfer of Mosing Holdings, LLC ("Mosing Holdings") interest to FINV attributable to comprehensive loss — (8,203 ) — (8,203 ) Comprehensive income (loss) attributable to Frank's International N.V. $ 3,683 $ (45,118 ) $ (47,850 ) $ (75,491 ) $ (12,617 ) $ (34,245 ) $ (36,503 ) $ (120,223 ) (134 ) (139 ) 1,583 285 (134 ) (139 ) 1,583 285 $ (12,751 ) $ (34,384 ) $ (34,920 ) $ (119,938 ) FRANK'S INTERNATIONAL N.V. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) (Unaudited) Nine Months Ended September 30, 2016 Accumulated Additional Other Non- Total Common Stock Paid-In Retained Comprehensive Treasury controlling Stockholders' Shares Value Capital Earnings Income (Loss) Stock Interest Equity Balances at December 31, 2015 155,146 $ 2,045 $ 712,486 $ 531,621 $ (25,555 ) $ (9,298 ) $ 240,127 $ 1,451,426 Net loss — — — (69,152 ) — — (20,741 ) (89,893 ) Foreign currency translation adjustments — — — — 1,443 — 381 1,824 Change in marketable securities — — — — 421 — 180 601 Equity-based compensation expense — — 12,356 — — — — 12,356 Distributions to noncontrolling interest — — — — — — (8,027 ) (8,027 ) Common stock dividends ($0.375 per share) — — — (62,333 ) — — — (62,333 ) Preferred stock dividends — — — (1 ) — — — (1 ) Transfer of Mosing Holdings interest to FINV — — 238,367 — (8,203 ) — (211,920 ) 18,244 Common shares issued on conversion of Series A preferred stock ("Preferred Stock") 52,976 597 — — — — — 597 Common shares issued upon vesting of restricted stock units 1,569 18 (18 ) — — — — — Tax receivable agreement ("TRA") and associated deferred taxes — — (74,788 ) — — — — (74,788 ) Common shares issued for employee stock purchase plan ("ESPP") 76 1 972 — — — — 973 Treasury shares withheld (225 ) — — — — (3,046 ) — (3,046 ) Balances at September 30, 2016 209,542 $ 2,661 $ 889,375 $ 400,135 $ (31,894 ) $ (12,344 ) $ — $ 1,247,933 Nine Months Ended September 30, 2017 Accumulated Additional Other Non- Total Common Stock Paid-In Retained Comprehensive Treasury controlling Stockholders' Shares Value Capital Earnings Income (Loss) Stock Interest Equity Balances at December 31, 2016 222,401 $ 2,802 $ 1,036,786 $ 317,270 $ (32,977 ) $ (12,562 ) $ — $ 1,311,319 Net loss — — — (50,317 ) — — — (50,317 ) Foreign currency translation adjustments — — — — 2,809 — — 2,809 Change in marketable securities — — — — (342 ) — — (342 ) Equity-based compensation expense — — 11,458 — — — — 11,458 Common stock dividends ($0.225 per share) — — — (50,424 ) — — — (50,424 ) Common shares issued upon vesting of restricted stock units 694 7 (7 ) — — — — — Common shares issued for ESPP 50 1 511 — — — — 512 Treasury shares issued upon vesting of restricted stock units 4 — (84 ) — — 66 — (18 ) Treasury shares issued for ESPP 106 — (166 ) (736 ) — 1,642 — 740 Treasury shares withheld (193 ) — — — — (2,254 ) — (2,254 ) Balances at September 30, 2017 223,062 $ 2,810 $ 1,048,498 $ 215,793 $ (30,510 ) $ (13,108 ) $ — $ 1,223,483 225,511 $ 2,846 $ 1,075,809 $ (220,805 ) $ (30,298 ) $ (17,258 ) $ 810,294 0 0 0 (321 ) 0 0 (321 ) — 0 0 (85,978 ) 0 0 (85,978 ) — 0 0 0 424 0 424 — 0 2,146 0 0 0 2,146 937 10 (10 ) 0 0 0 0 126 1 551 0 0 0 552 (293 ) 0 0 0 0 (1,056 ) (1,056 ) (373 ) 0 0 0 0 (1,017 ) (1,017 ) 225,908 $ 2,857 $ 1,078,496 $ (307,104 ) $ (29,874 ) $ (19,331 ) $ 725,044 — 0 0 (34,245 ) 0 0 (34,245 ) — 0 0 0 (139 ) 0 (139 ) — 0 3,515 0 0 0 3,515 229 3 (3 ) 0 0 0 0 (13 ) 0 0 0 0 (31 ) (31 ) (197 ) 0 0 0 0 (480 ) (480 ) 225,927 $ 2,860 $ 1,082,008 $ (341,349 ) $ (30,013 ) $ (19,842 ) $ 693,664 FRANK'S INTERNATIONAL N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30, 2017 2016 Cash flows from operating activities Net loss $ (50,317 ) $ (89,893 ) Adjustments to reconcile net loss to cash provided by operating activities Derecognition of the TRA liability (122,515 ) — Depreciation and amortization 92,700 84,278 Equity-based compensation expense 11,458 12,356 Amortization of deferred financing costs 267 123 Deferred tax provision (benefit) 12,824 (25,772 ) Reversal of deferred tax assets associated with the TRA 49,775 — Provision for bad debts 358 10,410 Gain on sale of assets (2,091 ) (1,095 ) Changes in fair value of investments (2,009 ) (1,061 ) Realized loss on sale of investment 478 — Unrealized loss on derivatives 49 296 Other (1,187 ) — Changes in operating assets and liabilities Accounts receivable 23,917 82,042 Inventories 6,146 20,032 Other current assets 7,097 5,990 Other assets 1,948 (4 ) Accounts payable (962 ) 474 Deferred revenue (9,039 ) (29,479 ) Accrued and other current liabilities 9,272 (28,556 ) Other non-current liabilities (3,584 ) (12,295 ) Net cash provided by operating activities 24,585 27,846 Cash flows from investing activities Purchases of property, plant and equipment (18,604 ) (29,777 ) Proceeds from sale of assets 10,690 2,235 Proceeds from sale of investments 11,499 11,101 Purchase of investments (60,764 ) (921 ) Other (64 ) — Net cash used in investing activities (57,243 ) (17,362 ) Cash flows from financing activities Repayments of borrowings (190 ) (7,120 ) Proceeds from borrowings — 318 Costs of Preferred Stock conversion to common stock — (595 ) Dividends paid on common stock (50,424 ) (62,333 ) Dividends paid on Preferred Stock — (1 ) Distribution to noncontrolling interest — (8,027 ) Net treasury shares withheld for taxes (2,272 ) (3,046 ) Proceeds from the issuance of ESPP shares 1,252 973 Net cash used in financing activities (51,634 ) (79,831 ) Effect of exchange rate changes on cash (1,896 ) (3,162 ) Net decrease in cash and cash equivalents (86,188 ) (72,509 ) Cash and cash equivalents at beginning of period 319,526 602,359 Cash and cash equivalents at end of period $ 233,338 $ 529,850 226,325 $ 2,866 $ 1,087,733 $ (377,346 ) $ (31,966 ) $ (20,038 ) $ 661,249 — 0 0 (23,886 ) 0 0 (23,886 ) — 0 0 0 1,716 0 1,716 — 0 2,872 0 0 0 2,872 1,717 21 (21 ) 0 0 0 0 238 3 444 0 0 0 447 (568 ) 0 0 0 0 (1,900 ) (1,900 ) 227,712 $ 2,890 $ 1,091,028 $ (401,232 ) $ (30,250 ) $ (21,938 ) $ 640,498 — 0 0 (12,617 ) 0 0 (12,617 ) — 0 0 0 (134 ) �� 0 (134 ) — 0 3,425 0 0 0 3,425 485 6 (6 ) 0 0 0 0 (9 ) 0 0 0 0 (30 ) (30 ) 228,188 $ 2,896 $ 1,094,447 $ (413,849 ) $ (30,384 ) $ (21,968 ) $ 631,142 $ (36,503 ) $ (120,223 ) 31,439 36,970 6,297 5,661 0 57,146 307 20,532 194 194 0 (1,690 ) 437 1,750 (1,661 ) (590 ) (1,012 ) 813 0 (380 ) (17,618 ) 24,465 (12,863 ) (4,539 ) 1,320 2,272 672 390 13,085 (15,187 ) (2 ) (226 ) (152 ) (3,212 ) (16,060 ) 4,146 (4,517 ) (20,259 ) 4,209 6,565 1,501 2,832 (1,294 ) 0 (1,608 ) 0 (179 ) (256 ) (1,888 ) (11,118 ) (1,431 ) 0 (1,930 ) (1,086 ) 0 (1,498 ) 447 552 (2,914 ) (2,032 ) (28 ) 6,543 (20,890 ) (2,461 ) 211,247 196,740 $ 190,357 $ 194,279 FRANK’SFRANK’S INTERNATIONAL N.V.1—1—Basis of Presentation("FINV")(“FINV”, “Frank's” or the “Company”, as the context requires), a limited liability company organized under the laws of Thethe Netherlands, is a global provider of highly engineered tubular services, tubular fabrication and specialty well construction and well intervention solutions to the oil and gas industry. FINV provides services and products to leading exploration and production companies in both offshore and onshore environments with a focus on complex and technically demanding wells.ninesix months ended SeptemberJune 30, 2017 2021 and 20162020 include the activities of Frank's International C.V. ("FICV"FINV, FICV, Blackhawk Group Holdings, LLC (“Blackhawk”) and itstheir wholly owned subsidiaries (collectively,(either individually or together, as context requires, the "Company," "we," "us"“Company,” “we,” “us” or "our"“our”). All intercompany accounts and transactions have been eliminated for purposes of preparing these condensed consolidated financial statements. 20162020, is derived from audited financial statements. However, certain information and footnote disclosures required by generally accepted accounting principles in the United States of America ("GAAP"(“GAAP”) for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2016,2020, which are included in our most recent Annual Report on Form 10-K10-K filed with the Securities and Exchange Commission ("SEC"(“SEC”) on February 24, 2017 ("March 1, 2021 (“Annual Report"Report”). In the opinion of management, these condensed consolidated financial statements, which have been prepared pursuant to the rules of the SEC and GAAP for interim financial reporting, reflect all adjustments, which consisted only of normal recurring adjustments that were necessary for a fair statement of the interim periods presented. The results of operations for interim periods are not necessarily indicative of those for a full year.ReclassificationsHistorically, and through December 31, 2016, certain direct and indirect costs related to operations and manufacturing were classified and reported as general and administrative expenses ("G&A"). The historical classification was consistent with the information used by the Company’s chief operating decision maker ("CODM") to assess performance of the Company’s segments and make resource allocation decisions, and the classification of such costs within the condensed consolidated statements of operations was aligned with the segment presentation. Effective January 1, 2017, the Company changed the classification of certain of these costs in its segment reporting disclosures and within the condensed consolidated statements of operations to reflect a change in the presentation of the information used by the Company’s CODM.This reclassification of costs between cost of revenue and G&A has no net impact to the condensed consolidated statements of operations or to total segment reporting. The change will better reflect the CODM's philosophy on assessing performance and allocating resources, as well as improve comparability to the Company's peer group. This is a change in costs classification and has been reflected retrospectively for all periods presented.The following is a summary oftohad no impact on our operating income (loss), net income (loss), working capital, cash flows or total equity previously reported amounts (in thousands): Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 As previously reported Reclassifications As currently reported As previously reported Reclassifications As currently reported Condensed Consolidated Statements of Operations Cost of revenues, exclusive of depreciation and amortization Equipment rentals and services $ 47,002 $ 10,305 $ 57,307 $ 155,367 $ 34,598 $ 189,965 Products 13,237 2,792 16,029 42,594 8,852 51,446 General and administrative expenses 52,774 (13,097 ) 39,677 182,036 (43,450 ) 138,586 Significant Accounting PoliciesShort‑term investmentsShort‑term investments consist of commercial paper. These investments have original maturities of greater than three months but less than twelve months. They are classified as held-to-maturity investments, which are recorded at amortized cost.("FASB"(“FASB”) generally in the form of accounting standards updates ("ASUs"(“ASUs”) to the FASB’s Accounting Standards Codification.ASUs.accounting pronouncements. ASUs not listed below were assessed and were either determined to be not applicable or are expected to have immaterial impact on our consolidated financial position, or results of operations.In May 2017, the FASB issued guidance to clarify and reduce both (i) diversity in practice and (ii) cost and complexity when accounting for a change to the terms and conditions of a share-based payment award. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted. The amendments in this guidance should be applied prospectively to an award modified on or after the adoption date. Management is evaluating the provisions of this new accounting guidance, including which period to adopt, and has not determined what impact the adoption will have on our consolidated financial statements.In January 2017, the FASB issued guidance that simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. The new standard will be applied prospectively, and is effective for public companies for their annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2019. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company has adopted the provisions of this new accounting guidance for the Company's annual goodwill impairment analysis for the year ended December 31, 2017.In January 2017, the FASB issued new accounting guidance for business combinations clarifying the definition of a business. The objective of the guidance is to help companies and other organizations which have acquired or sold a business to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities, the guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted under certain circumstances. Management is evaluating the provisions of this new accounting guidance.9FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSIn October 2016, the FASB issued new accounting guidance for recognition of income tax consequences of an intra-entity transfer of an asset other than inventory. The objective of the guidance is to eliminate the exception for an intra-entity transfer of an asset other than inventory and requires an entity to recognize the income tax consequences at the time of transfer rather than when the asset is sold to a third party. For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not yet been issued. Management is evaluating the provisions of this new accounting guidance, including which period to adopt, and has not determined what impact the adoption will have on our consolidated financial statements.In August 2016, the FASB issued new accounting guidance for classification of certain cash receiptsoperations and cash payments in the statement of cash flows. The objective of the guidance is to reduce the existing diversity in practice related to the presentation and classification of certain cash receipts and cash payments. The guidance addresses eight specific cash flow issues including but not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and proceeds from the settlement of corporate-owned life insurance policies. For public entities, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and is retrospective for all periods presented. Early adoption is permitted including for interim periods. Management is evaluating the provisions of this new accounting guidance, including which period to adopt, and has not determined what impact the adoption will have on our consolidated financial statements.For public entities,We adopted the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the provisions of this new accounting guidance, including which period to adopt, and has not determined what impact the adoption will have on our consolidated financial statements.In March 2016, the FASB issued accounting guidance on equity compensation, which simplifies the accounting for the taxes related to equity-based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. The ASU also gives an option to recognize actual forfeitures when they occur and clarifies the statement of cash flow presentation for certain components of share-based awards. We adopted this guidance on January 1, 2017 and have elected to recognize actual forfeitures when they occur. The adoption did not have an impact on our consolidated financial statements.In February 2016, the FASB issued accounting guidance for leases. The main objective of the accounting guidance is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and the new guidance is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The new guidance requires lessees to recognize assets and liabilities arising from leases on the balance sheet and further defines a lease as a contract that conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Control over the use of the identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefit from the use of the asset and (2) the right to direct the use of the asset. The accounting guidance requires disclosures by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. For public entities, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; early application is permitted. We are currently evaluating the impact of this accounting standard update on our consolidated financial statements and plan to adopt the new standard effective January 1, 2019.10FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSIn July 2015, the FASB issued accounting guidance on simplifying the measurement of inventory. Under this guidance, inventory will be measured at the lower of cost and net realizable value. Options that currently exist for market value will be eliminated. The guidance defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. We adopted this guidance on January 1, 2017, 2020, and the adoption did not have a material impact on our consolidated financial statements.In May 2014, the FASB issued amendments The new credit loss standard is expected to guidance on theaccelerate recognition of revenue based upon the entity’s contracts with customers to transfer goods or services. Under the new standard, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchangecredit losses on our accounts receivable. See Note 3—Accounts Receivable, net for those goods or services. The standard creates a five step model that requires companies to exercise judgment when considering the terms of a contractadditional information regarding allowance for credit losses on our accounts receivable.all relevant facts and circumstances. The standard allows for several transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presentedRestricted Cash financial statements, including additional disclosures of the standard’s application impact to individual financial statement line items. In July 2015, the FASB deferred the effective date by one year to December 15, 2017 for annual periods, and interim reporting periods within those fiscal years, beginning after that date.We are currently determining the impacts of the new standard on our contract portfolio. Our implementation efforts to date include the identification of revenue streams with similar contract structures, performing a detailed review of key contracts by revenue stream and comparing historical policies and practices to the new standard. Our evaluation of the impact of the new guidance on our consolidated financial statements is ongoing and we continue to evaluate the quantitative and qualitative impacts of the standard on timing of recognition for various revenues. While we are continuing to perform our analysis, at the present time, we anticipate the adoption of the new standard will have an immaterial impact on revenues from contracts for equipment rentals and services. However, revenues from product sales with bill-and-hold arrangements may be accelerated once we adopt the new standard. We will adopt the new standard effective January 1, 2018 using the modified retrospective method.Note 2—Noncontrolling InterestWe hold an economic interest in FICV and are responsible for all operational, management and administrative decisions relating to FICV’s business. Effective with the August 2016 conversion of all of Mosing Holdings' Preferred Stock, Mosing Holdings transferred all its interest in FICV to us and the noncontrolling interest associated with Mosing Holdings was eliminated.Historically we recorded a noncontrolling interest on our condensed consolidated balance sheet with respect to the remaining economic interest in FICV held by Mosing Holdings. Net loss attributable to noncontrolling interest on thesheets and condensed consolidated statements of operations represented the portion of earnings or losses attributable to the economic interest in FICV held by Mosing Holdings. The allocable domestic loss from FICV to FINV was subject to U.S. taxation.11FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSA reconciliation of net loss attributable to noncontrolling interest is detailedcash flows as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2016 Net loss $ (42,198 ) $ (89,893 ) 18,355 18,355 3,078 (10,414 ) 97 23 Net loss subject to noncontrolling interest (20,668 ) (81,929 ) 25.2 % 25.2 % Net loss attributable to noncontrolling interest $ (5,216 ) $ (20,741 ) (1)Represents net loss after August 26, 2016, when Mosing Holdings transferred its interest to FINV.(2)Represents income tax expense (benefit) of entities outside of FICV, as well as income tax attributable to our proportionate share of the U.S. operations of our partnership interests in FICV as of August 26, 2016.(3)Represents results of operations for entities outside of FICV as of August 26, 2016.(4)Represents the economic interest in FICV held by Mosing Holdings before the preferred stock conversion on August 26, 2016. This percentage changed as additional shares of FINV common stock were issued. Effective August 26, 2016, Mosing Holdings delivered its economic interest in FICV to us.Note 3—Acquisitioncash, cash equivalents and DivestituresBlackhawk AcquisitionOn November 1, 2016, we completed a transaction to acquire all outstanding shares in Blackhawk Group Holdings, Inc.restricted cash at June 30, 2021, the ultimate parent company of Blackhawk Specialty Tools LLC, ("Blackhawk") pursuant to the terms of a definitive merger agreement dated October 6, 2016. Blackhawk is a leading provider of well construction and well intervention services and products and the acquisition will allow us to combine Blackhawk’s cementing tool expertise and well intervention services with our global tubular running services. In conjunction with the acquisition, FI Tools Holdings, LLC, our newly formed subsidiary, merged with and into Blackhawk, with Blackhawk surviving the merger as our wholly-owned subsidiary. The merger consideration was comprised of a combination of $150.4 million of cash on hand and 12.8 million shares of our common stock, on a cash-free, debt-free basis, for total consideration of $294.6 million (based on our closing share price on October 31, 2016 of $11.25 and including working capital adjustments).The unaudited pro forma financial information presented below includes adjustments for amortization expense for identified intangible assets and depreciation expense based on the fair value and estimated lives of acquired property, plant and equipment. In addition, acquisition related costs are excluded from the unaudited pro forma financial information.The following table shows our unaudited pro forma financial information assuming the transaction occurred on January 1, 2015 (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, 2016 Revenue $ 120,902 $ 431,962 Net loss applicable to common shares (41,686 ) (82,650 ) Loss per common share: Basic and diluted $ (0.22 ) $ (0.47 ) 12FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Blackhawk acquisition was accounted for as a business combination. The purchase price is allocated to the fair value of assets acquired and liabilities assumed based on a discounted cash flow model and goodwill is recognized for the excess consideration transferred over the fair value of the net assets.The preliminary purchase price allocation was prepared in connection with our annual financial statements filed on our Annual Report. In 2017, we adjusted the purchase price allocation for a litigation settlement and the final valuation report. The following table summarizes the preliminary and the final purchase price allocations of the fair values of the assets acquired and liabilities assumed as part of the Blackhawk acquisition as of November 1, 2016 as determined in accordance with business combination accounting guidance (in thousands): Preliminary purchase price allocation Purchase price adjustments Final purchase price allocation Current assets, excluding cash $ 23,626 $ — $ 23,626 Property, plant and equipment 45,091 55 45,146 Other long-term assets 3,139 — 3,139 Intangible assets 41,972 153 42,125 Assets acquired $ 113,828 $ 208 $ 114,036 Current liabilities assumed 11,132 185 11,317 Other long-term liabilities 542 — 542 Liabilities assumed $ 11,674 $ 185 $ 11,859 Fair value of net assets acquired 102,154 23 102,177 Total consideration transferred 294,563 — 294,563 Goodwill $ 192,409 $ (23 ) $ 192,386 In conjunction with the merger, we created a fourth segment, Blackhawk, and have recorded goodwill of $192.4 million in that segment.DivestituresIn March 2017, we sold a fully depreciated aircraft for a total sales price of $1.3 million and recorded a gain on sale of $1.3 million.In August 2017, we sold an additional aircraft for a net sales price of $4.9 million and recorded an immaterial loss.In September 2017, we sold a building in the Middle East region for a net sales price of $2.7 million and recorded a gain on sale of $0.6 million.13FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSNote 4—Accounts Receivable, netAccounts receivable at September 30, 2017 and December 31, 20162020, were as follows (in thousands): $ 188,581 $ 209,575 1,776 1,672 $ 190,357 $ 211,247 September 30, December 31, 2017 2016 Trade accounts receivable, net of allowance of $13,907 and $14,337, respectively $ 96,034 $ 89,096 Unbilled revenue 24,464 30,882 Taxes receivable 13,987 42,870 895 717 Other receivables 5,526 3,852 Total accounts receivable $ 140,906 $ 167,417 $ 75,098 $ 65,684 33,511 26,215 15,232 14,292 549 549 3,541 3,867 $ 127,931 $ 110,607 (1)affiliates and receivables for aircraft charter income.affiliates.Note 5—InventoriesInventories at September 30, 2017 and December 31, 2016 were as follows (in thousands): September 30, December 31, 2017 2016 Pipe and connectors $ 88,982 $ 102,360 Finished goods 16,063 14,257 Work in progress 8,644 7,099 Raw materials, components and supplies 19,272 15,363 Total inventories $ 132,961 $ 139,079
1014FRANK’S6—4—Inventories, net $ 28,851 $ 22,642 18,997 22,715 1,891 1,730 44,941 34,631 $ 94,680 $ 81,718 SeptemberJune 30, 20172021, and December 31, 20162020, (in thousands): September 30,
2017 December 31,
2016Land — $ 16,491 $ 15,730 Land improvements 8-15 9,346 9,379 39 119,971 73,211 Rental machinery and equipment 7 930,443 933,667 Machinery and equipment - other 7 56,321 60,182 Furniture, fixtures and computers 5 26,280 19,073 Automobiles and other vehicles 5 32,621 36,796 Aircraft 7 — 16,267 7-15, or lease term if shorter 9,870 8,027 — 68,066 120,937 1,269,409 1,293,269 Less: Accumulated depreciation (771,625 ) (726,245 ) Total property, plant and equipment, net $ 497,784 $ 567,024 (1)See Note 12 - Related Party Transactions for additional information. — $ 31,148 $ 30,869 8 - 15 7,624 7,620 13 - 39 118,864 121,105 2 - 7 906,067 897,398 7 55,282 54,842 3 - 5 19,809 16,928 5 25,861 25,948 12,652 12,773 — 11,866 24,381 1,189,173 1,191,864 (944,716 ) (919,157 ) $ 244,457 $ 272,707 thirdsix months ended June 30, 2020, we recorded fixed asset impairment charges of $15.5 million primarily associated with construction in progress in our Cementing Equipment segment, which is included in severance and other charges, net on our condensed consolidated statements of operations. During the first quarter of 2017, we committed to sell certain2020, the results of our buildingsthe Company's test for impairment of goodwill in the Middle East regionCementing Equipment segment as a result of negative market indicators was a triggering event that indicated that our long-lived tangible assets in this segment were impaired. Impairment testing performed in the first quarter of 2020 resulted in the determination that certain long-lived assets were not recoverable and determined thosethat the estimated fair value was below the carrying value. Please see Note 15—Severance and Other Charges, net for additional details. No impairments associated with held for use assets were recognized during the three and six months ended June 30, 2021.in our unaudited condensed consolidated balance sheet. As a result, weand was reclassified the buildings, with a net book value of $4.1 million, from property, plant and equipment to assets held for sale on our condensed consolidated balance sheet. During the second quarter of 2021, we sold a building classified as held for sale for $1.8 million and recognizedrecorded a $0.3gain of $1.3 million.loss.periodsthree and six months ended SeptemberJune 30, 2017 2021 and 20162020 (in thousands): $ 13,683 $ 15,771 $ 28,154 $ 33,034 126 184 265 423 1,523 1,297 3,020 3,513 $ 15,332 $ 17,252 $ 31,439 $ 36,970 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Equipment rentals and services $ 25,663 $ 23,870 $ 78,558 $ 76,023 Products 1,278 989 3,838 3,081 General and administrative expenses 3,709 1,686 10,304 5,174 Total $ 30,650 $ 26,545 $ 92,700 $ 84,278
1215FRANK’S $ 28,300 $ (27,509 ) $ 791 $ 28,300 $ (26,324 ) $ 1,976 18,135 (9,017 ) 9,118 13,860 (7,939 ) 5,921 $ 46,435 $ (36,526 ) $ 9,909 $ 42,160 $ (34,263 ) $ 7,897 7—15—Severance and Other Charges, net for additional details.SeptemberJune 30, 20172021, and December 31, 20162020, consisted of the following (in thousands): September 30, December 31, 2017 2016 $ 29,671 $ 36,269 Deposits 2,193 2,343 Other 1,480 6,921 Total other assets $ 33,344 $ 45,533 $ 27,261 $ 26,167 1,830 2,182 1,990 2,510 $ 31,081 $ 30,859 (1)10 – 10—Fair Value Measurements for additional information.8—8—Accounts Payable and Accrued LiabilitiesOther Current LiabilitiesAccrued and other currentaccrued liabilities at SeptemberJune 30, 20172021, and December 31, 20162020, consisted of the following (in thousands): $ 28,063 $ 22,277 21,846 23,212 25,242 14,420 766 2,666 6,800 16,029 2,277 2,513 26,037 18,869 $ 111,031 $ 99,986 September 30, December 31, 2017 2016 Accrued compensation $ 18,758 $ 10,854 Accrued property and other taxes 19,781 19,740 Accrued severance and other charges 2,040 6,150 Income taxes 11,012 6,857 Accrued purchase orders 8,174 2,083 Other 15,329 19,266 Total accrued and other current liabilities $ 75,094 $ 64,950 9—9—DebtWe have$100.0 million5-year senior secured revolving credit facility (the “ABL Credit Facility”) with certainJPMorgan Chase Bank, N.A., as administrative agent (the “ABL Agent”), and other financial institutions as lenders with total commitments of $100.0 million including up to $20.0$15.0 million in available for letters of credit and up to $10.0 million in swingline loans, which matures in August 2018 (the “Credit Facility”).credit. Subject to the terms of the ABL Credit Facility, we have the ability to increase the commitments to $150.0 million. At September 30, 2017 and December 31, 2016, we had $2.8 million and $3.7 million, respectively, in letters of credit outstanding and no outstanding borrowings under this facility. As of September 30, 2017, our ability to $200.0 million. The maximum amount that the Company may borrow under the ABL Credit Facility has been reducedis subject to approximately $30 million as a resultborrowing base, which is based on a percentage of our decreased Adjusted EBITDA. Our borrowing capacitycertain eligible accounts receivable and eligible inventory, subject to customary reserves and other adjustments.could be further reduced or eliminated dependingare fully and unconditionally guaranteed jointly and severally by FINV’s subsidiaries, including FICV, Frank’s International, LLC, Blackhawk, Frank’s International GP, LLC, Frank’s International, LP, Frank’s International LP B.V., Frank’s International Partners B.V., Frank’s International Management B.V., Blackhawk Intermediate Holdings, LLC, Blackhawk Specialty Tools, LLC, and Trinity Tool Rentals, L.L.C., subject to customary exceptions and exclusions. In addition, the obligations under the ABL Credit Facility are secured by first priority liens on our future Adjusted EBITDA. As a resultsubstantially all of this, our overall liquidity would be diminished.ourFINV’s option at either a base rate or an adjusted Eurodollar rate.(a) the Alternate Base rate loans underRate (“ABR”) (as defined therein), calculated as the Credit Facility bear interest at a rate equal to the highergreatest of (i) the prime rate as published inof interest publicly quoted by the Wall Street Journal, as the “prime rate,” subject to each increase or decrease in such prime rate effective as of the date such change occurs, (ii) the Federal Funds Effective Ratefederal funds effective rate that is subject to a 0.00% interest rate floor plus 0.50% or, and (iii) the adjusted Eurodollar rateone-month Adjusted LIBO Rate (as defined therein) plus 1.00%, or (b) the Adjusted LIBO Rate, plus, an applicable margin ranging from 0.50% to 1.50%, subject to adjustment based on a leverage ratio. Interest is in each case, payable quarterly for base-rate loans. Eurodollar loans under the Credit Facility bear interest at an adjusted Eurodollar rate equal to the Eurodollar rate for such interest period multiplied by the statutory reserves, plus an applicable margin ranging from 1.50% to 2.50%. Interest is payable at the end ofmargin. The applicable interest periodsrate margin ranges from 1.00% to 1.50% per annum for ABR loans and 2.00% to 2.50% per annum for Eurodollar loans except that if the interest period for a Eurodollar loanand, in each case, is longer than three months, interest is paid at16FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSthe end of each three-month period.based on FINV’s leverage ratio. The unused portion of the ABL Credit Facility is subject to a commitment fee rangingthat varies from 0.250% to 0.375% based per annum, according to average daily unused commitments under the ABL Credit Facility. Interest on certain leverage ratios.that,and restrictive provisions which limit, subject to certain customary exceptions and thresholds, FINV’s ability to, among other things, limit our ability to grant certain liens,(1) enter into asset sales; (2) incur additional indebtedness; (3) make certaininvestments, acquisitions, or loans and investments, enter into mergerscreate or acquisitions, enter into hedging transactions, change our lines of business, prepayincur liens; (4) pay certain indebtedness, enter into certain affiliate transactions, incur additional indebtednessdividends or make other distributions and (5) engage in certain asset dispositions.financial covenants, which, amongcross default provisions that apply to FINV’s other things, require us, on a consolidated basis, to maintain: (i) a ratioindebtedness.total consolidated funded debt to adjusted EBITDA (as defined in our Credit Agreement) of not more than 2.5 to 1.0 and (ii) a ratio of EBITDA to interest expense of not less than 3.0 to 1.0.In addition,June 30, 2021, FINV had no borrowings outstanding under the ABL Credit Facility, contains customary eventsletters of default, including, among others, the failure to make required payments, the failure to comply with certain covenants or other agreements, breachcredit outstanding of the representations$9.4 million and covenants contained in the agreements, defaultavailability of certain other indebtedness, certain events of bankruptcy or insolvency and the occurrence of a change in control.On April 28, 2017, the Company obtained a limited waiver under its Revolving Credit Agreement, dated August 14, 2013, by and among FICV (as borrower), Amegy Bank National Association (as administrative agent), Capital One, National Association (as syndication agent) and the other lenders party thereto (the "Credit Agreement"), of its leverage ratio and interest coverage ratio for the fiscal quarters ending March 31, 2017 and June 30, 2017 (the “Waiver”) in order to not be in default for first quarter of 2017 testing. The Company agreed to comply with the following conditions during the period from the effective date of the Waiver until the delivery of its compliance certificate with respect to the fiscal quarter ending September 30, 2017: (i) maintain no less than $250.0 million in liquidity; (ii) abide by certain restrictions regarding the issuance of senior unsecured debt; and (iii) pay interest and commitment fees based on the highest “Applicable Margin” (as defined in the Credit Agreement) level. $34.0 million.Waiver, the Company paid a waiver fee to each lender that executed the Waiver equal to five basis pointsclosing of the respective lender’s commitment underMerger, Frank’s expects that the Credit Agreement. As of September 30, 2017, we were in compliance with the covenants included in the Credit Agreement.Citibank Credit FacilityIn 2016, we enteredCombined Company will enter into a three-yearnew revolving credit facility with Citibank N.A., UAE Branch inand terminate or otherwise replace the amountexisting Frank’s and Expro credit facilities.10—10—Fair Value Measurements10 - 10—Fair Value Measurements in our Annual Report for further discussion.17FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptemberJune 30, 20172021 and December 31, 20162020, were as follows (in thousands): (Level 1) (Level 2) (Level 3) Total September 30, 2017 Assets: Derivative financial instruments $ — $ 132 $ — $ 132 Investments: Cash surrender value of life insurance policies - deferred compensation plan — 29,671 — 29,671 Marketable securities - other 131 — — 131 Liabilities: Derivative financial instruments — 35 — 35 Deferred compensation plan — 27,659 — 27,659 December 31, 2016 Assets: Derivative financial instruments $ — $ 146 $ — $ 146 Investments: Cash surrender value of life insurance policies - deferred compensation plan — 36,269 — 36,269 Marketable securities - other 3,692 — — 3,692 Liabilities: Deferred compensation plan — 30,307 — 30,307 Our derivative financial instruments consist of short-duration foreign currency forward contracts. The fair value of our derivative financial instruments is based on quoted market values including foreign exchange forward rates and interest rates. The fair value is computed by discounting the projected future cash flow amounts to present value. Derivative financial instruments are included in our condensed consolidated balance sheets in accounts receivable, net and accrued and other current liabilities at September 30, 2017 and in accounts receivable, net, at December 31, 2016. $ 0 $ 27,261 $ 0 $ 27,261 2 0 0 2 0 20,185 0 20,185 $ 0 $ 26,167 $ 0 $ 26,167 3 0 0 3 0 20,271 0 20,271 third-partythird-party broker statements, which are derived from the fair value of the funds'funds’ underlying investments. We also have marketable securities in publicly traded equity securities as an indirect result of strategic investments. They are reported at fair value based on the price of the stock and are included in other assets on the condensed consolidated balance sheets. For business combinations (see Note 3 - Acquisition and Divestitures),purchase price is allocatedestimated fair value of each reporting unit to the assets acquired and liabilities assumed based onreporting unit’s carrying value, including goodwill. We estimate the fair value for each reporting unit using a discounted cash flow model for most intangibles as well asanalysis based on management’s short-term and long-term forecast of operating performance. This analysis includes significant assumptions regarding discount rates, revenue growth rates, expected profitability margins, forecasted capital expenditures and the timing of expected future cash flows based on market assumptions forconditions. If the valuationestimated fair value of equipmenta reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is measured and recorded.fixed assets. We utilizethan goodwill, we first compare estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount. If the undiscounted cash flows are less than the asset’s carrying amount, we then determine the asset’s fair value by using a discounted cash flow modelanalysis. These analyses are based on estimates such as management’s short-term and long-term forecast of operating performance, including revenue growth rates and expected profitability margins, estimates of the remaining useful life and service potential of the asset, and a discount rate based on our weighted average cost of capital.evaluatingvolatile economic environments and could result in impairment18FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSconsiderations related charges in future periods if actual results materially differ from the estimated assumptions utilized in our forecasts. If crude oil prices decline significantly and remain at low levels for a sustained period of time, we could be required to goodwill andrecord an impairment of the carrying value of our long-lived assets.assets in the future which could have a material adverse impact on our operating results. Given the unobservable nature of the inputs, the discounted cash flow models are deemed to use Level 3 inputs.sheetsheets of our cash and cash equivalents, restricted cash, short-term investments, trade accounts receivable, other current assets, accounts payable accrued and other currentaccrued liabilities and lines of credit approximate fair values due to their short maturities.11— DerivativesWe enter into short-duration foreign currency forward derivative contracts to reduce the risk of foreign currency fluctuations. We use these instruments to mitigate our exposure to non-local currency operating working capital. We record these contracts at fair value on our condensed consolidated balance sheets. Although the derivative contracts will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts for hedge accounting treatment. Accordingly, any changes in the fair value of the derivative instruments during a period will be included in our condensed consolidated statements of operations.As of September 30, 2017 and December 31, 2016, we had the following foreign currency derivative contracts outstanding in U.S. dollars (in thousands): September 30, 2017 Derivative Contracts Notional Amount Contractual Exchange Rate Settlement Date Canadian dollar $ 5,740 1.2194 12/15/2017 Euro 5,982 1.1963 12/15/2017 Euro 2,399 1.1993 10/13/2017 Norwegian krone 5,338 7.8675 12/15/2017 Pound sterling 7,961 1.3268 12/15/2017 December 31, 2016 Derivative Contracts Notional Amount Contractual Exchange Rate Settlement Date Canadian dollar $ 4,553 1.3179 3/14/2017 Euro 4,753 1.0563 3/14/2017 Euro 2,558 1.0659 1/13/2017 Norwegian krone 3,643 8.5101 3/14/2017 Pound sterling 3,908 1.2607 3/14/2017 The following table summarizes the location and fair value amounts of all derivative contracts in the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 (in thousands):Derivatives not Designated as Hedging Instruments Consolidated Balance Sheet Location September 30, 2017 December 31, 2016 Foreign currency contracts Accounts receivable, net $ 132 $ 146 Foreign currency contracts Accrued and other current liabilities (35 ) — 19FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe following table summarizes the location and amounts of the realized and unrealized gains and losses on derivative contracts in the condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, Derivatives not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative Contracts 2017 2016 2017 2016 Unrealized gain (loss) on foreign currency contracts Other income (expense), net $ 681 $ (615 ) $ (49 ) $ (296 ) Realized gain (loss) on foreign currency contracts Other income (expense), net (1,794 ) 511 (2,346 ) (1,068 ) Total net loss on foreign currency contracts $ (1,113 ) $ (104 ) $ (2,395 ) $ (1,364 ) Our derivative transactions are governed through International Swaps and Derivatives Association master agreements. These agreements include stipulations regarding the right of offset in the event that we or our counterparty default on our performance obligations. If a default were to occur, both parties have the right to net amounts payable and receivable into a single net settlement between parties. Our accounting policy is to offset derivative assets and liabilities executed with the same counterparty when a master netting arrangement exists.The following table presents the gross and net fair values of our derivatives at September 30, 2017 and December 31, 2016 (in thousands): Derivative Asset Positions Derivative Liability Positions September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016 Gross position - asset / (liability) $ 239 $ 181 $ (142 ) $ (35 ) Netting adjustment (107 ) (35 ) 107 35 Net position - asset / (liability) $ 132 $ 146 $ (35 ) $ — Note 12—11—Related Party TransactionsThe majority of these lease obligations expire in 2018 and, at our discretion, may be extended for an additional 36 months subject to agreement on pricing of the extension. These leases may be extended or allowed to expire by us depending on operational needs, market prices and the ability for us to negotiate and secure, at our discretion, alternative leases or replacement locations. Rent expense associated with our related party leases was $1.8 million for each of the three months ended September 30, 2017 and 2016, and $5.3$0.7 million and $6.2$0.7 million for the ninethree months ended SeptemberJune 30, 2017 2021 and 2016,2020, respectively, and $1.4 million and $1.4 million for the six months ended June 30, 2021 and 2020, respectively.In certain cases, we have made improvements to properties subject to As of June 30, 2021, $2.7 million of our operating lease right-of-use assets and $3.9 million of our lease liabilities were associated with related party leases referenced above, including the construction of buildings. As of September 30, 2017, the net book value associated with buildings we constructed on properties subject to related party leases was $62.7 million. We are depreciating the costs associated with these buildings over their estimated useful lives of approximately 39 years, which exceeds the remaining lease terms that primarily expire in 2018. Upon expiration of the leases, leasehold improvements could be construed as becoming the property of the related party lessors. As of September 30, 2017, the net book value associated with leasehold and land improvements we constructed on properties subject to related party leases was $13.4 million, a portion of which is in construction in progress. It is our intent to extend, renew, or replace the related party property leases such that we have unrestricted use of the buildings and improvements throughout their estimated useful lives. Extension, renewal or replacement of the related party property leases is dependent on negotiations with related parties, the failure of which could result in material disputes with the related parties. In the event we do not extend, renew, or20FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSreplace these related party property leases, we will revise the remaining estimated useful lives of the buildings accordingly.We are a party to certain agreements relating to the rental of aircraft to Western Airways ("WA"), an entity owned by the Mosing family. The WA agreements reflect both dry lease and wet lease rental, whereby we are charged a flat monthly fee primarily for crew, hangar, maintenance and administration costs in addition to other variable costs for fuel and maintenance. We also earn charter income from third party usage through a revenue sharing agreement. We recorded $0.4 million and $0.3 million of net charter expense for the three months ended September 30, 2017 and 2016, respectively, and $1.0 million and $0.8 million of net charter expense for nine months ended September 30, 2017 and 2016, respectively.and its permitted transferees converted all their Preferred Stockof its shares of our Series A convertible preferred stock into shares of our common stock on a one-for-one basis on August 26, 2016, subjectin connection with its delivery to customary conversion rate adjustments for stock splits, stock dividends and reclassifications and other similar transactions, by deliveryFINV of an equivalent portionall of theirits interests in FICV to us (the “Conversion”). FICV will makeAs a result of an election under Section 754 of the Internal Revenue Code. Pursuant to the Section 754 election,Code made by FICV, the Conversion will resultresulted in an adjustment to the tax basis of the tangible and intangible assets of FICV with respect to the portion of FICV now heldtransferred to FINV by FINV.Mosing Holdings. These adjustments will be allocatedare solely allocable to FINV. The adjustments to the tax basis of the tangible and intangible assets of FICV described above would not have been available absent thisthe Conversion. The basis adjustments may reduce the amount of tax that FINV would otherwise be required to pay in the future. These basis adjustments may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets."TRA"“TRA”) that we entered into with FICV and Mosing Holdings in connection with our initial public offering ("IPO"(“IPO”) generally provides for the payment by FINV to Mosing Holdings of 85% of the amount of the actual reductions,net cash savings, if any, in payments of U.S. federal, state and local income tax orand franchise tax (which reductionsthat we referactually realize (or are deemed to as “cash savings”)realize in certain circumstances) in periods after our IPO as a result of (i) the tax basis increases resulting from the Conversion and (ii) imputed interest deemed to be paid by usFINV as a result of, and additional tax basis arising from, payments under the TRA. In addition,We will retain the benefit of the remaining 15% of these cash savings, if any. Payments FINV makes under the TRA provides for paymentwill be increased by us ofany interest earnedaccrued from the due date (without extensions) of the corresponding tax return to the date of payment specified by the TRA. The payments under the TRA will not be conditioned upon a holder of rights under the TRA having a continued ownership interest in either FICV or FINV. We will retain the remaining 15% of cash savings, if any.liabilityamount and timing of payments under the TRA is by its nature imprecise andimprecise. For purposes of the TRA, cash savings in tax generally are calculated by comparing FINV’s actual tax liability to the amount FINV would have been required to pay had it not been able to utilize any of the tax benefits subject to the TRA. The amounts payable, as well as the timing of any payments, under the TRA are dependent upon significant future events and assumptions, regardingincluding the amount and timing of futurethe taxable income.income FINV generates in the future. As of SeptemberJune 30, 2017,2021, FINV has had a cumulative loss over the prior 36-month period. Based on this history of losses, as well as uncertainty regarding the timing and amount of future taxable income, we are no longer able to conclude that there will be future cash savings that will lead to additional payouts under the TRA beyond the estimated $2.1 million as of September 30, 2017 that represents 85% of the cash tax savings estimated to be realized in the 2016 federal income tax return of FINV.TRA. Additional TRA liability may be recognized in the future based on changes in expectations regarding the timing and likelihood of future cash savings.ourFINV’s obligations and are not obligations of FICV. The term of the TRA commenced upon the completion of the IPO and will continue until all such tax benefits that are subject to the TRA have been utilized or expired, unless FINV elects to exercise its sole right to terminate the TRA early.(or the TRA is terminated due to other circumstances, including our breach of a material obligation thereunder or certain mergers or other changes of control), and FINV makes the termination payment specified by the TRA, or FINV otherwise settles its obligations under the TRA. If FINV elects to terminate the TRA early, which it may do so in its sole discretion (or if it terminates early as a result of our breach), it would be required to make ana substantial, immediate lump-sum payment equal to the present value of the anticipatedhypothetical future tax benefits subjectpayments that could be required to be paid under the TRA (based upon certain assumptions and deemed events set forth in the TRA, including the assumption that it has sufficient taxable income to fully utilize such benefits and that any FICV interests that Mosing Holdings or its transferees ownbenefits), determined by applying a discount rate equal to the long-term Treasury rate in effect on the terminationapplicable date are deemed to be exchanged on the termination date).plus 300 basis points. Any early termination payment may be made significantly in advance of the actual realization, if any, of such future benefits. In addition, payments due under the TRA will be similarly accelerated following certain mergers or other changes of control. In these situations, FINV’s obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes21FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSSeptemberJune 30, 2017, 2021, the estimated termination payment would be approximately $102.0$66.5 million (calculated using a discount rate of 5.63%5.0%). The foregoing number is merely an estimate and the actual payment could differ materially.FICVour operating subsidiaries to make distributions to it in an amount sufficient to cover FINV’s obligations under such agreements; this ability, in turn, may depend on the ability of FICV’s subsidiaries to provide payments to it.agreement. The ability of FICV and itscertain of our operating subsidiaries to make such distributions will be subject to, among other things, the applicable provisions of Dutch law that may limit the amount of funds available for distribution and restrictions in our debt instruments. To the extent that FINV is unable to make payments under the TRA for any reason except(except in the case of an acceleration of payments thereunder occurring in connection with an early termination of the TRA or certain mergers or change of control,control) such payments will be deferred and will accrue interest until paid, and FINV will be prohibited from paying dividends on its common stock.13 - Income (Loss)12—Loss Per Common Shareincome (loss)loss per common share is determined by dividing net income (loss)loss by the weighted average number of common shares outstanding during the period. Diluted income (loss)loss per share is determined by dividing income (loss) attributable to common stockholders net loss by the weighted average number of common shares outstanding, assuming all potentially dilutive shares were issued.the unvested restricted stock units and ESPPemployee stock purchase plan (“ESPP”) shares. Through August 26, 2016, the date of the conversion of all of Mosing Holdings' Preferred Stock and Mosing Holdings' transfer of interest in FICV to us, the diluted income (loss) per share calculation assumed the conversion of 100% of our outstanding Preferred Stock on an as if converted basis. Accordingly, the numerator was also adjusted to include the earnings allocated to the noncontrolling interest after taking into account the tax effect of such exchange.22FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSincome (loss)loss per share calculations (in thousands, except per share amounts): $ (12,617 ) $ (34,245 ) $ (36,503 ) $ (120,223 ) 228,013 225,853 227,519 225,855 $ (0.06 ) $ (0.15 $ (0.16 ) $ (0.53 ) 1,329 707 1,688 955 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerator Net income (loss) $ 2,296 $ (42,198 ) $ (50,317 ) $ (89,893 ) Less: Net loss attributable to noncontrolling interest — 5,216 — 20,741 Less: Preferred stock dividends — — — (1 ) Net income (loss) available to common shareholders $ 2,296 $ (36,982 ) $ (50,317 ) $ (69,153 ) Denominator Basic weighted average common shares 223,056 177,125 222,847 162,656 525 — — — 223,581 177,125 222,847 162,656 Income (loss) per common share: Basic $ 0.01 $ (0.21 ) $ (0.23 ) $ (0.43 ) Diluted $ 0.01 $ (0.21 ) $ (0.23 ) $ (0.43 ) Approximate number of shares of potentially convertible preferred stock to common stock up until the time of conversion on August 26, 2016, unvested restricted stock units and stock to be issued pursuant to the ESPP have been excluded from the computation of diluted income (loss) per share as the effect would be anti-dilutive when the results from operations are at a net loss position. — 32,977 624 47,273 14—13—Income Taxesyear'syear’s pre-tax income (loss) as new information becomes available. The continual estimation process often results in a change to the expected effective tax rate for the year. When this occurs, we adjust the income tax provision (benefit) during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the most current expected annual tax rate.on income (loss) before income taxes was 97.4%(115.9)% and 13.9%(35.6)% for the three months ended SeptemberJune 30, 2017 2021 and 2016,2020, respectively and 327.7%(27.4)% and 14.6%5.2% for six months ended June 30, 2021 and 2020, respectively. The quarterly sequential variance in effective tax rates is due to a change in the geographical mix of income. The year over year variance in effective tax rates is primarily due to the beneficial impact in the prior year period from the five-year net operating loss carryback provision included in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), as well as a change in the geographical mix of income. We are subject to tax in many U.S. and non-U.S. jurisdictions. In many non-U.S. jurisdictions we are taxed on bases such as deemed profits or withholding taxes based on revenue. Consequently, the level of correlation between our pre-tax income and our income tax provision varies from period to period.nine months ended September 30, 2017 and 2016, respectively. The higher rate is due primarilyyears 2008 - 2019. We do not expect the results of these audits to recording valuation allowances againsthave any material effect on our net deferred tax assets. The deferred tax assets relate to net operating losses, outside basis differences in our partnership investment and other timing differences primarily associated with our U.S. operations.In determining that a valuation allowance must be recorded in the current period, we assessed the available positive and negative evidence and concluded that it is not more likely than not that sufficient future taxable income would be generated to permit the use of our deferred tax assets. This conclusion is primarily the result of cumulative losses incurred in the most recent three year period, and uncertainty regarding when we will return to profitability. The amount of deferred tax asset considered realizable and the related need for a valuation allowance may be adjusted in future periods as the available evidence changes.SeptemberJune 30, 2017,2021, there were no significant changes to our unrecognizeduncertain tax benefitspositions as reported in our audited financial statements for the year ended December 31, 2016.2020.23FRANK’S15—14—Commitments and ContingenciesSeptemberJune 30, 2017 and 2021 or December 31, 2016.2020. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows.United StatesU.S. Department of Justice (“DOJ”) and other governmental entities. It is our intent to continue to fully cooperate with these agencies and any other applicable authorities in connection with any further investigation that may be conducted in connection with this matter. While our review has not indicated that there has been any material impact on our previously filed financial statements, we have continued to collect information and cooperate with the authorities, but at this time are unable to predict the ultimate resolution of these matters with these agencies. In addition, during the courseinvestigation,FCPA remains ongoing, and we discovered historical business transactions (and bidswill continue to enter into business transactions) in certain countries that may have been subject to U.S.cooperate with the SEC, DOJ and other international sanctions. We have disclosed this information to variousrelevant governmental entities (including those involved in our ongoing investigation), but atconnection therewith. At this time, we are unable to predict the ultimate resolution of these matters with these agencies, including any financial impact to us. Our Board and management are committed to continuously enhancing our internal controls that support improved compliance and transparency throughout our global operations.16—15—Severance and Other Charges, net $ 845 $ 4,794 $ 1,110 $ 5,332 2,554 0 9,358 0 0 0 171 15,479 0 368 136 368 0 0 0 4,708 $ 3,399 $ 5,162 $ 10,775 $ 25,887 CODMCompany’s chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. We are comprised of fourthree reportable segments: InternationalTubular Running Services U.S. Services, Tubular Sales(“TRS”) segment, Tubulars segment and Blackhawk.International ServicesTRS segment provides tubular running services globally. Internationally, the TRS segment operates in internationalthe majority of the offshore oil and gas markets and also in several onshore international regions. Our customersregions with operations in these international markets are primarily large exploration and production companies, including integrated oil and gas companies and national oil and gas companies.Theapproximately 40 countries on six continents. In the U.S. Services, the TRS segment provides tubular services in the active onshore oil and gas drilling regions, in the U.S., including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale DJ Basin and Utica Shale, as well asand in the U.S. Gulf of Mexico. Our customers are primarily large exploration and production companies, including international oil and gas companies, national oil and gas companies, major independents and other oilfield service companies.Tubular SalesTubulars segment designs, manufactures and distributes large outside diameter ("OD") pipe, connectors and casing attachments andfor large outside diameter (“OD”) heavy wall pipe. Additionally, the Tubulars segment sells large OD pipe originally manufactured by various pipe mills. We also providemills, as plain end or fully fabricated with proprietary welded or thread-direct connector solutions and provides specialized fabrication and welding services in support of offshore deepwater projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long length tubulars (uplong-length tubular assemblies up to 300400 feet in length) for use as caissons or pilings. Thislength. The Tubulars segment also designsspecializes in the development, manufacture and manufacturessupply of proprietary equipment for use in our International and U.S. Services segments.BlackhawkCE segment provides well constructionspecialty equipment to enhance the safety and well intervention rentalefficiency of rig operations. It provides specialized equipment, services and products in addition to cementing tool expertise,utilized in the U.S.construction of the wellbore in both onshore and Mexican Gulfoffshore environments. The product portfolio includes casing accessories that serve to improve the installation of Mexico, onshore U.S.casing, centralization and wellbore zonal isolation, as well as enhance cementing operations through advance wiper plug and float equipment technology. The CE segment also provides services and products utilized in the construction, completion or abandonment of the wellbore. These solutions are primarily used to isolate portions of the wellbore through the setting of barriers downhole to allow for rig evacuation in case of inclement weather, maintenance work on other select international locations.rig equipment, squeeze cementing, pressure testing within the wellbore and temporary and permanent abandonments. These offerings improve operational efficiencies and limit non-productive time if unscheduled events are encountered at the wellsite. $ 20,246 $ 10,301 $ 11,213 $ 41,760 51,649 6,265 8,167 66,081 $ 71,895 $ 16,566 $ 19,380 $ 107,841 $ 18,874 $ 4,990 $ 7,284 $ 31,148 43,453 3,751 7,749 54,953 $ 62,327 $ 8,741 $ 15,033 $ 86,101 $ 38,613 $ 18,294 $ 20,558 $ 77,465 99,567 9,941 15,679 125,187 $ 138,180 $ 28,235 $ 36,237 $ 202,652 $ 49,043 $ 14,787 $ 20,815 $ 84,645 102,781 6,496 15,671 124,948 $ 151,824 $ 21,283 $ 36,486 $ 209,593 $ 41,760 $ 31,148 $ 77,465 $ 84,645 29,571 21,886 57,825 57,320 25,765 20,077 47,699 41,002 8,588 8,734 16,241 18,303 2,157 4,256 3,422 8,323 $ 107,841 $ 86,101 $ 202,652 $ 209,593 saledisposal of assets, foreign currency gain or loss, equity-24FRANK’S INTERNATIONAL N.V.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSbasedequity-based compensation, unrealized and realized gain or loss, the effects of the TRA,net severance and other charges, other non-cash adjustments and other charges. We review Adjusted EBITDA on both a consolidated basis and on a segment basis. We use Adjusted EBITDA to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), income tax, foreign currency exchange rates and other charges and credits. Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP. Previously reported Adjusted EBITDA for the three and nine months ended September 30, 2016 has been adjusted for investigation-related matters by $1.8 million and $5.1 million, respectively, as management believes removing the effect of these items allows for better comparability across periods.income (loss)loss (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Segment Adjusted EBITDA: International Services $ 11,151 $ 4,532 $ 25,459 $ 31,752 (11,322 ) (5,995 ) (27,775 ) (13,018 ) Tubular Sales (1,333 ) 165 1,736 1,343 Blackhawk 3,477 — 7,653 — 1,973 (1,298 ) 7,073 20,077 Interest income, net 1,019 646 2,170 1,050 Depreciation and amortization (30,650 ) (26,545 ) (92,700 ) (84,278 ) Income tax (expense) benefit (87,613 ) 6,800 (72,419 ) 15,311 Gain on sale of assets 829 46 2,091 1,095 Foreign currency gain (loss) 1,839 (1,696 ) 3,184 (5,907 ) 122,515 — 122,515 — (7,616 ) (20,151 ) (22,231 ) (37,241 ) Net income (loss) $ 2,296 $ (42,198 ) $ (50,317 ) $ (89,893 ) $ 9,750 $ 4,049 $ 17,878 $ 17,354 4,108 681 4,746 2,077 4,851 886 9,647 3,430 (6,297 ) (7,308 ) (13,207 ) (17,494 ) 12,412 (1,692 ) 19,064 5,367 0 0 0 (57,146 ) (3,399 ) (5,162 ) (10,775 ) (25,887 ) (101 ) 178 (388 ) 711 (15,332 ) (17,252 ) (31,439 ) (36,970 ) (6,773 ) (8,986 ) (7,843 ) 6,577 1,479 650 1,661 590 2,718 1,693 (150 ) (8,199 ) (3,621 ) (3,674 ) (6,633 ) (5,266 ) $ (12,617 ) $ (34,245 ) $ (36,503 ) $ (120,223 ) (1)(2)Amounts previously reported as Corporate and other of $159 and $361 for the three and nine months ended September 30, 2016, respectively, have been reclassified to U.S. Services to conform to the current presentation.(2)Please see Note 12 - Related Party Transactions for further discussion.(3)Comprised of Equity-based compensation expense (for the three months ended SeptemberJune 30, 2017 2021 and 2016: $2,3422020: $3,399 and $3,828,$3,515, respectively, and for the ninesix months ended SeptemberJune 30, 2017 2021 and 2016: $11,4582020: $6,297 and $12,356, respectively), Mergers and acquisition expense (for the three months ended September 30, 2017 and 2016: none and none, respectively, and for the nine months ended September 30, 2017 and 2016: $459 and none, respectively), Severance and other charges (for the three months ended September 30, 2017 and 2016: $1,648 and $14,534, respectively, and for the nine months ended September 30, 2017 and 2016: $2,386 and $18,858,$5,661, respectively), Unrealized and realized gains (losses) (for the three months ended SeptemberJune 30, 2017 2021 and 2016: $(1,123)2020: $(108) and $(10)$(111), respectively, and for the ninesix months ended SeptemberJune 30, 2017 2021 and 2016: $(2,819)2020: $(206) and $(973),$1,593, respectively) and Investigation-related matters (for the three months ended SeptemberJune 30, 2017 2021 and 2016: $2,5032020: $88 and $1,779,$48, respectively, and for the ninesix months ended SeptemberJune 30, 2017 2021 and 2016: $5,1092020: $130 and $5,054,$1,198, respectively). Tubular Sales Blackhawk Eliminations Total Three Months Ended September 30, 2017 Revenue from external customers $ 53,742 $ 29,065 $ 7,701 $ 17,575 $ — $ 108,083 Inter-segment revenue 3 4,062 3,111 33 (7,209 ) — Operating loss (2,647 ) (25,453 ) (3,967 ) (3,013 ) — (35,080 ) Adjusted EBITDA 11,151 (11,322 ) (1,333 ) 3,477 — * Three Months Ended September 30, 2016 Revenue from external customers $ 51,028 $ 34,057 $ 20,029 $ — $ — $ 105,114 Inter-segment revenue (1 ) 3,641 5,036 — (8,676 ) — Operating loss (17,697 ) (30,415 ) (820 ) — — (48,932 ) 4,532 (5,995 ) 165 — — * Nine Months Ended September 30, 2017 Revenue from external customers $ 153,851 $ 89,936 $ 40,787 $ 51,899 $ — $ 336,473 Inter-segment revenue 18 12,890 10,350 105 (23,363 ) — Operating loss (19,140 ) (73,092 ) (782 ) (12,642 ) — (105,656 ) Adjusted EBITDA 25,459 (27,775 ) 1,736 7,653 — * Nine Months Ended September 30, 2016 Revenue from external customers $ 191,440 $ 119,955 $ 68,151 $ — $ — $ 379,546 Inter-segment revenue 45 11,691 15,053 — (26,789 ) — Operating loss (25,834 ) (74,722 ) (1,936 ) — — (102,492 ) 31,752 (13,018 ) 1,343 — — * (1)Amounts previously reported as Corporate and other of $159 and $361 for the three and nine months ended September 30, 2016, respectively, have been reclassified to U.S. Services to conform to the current presentation. $ 71,895 $ 16,566 $ 19,380 $ 0 $ 107,841 (2,598 ) 2,407 2,337 (11,011 ) (8,865 ) 9,750 4,108 4,851 (6,297 ) * $ 62,327 $ 8,741 $ 15,033 $ 0 $ 86,101 (13,252 ) (184 ) (2,486 ) (11,364 ) (27,286 ) 4,049 681 886 (7,308 ) * $ 138,180 $ 28,235 $ 36,237 $ 0 $ 202,652 (8,047 ) 1,528 4,331 (26,463 ) (28,651 ) 17,878 4,746 9,647 (13,207 ) * $ 151,824 $ 21,283 $ 36,486 $ 0 $ 209,593 (14,567 ) 467 (79,984 ) (27,410 ) (121,494 ) 17,354 2,077 3,430 (17,494 ) * Note 17—Supplemental Cash Flow InformationSupplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands): For the Nine Months Ended September 30, 2017 2016 Non-cash transactions: Change in accounts payable and accrued expenses related to capital expenditures $ 3,983 $ 1,086 Conversion of Preferred Stock — 56,056 Tax receivable agreement liability — (124,646 ) Deferred tax impact of tax receivable agreement — 68,590 26our business strategy and prospects for growth;our cash flows and liquidity;our financial strategy, budget, projections and operating results;the amount, nature and timing of capital expenditures;the availability and terms of capital;competition and government regulations; andgeneral economic conditions.• • • • • • • “project,“expect,” “goal,” “plan,” “potential,” “predict,” “believe,“project,” “expect,” “anticipate,” “potential,” “plan,” “goal” or other terms that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. The forward-looking statements in this Form 10-Q speak only as of the date of this report; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following:the level of activity in the oil and gas industry;further or sustained declines in oil and gas prices, including those resulting from weak global demand;the timing, magnitude, probability and/or sustainability of any oil and gas price recovery;unique risks associated with our offshore operations;political, economic and regulatory uncertainties in our international operations;our ability to develop new technologies and products;our ability to protect our intellectual property rights;our ability to employ and retain skilled and qualified workers;the level of competition in our industry;operational safety laws and regulations; andweather conditions and natural disasters.• • • • • • • • • • • • • • • • unforeseen consequences of the Merger; • • • • IA1A of this Form 10-Q, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Form 10-Q, and elsewhere within this Form 10-Q, (2) our Annual Report on Form 10-K for the year ended December 31, 2016,2020, filed with the SEC on February 24, 2017March 1, 2021 (our "Annual Report"“Annual Report”), (3) our other reports and filings we make with the SEC from time to time and (4) other announcements we make from time to time. Should one or more of the risks or uncertainties described in the documents above or in this Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statements. All such forward-looking statements in this Form 10-Q are expressly qualified in their entirety by the cautionary statements in this section. Management’s Management’s Discussion and Analysis of Financial Condition and Results of Operations“Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations” included in our Annual Report.“Cautionary“Cautionary Note Regarding Forward-Looking Statements”Statements” and “Risk Factors”“Risk Factors” of this Form 10-Q.7580 years. We provide our services and products to leading exploration and production companies in both offshore and onshore environments, with a focus on complex and technically demanding wells.fourthree operating segments:• • International Services. We currently provide our services in approximately 60 countries on six continents. Our customers in these international markets are primarily large explorationproduction companies, including integrated oilMerger Sub, a direct wholly owned subsidiary of FINV, entered into the Merger Agreement with Expro, pursuant to which Expro will merge with and gas companiesinto Merger Sub, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of FINV. If the Merger is completed, each of the Expro Ordinary Shares, issued and national oiloutstanding immediately prior to the Effective Time, will be converted into the right to receive a number of shares of Frank’s common stock equal to the Exchange Ratio. Upon consummation of the transactions contemplated by the Merger Agreement and gas companies.U.S. Services. We service customersthe Plan of Merger (as defined in the offshore areasMerger Agreement), FINV expects that its current shareholders will own approximately 35% of the U.S. GulfCombined Company after the completion of Mexico. the Merger and related transactions, and current Expro shareholders will own approximately 65% of the Combined Company. Following the Merger, the name of FINV will be changed to “Expro Group Holdings N.V.” The closing of the Transactions, which is expected to occur during the third quarter of 2021, is subject to the satisfaction or waiver of closing conditions, including, among others, the requisite approval of the shareholders of each of FINV and Expro pursuant to the terms of the Merger Agreement.addition, weconnection with the Merger Agreement, FINV, FICV and Mosing Holdings have a presenceentered into an Amended and Restated Tax Receivable Agreement (the “A&R TRA”), that amends and restates the TRA. See Note 1—Basis of Presentation in the active onshoreNotes to the Unaudited Condensed Consolidated Financial Statements for additional information regarding the Merger Agreement and the A&R TRA. and gas drilling regions in the U.S., includingglobal economy remain uncertainPermian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale, DJ Basin and Utica Shale.Tubular Sales. mid to long term toward pre-pandemic levels. We design, manufacture and distribute large OD pipe, connectors and casing attachments and sell large OD pipe originally manufactured by various pipe mills. We also provide specialized fabrication and welding services in support of offshore projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long-length tubulars (upremain vigilant to 300 feet in length) for use as caissons or pilings. This segment also designs and manufactures proprietary equipment for use in our Internationalthe uncertainty that OPEC-controlled supply and U.S. Services segments.Blackhawk. We provide well construction and well intervention rental equipment, services and products, in addition to cementing tool expertise, inactivity levels can have on the U.S. and Mexicanmarket. onshore U.S.is expected to remain relatively flat through 2022, operators will continue to look to Frank’s digital and other select international locations.Market OutlookTheautomated technologies to drive operational efficiencies with reduced personnel. Frank's has had recent success in bolstering its market for our products and services continues to be challenged by depressed oil and gas commodity prices and reduced customer spending on offshore exploration and development projects. Despite some stabilizationshare in commodity prices and increases in U.S. onshore activity and profitability, commodity prices remain below levels necessary for meaningful increases in offshore activity, particularly in the markets of West Africa and the U.S. Gulf of Mexico. For the remainder of 2017, we expect to see further deterioration of pricing and activity in the U.S. Gulf of Mexico with digital and consequently, our Tubular Sales business segment. International markets are beginning to show signs of stabilizationautomated technology that remove personnel from the rig site, and the potential for reaching anas we see increased activity bottomlevels in the next twelve months. international markets, we are well positioned to adopt this same technology blueprint to these markets.our Blackhawk segment both in the U.S. onshore and in select international markets during the next several quarters as we expand its operational footprint. In order to offset some of the declines in activity and pricing, we continue to look for ways to improve our operational efficiency and grow share in markets in which we have historically been underrepresented, including international land and shelf opportunities. We also continue to evaluate potential28acquisitions to broaden our well construction offering and position the Company for revenue growth in aline with market recovery.saledisposal of assets, foreign currency gain or loss, equity-based compensation, unrealized gainand realized gains or loss,losses, the effects of the tax receivable agreement ("TRA"(“TRA”), other non-cash adjustments and other charges or credits. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of our revenues.revenue. We review Adjusted EBITDA and Adjusted EBITDA margin on both a consolidated basis and on a segment basis. We use Adjusted EBITDA and Adjusted EBITDA margin to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), items outside the control of our management team (such as income tax, and foreign currency exchange rates)rates and other charges outside the normal course of business.and credits. Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"(“GAAP”). Previously reported Adjusted EBITDA for the three and nine months ended September 30, 2016 has been adjusted for investigation-related matters by $1.8 million and $5.1 million, respectively, as management believes removing the effect of these items allows for better comparability across periods. to net income (loss) for each of the periods presented (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net income (loss) $ 2,296 $ (42,198 ) $ (50,317 ) $ (89,893 ) Interest income, net (1,019 ) (646 ) (2,170 ) (1,050 ) Depreciation and amortization 30,650 26,545 92,700 84,278 Income tax expense (benefit) 87,613 (6,800 ) 72,419 (15,311 ) Gain on sale of assets (829 ) (46 ) (2,091 ) (1,095 ) Foreign currency (gain) loss (1,839 ) 1,696 (3,184 ) 5,907 (122,515 ) — (122,515 ) — 7,616 20,151 22,231 37,241 Adjusted EBITDA $ 1,973 $ (1,298 ) $ 7,073 $ 20,077 Adjusted EBITDA margin 1.8 % (1.2 )% 2.1 % 5.3 % $ (12,617 ) $ (34,245 ) $ (36,503 ) $ (120,223 ) — — — 57,146 3,399 5,162 10,775 25,887 101 (178 ) 388 (711 ) 15,332 17,252 31,439 36,970 6,773 8,986 7,843 (6,577 ) (1,479 ) (650 ) (1,661 ) (590 ) (2,718 ) (1,693 ) 150 8,199 3,621 3,674 6,633 5,266 $ 12,412 $ (1,692 ) $ 19,064 $ 5,367 11.5 % (2.0 )% 9.4 % 2.6 % Please see Note 12 - Related Party Transactions in the Notes to the Unaudited Condensed Consolidated Financial Statements for further discussion.29(2)Comprised of Equity-based compensation expense (for the three months ended SeptemberJune 30, 20172021 and 2016: $2,3422020: $3,399 and $3,828,$3,515, respectively, and for the ninesix months ended SeptemberJune 30, 20172021 and 2016: $11,4582020: $6,297 and $12,356, respectively), Mergers and acquisition expense (for the three months ended September 30, 2017 and 2016: none and none, respectively, and for the nine months ended September 30, 2017 and 2016: $459 and none, respectively), Severance and other charges (for the three months ended September 30, 2017 and 2016: $1,648 and $14,534, respectively, and for the nine months ended September 30, 2017 and 2016: $2,386 and $18,858,$5,661, respectively), Unrealized and realized (gains) losses (for the three months ended SeptemberJune 30, 20172021 and 2016: $1,1232020: $108 and $10,$111, respectively, and for the ninesix months ended SeptemberJune 30, 20172021 and 2016: $2,8192020: $206 and $973,$(1,593), respectively) and Investigation-related matters (for the three months ended SeptemberJune 30, 20172021 and 2016: $2,5032020: $88 and $1,779,$48, respectively, and for the ninesix months ended SeptemberJune 30, 20172021 and 2016: $5,1092020: $130 and $5,054,$1,198, respectively).and improve our safety performance through the evaluation of safety observations, job and customer surveys, and safety data. The primary measure for our safety performance is the tracking of the Total Recordable Incident Rate in addition to the Lost Time Incident Rate, which areis reviewed on both a monthly and rolling twelve-month basis.Our business is dependent on our ability to provide highly reliable and safe equipment. If our equipment does not meet statutory regulations and/or our clients do not accept the quality of our equipment, we could encounter loss of contracts and/or loss of reputation, which could materially impact our operations and profitability. Further, the failure of our equipment could subject us to litigation, regulatory fines and/or adverse customer reaction. In addition, equipment certification requirements vary by region and changes in these requirements could impact our ability to operate in certain markets if our tools do not comply with these requirements.30 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (Unaudited) Revenues: Equipment rentals and services $ 92,547 $ 85,698 $ 272,402 $ 312,132 15,536 19,416 64,071 67,414 Total revenue 108,083 105,114 336,473 379,546 Operating expenses: Cost of revenues, exclusive of depreciation and amortization 60,981 57,307 178,865 189,965 10,750 16,029 45,162 51,446 39,963 39,677 125,107 138,586 Depreciation and amortization 30,650 26,545 92,700 84,278 Severance and other charges 1,648 14,534 2,386 18,858 Gain on sale of assets (829 ) (46 ) (2,091 ) (1,095 ) Operating loss (35,080 ) (48,932 ) (105,656 ) (102,492 ) Other income (expense): 122,515 — 122,515 — Other income (expense), net (384 ) 984 348 2,145 Interest income, net 1,019 646 2,170 1,050 Mergers and acquisition expense — — (459 ) — Foreign currency gain (loss) 1,839 (1,696 ) 3,184 (5,907 ) Total other income (expense) 124,989 (66 ) 127,758 (2,712 ) Income (loss) before income tax expense (benefit) 89,909 (48,998 ) 22,102 (105,204 ) Income tax expense (benefit) 87,613 (6,800 ) 72,419 (15,311 ) Net income (loss) 2,296 (42,198 ) (50,317 ) (89,893 ) Less: Net loss attributable to noncontrolling interest — (5,216 ) — (20,741 ) Net income (loss) attributable to Frank's International N.V. $ 2,296 $ (36,982 ) $ (50,317 ) $ (69,152 ) (1)For the three months ended September 30, 2016, $10,305 and $2,792 have been reclassified from general and administrative expenses to equipment rentals and services and products, respectively, and $34,598 and $8,852, respectively, for the nine months ended September 30, 2016. See Note 1 - Basis of Presentation in the Notes to Unaudited Condensed Consolidated Financial Statements.(2)Please see Note 12 - Related Party Transactions in the Notes to the Unaudited Condensed Consolidated Financial Statements for further discussion. $ 90,520 $ 74,583 $ 172,043 $ 179,666 17,321 11,518 30,609 29,927 107,841 86,101 202,652 209,593 68,619 61,051 132,554 140,431 14,408 8,286 25,322 22,274 16,427 22,286 32,874 48,969 15,332 17,252 31,439 36,970 — — — 57,146 3,399 5,162 10,775 25,887 (1,479 ) (650 ) (1,661 ) (590 ) (8,865 ) (27,286 ) (28,651 ) (121,494 ) 404 156 529 2,182 (101 ) 178 (388 ) 711 2,718 1,693 (150 ) (8,199 ) 3,021 2,027 (9 ) (5,306 ) (5,844 ) (25,259 ) (28,660 ) (126,800 ) 6,773 8,986 7,843 (6,577 ) $ (12,617 ) $ (34,245 ) $ (36,503 ) $ (120,223 ) SeptemberJune 30, 20172021 Compared to Three Months Ended SeptemberJune 30, 2016Revenues. Revenues2020SeptemberJune 30, 20172021 increased by $3.0$21.7 million, or 2.8%25.2%, to $108.1$107.8 million from $105.1$86.1 million for the three months ended SeptemberJune 30, 2016. The revenue increase2020. Revenue increased across all segments as the prior year was primarily attributable to our recently acquired Blackhawk segmentsignificantly impacted by the onset of the COVID-19 pandemic and our International Services segment, partially offset by a decreaseresulting decline in our U.S. Services and Tubular Sales segments. Revenuesoil prices. Revenue for our segments areis discussed separately below under the heading "Operating“Operating Segment Results."31revenues,revenue, exclusive of depreciation and amortization. revenuesrevenue for the three months ended SeptemberJune 30, 2017 decreased2021 increased by $1.6$13.7 million, or 2.2%19.8%, to $71.7$83.0 million from $73.3$69.3 million for the three months ended SeptemberJune 30, 20162020. The increase was driven by improved activity levels as compared to the prior year.ourpreviously implemented restructuring and cost cutting initiatives.SeptemberJune 30, 2017 increased2021 decreased by $4.1$2.0 million, or 15.5%11.6%, to $30.7$15.3 million from $26.5$17.3 million for the three months ended SeptemberJune 30, 2016, primarily due to our recently acquired Blackhawk segment.SeptemberJune 30, 20172021 decreased by $12.9$1.8 million, or 88.7%34.6%, to $1.6$3.4 million from $14.5$5.2 million for the three months ended SeptemberJune 30, 2016 due2020. Severance and other charges, net for the three months ended June 30, 2021 was impacted by lower severance costs recorded during the quarter as compared to higher workforce reductionsthe prior year. See Note 15—Severance and Other Charges, net in the third quarter of 2016 comparedNotes to 2017 as we took steps to adjust our workforce to meet the depressed demand in the industry.SeptemberJune 30, 2017 was $1.82021 increased by $1.0 million, as comparedor 58.8%, to a foreign currency loss$2.7 million from $1.7 million for the three months ended SeptemberJune 30, 2016 of $1.7 million.2020. The change in foreign currency gain (loss)results year-over-year was primarily driven by the weakening of the U.S. dollar in the current period as compared to the prior year period against other currencies.expense (benefit). SeptemberJune 30, 2017 increased2021 decreased by $94.4$2.2 million to $87.6$6.8 million from a benefit of $6.8$9.0 million for the three months ended SeptemberJune 30, 2016, 2020, primarily as a result of recording valuation allowances againsta change in the jurisdictional sources of income, namely an increase in revenue in certain regions that apply withholding or revenue based taxes. In addition, the three months ending June 30, 2020 included additional tax benefits recorded to update the previous quarter’s activity to the most recent estimated effective tax rate. We are subject to many U.S. and foreign tax jurisdictions and many tax agreements and treaties among the various taxing authorities. Our operations in these jurisdictions are taxed on various bases such as income before taxes, deemed profits (which is generally determined using a percentage of revenue rather than profits) and withholding taxes based on revenue; consequently, the relationship between our net deferredpre-tax income from operations and our income tax assets. The deferredprovision varies from period to period based on the overall effective tax assets relate to net operating losses, outside basis differencesrate for all jurisdictions in our partnership investment and other timing differences primarily associated with our U.S. operations.which we operate.SeptemberJune 30, 20172021 Compared to NineSix Months Ended SeptemberJune 30, 2016Revenues. Revenues2020ninesix months ended SeptemberJune 30, 20172021 decreased by $43.1$6.9 million, or 11.3%3.3%, to $336.5$202.7 million from $379.5$209.6 million for the ninesix months ended SeptemberJune 30, 2016. The decrease was primarily attributable to lower revenues2020. Revenue improvements in the majority of our segments due to declining activity as depressed oil and gas prices resulted in reduced rig count, downward pricing pressures, rig cancellations and delays as well as deferred work scopes in the International and offshore U.S. Services regions while revenues for Tubular Sales decreased due to lower international demand and decreased deepwater fabrication revenue. The decrease in total revenues was partiallyTubulars segment were more than offset by revenues fromdeclines in our recently acquired Blackhawk segment of $51.9 million. RevenuesTRS segment. Revenue for our segments areis discussed separately below under the heading "Operating“Operating Segment Results."revenues,revenue, exclusive of depreciation and amortization. revenuesrevenue for the ninesix months ended SeptemberJune 30, 20172021 decreased by $17.4$4.8 million, or 7.2%3.0%, to $224.0$157.9 million from $241.4$162.7 million for the ninesix months ended SeptemberJune 30, 2016. Our cost of revenues decline2020. The decrease was consistent withdriven by lower activity levels as compared to the prior year period in our lower revenue and cost cutting initiative.expenses. expenses. General and administrative expenses for the ninesix months ended SeptemberJune 30, 20172021 decreased by $13.5$16.1 million, or 9.7%32.9%, to $125.1$32.9 million from $138.6$49.0 million for the ninesix months ended SeptemberJune 30, 2016 primarily2020 due to bad debt expense recognized in 2016 related to difficulty in collecting certain receivables in Venezuelapreviously implemented restructuring and cost cutting initiatives.ninesix months ended SeptemberJune 30, 2017 increased2021 decreased by $8.4$5.6 million,, or 10.0%15.1%, to $92.7$31.4 million from $84.3$37.0 million for the ninesix months ended SeptemberJune 30, 2016, primarily due to our recently acquired Blackhawk segment, partially offset by2020, as a result of a lower depreciable base relatedand less intangible asset amortization.our legacy assets.ninesix months ended SeptemberJune 30, 20172021 decreased by $16.5$15.1 million or 87.3%, to $2.4$10.8 million from $18.9$25.9 million for the ninesix months ended SeptemberJune 30, 2016 as a result2020. Severance and other charges, net for the six months ended June 30, 2020 was unfavorably impacted by fixed asset impairment charges of a higher workforce reduction$15.5 million and intangible asset impairments of $4.7 million, primarily driven by COVID-19-related activity disruptions and customer spending cuts in 2016 comparedresponse to 2017 as we took steps to adjust our workforce to meet the depressed demandfalling oil prices. See Note 15—Severance and Other Charges, net in the industry.32 currency gain for the nine months ended September 30, 2017 was $3.2 million as compared to a foreign currency loss for the ninesix months ended SeptemberJune 30, 2016 of $5.9 million. The improvement in foreign currency gain (loss) year-over-year was primarily driven2021 decreased by $8.0 million, to $0.2 million compared to $8.2 million for the weakeningsix months ended June 30, 2020. Prior year results were negatively impacted by increased strengthening of the U.S. dollar, against other currencies which positively impacted foreign currency gain (loss) forpartially due to the nine months ended September 30, 2017 and the absenceimpact of the devaluation of the Nigerian Naira which negatively impacted foreign currency gain (loss) for the nine months ended September 30, 2016.ninesix months ended SeptemberJune 30, 20172021 increased by $87.7$14.4 million to $72.4an expense of $7.8 million from a benefit of $15.3$(6.6) million for the ninesix months ended SeptemberJune 30, 2016, primarily as a result of recording valuation allowances against our net deferred tax assets.2020. The deferred tax assets relate toprior year period benefited from the 5-year net operating losses, outside basis differencesloss carryback provision included in our partnership investmentthe recently-enacted Coronavirus Aid, Relief, and other timing differences primarily associated with our U.S. operations.Economic Security Act.revenuesrevenue and Adjusted EBITDA by segment (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue: International Services $ 53,742 $ 51,028 $ 153,851 $ 191,440 U.S. Services 29,065 34,057 89,936 119,955 Tubular Sales 7,701 20,029 40,787 68,151 Blackhawk 17,575 — 51,899 — Total $ 108,083 $ 105,114 $ 336,473 $ 379,546 International Services $ 11,151 $ 4,532 $ 25,459 $ 31,752 (11,322 ) (5,995 ) (27,775 ) (13,018 ) Tubular Sales (1,333 ) 165 1,736 1,343 Blackhawk 3,477 — 7,653 — $ 1,973 $ (1,298 ) $ 7,073 $ 20,077 $ 71,895 $ 62,327 $ 138,180 $ 151,824 16,566 8,741 28,235 21,283 19,380 15,033 36,237 36,486 $ 107,841 $ 86,101 $ 202,652 $ 209,593 $ 9,750 $ 4,049 $ 17,878 $ 17,354 4,108 681 4,746 2,077 4,851 886 9,647 3,430 (6,297 ) (7,308 ) (13,207 ) (17,494 ) $ 12,412 $ (1,692 ) $ 19,064 $ 5,367 Amounts previously reported as Corporate and other of $159 and $361 for the three and nine months ended September 30, 2016, respectively, have been reclassified to U.S. Services to conform to the current presentation.(2)"Adjusted“Adjusted EBITDA and Adjusted EBITDA Margin"Margin”).SeptemberJune 30, 20172021 Compared to Three Months Ended SeptemberJune 30, 2016International2020International ServicesTRS segment increased by $2.7was $71.9 million for the three months ended SeptemberJune 30, 2017,2021, an increase of $9.6 million, or 5.3%15.4%, compared to $62.3 million for the same period in 2016,2020. The increase was driven by improved activity levels across most regions as the prior year was significantly impacted by COVID-19-related activity disruptions and customer spending cuts in response to falling oil prices, primarily due to an increase in Middle East onshore activity, EuropeanAfrica, Europe, and the U.S. land and offshore shelf activity, and increased offshore activity in Latin America and Canada, partially offset by declines in revenue attributable to the Africa and Asia Pacific regions.International ServicesTRS segment increased by $6.6was $9.8 million for the three months ended SeptemberJune 30, 2017,2021, an increase of $5.8 million, or 146.1%145.0%, compared to $4.0 million for the same period in 2016, primarily driven by increased revenue as well as lower expenses2020. Improved activity levels in 2017 dueAfrica and the U.S. land and offshore markets contributed to cost cutting measures.33U.S. ServicesU.S. ServicesTubulars segment decreased by $5.0was $16.6 million for the three months ended SeptemberJune 30, 2017,2021, an increase of $7.9 million, or 14.7%90.8%, compared to $8.7 million for the same period in 2016. Onshore services revenue increased by $6.3 million2020, primarily as a result of improved activity fromlevels and increased rig counts.tubular product sales as compared to the prior year, which was impacted by COVID-19-related activity disruptions and customer spending cuts in response to falling oil prices. The offshore business sawcurrent quarter also included a decrease in revenue of $11.3 million as a result of overall lower activity due to rig cancellations and delays in the Gulf of Mexico, coupled with downward pricing pressures.U.S. ServicesTubulars segment decreased by $5.3was $4.1 million for the three months ended SeptemberJune 30, 2017,2021, an increase of $3.4 million, or 88.9%485.7%, compared to $0.7 million for the same period in 20162020, primarily due to overall lower offshore activity and increased pricing pressures partially offset by higher activitythe increase in our onshore services.Tubular SalesTubular SalesCE segment decreased by $12.3was $19.4 million for the three months ended SeptemberJune 30, 2017,2021, an increase of $4.4 million, or 61.6%29.3%, compared to $15.0 million for the same period in 2016 primarily due to lower deepwater2020, driven by improved drilling activity and increased product sales in the GulfU.S. as a result of Mexico and delaysthe recovery in projects.Tubular SalesCE segment decreased by $1.5was $4.9 million for the three months ended SeptemberJune 30, 2017,2021, an increase of $4.0 million, or 444.4%, compared to $0.9 million for the same period in 2016 primarily2020, due to increased revenue, particularly in the decrease in revenue, which was partially offset by lower expenses due to reduced activityU.S. offshore market and ongoing cost cutting measures.BlackhawkThe Blackhawk segment is comprised solely of the assets we acquired on November 1, 2016. Revenues and management.the segment were $17.6 million and $3.5Corporate was a loss of $6.3 million for the three months ended SeptemberJune 30, 2017. See Note 3 - Acquisition and Divestitures in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on our Blackhawk acquisition.Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016International ServicesRevenue for the International Services segment decreased by $37.62021, an improvement of $1.0 million, for the nine months ended September 30, 2017, or 19.6%13.7%, compared to a loss of $7.3 million for the same period in 2016,2020, primarily due to depressed oillower costs as a result of restructuring and gas prices whichcost cutting measures.challengedimproved from pandemic-era lows, prior year results benefited from pre-COVID activity levels during most of the economicsfirst quarter of our customers' development projects, particularly in Europe and Africa where complex deepwater wells had previously been large revenue drivers. This was partially offset by improved revenue in the Middle East due to increased onshore activity.International ServicesTRS segment decreased by $6.3was $17.9 million for the ninesix months ended SeptemberJune 30, 2017,2021, an increase of $0.5 million, or 19.8%2.9%, compared to $17.4 million for the same period in 2016 primarily due to the decrease in revenue, which was partially offset by the absence of non-recurring charges recognized in 2016 of $9.7 million2020. Segment results for bad debt primarily related to difficulty in collecting certain receivables in Venezuela and $2.5 million of additional payroll related costs for Nigeria and Mexico, as well as lower expenses in 2017 due to reduced activity and cost cutting measures.U.S. ServicesRevenue for the U.S. Services segment decreased by $30.0 million for the nine months ended September 30, 2017, or 25.0%, compared to the same period in 2016. Onshore services revenue increased by $12.0 million as a result of improved activity from increased rig counts. The offshore business saw a decrease in revenue of $42.0 million as a result of overall lower activity due to rig cancellations and delays in the Gulf of Mexico, coupled with downward pricing pressures.34Adjusted EBITDA for the U.S. Services segment decreased by $14.8 million for the nine months ended September 30, 2017 compared to the same period in 2016 primarily due to lower activity in our offshore services, partially offset by an increase in onshore services activity.Tubular SalesRevenue for the Tubular Sales segment decreased by $27.4 million for the nine months ended September 30, 2017, or 40.2%, compared to the same period in 2016 primarily as a result of lower deepwater activity in the Gulf of Mexico, which more than offset higher revenue in our international markets.Adjusted EBITDA for the Tubular Sales segment increased by $0.4 million for the nine months ended September 30, 2017 compared to the same period in 2016 as it was2021 were positively impacted by cost cutting measures undertaken during 2016.BlackhawkThe Blackhawk segment is comprised solelyimplemented after the onset of the assets we acquired on November 1, 2016. Revenuespandemic.were $51.9 million and $7.7was $4.7 million for the ninesix months ended SeptemberJune 30, 2017. See Note 3 - Acquisition2021, an increase of $2.6 million, or 123.8%, compared to $2.1 million for the same period in 2020. An increase in high margin Gulf of Mexico and Divestituresinternational tubular products sales contributed to the improvement. NotesCE segment was $9.6 million for the six months ended June 30, 2021, an increase of $6.2 million, or 182.4%, compared to Unaudited Condensed Consolidated Financial Statements$3.4 million for additional information on our Blackhawk acquisition.SeptemberJune 30, 2017,2021, we had cash and cash equivalents and short-term investments of $293.9$188.6 million and debt of $0.1 million.no debt. Our primary sources of liquidity to date have been cash flows from operations. Our primary uses of capital have been for organic growth capital expenditures. We continually monitor potential capital sources, including equity and debt financing, in order to meet our investment and target liquidity requirements.at $40.0to be approximately $20 to $25 million for 2017. Wein 2021, of which we expect to spend approximately $22.0 million90% will be used for the purchase and manufacture of equipment and $18.0 million10% for other property, plant and equipment, inclusive of the purchase or construction of facilities.equipment. The actual amount of capital expenditures for the manufacture of equipment may fluctuate based on market conditions.conditions and timing of deliveries. During the ninesix months ended SeptemberJune 30, 20172021 and 2016, capital2020, cash expenditures related to property, plant and equipment were $18.6$4.5 million and $29.8$20.3 million, respectively, all of which were funded from internally generated funds. We believe our cash on hand and cash flows from operations should be sufficient to fund our capital expenditure and liquidity requirements for the remainder of 2017.paid dividends on our common stockexpect that following the Merger, the board of $50.4 million, or $0.225 per common share during the nine months ended September 30, 2017. On October 27, 2017, the Board of Managing Directorsdirectors of the Combined Company with the approval from the Board of Supervisory Directors of the Company, approved a plan to suspend the Company’s quarterly dividend in order to preservewill reevaluate our capital for various purposes, including to invest in growth opportunities.We have$100.0 millionfive-year senior secured revolving credit facility (the “ABL Credit Facility”) with certainJPMorgan Chase Bank, N.A., as administrative agent (the “ABL Agent”), and other financial institutions as lenders with total commitments of $100.0 million including up to $20.0$15.0 million inavailable for letters of credit and up to $10.0 million in swingline loans, which matures in August 2018 (the “Credit Facility”).credit. Subject to the terms of the ABL Credit Facility, we have the ability to increase the commitments to $150.0$200.0 million. At September 30, 2017 and December 31, 2016, we had $2.8 million and $3.7 million, respectively, in letters of credit outstanding and no outstanding borrowings under this facility. As of September 30, 2017, our ability toThe maximum amount that the Company may borrow under the ABL Credit Facility has been reducedis subject to approximately $30 million as a resultborrowing base, which is based on a percentage of our decreased Adjusted EBITDA. Our borrowing capacitycertain eligible accounts receivable and eligible inventory, subject to customary reserves and other adjustments.could be further reduced or eliminated dependingare fully and unconditionally guaranteed jointly and severally by FINV’s subsidiaries, including FICV, Frank’s International, LLC, Blackhawk, Frank’s International GP, LLC, Frank’s International, LP, Frank’s International LP B.V., Frank’s International Partners B.V., Frank’s International Management B.V., Blackhawk Intermediate Holdings, LLC, Blackhawk Specialty Tools, LLC, and Trinity Tool Rentals, L.L.C., subject to customary exceptions and exclusions. In addition, the obligations under the ABL Credit Facility are secured by first priority liens on our future Adjusted EBITDA. As a resultsubstantially all of this, our overall liquidity would be diminished.35ourFINV’s option at either a base rate or an adjusted Eurodollar rate.(a) the Alternate Base rate loans underRate (“ABR”) (as defined therein), calculated as the Credit Facility bear interest at a rate equal to the highergreatest of (i) the prime rate as published inof interest publicly quoted by the Wall Street Journal, as the “prime rate,” subject to each increase or decrease in such prime rate effective as of the date such change occurs, (ii) the Federal Funds Effective Ratefederal funds effective rate that is subject to a 0.00% interest rate floor plus 0.50% or, and (iii) the adjusted Eurodollar rateone-month Adjusted LIBO Rate (as defined therein) plus 1.00%, or (b) the Adjusted LIBO Rate, plus, an applicable margin ranging from 0.50% to 1.50%, subject to adjustment based on a leverage ratio. Interest is in each case, payable quarterly for base-rate loans. Eurodollar loans under the Credit Facility bear interest at an adjusted Eurodollar rate equal to the Eurodollar rate for such interest period multiplied by the statutory reserves, plus an applicable margin. The applicable interest rate margin rangingranges from 1.00% to 1.50% per annum for ABR loans and 2.00% to 2.50%. Interest is payable at the end of applicable interest periods per annum for Eurodollar loans except that if the interest period for a Eurodollar loanand, in each case, is longer than three months, interest is paid at the end of each three-month period.based on FINV’s leverage ratio. The unused portion of the ABL Credit Facility is subject to a commitment fee rangingthat varies from 0.250% to 0.375% basedper annum, according to average daily unused commitments under the ABL Credit Facility. Interest on certain leverage ratios.Eurodollar loans is payable at the end of the selected interest period, but no less frequently than quarterly. Interest on ABR loans is payable monthly in arrears.that,and restrictive provisions which limit, subject to certain customary exceptions and thresholds, FINV’s ability to, among other things, limit our ability to grant certain liens,(1) enter into asset sales; (2) incur additional indebtedness; (3) make certaininvestments, acquisitions, or loans and investments, enter into mergerscreate or acquisitions, enter into hedging transactions, change our lines of business, prepayincur liens; (4) pay certain indebtedness, enter into certain affiliate transactions, incur additional indebtednessdividends or make other distributions and (5) engage in certain asset dispositions.financial covenants, which, amongcross default provisions that apply to FINV’s other things, require us,indebtedness.consolidated basis,need to maintain: (i) a ratioborrow under the ABL Credit Facility during the remainder of total consolidated funded debt to adjusted EBITDA (as defined2021. Further, we do not believe that an FCCR Trigger Event will occur in the Credit Agreement)remainder of not more than 2.5 to 1.0 and (ii) a ratio of EBITDA to interest expense of not less than 3.0 to 1.0.In addition, the Credit Facility contains customary events of default, including, among others, the failure to make required payments, failure to comply with certain covenants or other agreements, breach of the representations and covenants contained in the agreements, default of certain other indebtedness, certain events of bankruptcy or insolvency and the occurrence of a change in control.On April 28, 2017, the Company obtained a limited waiver under its Revolving Credit Agreement, dated August 14, 2013, by and among FICV (as borrower), Amegy Bank National Association (as administrative agent), Capital One, National Association (as syndication agent) and the other lenders party thereto (the "Credit Agreement"), of its leverage ratio and interest coverage ratio for the fiscal quarters ending March 31, 2017 and June 30, 2017 (the “Waiver”) in order to not be in default for first quarter of 2017 testing. The Company agreed to comply with the following conditions during the period from the effective date of the Waiver until the delivery of its compliance certificate with respect to the fiscal quarter ending September 30, 2017: (i) maintain no less than $250.0 million in liquidity; (ii) abide by certain restrictions regarding the issuance of senior unsecured debt; and (iii) pay interest and commitment fees based on the highest “Applicable Margin” (as defined in the Credit Agreement) level. 2021.Waiver, the Company paid a waiver fee to each lender that executed the Waiver equal to five basis pointsclosing of the respective lender’s commitment underMerger, Frank’s expects that the Credit Agreement. As of September 30, 2017, we were in compliance with the covenants included in the Credit Agreement.Citibank Credit FacilityIn 2016, we enteredCombined Company will enter into a three-yearnew revolving credit facility with Citibank N.A., UAE Branch inand terminate or otherwise replace the amount of $6.0 million for issuance of standby letters ofexisting Frank’s and Expro credit and guarantees. The credit facility also allows for open ended guarantees. Outstanding amounts under the credit facility bear interest of 1.25% per annum for amounts outstanding up to one year. Amounts outstanding more than one year bear interest at 1.5% per annum. As of September 30, 2017 and December 31, 2016, we had $2.5 million and $2.2 million in letters of credit outstanding.a tax receivable agreement (the “TRA”)the TRA with Frank's International C.V. ("FICV")FICV and Mosing Holdings LLC ("Mosing Holdings") in connection with our initial public offering ("IPO").IPO. The TRA generally provides for the payment by usFINV to Mosing Holdings of 85% of the amount of the actual reductions,net cash savings, if any, in payments of U.S. federal, state and local income tax orand franchise tax that FINV actually realizes (or is deemed to realize in certain circumstances) in periods after our IPO (which reductions we refer to as "cash savings") as a result of (i) the tax basis increases resulting from the transfer of FICV interests to us in connection with the conversion of shares of Preferred Stock into shares of our common stock on August 26, 2016Conversion and (ii) imputed36usFINV as a result of, and additional tax basis arising from, payments under the TRA. In addition,We will retain the benefit of the remaining 15% of these cash savings, if any. Payments FINV makes under the TRA provides forwill be increased by any interest earnedaccrued from the due date (without extensions) of the corresponding tax return to the date of payment specified by the TRA. WeThe payments under the TRA will retainnot be conditioned upon a holder of rights under the remaining 15%TRA having a continued ownership interest in FINV. As of cash savings, if any. July 29, 2021, based on the best information available to us, the Mosing family collectively owns approximately 46% of our common shares.ourFINV’s obligations and are not obligations of FICV. The term of the TRA continuescommenced upon the completion of the IPO and will continue until all such tax benefits that are subject to the TRA have been utilized or expired, unless weFINV elects to exercise our right to terminate the TRA.If we elect to execute our soleits right to terminate the TRA (or the TRA is terminated due to other circumstances, including our breach of a material obligation thereunder or certain mergers or other changes of control), and FINV makes the termination payment specified by the TRA or FINV otherwise settles its obligations under the TRA.wewhich it may do in its sole discretion (or if it terminates early as a result of our breach), it would be required to make ana substantial, immediate lump-sum payment equal to the present value of the anticipatedhypothetical future tax benefits subjectpayments that could be required to be paid under the TRA (based upon certain assumptions and deemed events set forth in the TRA, including the assumption that it has sufficient taxable income to fully utilize such benefits and that any FICV interests that Mosing Holdings or its transferees ownbenefits), determined by applying a discount rate equal to the long-term Treasury rate in effect on the applicable date plus 300 basis points. Any early termination date are deemed topayment may be exchanged onmade significantly in advance of the termination date).actual realization, if any, of such future benefits. In addition, payments due under the TRA will be similarly accelerated following certain mergers or other changes of control.weFINV may be required to make payments under the TRA that we haveit has entered into with Mosing Holdings. In most circumstances, these payments will be associated with the actual cash savings that we recognize in connection withFINV recognizes from tax benefits resulting from the conversion of Preferred Stock,Conversion, which would reduce the actual tax benefit to us.FINV. If we wereFINV was to elect to exercise ourits sole right to terminate the TRA early or enter into certain change of control transactions, weFINV may incur payment obligations prior to the time weit actually incurincurs any tax benefit. In those circumstances, weFINV would need to pay the amounts out of cash on hand, finance the payments or refrain from triggeringincurring the obligation.obligation (including by not entering into a change of control transaction). Though we do not have any present intention of triggeringincurring an advance payment under the TRA (other than as described below with respect to the A&R TRA), based on our current liquidity and our expected ability to access debt and equity financing, we believe weFINV would be able to make such a payment if necessary. Any such payment could reduce our cash on hand and our borrowing availability, however, which would also reduce the amount of cash available to operate our business, to fund capital expenditures and to be paid as dividends to our stockholders, among other things.12 - 11—Related Party Transactions in the Statements.Statements.provided by (used in)from our operations, investing and financing activities are summarized below (in thousands): Nine Months Ended September 30, 2017 2016 Operating activities $ 24,585 $ 27,846 Investing activities (57,243 ) (17,362 ) Financing activities (51,634 ) (79,831 ) (84,292 ) (69,347 ) Effect of exchange rate changes on cash (1,896 ) (3,162 ) Net decrease in cash and cash equivalents $ (86,188 ) $ (72,509 ) $ (16,060 ) $ 4,146 (1,888 ) (11,118 ) (2,914 ) (2,032 ) (20,862 ) (9,004 ) (28 ) 6,543 $ (20,890 ) $ (2,461 ) $24.6$(16.1) million for the ninesix months ended SeptemberJune 30, 20172021, compared to cash flow provided by operating activities of $27.8$4.1 million for the same period in 2016.2020. The decreasechange in cash flow provided byfrom operating activities of $20.2 million was primarily due to lower activity as a result of depressed oil and gas prices, which resulted in a decreaseunfavorable changes in accounts receivable of $58.1 million and inventories of $13.9$42.1 million, partially offset37a decreasefavorable changes in accrued expensesaccounts payable and other currentaccrued liabilities of $37.8 million, deferred revenue of $20.4 million and other non-current liabilities of $8.7$28.3 million.$57.2$1.9 million for the ninesix months ended SeptemberJune 30, 20172021, compared to $17.4$11.1 million in the same period in 2016.2020, a year-over-year decrease of $9.2 million primarily due to a decrease of $15.7 million in the purchases of property, plant, and equipment. This was offset by a decrease in proceeds from sale of assets of $2.3 million and a decrease in net proceeds from sale of investments of $2.6 million.investingfinancing activities of $0.9 million was primarily relateddue to the purchaseincreased repayment of investmentsborrowings of $59.8$1.4 million and an increase of $0.8 million of treasury shares withheld for taxes, partially offset by lower purchasesrepurchases under our publicly announced share repurchase program of property, plant and equipment of $11.2 million and higher proceeds from the sale of assets of $8.5$1.5 million during the ninesix months ended SeptemberJune 30, 2017.Financing ActivitiesCash flow used in financing activities was $51.6 million for the nine months ended September 30, 2017 compared to $79.8 million in the same period in 2016. The decrease in cash flow used in financing activities was primarily due to lower dividend paymentsTable of $11.9 million, the absence of a payment to our noncontrolling interest of $8.0 million made in the nine months ended September 30, 2016, and lower repayments on borrowings of $6.9 million.Contentsoperating leases.1 - 1—Basis of Presentation in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of accounting standards we recently adopted or will be required to adopt.2016 Annual Report on Form 10-K. Except for the change below, ourReport. Our exposure to market risk has not changed materially since December 31, 2016.We account for our derivative activities under the accounting guidance for derivatives and hedging. Derivatives are recognized on the condensed consolidated balance sheets at fair value. Although the derivative contracts will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts for hedge accounting treatment. Accordingly, any changes in the fair value of the derivative instruments during a period will be included in our condensed consolidated statements of operations. Based on the derivative contracts that were in place as of September 30, 2017, a 10% weakening of the U.S. dollar as compared to the Canadian dollar, Euro, Norwegian krone, and Pound sterling would result in a $2.4 million decrease in the market value of our forward contracts. Please see Item 1. Financial Statements - Note 11 - Derivatives for additional information regarding our foreign currency derivative contracts outstanding in U.S. dollars as of September 30, 2017.38SeptemberJune 30, 20172021 at the reasonable assurance level.There have beenourthe Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2017, that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting during the period covered by this quarterly report.SeptemberJune 30, 20172021 and December 31, 2016.2020. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows. Please see Note 15 - 14—Commitments and Contingencies in the Statements.United StatesU.S. Department of Justice (“DOJ”) and other governmental entities. It is our intent to continue to fully cooperate with these agencies and any other applicable authorities in connection with any further investigation that may be conducted in connection with this matter. While our review has not indicated that there has been any material impact on our previously filed financial statements, we have continued to collect information and cooperate with the authorities, but at this time are unable to predict the ultimate resolution of these matters with these agencies. In addition, during the courseinvestigation,FCPA remains ongoing, and we discovered historical business transactions (and bidswill continue to enter into business transactions) in certain countries that may have been subject to U.S.cooperate with the SEC, DOJ and other international sanctions. We have disclosed this information to variousrelevant governmental entities (including those involved in our ongoing investigation), but atconnection therewith. At this time, we are unable to predict the ultimate resolution of these matters with these agencies, including any financial impact to us. Our boardBoard and management are committed to continuously enhancing our internal controls that support improved compliance and transparency throughout our global operations. — $ — — $ 38,502,322 — $ — — $ 38,502,322 — $ — — $ 38,502,322 — $ — — which follows the signature page to this report and is incorporated by reference herein, sets forth a list of exhibits to this report. FRANK'S November 2, 2017Kyle McClureMelissa Cougle Kyle McClure 41EXHIBIT INDEXExhibitNumberDescription3.1Deed of Amendment to Articles of Association of Frank's International N.V., dated May 19, 2016 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-36053), filed on May 25, 2017).Frank's International N.V. 2013 Long-Term Incentive Plan Employee Restricted Stock Unit Agreement (Supplemental Grant Form).Employment Offer Letter for Michael C. Kearney effective as of September 26, 2017.Separation Agreement by and between Douglas G. Stephens, Frank’s International, LLC and Frank’s International N.V., dated October 5, 2017.Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the Securities Exchange Act of 1934.Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.*101.INSXBRL Instance Document.*101.SCHXBRL Taxonomy Extension Schema Document.*101.CALXBRL Taxonomy Calculation Linkbase Document.*101.DEFXBRL Taxonomy Definition Linkbase Document.*101.LABXBRL Taxonomy Extension Label Linkbase Document.*101.PREXBRL Taxonomy Extension Presentation Linkbase Document.†Represents management contract or compensatory plan or arrangement.*Filed herewith.**Furnished herewith.42