UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ☑Quarterly Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020

¨☐ Transition Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission file number: 001-36053

~~Frank’s International~~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)22367 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. Yesþ☑ No ¨☐

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). Yesþ☑ No ¨☐

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	þ☑	Accelerated filer	¨☐
Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~ ☐	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).

Yes¨☐ No þ☑

As of ~~October 27, 2017,~~April 30, 2020, there were ~~223,107,260~~225,709,820 shares of common stock, €0.01 par value per share, outstanding.



TABLE OF CONTENTS
		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited) at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4
	Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss (Unaudited) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	5
	Condensed Consolidated Statements of ~~Stockholders'~~Stockholders’ Equity (Unaudited) for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	7
	Notes to the Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and
	Results of Operations	2826

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3836

Item 4.	Controls and Procedures	3936

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	4037

Item 1A.	Risk Factors	4037

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 6.	Exhibits	4042

Signatures		4144

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


FRANK'S INTERNATIONAL N.V.
FRANK’S INTERNATIONAL N.V.							FRANK’S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS													(In thousands, except share data)

	September 30,			December 31,			March 31,			December 31,
	2017			2016			2020			2019
Assets	(Unaudited)						(Unaudited)
Current assets:
Cash and cash equivalents	$	233,338		$	319,526		$	170,897		$	195,383
Short-term investments	60,598			—
Restricted cash							1,358			1,357
Accounts receivables, net	140,906			167,417			176,049			166,694
Inventories	132,961			139,079
Inventories, net							78,088			78,829
Assets held for sale	3,792			—			13,525			13,795
Other current assets	6,893			14,027			11,855			10,360
Total current assets	578,488			640,049			451,772			466,418

Property, plant and equipment, net	497,784			567,024			302,904			328,432
Goodwill and intangible assets, net	247,699			256,146
Deferred tax assets	—			79,309
Goodwill							42,785			99,932
Intangible assets, net							10,523			16,971
Deferred tax assets, net							15,775			16,590
Operating lease right-of-use assets							30,839			32,585
Other assets	33,344			45,533			31,042			33,237
Total assets	$	1,357,315		$	1,588,061		$	885,640		$	994,165

Liabilities and Equity
Current liabilities:
Short-term debt	$	87		$	276
Accounts payable	21,172			16,081
Accounts payable and accrued liabilities							$	103,970		$	120,321
Current portion of operating lease liabilities							7,925			7,925
Deferred revenue	9,035			18,072			694			657
Accrued and other current liabilities	75,094			64,950
Total current liabilities	105,388			99,379			112,589			128,903

Deferred tax liabilities	254			20,951			1,495			2,923
Non-current operating lease liabilities							23,312			24,969
Other non-current liabilities	28,190			156,412			23,200			27,076
Total liabilities	133,832			276,742			160,596			183,871

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
Stockholders’ equity:
Common stock, €0.01 par value, 798,096,000 shares authorized, 228,063,169 and 227,000,507 shares issued and 225,907,182 and 225,510,650 shares outstanding							2,857			2,846
Additional paid-in capital	1,048,498			1,036,786			1,078,496			1,075,809
Retained earnings	215,793			317,270
Accumulated deficit							(307,104		)	(220,805		)
Accumulated other comprehensive loss	(30,510		)	(32,977		)	(29,874		)	(30,298		)
Treasury stock (at cost), 844,636 and 759,929 shares	(13,108		)	(12,562		)
Total equity	1,223,483			1,311,319
Treasury stock (at cost), 2,155,987 and 1,489,857 shares							(19,331		)	(17,258		)
Total stockholders’ equity							725,044			810,294
Total liabilities and equity	$	1,357,315		$	1,588,061		$	885,640		$	994,165

The accompanying notes are an integral part of these condensed consolidated financial statements.

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



FRANK’S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended
	March 31,
	2020			2019
Revenue:
Services	$	105,083		$	115,406
Products	18,409			29,002
Total revenue	123,492			144,408

Operating expenses:
Cost of revenue, exclusive of depreciation and amortization
Services	79,380			83,239
Products	13,988			20,128
General and administrative expenses	26,683			35,411
Depreciation and amortization	19,718			25,242
Goodwill impairment	57,146			—
Severance and other charges, net	20,725			455
Loss on disposal of assets	60			227
Operating loss	(94,208		)	(20,294		)

Other income (expense):
Other income, net	2,026			529
Interest income, net	533			768
Foreign currency gain (loss)	(9,892		)	483
Total other income (expense)	(7,333		)	1,780

Loss before income taxes	(101,541		)	(18,514		)
Income tax expense (benefit)	(15,563		)	9,773
Net loss	$	(85,978	)	$	(28,287	)

Loss per common share:
Basic and diluted	$	(0.38	)	$	(0.13	)

Weighted average common shares outstanding:
Basic and diluted	225,505			224,653

The accompanying notes are an integral part of these condensed consolidated financial statements.

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 )



FRANK’S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)

	Three Months Ended
	March 31,
	2020			2019

Net loss	$	(85,978	)	$	(28,287	)
Other comprehensive income (loss):
Foreign currency translation adjustments	424			250
Unrealized gain on marketable securities	—			16
Total other comprehensive income	424			266
Comprehensive loss	$	(85,554	)	$	(28,021	)

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)

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



FRANK’S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

	Three Months Ended March 31, 2019
											Accumulated
					Additional						Other						Total
	Common Stock				Paid-In			Accumulated			Comprehensive			Treasury			Stockholders’
	Shares		Value		Capital			Deficit			Income (Loss)			Stock			Equity
Balances at December 31, 2018	224,290		$	2,829	$	1,062,794		$	16,860		$	(32,338	)	$	(15,373	)	$	1,034,772
Cumulative effect of accounting change	—		—		—			(700		)	—			—			(700		)
Net loss	—		—		—			(28,287		)	—			—			(28,287		)
Foreign currency translation adjustments	—		—		—			—			250			—			250
Change in marketable securities	—		—		—			—			16			—			16
Equity-based compensation expense	—		—		2,574			—			—			—			2,574
Common shares issued upon vesting of share-based awards	720		8		(8		)	—			—			—			—
Common shares issued for employee stock purchase plan	154		2		690			—			—			—			692
Treasury shares withheld	(220	)	—		—			—			—			(1,452		)	(1,452		)
Balances at March 31, 2019	224,944		$	2,839	$	1,066,050		$	(12,127	)	$	(32,072	)	$	(16,825	)	$	1,007,865

	Three Months Ended March 31, 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	225,511		$	2,846	$	1,075,809		$	(220,805	)	$	(30,298	)	$	(17,258	)	$	810,294
Cumulative effect of accounting change	—		—		—			(321		)	—			—			(321		)
Net loss	—		—		—			(85,978		)	—			—			(85,978		)
Foreign currency translation adjustments	—		—		—			—			424			—			424
Equity-based compensation expense	—		—		2,146			—			—			—			2,146
Common shares issued upon vesting of share-based awards	937		10		(10		)	—			—			—			—
Common shares issued for employee stock purchase plan	126		1		551			—			—			—			552
Treasury shares withheld	(293	)	—		—			—			—			(1,056		)	(1,056		)
Share repurchase program	(373	)	—		—			—			—			(1,017		)	(1,017		)
Balances at March 31, 2020	225,908		$	2,857	$	1,078,496		$	(307,104	)	$	(29,874	)	$	(19,331	)	$	725,044

The accompanying notes are an integral part of these condensed consolidated financial statements.


FRANK'S INTERNATIONAL N.V.
FRANK’S INTERNATIONAL N.V.							FRANK’S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS													(In thousands)	(Unaudited)
	Nine Months Ended
	September 30,						Three Months Ended
	2017			2016			March 31,
							2020			2019
Cash flows from operating activities
Net loss	$	(50,317	)	$	(89,893	)	$	(85,978	)	$	(28,287	)
Adjustments to reconcile net loss to cash provided by operating activities
Derecognition of the TRA liability	(122,515		)	—
Adjustments to reconcile net loss to cash from operating activities
Depreciation and amortization	92,700			84,278			19,718			25,242
Equity-based compensation expense	11,458			12,356			2,146			2,574
Goodwill impairment							57,146			—
Loss on asset impairments and retirements							20,187			66
Amortization of deferred financing costs	267			123			97			87
Deferred tax provision (benefit)	12,824			(25,772		)	(1,690		)	3,618
Reversal of deferred tax assets associated with the TRA	49,775			—
Provision for bad debts	358			10,410			1,280			19
Gain on sale of assets	(2,091		)	(1,095		)
Loss on disposal of assets							60			227
Changes in fair value of investments	(2,009		)	(1,061		)	2,411			(1,412		)
Realized loss on sale of investment	478			—
Unrealized loss on derivatives	49			296
Unrealized gain on derivative instruments							—			(496		)
Other	(1,187		)	—			(381		)	(566		)
Changes in operating assets and liabilities
Accounts receivable	23,917			82,042			(16,129		)	(14,734		)
Inventories	6,146			20,032			(1,855		)	(4,083		)
Other current assets	7,097			5,990			(814		)	771
Other assets	1,948			(4		)	139			(245		)
Accounts payable	(962		)	474
Accounts payable and accrued liabilities							(14,860		)	(13,184		)
Deferred revenue	(9,039		)	(29,479		)	67			22
Accrued and other current liabilities	9,272			(28,556		)
Other non-current liabilities	(3,584		)	(12,295		)	(3,796		)	611
Net cash provided by operating activities	24,585			27,846
Net cash used in operating activities							(22,252		)	(29,770		)

Cash flows from investing activities
Purchases of property, plant and equipment	(18,604		)	(29,777		)
Purchases of property, plant and equipment and intangibles							(9,968		)	(8,145		)
Proceeds from sale of assets	10,690			2,235			70			14
Proceeds from sale of investments	11,499			11,101			—			12,539
Purchase of investments	(60,764		)	(921		)	—			(5,092		)
Other	(64		)	—			(141		)	(103		)
Net cash used in investing activities	(57,243		)	(17,362		)	(10,039		)	(787		)

Cash flows from financing activities
Repayments of borrowings	(190		)	(7,120		)	—			(1,737		)
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		)
Treasury shares withheld for taxes							(1,056		)	(1,452		)
Treasury share repurchase							(1,017		)	—
Proceeds from the issuance of ESPP shares	1,252			973			552			692
Net cash used in financing activities	(51,634		)	(79,831		)	(1,521		)	(2,497		)
Effect of exchange rate changes on cash	(1,896		)	(3,162		)	9,327			(376		)
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
Net decrease in cash, cash equivalents and restricted cash							(24,485		)	(33,430		)
Cash, cash equivalents and restricted cash at beginning of period							196,740			186,212
Cash, cash equivalents and restricted cash at end of period							$	172,255		$	152,782

The accompanying notes are an integral part of these condensed consolidated financial statements.

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Basis of Presentation

Nature of Business

Frank’s International N.V. ~~("FINV"~~(“FINV”), a limited liability company organized under the laws of ~~The~~the 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.

The impact of the Coronavirus Disease 2019 (“COVID-19”) pandemic and related economic, business and market disruptions is evolving rapidly and its future effects are uncertain. The actual impact of these recent developments 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 precision the broad future effect of this health crisis on the global economy, the energy industry or us. 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.

Basis of Presentation

The condensed consolidated financial statements of FINV for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 include the activities of ~~Frank's~~FINV, Frank’s International C.V. ~~("FICV"~~(“FICV”), Blackhawk Group Holdings, LLC (“Blackhawk”) and ~~its~~their 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.

Our accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. The consolidated balance sheet at December 31, ~~2016~~2019 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,~~2019, which are included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ~~("SEC"~~(“SEC”) on February ~~24, 2017 ("~~25, 2020 (“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.

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.

Reclassifications

~~Historically, and through December 31, 2016, certain direct and indirect costs related~~Certain prior-period amounts have been reclassified to ~~operations and manufacturing were classified and reported as general and administrative expenses ("G&A"). The historical classification was consistent with~~conform to the ~~information used~~current period’s presentation. These reclassifications had no impact on our operating income (loss), net income (loss), working capital, cash flows or total equity previously reported.

Recent Accounting Pronouncements

Changes to GAAP are established by the ~~Company’s chief operating decision maker ("CODM"~~Financial Accounting Standards Board (“FASB”) generally in the form of accounting standards updates (“ASUs”) 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.FASB’s Accounting Standards Codification.

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.

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~The following is a summary of reclassifications to 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 Policies~~

~~Short‑term investments~~

Short‑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.

~~Recent Accounting Pronouncements~~

~~Changes to GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standards updates ("ASUs") to the FASB’s Accounting Standards Codification.~~

We consider the applicability and impact of all ~~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.

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

In 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 receipts~~operations 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.

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. For public entities, 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~~the 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.

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

In 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 the~~accelerate 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 exchange for those goods or services. The standard creates a five step model that requires companies to exercise judgment when considering the terms of a contract and 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 presented in the 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~~credit losses 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 guidanceaccounts receivable. See Note 3—Accounts Receivable, net for additional information regarding allowance for credit losses 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.accounts receivable.

Note 2—~~Noncontrolling Interest~~Cash, Cash Equivalents and Restricted Cash

~~We hold an economic interest~~Amounts reported 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 the~~sheets 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.

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~A reconciliation of net loss attributable to noncontrolling interest is detailed~~cash flows as cash, cash equivalents and restricted cash at March 31, 2020 and December 31, 2019 were as follows (in thousands):



	March 31,		December 31,
	2020		2019
Cash and cash equivalents	$	170,897	$	195,383
Restricted cash	1,358		1,357
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	172,255	$	196,740

Three Months Ended Nine Months Ended
September 30, 2016
Net loss $ (42,198 ) $ (89,893 )
Add: Net loss after Mosing Holdings contributed interest to FINV ⁽¹⁾
18,355
18,355
Add: Provision (benefit) for U.S. income taxes of FINV ⁽²⁾
3,078
(10,414 )
Less: Loss of FINV ⁽³⁾
97
23
Net loss subject to noncontrolling interest (20,668 ) (81,929 )
Noncontrolling interest percentage ⁽⁴⁾
25.2 % 25.2 %
Net loss attributable to noncontrolling interest $ (5,216 ) $ (20,741 )

Restricted cash primarily consists of cash deposits that collateralize our credit card program.

Note 3—Accounts Receivable, net

Accounts receivable at March 31, 2020 and December 31, 2019 were as follows (in thousands):



	March 31,		December 31,
	2020		2019
Trade accounts receivable, net of allowance for credit losses of $7,103 and $5,129, respectively	$	106,659	$	101,718
Unbilled receivables	36,302		43,422
Taxes receivable	29,615		18,516
Affiliated ⁽¹⁾	549		549
Other receivables	2,924		2,489
Total accounts receivable, net	$	176,049	$	166,694


⁽¹⁾	~~Represents net loss after August 26, 2016, when Mosing Holdings transferred its interest to FINV.~~


⁽²⁾	~~Represents income tax expense (benefit)~~Amounts represent expenditures on behalf 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.non-consolidated affiliates.

~~Note 3—Acquisition and Divestitures~~

~~Blackhawk Acquisition~~

On November 1, 2016, we completed a transaction to acquire all outstanding shares in Blackhawk Group Holdings, Inc., 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 (basedWe estimate current expected credit losses 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~~accounts receivable at each reporting date. We estimate current expected credit losses based on ~~the fair value~~our credit loss history, adjusted for current factors including global economic and ~~estimated lives of acquired property, plant~~business conditions, oil and ~~equipment. In addition, acquisition related costs are excluded from the unaudited pro forma financial information.~~natural gas industry and market conditions and customer mix.

~~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 )

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The 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.~~

~~Divestitures~~

~~In 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.~~

139

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4—~~Accounts Receivable,~~Inventories, net

~~Accounts receivable~~Inventories at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 were as follows (in thousands):

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
Affiliated ⁽¹⁾
895
717
Other receivables 5,526
3,852
Total accounts receivable $ 140,906
$ 167,417



	March 31,		December 31,
	2020		2019
Pipe and connectors, net of allowance of $17,957 and $18,287, respectively	$	21,251	$	21,779
Finished goods, net of allowance of $485 and $485, respectively	24,959		25,628
Work in progress	4,083		3,663
Raw materials, components and supplies	27,795		27,759
Total inventories, net	$	78,088	$	78,829


⁽¹⁾	~~Amounts represent expenditures on behalf of non-consolidated affiliates and receivables for aircraft charter income.~~

Note 5—~~Inventories~~Property, Plant and Equipment

~~Inventories~~The following is a summary of property, plant and equipment at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~ ~~were as follows~~2019 (in thousands):



	Estimated Useful Lives in Years	March 31, 2020			December 31, 2019
Land	—	$	29,292		$	30,724
Land improvements	8-15	7,179			7,193
Buildings and improvements	13-39	113,637			116,182
Rental machinery and equipment	5-7	881,637			882,979
Machinery and equipment - other	7	58,993			60,182
Furniture, fixtures and computers	5	16,982			17,251
Automobiles and other vehicles	5	28,201			28,734
Leasehold improvements	7-15, or lease term if shorter	14,098			14,258
Construction in progress - machinery and equipment	—	41,632			46,564
		1,191,651			1,204,067
Less: Accumulated depreciation		(888,747		)	(875,635		)
Total property, plant and equipment, net		$	302,904		$	328,432

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

During the three months ended March 31, 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 2020, the results of the Company's test for impairment of goodwill in the Cementing 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 resulted in the determination that certain long-lived assets were not recoverable and that the estimated fair value was below the carrying value. NaN impairments were recognized during the three months ended March 31, 2019 for assets held for use. Please see Note 16—Severance and Other Charges, net for additional details.

1410

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the depreciation and amortization expense associated with each line item for the three months ended March 31, 2020 and 2019 (in thousands):



	Three Months Ended
	March 31,
	2020		2019
Services	$	17,263	$	21,505
Products	239		434
General and administrative expenses	2,216		3,303
Total	$	19,718	$	25,242

Note 6—~~Property, Plant~~Goodwill and ~~Equipment~~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, 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.

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 for the three months ended March 31, 2019. At March 31, 2020, goodwill is allocated to our reportable segments as follows: Cementing Equipment - approximately $24.1 million; Tubular Running Services - approximately $18.7 million.

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 ~~is a summary~~table provides information related to our intangible assets as of ~~property, plant~~March 31, 2020 and ~~equipment at~~ ~~September 30, 2017~~ ~~and~~ December 31, ~~2016~~2019 (in thousands):



	March 31, 2020							December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Total		Gross Carrying Amount		Accumulated Amortization			Total
Customer Relationships	$	28,301	$	(25,166	)	$	3,135	$	32,890	$	(23,946	)	$	8,944
Intellectual Property	13,910		(6,522		)	7,388		14,029		(6,002		)	8,027
Total intangible assets	$	42,211	$	(31,688	)	$	10,523	$	46,919	$	(29,948	)	$	16,971

Our intangible assets are primarily associated with our Cementing Equipment segment. Amortization expense for intangible assets was $1.7 million and $2.9 million for the three months ended March 31, 2020 and 2019, 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 three months ended March 31, 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. NaN intangible asset impairment was recorded during the three months ended March 31, 2019. Please see Note 16—Severance and Other Charges, net for additional details.

Note 7—Other Assets

Other assets at March 31, 2020 and December 31, 2019 consisted of the following (in thousands):

Estimated
Useful Lives
in Years
September 30,
2017 December 31,
2016
Land — $ 16,491
$ 15,730
Land improvements 8-15 9,346
9,379
Buildings and improvements ⁽¹⁾
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
Leasehold improvements ⁽¹⁾
7-15, or lease term if shorter 9,870
8,027
Construction in progress - machinery
and equipment and buildings ⁽¹⁾
— 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



	March 31,		December 31,
	2020		2019
Cash surrender value of life insurance policies ⁽¹⁾	$	25,386	$	27,313
Deposits	2,131		2,119
Other	3,525		3,805
Total other assets	$	31,042	$	33,237


⁽¹⁾	See Note ~~12 - Related Party Transactions~~10—Fair Value Measurements for additional information.

~~During~~

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8—Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at March 31, 2020 and December 31, 2019 consisted of the third quarter of 2017, we committed to sell certain of our buildings in the Middle East region and determined those assets met the criteria to be classified as held for sale in our unaudited condensed consolidated balance sheet. As a result, we reclassified the buildings, with a net book value of $4.1 million, from property, plant and equipment to assets held for sale and recognized a $0.3 million loss.

~~The~~ following ~~table presents the depreciation and amortization associated with each line for the periods ended September 30, 2017 and 2016~~ (in thousands):



	March 31,		December 31,
	2020		2019
Accounts payable	$	11,029	$	16,793
Accrued compensation	20,175		23,988
Accrued property and other taxes	11,334		20,099
Accrued severance and other charges	3,757		5,837
Income taxes	21,787		19,166
Affiliated ⁽¹⁾	2,159		1,694
Accrued purchase orders and other	33,729		32,744
Total accounts payable and accrued liabilities	$	103,970	$	120,321

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


⁽¹⁾	Represents amounts owed to non-consolidated affiliates.

Note 9—Debt

Credit Facility

Asset Based Revolving Credit Facility

All obligations under the ABL Credit Facility are 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 substantially all of the assets and property of the borrowers and guarantors, including pledges of equity interests in certain of FINV’s subsidiaries, subject to certain exceptions. Borrowings under the ABL Credit Facility bear interest at FINV’s option at either (a) the Alternate Base Rate (“ABR”) (as defined therein), calculated as the greatest of (i) the rate of 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 rate that is subject to a 0.00% interest rate floor plus 0.50%, and (iii) the one-month Adjusted LIBO Rate (as defined therein) plus 1.00%, or (b) the Adjusted LIBO Rate, plus, in each case, an applicable margin. The applicable interest rate margin ranges from 1.00% to 1.50% per annum for ABR loans and 2.00% to 2.50% per annum for Eurodollar loans and, in each case, is based on FINV’s leverage ratio. The unused portion of the ABL Credit Facility is subject to a commitment fee that varies from 0.250% to 0.375% per annum, according to average daily unused commitments under the ABL

1513

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Note 7—Other Assets~~

~~Other assets at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~ ~~consisted of the following (in thousands):~~

September 30, December 31,
2017 2016
Cash surrender value of life insurance policies ⁽¹⁾
$ 29,671
$ 36,269
Deposits 2,193
2,343
Other 1,480
6,921
Total other assets $ 33,344
$ 45,533


⁽¹⁾	~~See Note 10 – Fair Value Measurements~~

~~Note 8—Accrued and Other Current Liabilities~~

~~Accrued and other current liabilities at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~ ~~consisted of the following (in thousands):~~

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

~~Note 9—Debt~~

Credit ~~Facility~~

~~We have a~~ ~~$100.0 million~~ ~~revolving credit facility with certain financial institutions, including up to~~ ~~$20.0 million~~ ~~in letters of credit and up to~~ ~~$10.0 million~~ ~~in swingline loans, which matures in~~ ~~August 2018~~ ~~(the “Credit Facility”). Subject to the terms of the 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 borrow under the Credit Facility has been reduced to approximately $30 million as a result of our decreased Adjusted EBITDA. Our borrowing capacity under the Credit Facility could be further reduced or eliminated dependingFacility. Interest on ~~our future Adjusted EBITDA. As a result of this, our overall liquidity would be diminished.~~

Borrowings under the Credit Facility bear interest, at our option, at either a base rate or an adjusted Eurodollar rate. Base rate loans under the Credit Facility bear interest at a rate equal to the higher of (i) the prime rate as published in the Wall Street Journal, (ii) the Federal Funds Effective Rate plus ~~0.50%~~ ~~or (iii) the adjusted Eurodollar rate plus~~ ~~1.00%, 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 of ~~applicable interest periods for Eurodollar loans, except that if~~ the selected interest period, ~~for a Eurodollar loan~~but no less frequently than quarterly. Interest on ABR loans is ~~longer than three months, interest is paid at~~payable monthly in arrears.

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~the end of each three-month period.~~ The ~~unused portion of the Credit Facility is subject to a commitment fee ranging from 0.250% to~~ ~~0.375%~~ ~~based on certain leverage ratios.~~

~~The~~ABL Credit Facility contains various covenants ~~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 ~~certain~~investments, acquisitions, or loans and ~~investments, enter into mergers~~create or ~~acquisitions, enter into hedging transactions, change our lines of business, prepay~~incur liens; (4) pay certain ~~indebtedness, enter into certain affiliate transactions, incur additional indebtedness~~dividends or make other distributions and (5) engage in ~~certain asset dispositions.~~

transactions with affiliates. The ABL Credit Facility also requires FINV to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0 based on the ratio of (a) consolidated EBITDA (as defined therein) minus unfinanced capital expenditures to (b) Fixed Charges (as defined therein), when either (i) an event of default occurs under the ABL Credit Facility or (ii) availability under the ABL Credit Facility falls for at least two consecutive calendar days below the greater of (A) $12.5 million and (B) 15% of the lesser of the borrowing base and aggregate commitments (a “FCCR Trigger Event”). Accounts receivable received by FINV’s U.S. subsidiaries that are parties to the ABL Credit Facility will be deposited into deposit accounts subject to deposit control agreements in favor of the ABL Agent. After a FCCR Trigger Event, these deposit accounts would be subject to “springing” cash dominion. After a FCCR Trigger Event, the Company will be subject to compliance with the fixed charge coverage ratio and “springing” cash dominion until no default exists under the ABL Credit Facility and availability under the facility for the preceding thirty consecutive days has been equal to at least the greater of (x) $12.5 million and (y) 15% of the lesser of the borrowing base and the aggregate commitments. If FINV fails to perform its obligations under the agreement that results in an event of default, the commitments under the ABL Credit Facility could be terminated and any outstanding borrowings under the ABL Credit Facility may be declared immediately due and payable. The ABL Credit Facility also contains ~~financial covenants, which, among~~cross default provisions that apply to FINV’s other ~~things, require us, on a consolidated basis, to maintain: (i) a ratio~~indebtedness.

As of ~~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, the Credit Facility contains customary events of default, including, among others, the failure to make required payments, the 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. In connection with the Waiver, the Company paid a waiver fee to each lender that executed the Waiver equal to five basis points of the respective lender’s commitment2020, FINV had 0 borrowings outstanding under the ~~Credit Agreement. As of September 30, 2017, we were in compliance with the covenants included in the Credit Agreement.~~

~~Citibank~~ABL Credit Facility,

~~In 2016, we entered into a three-year credit facility with Citibank N.A., UAE Branch in the amount of $6.0 million for the issuance of standby~~ letters of credit ~~and guarantees. The credit facility also allows for open ended guarantees. Outstanding amounts under the credit facility bear interest~~outstanding 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~~$9.1 million and ~~$2.2 million, respectively, in letters~~availability of ~~credit outstanding.~~$46.8 million.

Note 10—Fair Value Measurements

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 10 - —Fair Value Measurements in our Annual Report for further discussion.

1714

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019, were as follows (in thousands):



	Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
March 31, 2020
Assets:
Investments:
Cash surrender value of life insurance policies - deferred compensation plan	$	—	$	25,386	$	—	$	25,386
Marketable securities - other	1		—		—		1
Liabilities:
Deferred compensation plan	—		19,749		—		19,749

December 31, 2019
Assets:
Investments:
Cash surrender value of life insurance policies - deferred compensation plan	$	—	$	27,313	$	—	$	27,313
Marketable securities - other	8		—		—		8
Liabilities:
Derivative financial instruments	—		324		—		324
Deferred compensation plan	—		23,251		—		23,251

Quoted Prices
in Active
Markets

Significant
Other
Observable
Inputs

Significant
Unobservable
Inputs

(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~~payable and accrued ~~and other current~~ liabilities ~~at September 30, 2017 and in accounts receivable, net,~~ at December 31, ~~2016.~~2019.

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 third-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.

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. ~~For business combinations (see Note 3 - Acquisition and Divestitures),~~

We perform our goodwill impairment assessment for each reporting unit by comparing the ~~purchase price is allocated~~estimated fair value of each reporting unit to the ~~assets acquired and liabilities assumed based on~~reporting 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 as market~~analysis based on management’s short-term and long-term forecast of operating performance. This analysis includes significant assumptions ~~for the valuation of equipment and other fixed assets. We utilize a discounted cash flow model in evaluating impairment~~regarding discount rates, revenue growth rates,

1815

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~considerations related~~expected profitability margins, forecasted capital expenditures and the timing of expected future cash flows based on market conditions. If the estimated fair value of a 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.

When conducting an impairment test on long-lived assets, other than 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 analysis. 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.

As a result of factors, including COVID-19, we have sustained a continued decline in the market price of our common stock. This is one of the qualitative factors to be considered when evaluating whether events or changes in circumstances may indicate that it is likely that a potential goodwill impairment exists. We will consider this decline and other factors, both specific to us and to the energy industry as a whole, as a result of COVID-19 as we perform our annual goodwill impairment test as of October 31 this year.

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 volatile economic environments and could result in impairment 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 record 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.

Other Fair Value Considerations

The carrying values on our condensed consolidated balance ~~sheet~~sheets of our cash and cash equivalents, restricted cash, short-term investments, trade accounts receivable, other current assets, accounts payable ~~accrued~~ and ~~other current~~accrued liabilities and lines of credit approximate fair values due to their short maturities.

Note 11—Derivatives

WeFrom time to time we 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~~March 31, 2020, we had no foreign currency derivative contracts outstanding. As of December 31, ~~2016,~~2019, we had the following foreign currency derivative contracts outstanding in U.S. dollars (in thousands):



	December 31, 2019
Derivative Contracts	Notional Amount		Contractual Exchange Rate	Settlement Date
Canadian dollar	$	948	1.3182	3/16/2020
Euro	9,279		1.1180	3/17/2020
Norwegian krone	11,027		9.0688	3/17/2020
Pound sterling	16,057		1.3381	3/17/2020

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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~~2019 (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 ) —

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The 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
		March 31,
Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative Contracts	2020		2019
Unrealized gain (loss) on foreign currency contracts	Other income, net	$	—	$	496
Realized gain (loss) on foreign currency contracts	Other income, net	1,475		(660		)
Total net gain (loss) on foreign currency contracts		$	1,475	$	(164	)

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~~2019 (in thousands):



	Derivative Asset Positions			Derivative Liability Positions
	December 31, 2019			December 31, 2019
Gross position - asset / (liability)	$	127		$	(451	)
Netting adjustment	(127		)	127
Net position - asset / (liability)	$	—		$	(324	)

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—Related Party Transactions

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. The 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 nine months ended September 30, 2017 and 2016, respectively.~~

In certain cases, we have made improvements to properties subject to 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, or

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~replace 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~~March 31, 2020 and ~~2016, respectively, and $1.0 million and $0.8~~2019, respectively. As of March 31, 2020, $5.7 million of ~~net charter expense for nine months ended September 30, 2017~~our operating lease right-of-use assets and ~~2016, respectively.~~$6.4 million of our lease liabilities were associated with related party leases.

Tax Receivable Agreement

Mosing Holdings, LLC ("Mosing Holdings") and its permitted transferees converted all of their Preferred Stock into shares of our common stock on a ~~one-for-one~~1-for-one basis on August 26, 2016, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications and other similar transactions, by delivery of ~~an equivalent portion~~all of their interests in FICV to us (the “Conversion”). ~~FICV will make~~As 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 result~~resulted in an adjustment to the tax basis of the tangible and intangible assets of FICV with respect to the portion of FICV ~~now held~~transferred to FINV by ~~FINV.~~Mosing Holdings and its permitted transferees. These adjustments ~~will be~~are allocated to FINV. The adjustments to the tax basis of the tangible and intangible assets of FICV

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

described above would not have been available absent this 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.

The tax receivable agreement ~~(the "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 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 reductions~~that we ~~refer~~actually 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 us 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 we make under the TRA ~~provides for payment~~will be increased by ~~us of~~any interest ~~earned~~accrued 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.~~

The estimation of the ~~liability~~amount and timing of payments under the TRA is by its nature ~~imprecise and~~ imprecise. For purposes of the TRA, cash savings in tax generally are calculated by comparing our actual tax liability to the amount we would have been required to pay had we 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, ~~regarding~~including the amount and timing of ~~future~~the taxable ~~income.~~income we generate in the future. As of ~~September 30, 2017,~~March 31, 2020, 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.

The payment obligations under the TRA are our 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 we make the termination payment specified in the TRA. If FINV elects to terminate the TRA early, which it may do so in its sole discretion, (or if it terminates 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 ~~anticipated~~hypothetical future ~~tax benefits subject~~payments 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 own~~benefits), determined by applying a discount rate equal to the long-term Treasury rate in effect on the ~~termination~~applicable 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 changes

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

of control. For example, if the TRA were terminated on ~~September 30, 2017,~~March 31, 2020, the estimated termination payment would be approximately ~~$102.0~~$57.0 million (calculated using a discount rate of ~~5.63%~~4.15%). The foregoing number is merely an estimate and the actual payment could differ materially.

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 ~~FICV~~FINV's 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 its~~certain of FINV’s 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.

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note ~~13 - Income (Loss)~~13—Loss Per Common Share

Basic ~~income (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.

We apply the treasury stock method to determine the dilutive weighted average common shares represented by ~~the~~ unvested restricted stock units and ~~ESPP~~employee 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.

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The following table summarizes the basic and diluted ~~income (loss)~~loss per share calculations (in thousands, except per share amounts):

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
Restricted stock units ⁽¹⁾
525
—
—
—
Diluted weighted average common shares⁽¹⁾
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 )



	Three Months Ended
	March 31,
	2020			2019
Numerator
Net loss	$	(85,978	)	$	(28,287	)
Denominator
Basic and diluted weighted average common shares⁽¹⁾	225,505			224,653
Loss per common share:
Basic and diluted	$	(0.38	)	$	(0.13	)

⁽¹⁾
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

Note 14—Income Taxes

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 ~~year's~~year’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.

Our effective tax rate ~~on income (loss) before income taxes~~ was ~~97.4%~~15.3% and ~~13.9%~~(52.8)% for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and 327.7% and 14.6% for the nine months ended September 30, 2017 and 2016,~~2019, respectively. The ~~higher rate~~variance in effective tax rates compared to the same period last year is due ~~primarily~~ to recording valuation allowances against 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~~the beneficial impact in the current period ~~we assessed~~of a provision in the ~~available positive~~recently-enacted Coronavirus Aid, Relief, and ~~negative evidence~~Economic Security Act (the “CARES Act”), which allows corporations with net operating losses (“NOLs”) incurred in 2018, 2019 and ~~concluded that it~~2020 to carry back such NOLs to each of the five years preceding the year of the NOL, beginning with the earliest year in which there is ~~not more likely than not that sufficient future~~ taxable income, ~~would be generated to permit~~and claim an income tax refund in the ~~use of our deferred tax assets. This conclusion is primarily the~~applicable carryback year. As a result of ~~cumulative losses incurred~~the NOL carryback provision in the ~~most recent three year~~CARES Act, we were able to recognize an income tax refund receivable as of March 31, 2020 of $17.5 million. We are subject to tax in many U.S. and foreign jurisdictions. In many foreign jurisdictions we are taxed on bases such as deemed profits or withholding taxes based on revenue. Consequently, the relationship between our pre-tax income and our income tax provision varies from period ~~and uncertainty regarding when we will return~~ to ~~profitability. The amount~~period.

We are under audit by certain foreign jurisdictions for the years 2008 - 2019. We do not expect the results 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.~~these audits to have any material effect on our financial statements.

As of ~~September 30, 2017,~~March 31, 2020, there were no significant changes to our ~~unrecognized~~uncertain tax ~~benefits~~positions as reported in our audited financial statements for the year ended December 31, ~~2016.~~2019.

2319

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 15—Commitments and Contingencies

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 ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019. 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.

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 ~~United States~~U.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 course~~

As disclosed above, our investigation into possible violations of the ~~investigation,~~FCPA remains ongoing, and we ~~discovered historical business transactions (and bids~~will 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 various~~relevant governmental entities ~~(including those involved~~ in ~~our ongoing investigation), but at~~connection 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.

Note 16—Severance and Other Charges, net

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 March 31,
	2020		2019
Severance and other costs	$	538	$	389
Fixed asset impairments and retirements	15,479		66
Intangible asset impairments	4,708		—
	$	20,725	$	455

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. At March 31, 2020, our outstanding liability associated with our current program was approximately $3.8 million and included severance payments and other employee-related separation costs.

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Below is a reconciliation of our employee separation liability balance (in thousands):



	Tubular Running Services			Tubulars			Cementing Equipment			Corporate			Total
Balance at December 31, 2019	$	2,000		$	19		$	1,632		$	2,186		$	5,837
Additions for costs expensed	117			(19		)	82			358			538
Severance and other payments	(1,005		)	—			(897		)	(715		)	(2,617		)
Other adjustments	—			—			—			(1		)	(1		)
Balance at March 31, 2020	$	1,112		$	—		$	817		$	1,828		$	3,757

Fixed asset impairments and retirements: During the three months ended March 31, 2019, we recognized $0.1 million of impairment related to assets held for sale. During the three months ended March 31, 2020, we recorded fixed asset impairment charges of $15.5 million primarily associated with construction in progress in our Cementing Equipment segment. Please see Note 5—Property, Plant and Equipment for additional details.

Intangible asset impairments: During the three months ended March 31, 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. Please see Note 6—Goodwill and Intangible Assets for additional details.

Note 17—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 ~~CODM~~Company’s chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. We are comprised of ~~four~~3 reportable segments: ~~International~~Tubular Running Services ~~U.S. Services, Tubular Sales~~(“TRS”) segment, Tubulars segment and ~~Blackhawk.~~Cementing Equipment (“CE”) segment.

The ~~International Services~~TRS segment provides tubular running services globally. Internationally, the TRS segment operates in ~~international~~the majority of the offshore oil and gas markets and also in several onshore ~~international regions. Our customers~~regions 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.~~

~~The~~approximately 50 countries on 6 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 as~~and 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.

The ~~Tubular Sales~~Tubulars segment designs, manufactures and distributes ~~large outside diameter ("OD") pipe,~~ connectors and casing attachments ~~and~~for large outside diameter (“OD”) heavy wall pipe. Additionally, the Tubulars segment sells large OD pipe originally manufactured by various pipe ~~mills. We also provide~~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 tubulars (up~~long-length tubular assemblies up to ~~300~~400 feet in ~~length) for use as caissons or pilings. This~~length. The Tubulars segment also ~~designs~~specializes in the development, manufacture and ~~manufactures~~supply of proprietary ~~equipment for use in our International and U.S. Services segments.~~drilling tool solutions that focus on improving drilling productivity through eliminating or mitigating traditional drilling operational risks.

The ~~Blackhawk~~CE segment provides ~~well construction~~specialty equipment to enhance the safety and ~~well intervention rental~~efficiency 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 Gulf~~offshore 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.

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

These offerings improve operational efficiencies and limit non-productive time if unscheduled events are encountered at the wellsite.

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 March 31, 2020
	Tubular Running Services		Tubulars		Cementing Equipment		Consolidated
United States	$	30,169	$	9,797	$	13,531	$	53,497
International	59,328		2,745		7,922		69,995
Total Revenue	$	89,497	$	12,542	$	21,453	$	123,492

	Three Months Ended March 31, 2019
	Tubular Running Services		Tubulars		Cementing Equipment		Consolidated
United States	$	38,155	$	16,628	$	21,578	$	76,361
International	59,924		2,029		6,094		68,047
Total Revenue	$	98,079	$	18,657	$	27,672	$	144,408

Revenue by geographic area were as follows (in thousands):



	Three Months Ended
	March 31,
	2020		2019
United States	$	53,497	$	76,361
Europe/Middle East/Africa	35,434		36,400
Latin America	20,925		17,444
Asia Pacific	9,569		7,949
Other countries	4,067		6,254
Total Revenue	$	123,492	$	144,408

Adjusted EBITDA

~~FRANK’S INTERNATIONAL N.V.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~based~~equity-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

FRANK’S INTERNATIONAL N.V.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Our CODM uses Adjusted EBITDA as the primary measure of segment reporting performance.

The following table presents a reconciliation of Segment Adjusted EBITDA to net ~~income (loss)~~loss (in thousands):



	Three Months Ended
	March 31,
	2020			2019
Segment Adjusted EBITDA:
Tubular Running Services	$	13,305		$	17,735
Tubulars	1,396			4,112
Cementing Equipment	2,544			3,794
Corporate ⁽¹⁾	(10,186		)	(15,983		)
	7,059			9,658
Goodwill impairment	(57,146		)	—
Severance and other charges, net	(20,725		)	(455		)
Interest income, net	533			768
Depreciation and amortization	(19,718		)	(25,242		)
Income tax (expense) benefit	15,563			(9,773		)
Loss on disposal of assets	(60		)	(227		)
Foreign currency gain (loss)	(9,892		)	483
Charges and credits ⁽²⁾	(1,592		)	(3,499		)
Net loss	$	(85,978	)	$	(28,287	)

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
U.S. Services ⁽¹⁾
(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 )
Derecognition of the TRA liability ⁽²⁾
122,515
—
122,515
—
Charges and credits ⁽³⁾
(7,616 ) (20,151 ) (22,231 ) (37,241 )
Net income (loss) $ 2,296
$ (42,198 ) $ (50,317 ) $ (89,893 )


⁽¹⁾	~~Amounts previously reported~~Includes certain expenses not attributable to a particular segment, such as ~~Corporate~~costs related to support functions 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.~~corporate executives.


⁽²⁾	~~Please see Note 12 - Related Party Transactions for further discussion.~~

⁽³⁾

Comprised of Equity-based compensation expense (for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016: $2,342~~2019: $2,146 and ~~$3,828, respectively,~~$2,574, respectively), Unrealized and ~~for the nine months ended September 30, 2017 and 2016: $11,458 and $12,356, respectively), Mergers and acquisition expense~~realized gains (for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016: none~~2019: $1,704 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, respectively), Unrealized and realized (losses) (for the three months ended September 30, 2017 and 2016: $(1,123) and $(10), respectively, and for the nine months ended September 30, 2017 and 2016: $(2,819) and $(973),$308, respectively) and Investigation-related matters (for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016: $2,503~~2019: $1,150 and ~~$1,779, respectively, and for the nine months ended September 30, 2017 and 2016: $5,109 and $5,054,~~$1,233, respectively).

~~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 March 31, 2020
Revenue from external customers	$	89,497		$	12,542	$	21,453		$	—		$	123,492
Operating income (loss)	(1,315		)	651		(77,498		)	(16,046		)	(94,208		)
Adjusted EBITDA	13,305			1,396		2,544			(10,186		)	*

Three Months Ended March 31, 2019
Revenue from external customers	$	98,079		$	18,657	$	27,672		$	—		$	144,408
Operating income (loss)	141			3,194		(824		)	(22,805		)	(20,294		)
Adjusted EBITDA	17,735			4,112		3,794			(15,983		)	*

International
Services

U.S.
Services
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 )
Adjusted EBITDA ⁽¹⁾
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 )
Adjusted EBITDA ⁽¹⁾
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.

* Non-GAAP financial measure not disclosed.

~~Note 17—Supplemental Cash Flow Information~~

~~Supplemental 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

2623

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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;

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,” ~~“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~~continuation of ~~activity~~a swift and material decline in ~~the~~global crude oil demand and crude oil prices for an uncertain period of time that correspondingly may lead to a significant reduction of domestic oil and gas ~~industry;~~

~~further or sustained~~activity, which in turn could result in significant declines in demand for our products and services;

uncertainty regarding the length of time it will take for the United States and the rest of the world to slow the spread of the COVID-19 virus to the point where applicable authorities are comfortable easing current restrictions on various commercial and economic activities; such restrictions are designed to protect public health but also have the effect of significantly reducing demand for oil and gas, ~~prices, including those resulting from weak global demand;~~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 ~~timing, magnitude, probability and/or sustainability~~impact of ~~any oil~~current and ~~gas price recovery;~~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.~~disasters;

global or national health concerns, including health epidemics, including COVID-19; and

policy or regulatory changes domestically in the United States.

These and other important factors that could affect our operating results and performance are described in (1) “Risk Factors” in Part II, Item 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,~~2019, filed with the SEC on February ~~24, 2017~~25, 2020 (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.

2725

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.

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 “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” of this Form 10-Q.

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 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.

We conduct our business through ~~four~~three operating segments:

•

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 50 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.

~~International Services.~~ ~~We currently provide our services in approximately 60 countries on six continents. Our customers in these international markets~~

Outlook

Two significant events occurring during the first quarter are ~~primarily large exploration and production companies, including integrated~~creating headwinds across the oil and gas ~~companies~~markets. First, there was a breakdown in Organization of Petroleum Exporting Countries (“OPEC”) and ~~national~~Russia production cut agreements and during the period of dispute, meaningful downward pressure on commodity prices occurred. There was an ultimate agreement made amongst OPEC+ parties in April 2020 which will take effect beginning in May 2020. Despite this agreement, there is expected to be substantial oversupply in the future. This is due to the second event, the global COVID-19 pandemic which is creating energy demand declines and giving rise to logistical challenges in furthering existing drilling programs. Both of these events have generated reduced capital spending plans for our customers, with U.S. onshore markets seeing the largest reductions from initial 2020 guidance. International customer spending is also being reduced although at a lower rate than the U.S. onshore markets. Due to travel restrictions associated with COIVD-19, clients have suspended several international projects which we believe will recommence as travel restrictions are eased. We are also seeing a number of clients delay the start-up projects of new project later in the year, postponing these into 2021, or longer. We believe that the effects of COVID-19 will depress the oil and gas ~~companies.~~

~~U.S. Services.~~ ~~We service customers~~markets in the ~~offshore areas~~short to intermediate term as many governments impose a range of regulations that continue to limit energy demand. We expect commodity over-supply issues to have a long-term effect over the next 24 months, requiring time for the market supply and demand curve to return to balance.

As of March 31, 2020, the full impact of the ~~U.S. Gulf of Mexico. In addition, we have a presence~~COVID-19 outbreak and the reduction in oil sector activity continues to evolve daily. It is uncertain how long either event will last. With the ~~active onshore~~significant decline in 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.~~

~~Tubular Sales.~~ ~~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,~~prices as well as ~~long-length tubulars (up to 300 feet in length) for use as caissons or pilings.~~ ~~This segment also designs and manufactures proprietary equipment for use in our International and U.S. Services segments.~~

~~Blackhawk.~~ ~~We provide well construction and well intervention rental equipment, services and products, in addition to cementing tool expertise, in~~ the ~~U.S. and Mexican Gulf~~general economic decline caused by the impacts of ~~Mexico, onshore U.S. and other select international locations.~~

~~Market Outlook~~

~~The market~~COVID-19, we expect demand for our products and services ~~continues~~ to ~~be challenged by depressed oil~~decline due to much lower capital expenditure budgets throughout the industry.

The direct impact of the COVID-19 outbreak on our ability to conduct operations has been minor. We have implemented a work-from-home directive for office personnel across the globe, split-shift rotation protocols for our manufacturing facilities and ~~gas commodity prices~~operations facilities, social distancing guidelines in manufacturing and ~~reduced customer spending~~operations facilities, and quarantine protocols for employees at risk of exposure to COVID-19. In addition, we have experienced local disruptions of activity in response to outbreaks of COVID-19 at certain offshore drilling locations, and disruptions due to travel restrictions and local governmental orders. However, in the majority of locations, our products and services have been deemed essential economic activity and have continued during local restrictions on ~~offshore exploration~~business activity.

In this challenging and uncertain environment, we are continuing and building upon our profitability improvement project to further reduce our cost base. We are implementing workforce reductions, in conjunction with changes to our compensation and benefits programs and concurrent with the pursuit of several government-sponsored relief support programs globally that will capture additional labor savings. We are also working to reduce our non-labor spend, engaging in active discussions with our vendors and scrutinizing research and development projects. Despite some stabilization in commodity prices and increases in U.S. onshore activity and profitability, commodity prices remain below levels necessary for meaningful increases in offshore activity, particularlyspending. We are also working to optimize working capital, with workstreams under way in the ~~markets~~areas of ~~West Africa~~collections, capital expenditures, inventory management 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 and, consequently, our Tubular Sales business segment. International markets are beginning to show signs of stabilization and the potential for reaching an activity bottom in the next twelve months. We expect to see growth in 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. disbursements.

We also continue to ~~evaluate~~monitor potential goodwill impairments as a result of COVID-19. For further information, see Note 6—Goodwill and Intangible Assets in our Notes to Unaudited Condensed Consolidated Financial Statements.

While management anticipates that the industry and economic impact of COVID-19 and OPEC’s actions will have a negative effect on our results of operations in 2020 and perhaps beyond, the degree to which these factors will impact our business remains uncertain. Please read Item 1A, Risk Factors, in this Quarterly Report.

~~acquisitions to broaden our well construction offering and position the Company for revenue growth in a market recovery.~~

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.

Adjusted EBITDA and Adjusted EBITDA Margin

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 ~~sale~~disposal of assets, foreign currency gain or loss, equity-based compensation, unrealized ~~gain~~and 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.

The following table presents a reconciliation of net loss to Adjusted EBITDA and Adjusted EBITDA margin ~~to net income (loss)~~ for each of the periods presented (in thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2020			2019

Net income (loss)	$	2,296		$	(42,198	)	$	(50,317	)	$	(89,893	)
Net loss													$	(85,978	)	$	(28,287	)
Goodwill impairment													57,146			—
Severance and other charges, net													20,725			455
Interest income, net	(1,019		)	(646		)	(2,170		)	(1,050		)	(533		)	(768		)
Depreciation and amortization	30,650			26,545			92,700			84,278			19,718			25,242
Income tax expense (benefit)	87,613			(6,800		)	72,419			(15,311		)	(15,563		)	9,773
Gain on sale of assets	(829		)	(46		)	(2,091		)	(1,095		)
Loss on disposal of assets													60			227
Foreign currency (gain) loss	(1,839		)	1,696			(3,184		)	5,907			9,892			(483		)
Derecognition of the TRA liability ⁽¹⁾	(122,515		)	—			(122,515		)	—
Charges and credits⁽²⁾	7,616			20,151			22,231			37,241
Charges and credits⁽¹⁾													1,592			3,499
Adjusted EBITDA	$	1,973		$	(1,298	)	$	7,073		$	20,077		$	7,059		$	9,658
Adjusted EBITDA margin	1.8		%	(1.2		)%	2.1		%	5.3		%	5.7		%	6.7		%


⁽¹⁾	~~Please see Note 12 - Related Party Transactions in the Notes to the Unaudited Condensed Consolidated Financial Statements for further discussion.~~

⁽²⁾

Comprised of Equity-based compensation expense (for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016: $2,342~~2019: $2,146 and ~~$3,828, respectively,~~$2,574, respectively), Unrealized and ~~for the nine months ended September 30, 2017 and 2016: $11,458 and $12,356, respectively), Mergers and acquisition expense~~realized gains (for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016: none~~2019: $1,704 and ~~none, respectively, and for the nine months ended September 30, 2017 and 2016: $459 and none,~~$308, 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, respectively), Unrealized and realized losses (for the three months ended September 30, 2017 and 2016: $1,123 and $10, respectively, and for the nine months ended September 30, 2017 and 2016: $2,819 and $973, respectively) and Investigation-related matters (for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016: $2,503~~2019: $1,150 and ~~$1,779, respectively, and for the nine months ended September 30, 2017 and 2016: $5,109 and $5,054,~~$1,233, respectively).

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 ~~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 ~~are~~is 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.

Consolidated Results of Operations

The following table presents our consolidated results for the periods presented (in thousands):

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
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 ⁽¹⁾
60,981
57,307
178,865
189,965
Products ⁽¹⁾
10,750
16,029
45,162
51,446
General and administrative expenses ⁽¹⁾
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 TRA liability ⁽²⁾
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 )



	Three Months Ended
	March 31,
	2020			2019
	(Unaudited)
Revenue:
Services	$	105,083		$	115,406
Products	18,409			29,002
Total revenue	123,492			144,408

Operating expenses:
Cost of revenue, exclusive of depreciation and amortization
Services	79,380			83,239
Products	13,988			20,128
General and administrative expenses	26,683			35,411
Depreciation and amortization	19,718			25,242
Goodwill impairment	57,146			—
Severance and other charges, net	20,725			455
Loss on disposal of assets	60			227
Operating loss	(94,208		)	(20,294		)

Other income (expense):
Other income, net	2,026			529
Interest income, net	533			768
Foreign currency gain (loss)	(9,892		)	483
Total other income (expense)	(7,333		)	1,780

Loss before income taxes	(101,541		)	(18,514		)
Income tax expense (benefit)	(15,563		)	9,773
Net loss	$	(85,978	)	$	(28,287	)


⁽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.~~

Three Months Ended ~~September 30, 2017~~March 31, 2020 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2019

~~Revenues.~~ ~~Revenues~~Two significant, and somewhat independent, events combined to cause a significant decrease in revenue near the end of the first quarter of 2020. Threatened actions to compete for market share gains by oil producing countries, notably Saudi Arabia and Russia, created the expectation of significant oversupply in the future, while the COVID-19 pandemic drove energy demand downward and led to disruptions of activity in some locations. U.S. onshore markets saw the largest reductions. International customer spending was also reduced, although to a lesser extent than the U.S. onshore market. Within the international market, certain regions were impacted more than others by disruptions related to COVID-19. In Africa, in particular, travel restrictions led to significant disruptions of activity.

Direct impact of the COVID-19 outbreak on our ability to conduct operations has been minor. We have implemented a work-from-home directive for office personnel across the globe, split-shift rotation protocols for our manufacturing facilities and operations facilities, social distancing guidelines in manufacturing and operations facilities, and quarantine protocols for employees at risk of exposure to COVID-19. In addition, we have experienced local disruptions of activity in response to outbreaks of COVID-19 at certain offshore drilling locations, and disruptions due to travel restrictions

and local governmental orders. However, in the majority of locations, our products and services have been deemed essential economic activity and have continued during local restrictions on business activity.

Revenue. Revenue from external customers, excluding intersegment sales, for the three months ended ~~September 30, 2017 increased~~March 31, 2020 decreased by ~~$3.0~~$20.9 million, or ~~2.8%~~14.5%, to ~~$108.1~~$123.5 million from ~~$105.1~~$144.4 million for the three months ended ~~September 30, 2016. The revenue increase was primarily attributable~~March 31, 2019. Revenue decreased across all segments, partially due to ~~our recently acquired Blackhawk segment~~ the COVID-19 pandemic and ~~our International Services segment,~~ ~~partially offset by a decrease~~the sharp decline in ~~our U.S. Services and Tubular Sales segments. Revenues~~oil prices. Revenue for our segments ~~are~~is discussed separately below under the heading ~~"Operating~~“Operating Segment Results."”

Cost of ~~revenues,~~revenue, exclusive of depreciation and amortization. Cost of ~~revenues~~revenue for the three months ended ~~September 30, 2017~~March 31, 2020 decreased by ~~$1.6~~$10.0 million, or ~~2.2%~~9.7%, to ~~$71.7~~$93.4 million from ~~$73.3~~$103.4 million for the three months ended ~~September 30, 2016~~ March 31, 2019. The decrease was driven by lower activity levels and mix of work in the TRS, Tubulars, and CE segments.

General and administrative expenses. General and administrative expenses for the three months ended March 31, 2020 decreased by $8.7 million, or 24.6%, to $26.7 million from $35.4 million for the three months ended March 31, 2019 due to ~~our~~the restructuring and cost cutting ~~initiatives.~~measures we implemented during 2019.

Depreciation and amortization. Depreciation and amortization for the three months ended ~~September 30, 2017 increased~~March 31, 2020 decreased by ~~$4.1~~$5.5 million, or ~~15.5%~~21.9%, to ~~$30.7~~$19.7 million from ~~$26.5~~$25.2 million for the three months ended ~~September 30, 2016, primarily due to~~ ~~our recently acquired Blackhawk segment.~~March 31, 2019, as a result of a lower depreciable base and less intangible asset amortization.

~~Severance and other charges. Severance and other charges for the three months ended September 30, 2017 decreased by $12.9 million, or 88.7%, to $1.6 million from $14.5~~Goodwill impairment. We recognized a goodwill impairment of $57.1 million for the three months ended ~~September 30, 2016 due to higher workforce reductions~~March 31, 2020. There was no goodwill impairment charge during the three months ended March 31, 2019. See Note 6—Goodwill and Intangible Assets in the ~~third quarter of 2016 compared~~Notes to ~~2017 as we~~ ~~took steps to adjust our workforce to meet the depressed demand in the industry.~~Unaudited Condensed Consolidated Financial Statements for additional information.

~~Foreign currency gain (loss)~~Severance and other charges, net. ~~Foreign currency gain~~Severance and other charges, net for the three months ended ~~September 30, 2017~~March 31, 2020 increased by $20.3 million to $20.7 million from $0.5 million for the three months ended March 31, 2019. Severance and other charges, net for the three months ended March 31, 2020 was ~~$1.8~~unfavorably impacted by fixed asset impairment charges of $15.5 million, intangible asset impairments of $4.7 million and severance and other costs of $0.5 million, primarily driven by the expected decrease in demand for our services and products as ~~compared~~a result of lower oil prices due to ~~a foreign~~the ongoing COVID-19 pandemic and the OPEC+ price war. See Note 16—Severance and Other Charges, net in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

Foreign currency loss. Foreign currency loss for the three months ended ~~September 30, 2016 of $1.7 million. The change in foreign currency gain (loss) year-over-year was primarily driven~~March 31, 2020 changed by ~~the weakening of the U.S. dollar against other currencies.~~

~~Income tax expense (benefit).~~ ~~Income tax expense for the three months ended September 30, 2017 increased by $94.4~~$10.4 million, to ~~$87.6~~a loss of $9.9 million from a ~~benefit~~gain of ~~$6.8~~$0.5 million for the three months ended ~~September 30, 2016,~~ ~~primarily as a result of recording valuation allowances against our net deferred tax assets.~~March 31, 2019. 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.~~

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

~~Revenues.~~ Revenues from external customers, excluding intersegment sales, for the nine months ended September 30, 2017 decreased by $43.1 million, or 11.3%, to $336.5 million from $379.5 million for the nine months ended September 30, 2016. The decrease was primarily attributable to lower revenues 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 partially offset by revenues from our recently acquired Blackhawk segment of $51.9 million. Revenues for our segments are discussed separately below under the heading "Operating Segment Results."~~

~~Cost of revenues, exclusive of depreciation and amortization.~~ Cost of revenues for the nine months ended September 30, 2017 decreased by $17.4 million, or 7.2%, to $224.0 million from $241.4 million for the nine months ended September 30, 2016. Our cost of revenues decline was consistent with our lower revenue and cost cutting initiative.

~~General and administrative expenses. General and administrative expenses for the~~ ~~nine months ended September 30, 2017~~ ~~decreased by $13.5 million, or 9.7%, to $125.1 million from $138.6 million for the~~ ~~nine months ended September 30, 2016~~ ~~primarily due to bad debt expense recognized in 2016 related to difficulty in collecting certain receivables in Venezuela and cost cutting initiatives.~~

~~Depreciation and amortization.~~ ~~Depreciation and amortization for the nine months ended September 30, 2017 increased by~~ ~~$8.4 million, or 10.0%, to~~ ~~$92.7 million~~ ~~from~~ ~~$84.3 million~~ ~~for the nine months ended September 30, 2016, primarily due to~~ ~~our recently acquired Blackhawk segment, partially offset by a lower depreciable base related to our legacy assets.~~

~~Severance and other charges~~. Severance and other charges for the nine months ended September 30, 2017 decreased by $16.5 million, or 87.3%, to $2.4 million from $18.9 million for the nine months ended September 30, 2016 as a result of a higher workforce reduction in 2016 compared to 2017 as we took ~~steps to adjust our workforce to meet the depressed demand in the industry.~~

~~Foreign currency gain (loss)~~. Foreign currency gain for the nine months ended September 30, 2017 was $3.2 million as compared to a foreign currency loss for the nine months ended September 30, 2016 of $5.9 million. The improvementchange in foreign currency ~~gain (loss)~~results year-over-year was primarily driven by ~~the weakening~~increased strengthening of the U.S. dollar ~~against other currencies which positively impacted foreign currency gain (loss) for~~in the ~~nine months ended September 30, 2017 and~~current period as compared to the ~~absence~~prior year period, partially due to the impact of ~~the devaluation of the Nigerian Naira which negatively impacted foreign currency gain (loss) for the nine months ended September 30, 2016.~~COVID-19.

Income tax expense (benefit). Income tax expense (benefit) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 increased by ~~$87.7~~$25.3 million to ~~$72.4 million from~~ a benefit of ~~$15.3~~$15.6 million from an expense of $9.8 million for the ~~nine~~three months ended ~~September 30, 2016,~~ ~~primarily as a result of recording valuation allowances against our net deferred~~March 31, 2019. The variance in effective tax ~~assets. The deferred tax assets relate~~rates compared to the same period last year is due to the beneficial impact in the current period from the 5-year net operating ~~losses, outside basis differences~~loss carryback provision included in ~~our partnership investment~~the recently-enacted Coronavirus Aid, Relief, and ~~other timing differences primarily associated with our U.S. operations.~~Economic Security Act.

Operating Segment Results

The following table presents ~~revenues~~revenue 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

Segment Adjusted EBITDA ⁽²⁾:

International Services $ 11,151
$ 4,532
$ 25,459
$ 31,752
U.S. Services ⁽¹⁾
(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



	Three Months Ended
	March 31,
	2020			2019
Revenue:
Tubular Running Services	$	89,497		$	98,079
Tubulars	12,542			18,657
Cementing Equipment	21,453			27,672
Total	$	123,492		$	144,408

Segment Adjusted EBITDA ⁽¹⁾:
Tubular Running Services	$	13,305		$	17,735
Tubulars	1,396			4,112
Cementing Equipment	2,544			3,794
Corporate ⁽²⁾	(10,186		)	(15,983		)
	$	7,059		$	9,658


⁽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.


⁽²⁾	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 ~~"Adjusted~~“Adjusted EBITDA and Adjusted EBITDA ~~Margin"~~Margin”).


⁽²⁾	Includes certain expenses not attributable to a particular segment, such as costs related to support functions and corporate executives.

Three Months Ended ~~September 30, 2017~~March 31, 2020 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2019

~~International~~Tubular Running Services

Revenue for the ~~International Services~~TRS segment ~~increased by $2.7~~was $89.5 million for the three months ended ~~September 30, 2017,~~March 31, 2020, a decrease of $8.6 million, or ~~5.3%~~8.8%, compared to $98.1 million for the same period in ~~2016, primarily due~~2019. The decrease was driven by COVID-19-related activity disruptions and initial customer spending cuts in response to ~~an increase~~falling oil prices in the U.S., Middle East, ~~onshore activity, European offshore shelf activity, and increased offshore activity in Latin America~~Africa, and Canada, partially offset by ~~declines~~improved year-over-year results in ~~revenue attributable to the Africa and~~Mexico, Asia Pacific ~~regions.~~and Europe.

Adjusted EBITDA for the ~~International Services~~TRS segment ~~increased by $6.6~~was $13.3 million for the three months ended ~~September 30, 2017, or 146.1%~~March 31, 2020, ~~compared to the same period in 2016, primarily driven by increased revenue as well as lower expenses in 2017 due to cost cutting measures.~~

~~U.S. Services~~

Revenue for the U.S. Services segment decreased by $5.0 million for the three months ended September 30, 2017, or 14.7%, compared to the same period in 2016. Onshore services revenue increased by $6.3 million as a result of improved activity from increased rig counts. The offshore business saw a decrease ~~in revenue~~ of ~~$11.3~~$4.4 million, ~~as a result of overall lower activity due to rig cancellations and delays in the Gulf of Mexico, coupled with downward pricing pressures.~~

Adjusted EBITDA for the U.S. Services segment decreased by $5.3 million for the three months ended September 30, 2017, or 88.9%, compared to the same period in 2016 due to overall lower offshore activity and increased pricing pressures partially offset by higher activity in our onshore services.

~~Tubular Sales~~

Revenue for the Tubular Sales segment decreased by $12.3 million for the three months ended September 30, 2017, or 61.6%, compared to the same period in 2016 primarily due to lower deepwater activity in the Gulf of Mexico and delays in projects.

Adjusted EBITDA for the Tubular Sales segment decreased by $1.5 million for the three months ended September 30, 2017, compared to the same period in 2016 primarily due to the decrease in revenue, which was partially offset by lower expenses due to reduced activity and cost cutting measures.

~~Blackhawk~~

The Blackhawk segment is comprised solely of the assets we acquired on November 1, 2016. Revenues and Adjusted EBITDA for the segment were $17.6 million and $3.5 million for the three months ended September 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, 2016~~

~~International Services~~

~~Revenue for the International Services segment decreased by $37.6 million for the~~ ~~nine months ended September 30, 2017~~, or 19.6%, compared to the same period in 2016, primarily due to depressed oil and gas prices which have challenged the economics 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.

~~Adjusted EBITDA for the International Services segment decreased by $6.3 million for the~~ ~~nine months ended September 30, 2017~~, or 19.8%, compared to 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 million 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. Services~~

~~Revenue for the U.S. Services segment decreased by $30.0 million for the~~ ~~nine months ended September 30, 2017~~, or 25.0%, compared to $17.7 million for the same period in ~~2016. Onshore services revenue increased~~2019. Segment results were negatively impacted by ~~$12.0 million as a result of improved~~the activity ~~from increased rig counts. The offshore business saw a decrease~~declines in ~~revenue of $42.0 million as a result of overall lower activity due to rig cancellations~~Africa, the U.S., Middle East and ~~delays in the Gulf of Mexico, coupled with downward pricing pressures.~~Canada.

Tubulars

~~Adjusted EBITDA~~Revenue for the ~~U.S. Services~~Tubulars segment ~~decreased by $14.8~~was $12.5 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020, a decrease of $6.1 million, or 32.8%, compared to $18.7 million for the same period in ~~2016 primarily due to lower activity in our offshore services, partially offset by an increase in onshore services activity.~~

~~Tubular Sales~~

~~Revenue 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~~2019, primarily as a result of lower ~~deepwater~~drilling tools activity and lower tubular sales during the current period, due in ~~the Gulf of Mexico, which more than offset higher revenue~~part to COVID-19-related activity disruptions and initial customer spending cuts in ~~our international markets.~~response to falling oil prices.

Adjusted EBITDA for the ~~Tubular Sales~~Tubulars segment ~~increased by $0.4~~was $1.4 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020, a decrease of $2.7 million, or 66.1%, compared to $4.1 million for the same period in ~~2016~~2019. Lower drilling tools activity and lower tubular sales impacted the current period.

Cementing Equipment

Revenue for the CE segment was $21.5 million for the three months ended March 31, 2020, a decrease of $6.2 million, or 22.5%, compared to $27.7 million for the same period in 2019, driven by lower product sales in the U.S. as ~~it was positively impacted by cost cutting measures undertaken during 2016.~~a result of falling oil prices.

~~Blackhawk~~

~~The Blackhawk segment is comprised solely of the assets we acquired on November 1, 2016. Revenues and~~ Adjusted EBITDA for the CE segment ~~were $51.9 million and $7.7~~was $2.5 million for the ~~nine~~three months ended ~~September 30, 2017~~. ~~See Note 3 - Acquisition and Divestitures~~March 31, 2020, a decrease of $1.3 million, or 32.9%, compared to $3.8 million for the same period in 2019, primarily due to lower revenue, particularly in the ~~Notes~~U.S. offshore market.

Corporate

Adjusted EBITDA for Corporate was a loss of $10.2 million for the three months ended March 31, 2020, an improvement of $5.8 million, or 36.3%, compared to ~~Unaudited Condensed Consolidated Financial Statements~~a loss of $16.0 million for ~~additional information on our Blackhawk acquisition.~~the same period in 2019, primarily due to lower costs associated with restructuring and cost cutting measures we implemented during 2019.

Liquidity and Capital Resources

Liquidity

At ~~September 30, 2017,~~March 31, 2020, we had cash and cash equivalents ~~and short-term investments~~ of ~~$293.9~~$170.9 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. The COVID-19 pandemic has significantly reduced economic activity levels across the globe, which has resulted in lower demand for oil and natural gas, as well as for our services and products. The reduced demand for our services and products has had, and is likely to continue to have, a material adverse impact on our business, results of operations and financial condition. In consideration of these risks, we are undertaking additional measures to protect liquidity. These measures include increased focus on collection of receivables, with particular attention to the U.S. onshore market, enhanced customer credit review, special measures to reduce risks of high-cost inventory items, and enhanced cash reporting requirements.

Our total capital expenditures are estimated ~~at $40.0~~to range between $20.0 million ~~for 2017. We~~and $25.0 million in 2020, of which we expect ~~to spend~~ approximately ~~$22.0 million~~90% will be used for the purchase and manufacture of equipment and ~~$18.0 million~~10% for other property, plant and equipment, inclusive of ~~the purchase or construction of facilities.~~capitalized enterprise resource planning software implementation costs. The actual amount of capital expenditures for the manufacture of equipment may fluctuate based on market ~~conditions.~~conditions and timing of deliveries. During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, capital~~2019, cash expenditures related to property, plant and equipment and intangibles were ~~$18.6~~$10.0 million and ~~$29.8~~$8.1 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.~~2020.

We paid dividends on our common stock 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 Directors of the 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 preserve capital for various purposes, including to invest in growth opportunities.

Credit Facility

~~We have~~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 ~~$100.0 million~~five-year senior secured revolving credit facility (the “ABL Credit Facility”) with ~~certain~~JPMorgan 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 reduced~~is subject to ~~approximately $30 million as~~ a ~~result~~borrowing base, which is based on a percentage of ~~our decreased Adjusted EBITDA. Our borrowing capacity~~certain eligible accounts receivable and eligible inventory, subject to customary reserves and other adjustments.

All obligations under the ABL Credit Facility ~~could be further reduced or eliminated depending~~are 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 result~~substantially all of ~~this, our overall liquidity would be diminished.~~

the assets and property of the borrowers and guarantors, including pledges of equity interests in certain of FINV’s subsidiaries, subject to certain exceptions. Borrowings under the ABL Credit Facility bear interest at ~~our~~FINV’s option at either ~~a base rate or an adjusted Eurodollar rate.~~(a) the Alternate Base ~~rate loans under~~Rate (“ABR”) (as defined therein), calculated as the ~~Credit Facility bear interest at a rate equal to the higher~~greatest of (i) the ~~prime~~ rate ~~as published in~~of 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 Rate~~federal funds effective rate that is subject to a 0.00% interest rate floor plus 0.50% or, and (iii) the ~~adjusted Eurodollar rate~~one-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 ~~ranging~~ranges 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 loan~~and, 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 ~~ranging~~that 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.~~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.

The ABL Credit Facility contains various covenants ~~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 ~~certain~~investments, acquisitions, or loans and ~~investments, enter into mergers~~create or ~~acquisitions, enter into hedging transactions, change our lines of business, prepay~~incur liens; (4) pay certain ~~indebtedness, enter into certain affiliate transactions, incur additional indebtedness~~dividends or make other distributions and (5) engage in ~~certain asset dispositions.~~

As of ~~total consolidated funded debt to adjusted EBITDA (as defined in the 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, 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) maintain2020, FINV had 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. In connection with the Waiver, the Company paid a waiver fee to each lender that executed the Waiver equal to five basis points of the respective lender’s commitmentborrowings outstanding under the ~~Credit Agreement. As of September 30, 2017, we were in compliance with the covenants included in the Credit Agreement.~~

~~Citibank~~ABL Credit Facility,

~~In 2016, we entered into a three-year credit facility with Citibank N.A., UAE Branch in the amount of $6.0 million for issuance of standby~~ letters of credit outstanding of $9.1 million and ~~guarantees. The credit facility also allows for open ended guarantees. Outstanding amounts~~availability of $46.8 million. At this time, due to our expected abilityto fund our capital expenditure and liquidity requirements from cash on hand, we do not anticipate a need to borrow under the ~~credit facility bear interest~~ABL Credit Facility during the remainder 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~~2020. Further, we do not believe that an FCCR Trigger Event will occur in the remainder of ~~September 30, 2017 and December 31, 2016, we had $2.5 million and $2.2 million in letters of credit outstanding.~~2020.

Tax Receivable Agreement

We entered into ~~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 us 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 we actually realize (or are 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, 2016~~ and (ii) imputed

interest deemed to be paid by us as a result of, and additional tax basis arising from, payments under the TRA. ~~In addition,~~We will retain the remaining 15% of cash savings, if any. Payments we make under the TRA ~~provides for~~will be increased by any interest ~~earned~~accrued from the due date (without extensions) of the corresponding tax return to the date of ~~payment specified by~~payment. The payments under the ~~TRA. We~~TRA will ~~retain~~not 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.~~ April 30, 2020, based on the best information available to us, the Mosing family collectively owns approximately 52%, of our common shares.

The payment obligations under the TRA are our obligations and are not obligations of FICV. The term of the TRA ~~continues~~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 we exercise our 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 controls), and we make the termination payment specified in the TRA.

If we elect to execute our sole right to terminate the TRA early (or if it terminates early as a result of our breach), we would be required to make ana substantial immediate lump-sum payment equal to the present value of the ~~anticipated~~hypothetical future ~~tax benefits subject~~payments 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 own~~determined by applying a discount rate equal to the long-term Treasury rate in effect on the ~~termination~~applicable date ~~are deemed to be exchanged on the termination date).~~plus 300 basis points. In addition, payments due under the TRA will be similarly accelerated following certain mergers or other changes of control.

In certain circumstances, we may be required to make payments under the TRA that we have entered into with Mosing Holdings. In most circumstances, these payments will be associated with the actual cash savings that we recognize ~~in connection with~~from tax benefits resulting from the conversion of Preferred Stock, which would reduce the actual tax benefit to us. If we were to elect to exercise our sole right to terminate the TRA early or enter into certain change of control transactions, we may incur payment obligations prior to the time we actually incur any tax benefit. In those circumstances, we would need to pay the amounts out of cash on hand, finance the payments or refrain from ~~triggering~~incurring the ~~obligation.~~obligation (including by not entering into a change of control transaction). Though we do not have any present intention of ~~triggering~~incurring an advance payment under the TRA, based on our current liquidity and our expected ability to access debt and equity financing, we believe we 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. Please see Note ~~12 -~~ 12—Related Party Transactions in the Notes to Unaudited Condensed Consolidated Financial Statements.

Cash Flows from Operating, Investing and Financing Activities

Cash flows ~~provided by (used in)~~from our operations, investing and financing activities are summarized below (in thousands):


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2020			2019
Operating activities	$	24,585		$	27,846		$	(22,252	)	$	(29,770	)
Investing activities	(57,243		)	(17,362		)	(10,039		)	(787		)
Financing activities	(51,634		)	(79,831		)	(1,521		)	(2,497		)
	(84,292		)	(69,347		)	(33,812		)	(33,054		)
Effect of exchange rate changes on cash	(1,896		)	(3,162		)	9,327			(376		)
Net decrease in cash and cash equivalents	$	(86,188	)	$	(72,509	)
Net decrease in cash, cash equivalents and restricted cash							$	(24,485	)	$	(33,430	)

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 ~~$24.6~~$22.3 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to cash flow ~~provided by~~used in operating activities of ~~$27.8~~$29.8 million for the same period in ~~2016.~~2019. The ~~decrease~~change in cash flow ~~provided by~~from operating activities of $7.5 million was primarily due to ~~lower activity as a result of depressed oil and gas prices, which resulted in~~ a decrease in ~~accounts receivable~~employee cash compensation and favorable changes in the realized positions of ~~$58.1 million and inventories of $13.9 million,~~our foreign currency derivative contracts, partially offset by unfavorable working capital changes.

~~by a decrease in accrued expenses and other current liabilities of $37.8 million, deferred revenue of $20.4 million and other non-current liabilities of $8.7 million.~~

Investing Activities

Cash flow used in investing activities was ~~$57.2~~$10.0 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to $~~17.4~~0.8 million in the same period in ~~2016.~~2019. The ~~increase~~change in cash flow ~~used in~~from investing activities of $9.3 million was ~~primarily related to~~driven by a $1.8 million increase in the ~~purchase of investments of $59.8 million, partially offset by lower~~ purchases of property, plant, equipment and ~~equipment~~intangibles. First quarter of ~~$11.2 million and higher~~2019 investing activities included net proceeds from sales of investments of $7.4 million that did not reoccur in the ~~sale~~first quarter of ~~assets of $8.5 million during the nine months ended September 30, 2017.~~2020.

Financing Activities

Cash flow used in financing activities was ~~$51.6~~$1.5 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to $~~79.8~~2.5 million in the same period in ~~2016.~~2019. The decrease in cash flow used in financing activities of $1.0 million was ~~primarily~~ due to ~~lower dividend payments~~decreased repayment 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.~~$1.7 million and treasury shares withheld of $0.4 million, partially offset by repurchases under our publicly announced share repurchase program of $1.0 million during the first quarter of 2020.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements with the exception of ~~operating leases.~~purchase obligations.

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 ~~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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our ~~2016~~ Annual ~~Report on Form 10-K. Except for the change below, our~~Report. Our exposure to market risk has not changed materially since December 31, ~~2016.~~2019.

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.

Item 4. Controls and Procedures


(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 ~~September 30, 2017~~March 31, 2020 at the reasonable assurance level.


(b)	Change in Internal Control Over Financial Reporting.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2017,~~March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3936

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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 ~~United States~~U.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 course~~

Item 1A. Risk Factors

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.

Our business depends on the level of activity in the oil and gas industry, which is significantly affected by oil and gas prices and other factors.

Our business depends on the level of activity in oil and gas exploration, development and production in market sectors worldwide. Oil and gas prices and market expectations of potential changes in these prices significantly affect this level of activity. However, higher commodity prices do not necessarily translate into increased drilling or well construction and completion activity, since customers’ expectations of future commodity prices typically drive demand for our services and products. The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development and political and regulatory environments also affect the demand for our services and products. Worldwide military, political and economic events have in the past contributed to oil and gas price volatility and continue to do so at present. Average daily prices for New York Mercantile Exchange West Texas Intermediate ranged from a high of approximately $63/Bbl in January 2020 to a low of negative $37/Bbl in April 2020. This significant decline in crude oil prices has largely been attributable to the recent actions of Saudi Arabia and Russia, which have resulted in a substantial decrease in oil and natural gas prices, and the global outbreak of COVID-19, which has reduced demand for oil and natural gas because of significantly reduced global and national economic activity. Specifically, in March 2020, Saudi Arabia and Russia failed to agree on a plan to cut production of oil and gas within OPEC and Russia. Subsequently, Saudi Arabia announced plans to increase production to record levels and reduce the prices at which they sell oil. We cannot predict whether or when oil production and economic activities will return to normalized levels. Saudi Arabia and Russia subsequently announced production cuts, but even with such cuts oil prices could remain at current levels, or decline further, for an extended period of time. If current levels are sustained or decline further, certain of our customers may be unable to pay their vendors and service providers, including us, as a

result of the decline in commodity prices. Reduced activity in our areas of operation as a result of decreased capital spending could have a negative long-term impact on our business, even in an environment of stronger oil and natural gas prices.

The demand for our services and products may also be generally affected by numerous factors, including:

the level of worldwide oil and gas exploration and production;

the cost of exploring for, producing and delivering oil and gas;

demand for energy, which is affected by worldwide economic activity and population growth;

the level of excess production capacity;

the discovery rate of new oil and gas reserves;

the ability of OPEC to set and maintain production levels for oil;

the level of production by non-OPEC countries;

global or national health concerns, including health epidemics such as the outbreak of COVID-19 at the beginning of 2020;

the location of oil and gas drilling and production activity, including the relative amounts of activity onshore and offshore;

the technical specifications of wells including depth of wells and complexity of well design;

U.S. and global political and economic uncertainty or inactivity, socio-political unrest and instability or hostilities;

demand for, availability of and technological viability of, alternative sources of energy; and

technological advances affecting energy exploration, production, transportation and consumption.

Demand for our offshore services and products substantially depends on the level of activity in offshore oil and gas exploration, development and production. The level of offshore activity is historically cyclical and characterized by large fluctuations in response to relatively minor changes in a variety of factors, including oil and gas prices, which could have a material adverse effect on our business, financial condition and results of operations.

A significant amount of our U.S. onshore business is focused on unconventional shale resource plays. The demand for those services and products is substantially affected by oil and gas prices and market expectations of potential changes in these prices. If commodity prices remain depressed, demand for our services and products in the U.S. onshore market could be reduced, which could have a material adverse effect on our business, financial condition and results of operations. Any actual or anticipated reduction in oil or gas prices may reduce the level of exploration, drilling and production activities. Prolonged low oil prices have resulted in softer demand for our products and services and if prices remain at current levels, demand could be further reduced. Additionally, we have reduced pricing in some of our customer contracts in light of the volatility of the oil and gas market.

Furthermore, the oil and gas industry has historically experienced periodic downturns, which have been characterized by reduced demand for oilfield products and services and downward pressure on the prices we charge. A significant downturn in the oil and gas industry has adversely affected the demand for oilfield services and our business, financial condition and results of operations since late 2014. In the first quarter of 2020, demand further decreased due to the COVID-19 outbreak and increased oil production out of Saudi Arabia and Russia. With the continued downturn, demand for our products and services has not returned to the levels experienced prior to late 2014. We cannot be assured that there will be a significant recovery in the demand for our products and services to equal or approach levels experienced prior to the downturn.

The recent downturns in 2014 and 2020 in the oil and gas industry have negatively affected, and will likely continue to affect, our ability to accurately predict customer demand, causing us to potentially hold excess or obsolete inventory and experience a reduction in gross margins and financial results.

We may not be able to accurately predict what or how many products our customers will need in the future. Orders are placed with our suppliers based on forecasts of customer demand and, in some instances, we may establish buffer inventories to accommodate anticipated demand. Our forecasts of customer demand are based on multiple assumptions, each of which may introduce errors into the estimates. In addition, many of our suppliers require a longer lead time to

provide products than our customers demand for delivery of our finished products. If we overestimate customer demand, we may allocate resources to the purchase of material or manufactured products that we may not be able to sell when we expect to, if at all. As a result, we would hold excess or obsolete inventory, which would reduce gross margin and adversely affect financial results. We overestimated customer demand for our pipe and connectors inventory, and this resulted in a material impairment charge in 2017. Conversely, if we underestimate customer demand or if insufficient manufacturing capacity is available, we would miss revenue opportunities and potentially lose market share and damage our customer relationships. In addition, any future significant cancellations or deferrals of product orders or the return of previously sold products could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations. Recently, the uncertainty surrounding the duration and spread of the COVID-19 pandemic along with the market volatility due to increased oil production from Russia and Saudi Arabia have further decreased our ability to accurately estimate demand for our services and products. In particular, sporadic suspensions of activity in certain locations due to local outbreaks of COVID-19 are difficult or impossible to anticipate, and can cause interruption of revenue and delays in availability of equipment and personnel for subsequent work, interfering with our ability to plan allocation of resources over time.

We may be exposed to unforeseen risks in our services and product manufacturing, which could adversely affect our results of operations.

We operate a number of manufacturing facilities to support our operations. In addition, we also manufacture certain products, including large OD pipe connectors and cementing products that we sell directly to external customers. The equipment and management systems necessary for such operations may break down, perform poorly or fail, resulting in fluctuations in manufacturing efficiencies. In addition, in the event of an outbreak of COVID-19 among workers at a manufacturing facility, all or some of the workers at the facility might become temporarily unavailable due to required public health measures. Any such disruptions caused by equipment or personnel availability could negatively impact our ability to manufacture and timely deliver products to our customers or our field operations, which could materially and negatively impact the results of our operations. In addition, in such circumstances our customers might cancel purchase orders for failure to timely deliver the products, potentially leading to us holding excess or obsolete inventory, which would reduce gross margin and adversely affect financial results.

Additionally, some of our U.S. onshore business may be conducted under fixed price or “turnkey” contracts. Under fixed price contracts, we agree to perform a defined scope of work for a fixed price. Prices for these contracts are based largely upon estimates and assumptions relating to project scope and specifications, personnel and material needs.

Fluctuations in our manufacturing process and inaccurate estimates and assumptions used in our projects may occur due to factors out of our control, resulting in cost overruns, which we may be required to absorb and could have a material adverse effect on our business, financial condition and results of operations. Such fluctuations or incorrect estimates may affect our ability to deliver services and products to our customers on a timely basis and we may suffer financial penalties and a diminution of our commercial reputation and future product orders, which could adversely affect our business, financial condition and results of operations.

We may be unable to employ a sufficient number of skilled and qualified workers to sustain or expand our current operations.

Our operations require personnel with specialized skills and experience. Our ability to be productive and profitable will depend upon our ability to employ and retain skilled workers. In addition, our ability to expand our operations depends in part on our ability to increase the size of our skilled labor force. The demand for skilled workers is high, the supply can be limited in certain jurisdictions, and the cost to attract and retain qualified personnel has increased over the past few years. In addition, we are currently a party to collective bargaining or similar agreements in certain international areas in which we operate, which could result in increases in the wage rates that we must pay to retain our employees. Furthermore, a significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both. Finally, the recent COVID-19 pandemic provides an illustrative example of how a pandemic or other health crisis can impact our operations and business by affecting the health of skilled workers and rendering them unable to work or travel. These events may cause our capacity to be diminished, our ability to respond quickly to customer demands or strong market conditions may be inhibited

and our growth potential could be impaired, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that may increase our costs, limit the demand for our services and products or restrict our operations.

Our business and our customers’ businesses may be significantly affected by:

federal, state and local restrictions on business activity and travel including stay at home orders and quarantines such as those enacted in response to COVID-19;

federal, state and local and non-U.S. laws and other regulations relating to oilfield operations, worker safety and protection of the environment and natural resources;

changes in these laws and regulations; and

the level of enforcement of these laws and regulations.

In addition, we depend on the demand for our services and products from the oil and gas industry. This demand is affected by changing taxes, price controls and other laws and regulations relating to the oil and gas industry in general. For example, the adoption of laws and regulations curtailing exploration and development drilling for oil and gas for economic or other policy reasons could adversely affect our operations by limiting demand for our products. In addition, some non-U.S. countries may adopt regulations or practices that give advantage to indigenous oil companies in bidding for oil leases, or require indigenous companies to perform oilfield services currently supplied by international service companies. To the extent that such companies are not our customers, or we are unable to develop relationships with them, our business may suffer. We cannot determine the extent to which our future operations and earnings may be affected by new legislation, new regulations or changes in existing regulations.

Because of our non-U.S. operations and sales, we are also subject to changes in non-U.S. laws and regulations that may encourage or require hiring of local contractors or require non-U.S. contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. If we fail to comply with any applicable law or regulation, our business, financial condition and results of operations may be adversely affected.

Our business is dependent on capital spending by our customers, and reductions in capital spending in response to declining commodity prices will have a material adverse effect on our business.

Any change in capital expenditures by our customers or reductions in their capital spending could directly impact our business by reducing demand for our products and services and could have a material adverse effect on our business. Our customers are subject to risks which, in turn, could impact our business, including recent volatile oil and gas prices caused by COVID-19 and increased oil production from Russia and Saudi Arabia, difficulty accessing capital on economically advantageous terms and adverse developments in their own business or operations. With respect to national oil company customers, we are also subject to risk of policy, regime and budgetary changes.

We face risks related to natural disasters, which could result in severe property damage or materially and adversely disrupt our operations and affect travel required for our worldwide operations.

Some of our operations involve risks of, among other things, property damage, which could curtail our operations. For example, disruptions in operations or damage to a manufacturing plant could reduce our ability to produce products and satisfy customer demand. In particular, we have offices and manufacturing facilities in Houston, Texas and Houma and Lafayette, Louisiana as well as in various places throughout the Gulf Coast region of the United States. These offices and facilities are particularly susceptible to severe tropical storms, hurricanes and flooding, which may disrupt our operations. If one or more manufacturing facilities we own are damaged by severe weather or any other disaster, accident, catastrophe or event, our operations could be significantly interrupted. Similar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants or other stoppages arising from factors beyond our control. These interruptions might involve significant damage to, among other things, property, and repairs might take from a week or less for a minor incident to many months or more for a major interruption.

In addition, a portion of our business involves the movement of people and certain parts and supplies to or from foreign locations. Any restrictions on travel or shipments to and from foreign locations, due to the occurrence of natural disasters such as earthquakes, floods or hurricanes, in these locations, could significantly disrupt our operations and decrease our ability to provide services to our customers. If a natural disaster were to impact a location where we have a high concentration of business and resources, our local facilities and workforce could be affected by such an occurrence or outbreak which could also significantly disrupt our operations and decrease our ability to provide services and products to our customers.

Events outside of our control, including a pandemic, epidemic or outbreak of an infectious disease, such as the recent global outbreak of COVID-19, have materially adversely affected, and may further materially adversely affect, our business.

We face risks related to pandemics, epidemics, outbreaks or other public health events that are outside of our control, and could significantly disrupt our operations and adversely affect our financial condition. For example, the recent global outbreak of COVID-19 has reduced demand for oil and natural gas because of significantly reduced global and national economic activity. In addition, the impact of COVID-19 or other public health events may adversely affect our operations or the health of our workforce and the workforces of our customers and service providers by rendering employees or contractors unable to work or unable to access our and their facilities for an indefinite period of time. On March 13, 2020, the United States declared the COVID-19 pandemic a national emergency, and several states, including Texas and Louisiana, and municipalities have declared public health emergencies. Along with these declarations, there have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Our business involves movement of people and certain parts and supplies to or from foreign locations, and the travel restrictions many governments have imposed due to COVID-19 have significantly disrupted such movement and decreased our ability to provide products and services to our customers. To the extent COVID-19 continues or worsens, governments may impose additional similar restrictions.

In addition, the technology required for the corresponding transition to remote work increases our vulnerability to cybersecurity threats, including threats to gain unauthorized access to sensitive information or to render data or systems unusable, the impact of which may have material adverse effects on our business and operations. See “Item 1A. Risk Factors—Risks Related to Our Business-Our business could be negatively affected by cybersecurity threats and other disruptions” in our Annual Report on Form 10-K for the year ended December 31, 2019.

As the potential impact from COVID-19 is difficult to predict, the extent to which it may negatively affect our operating results or the duration of any potential business disruption is uncertain. Any potential impact will depend on future developments and new information that may emerge regarding the severity and duration of COVID-19 and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our operating results.

Customer credit risks could result in losses.

The concentration of our customers in the energy industry may impact our overall exposure to credit risk as customers may be similarly affected by prolonged changes in economic and industry conditions. Those countries that rely heavily upon income from hydrocarbon exports would be hit particularly hard by a drop in oil prices such as the drop that has occurred in recent months. The impact of the most recent downturn on our customers and their ability to continue operations and pay for our services is uncertain. Further, laws in some jurisdictions in which we operate could make collection difficult or time consuming. We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables. While we maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.

Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us. To the extent one or more of our key

customers is in financial distress or commences bankruptcy proceedings, contracts with these customers may be subject to renegotiation or rejection under applicable provisions of the United States Bankruptcy Code and similar international laws. Any material nonpayment or nonperformance by our key customers could adversely affect our business, financial condition and results of operations. The current downturn in our industry as a result of the COVID-19 pandemic along with the market volatility due to increased oil production from Russia and Saudi Arabia has exacerbated these credit risks.

In addition, customers experiencing financial difficulty may delay payment for our products and services. Such delays, even if accounts are ultimately paid in full, could reduce our cash resources available and materially and adversely impact our credit available from suppliers and financial institutions.

Our executive officers and certain key personnel are critical to our business, and these officers and key personnel may not remain with us in the future.

Our future success depends in substantial part on our ability to hire and retain our executive officers and other key personnel who possess extensive expertise, talent and leadership and are critical to our success. The diminution or loss of the services of these individuals, or other integral key personnel affiliated with entities that we acquire in the future, could have a material adverse effect on our business. The public health concerns posed by COVID-19 could pose a risk to our employees and may render our employees unable to work or travel. The extent to which COVID-19 may impact our employees, and subsequently our business, cannot be predicted at this time. We continue to monitor the situation, have actively implemented policies and practices to address the situation, and may adjust our current policies and practices as more information and guidance become available. Furthermore, we may not be able to enforce all of the provisions in agreements we have entered into with certain of our executive officers, and such agreements may not otherwise be effective in retaining such individuals. In addition, we may not be able to retain key employees of entities that we acquire in the future. This may impact our ability to successfully integrate or operate the assets we acquire.

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 March 31, 2020.



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Program ⁽²⁾
January 1 - January 31	—	$	—	—	$	40,000,000
February 1 - February 29	—	$	—	—	$	40,000,000
March 1 - March 31	372,682	$	2.73	372,682	$	38,982,754
Total	372,682	$	2.73	372,682


⁽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 $38,982,754 remained authorized for repurchases as of March 31, 2020. From the inception of this program in February 2020 through March 31, 2020, we repurchased 372,682 shares of our common stock for a total cost of approximately $1.0 million. This program was suspended during the second quarter of 2020.

Item 6. Exhibits

The exhibits required to be filed by Item 6 are set forth in the Exhibit Index ~~which follows the signature page to this report and is incorporated by reference herein, sets forth a list of exhibits to this report.~~included below.

4042

~~SIGNATURES~~

~~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: November 2, 2017~~	~~By:~~	~~/s/ Kyle McClure~~
		~~Kyle McClure~~
		~~Senior Vice President and Chief Financial Officer~~
		~~(Principal Financial Officer)~~

EXHIBIT INDEX



Exhibit Number	Description
3.1	Deed of Amendment to Articles of Association of ~~Frank's~~Frank’s International N.V., dated May 19, ~~2016~~2017 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-36053), filed on May 25, 2017).
*†10.1	~~Frank's International N.V. 2013 Long-Term Incentive Plan Employee Restricted Stock Unit Agreement (Supplemental Grant Form).~~
*†10.2	~~Employment Offer Letter for Michael C. Kearney effective as of September 26, 2017.~~
*†10.3	~~Separation Agreement by and between Douglas G. Stephens, Frank’s International, LLC and Frank’s International N.V., dated October 5, 2017.~~
**31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the Securities Exchange Act of 1934.
**31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
**32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
**32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
*~~101.INS~~101.1	~~XBRL Instance Document.~~The following materials from Frank’s International N.V.’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 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.
*~~101.SCH~~104.1	Cover Page Interactive Data File (embedded within the Inline XBRL ~~Taxonomy Extension Schema Document.~~
*101.CAL	~~XBRL Taxonomy Calculation Linkbase Document.~~
*101.DEF	~~XBRL Taxonomy Definition Linkbase Document.~~
*101.LAB	~~XBRL Taxonomy Extension Label Linkbase Document.~~
*101.PRE	~~XBRL Taxonomy Extension Presentation Linkbase Document.~~document).


†	Represents management contract or compensatory plan or arrangement.


*	Filed herewith.


**	Furnished herewith.

4243

SIGNATURES

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:	May 11, 2020	By:	/s/ Melissa Cougle
			Melissa Cougle
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)



	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



	Three Months Ended			Nine Months Ended
	September 30, 2016
Net loss	$	(42,198	)	$	(89,893	)
Add: Net loss after Mosing Holdings contributed interest to FINV ⁽¹⁾	18,355			18,355
Add: Provision (benefit) for U.S. income taxes of FINV ⁽²⁾	3,078			(10,414		)
Less: Loss of FINV ⁽³⁾	97			23
Net loss subject to noncontrolling interest	(20,668		)	(81,929		)
Noncontrolling interest percentage ⁽⁴⁾	25.2		%	25.2		%
Net loss attributable to noncontrolling interest	$	(5,216	)	$	(20,741	)



	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



	Estimated Useful Lives in Years	September 30, 2017			December 31, 2016
Land	—	$	16,491		$	15,730
Land improvements	8-15	9,346			9,379
Buildings and improvements ⁽¹⁾	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
Leasehold improvements ⁽¹⁾	7-15, or lease term if shorter	9,870			8,027
Construction in progress - machinery and equipment and buildings ⁽¹⁾	—	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



	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




⁽¹⁾	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



	International Services			U.S. Services			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		)
Adjusted EBITDA ⁽¹⁾	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		)
Adjusted EBITDA ⁽¹⁾	31,752			(13,018		)	1,343			—			—			*



	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

Derivatives not Designated as Hedging Instruments

Consolidated Balance Sheet Location

December 31, 2019

Foreign currency contracts

Accounts payable and accrued liabilities