Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 24, 2020 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Entity Registrant Name | FTS International, Inc. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 107,575,751 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001529463 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | ||
Revenue | $ 150.8 | $ 221.6 |
Revenue from related parties | 0.7 | 0.9 |
Total revenue | 151.5 | 222.5 |
Operating expenses | ||
Costs of revenue (excluding depreciation of $20.5 and $20.4, respectively, included in depreciation and amortization below) | 115.2 | 163.1 |
Selling, general and administrative | 17.7 | 23.6 |
Depreciation and amortization | 21.4 | 22.4 |
Impairments and other charges | 3.7 | 60.8 |
Gain on disposal of assets, net | (0.1) | 0.3 |
Total operating expenses | 157.9 | 270.2 |
Operating loss | (6.4) | (47.7) |
Interest expense, net | (7.3) | (8.2) |
Gain on extinguishment of debt, net | 2 | 0.5 |
Equity in net income of joint venture affiliate | 0.6 | |
Loss before income taxes | (11.7) | (54.8) |
Income tax expense | 0.2 | |
Net loss | (11.7) | (55) |
Net loss used for basic and diluted EPS computations | $ (11.7) | $ (55) |
Basic and diluted loss per share | $ (0.11) | $ (0.50) |
Shares used in computing basic and diluted loss per share | 107.3 | 109.7 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Depreciation | ||
Depreciation | $ 20.5 | $ 20.4 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 199.2 | $ 223 |
Accounts receivable, net | 78.6 | 77 |
Accounts receivable from related parties, net | 0.6 | |
Inventories | 43.6 | 45.5 |
Prepaid expenses and other current assets | 15 | 7 |
Total current assets | 337 | 352.5 |
Property, plant, and equipment, net | 223.1 | 227 |
Operating lease right-of-use assets | 22.5 | 26.3 |
Intangible assets, net | 29.5 | 29.5 |
Other assets | 3.9 | 4 |
Total assets | 616 | 639.3 |
Current liabilities | ||
Accounts payable | 53.6 | 36.4 |
Accrued expenses | 25.2 | 22.9 |
Current portion of operating lease liabilities | 13.8 | 14.3 |
Other current liabilities | 14.6 | 11.6 |
Total current liabilities | 107.2 | 85.2 |
Long-term debt | 434.7 | 456.9 |
Operating lease liabilities | 10.5 | 13.9 |
Other liabilities | 34.6 | 45.6 |
Total liabilities | 587 | 601.6 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity | ||
Preferred stock, $0.01 par value, 25,000,000 shares authorized | ||
Common stock, $0.01 par value, 320,000,000 shares authorized, 107,498,360 shares issued and outstanding at March 31, 2020 and 107,107,401 shares issued and outstanding at December 31, 2019 | 36.4 | 36.4 |
Additional paid-in capital | 4,385 | 4,382 |
Accumulated deficit | (4,392.4) | (4,380.7) |
Total stockholders’ equity | 29 | 37.7 |
Total liabilities and stockholders’ equity | $ 616 | $ 639.3 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Preferred stock. | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 320,000,000 | 320,000,000 |
Common stock, issued (in shares) | 107,498,360 | 107,107,401 |
Common stock, outstanding (in shares) | 107,498,360 | 107,107,401 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Cash flows from operating activities | |||
Net Loss | $ (11.7) | $ (55) | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation and amortization | 21.4 | 22.4 | |
Stock-based compensation | 3.1 | 3 | |
Amortization of debt discounts and issuance costs | 0.4 | 0.5 | |
Impairment of assets | 2.8 | ||
Gain on disposal of assets, net | (0.1) | 0.3 | |
Gain on extinguishment of debt, net | (2) | (0.5) | |
Non-cash provision for supply commitment charges | 3.2 | 56.6 | |
Cash paid to settle supply commitment charges | (11.2) | ||
Inventory write-down | 1.4 | ||
Other non-cash items | 1 | (0.8) | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (2.4) | 7.7 | |
Accounts receivable from related parties | (0.7) | ||
Inventories | 1.8 | (1.7) | |
Prepaid expenses and other assets | (8.1) | 0.3 | |
Accounts payable | 16.2 | (11.3) | |
Accrued expenses and other liabilities | 2.3 | 8.2 | |
Net cash provided by operating activities | 13.2 | 33.9 | |
Cash flows from investing activities | |||
Capital expenditures | (16.4) | (11.7) | |
Proceeds from disposal of assets | 0.1 | 0.1 | |
Net cash used in investing activities | (16.3) | (11.6) | |
Cash flows from financing activities | |||
Repayments of long-term debt | (20.6) | (26.3) | |
Taxes paid related to net share settlement of equity awards | (0.1) | (1.7) | |
Net cash used in financing activities | (20.7) | (28) | |
Net decrease in cash and cash equivalents | (23.8) | (5.7) | |
Cash and cash equivalents at beginning of period | 223 | 177.8 | $ 177.8 |
Cash and cash equivalents at end of period | 199.2 | 172.1 | $ 223 |
Supplemental cash flow information: | |||
Interest paid | 1.4 | 2.3 | |
Noncash investing and financing activities: | |||
Capital expenditures included in accounts payable | $ 2 | $ 4.1 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Millions | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at beginning of period at Dec. 31, 2018 | $ 36.4 | $ 4,378.4 | $ (4,307.9) | $ 106.9 |
Balance at beginning of period (in shares) at Dec. 31, 2018 | 109,435,000 | |||
Net Loss | (55) | (55) | ||
Activity related to stock plans | 0.1 | 0.1 | ||
Recapitalization of convertible preferred stock to common stock | 1.3 | 1.3 | ||
Recapitalization of convertible preferred stock to common stock (in shares) | 364,000 | |||
Balance at end of period at Mar. 31, 2019 | $ 36.4 | 4,379.7 | (4,362.8) | 53.3 |
Balance at end of period (in shares) at Mar. 31, 2019 | 109,799,000 | |||
Balance at beginning of period at Dec. 31, 2019 | $ 36.4 | 4,382 | (4,380.7) | $ 37.7 |
Balance at beginning of period (in shares) at Dec. 31, 2019 | 107,107,000 | 107,107,401 | ||
Net Loss | (11.7) | $ (11.7) | ||
Repurchase of common stock (in shares) | 0 | |||
Activity related to stock plans | 3 | $ 3 | ||
Activity related to stock plans (in shares) | 391,000 | |||
Balance at end of period at Mar. 31, 2020 | $ 36.4 | $ 4,385 | $ (4,392.4) | $ 29 |
Balance at end of period (in shares) at Mar. 31, 2020 | 107,498,000 | 107,498,360 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block | |
BASIS OF PRESENTATION | NOTE 1 — BASIS OF PRESENTATION Unless the context requires otherwise, the use of the terms “FTSI,” “Company,” “we,” “us,” “our” or “ours” in these Notes to Consolidated Financial Statements refer to FTS International, Inc., together with its consolidated subsidiaries. The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2019. In our opinion, the consolidated financial statements included herein contain all adjustments of a normal, recurring nature considered necessary for a fair presentation of the interim periods. The results of operations of the interim periods are not necessarily indicative of the results of operations to be expected for the full year. There were no items of other comprehensive income in the periods presented. Fair Value of Financial Instruments Money market funds, classified as cash and cash equivalents, are the only financial instruments that are measured and recorded at fair value on the Company’s balance sheets. The following table presents money market funds at their level within the fair value hierarchy. (In millions) Total Level 1 Level 2 Level 3 March 31, 2020 Money market funds $ 144.4 $ 144.4 $ — $ — December 31, 2019 Money market funds $ 193.6 $ 193.6 $ — $ — New Accounting Standards Updates In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments . This standard requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard also applies to financial assets arising from revenue transactions such as accounts receivables. We adopted this standard on January 1, 2020, and it had no material effect on our consolidated financial statements. |
CURENT ECONOMIC ENVIRONMENT
CURENT ECONOMIC ENVIRONMENT | 3 Months Ended |
Mar. 31, 2020 | |
CURRENT ECONOMIC ENVIRONMENT | |
Concentration Risk Disclosure [Text Block] | NOTE 2 — CURRENT ECONOMIC ENVIRONMENT Our business activities are concentrated in the well completion services segment of the oilfield services industry in the United States. The market for these services is cyclical, and we depend on the willingness of our customers to make expenditures to explore for, develop, and produce oil and natural gas in the United States. Our customer base is also concentrated. Our business, financial condition and results of operations can be materially adversely affected if one or more of our significant customers ceases to engage us for our services on favorable terms, or at all, or fails to pay, or delays in paying, us significant amounts of our outstanding receivables. Low oil prices since March 2020 because of the COVID-19 pandemic and the Saudi-Russia price war have caused our customers to substantially reduce their hydraulic fracturing activities and the prices they are willing to pay for our services. In response to this market environment, we are focused on reducing the number of active fleets we offer into the market, as well as managing our fixed costs to reduce the amount of cash needed to support our business during this time of low activity and low pricing levels. Our actions have included reducing labor costs through reductions in force, wage reductions, and furloughs. We are also negotiating with all our vendors to significantly reduce our non-labor costs. We are working to ensure the Company is well positioned to supply the industry with the hydraulic fracturing services that are an integral part of U.S. oil production. We believe that our cash and cash equivalents, any cash provided by operations, and the availability under our revolving credit facility will be sufficient to fund our operations, capital expenditures, contractual obligations, and debt maturities for at least the next 12 months. We continually assess alternatives to our capital structure and evaluate strategic capital initiatives which may include, but are not limited to, equity and debt financings and the modification of existing debt, including the amount of debt outstanding, the types of debt issued and the maturity dates of the debt. These alternatives, if implemented, could materially affect our capitalization, debt ratios and cash balances. |
INDEBTEDNESS AND BORROWING FACI
INDEBTEDNESS AND BORROWING FACILITY | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block | |
INDEBTEDNESS AND BORROWING FACILITY | NOTE 3 — INDEBTEDNESS AND BORROWING FACILITY The following table summarizes our long-term debt: March 31, December 31, (In millions) 2020 2019 Term loan due April 2021 ("Term Loan") $ 67.4 $ 90.0 Senior notes due May 2022 ("2022 Senior Notes") 369.9 369.9 Total principal amount 437.3 459.9 Less unamortized discount and debt issuance costs (2.6) (3.0) Total long-term debt $ 434.7 $ 456.9 Estimated fair value of long-term debt $ 184.7 $ 317.2 Estimated fair values for our Term Loan and 2022 Senior Notes were determined using recent trading activity and/or bid-ask spreads and are classified as Level 2 in the FASB’s fair value hierarchy. We believe we were in compliance with all of the covenants in our debt agreements at March 31, 2020. Debt Repayments In the first quarter of 2020, we repaid $22.6 million of aggregate principal amount of Term Loan using cash on hand. We recognized a gain on this debt extinguishment of $2.0 million. Revolving Credit Facility The maximum availability of credit under our revolving credit facility is limited at any time to the lesser of $250 million or a borrowing base. The borrowing base is based on percentages of eligible accounts receivable and eligible inventory and is subject to certain reserves. In an event of default or if the amount available under the credit facility is less than either 10% of our maximum availability or $12.5 million, we will be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0. If at any time borrowings and letters of credit issued under the credit facility exceed the borrowing base, we will be required to repay an amount equal to such excess. As of March 31, 2020, the borrowing base was $60.6 million and therefore our maximum availability under the credit facility was $60.6 million. As of March 31, 2020, there were no borrowings outstanding under the credit facility, and letters of credit totaling $4.3 million were issued, resulting in $56.3 million of availability under the credit facility. We believe we were in compliance with all of the covenants in the credit facility at March 31, 2020. |
SHARE REPURCHASE
SHARE REPURCHASE | 3 Months Ended |
Mar. 31, 2020 | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
STOCKHOLDERS' EQUITY (DEFICIT) | NOTE 4 — SHARE REPURCHASE In May 2019, our board of directors (our “Board”) approved an authorization for a total share repurchase of up to $100 million of the Company’s common stock to be executed through open market or private transactions. The authorization expires on May 14, 2020 and may be discontinued at any time. For the first quarter of 2020 we repurchased zero shares of common stock. At March 31, 2020, $90.1 million of the authorized amount was available for share repurchases under this program. The amount and timing of share repurchases are at the sole discretion of the Company, and plans for future share repurchases may be revised by the Board at any time. The share repurchase program could be affected by, among other things, changes in results of operations, capital expenditures, cash flows, and applicable tax laws. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2020 | |
REVENUE | |
REVENUE | NOTE 5 — REVENUE The Company contracts with its customers to perform hydraulic fracturing services on one or more oil or natural gas wells. Under these arrangements, we satisfy our performance obligations as services are rendered, which is generally upon the completion of a fracturing stage or the passage of time. Pricing for our services is frequently negotiated with our customers and is based on prevailing market rates during each reporting period. The amounts we invoice our customers for services performed during a period are directly related to the value received by the customers for the period. There is no inherent uncertainty to the amount of consideration we will receive for services performed during a period and no judgment is required to allocate a portion of the transaction price to a future period. Accordingly, we are not required to identify any unsatisfied performance obligations nor attribute any revenue to them. We have no material contract assets or liabilities with our customers. We do not present disaggregated revenue because we do not believe this information is necessary to understand the nature, amount, timing and uncertainty of our revenues and cash flows. |
IMPAIRMENTS AND OTHER CHARGES
IMPAIRMENTS AND OTHER CHARGES | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block | |
IMPAIRMENTS AND OTHER CHARGES | NOTE 6 — IMPAIRMENTS AND OTHER CHARGES The following table summarizes our impairments and other charges: Three Months Ended March 31, (In millions) 2020 2019 Supply commitment charges $ 3.2 $ 56.6 Employee severance costs 0.5 — Impairment of assets — 2.8 Inventory write-down — 1.4 Total impairments and other charges $ 3.7 $ 60.8 Supply Commitment Charges We incur supply commitment charges when our purchases of sand from certain suppliers are less than the minimum purchase commitments in our supply contracts. According to the accounting guidance for firm purchase commitments, future losses that are considered likely are also required to be recorded in the current period. During the first quarter of 2020 and 2019, we recorded aggregate charges under these supply contracts of $3.2 million and $56.6 million, respectively. These charges relate to actual purchase shortfalls incurred, as well as forecasted losses expected to be incurred and settled in future periods. Historically, these purchase shortfalls have been largely due to our customers choosing to procure their own sand, often from sand mines closer to their operating areas. The supply commitment charge in the first quarter of 2020 was also due to the significant reduction in customer activity expected in the second quarter of 2020 as a result of the decline in oil and gas commodity prices. In May 2019, we restructured and amended our largest sand supply contract to reduce the total remaining commitment through 2024 by approximately $162 million. In connection with this amendment, we recorded a supply commitment charge of $55.0 million in the first quarter of 2019 to record losses on certain expected purchase shortfalls. Please refer to Note 9, “Impairments and Other Charges” in our annual report on Form 10-K for the year ended December 31, 2019, for more information regarding this amended and restated supply contract. The remaining amount of the 2019 charges represent revised estimates of our purchase shortfalls under this contract for 2019. Estimated losses related to these supply contracts contain uncertainties, such as future customer demand and sand preferences. These uncertainties require us to use judgment to quantify these estimates. Actual results could materially differ from our estimates. For example, we could see additional charges in 2020 if current activity levels extend well into the second half of 2020 and we are unable to utilize the sand under these supply contracts. Employee Severance Costs In the first quarter of 2020, we incurred employee severance costs of $0.5 million in connection with our cost reduction measures to mitigate losses from the decline in customer activity levels due to the low commodity price environment. At March 31, 2020, we had a remaining liability for future severance payments of $0.5 million. Discontinued Wireline Operations In May 2019, we discontinued our wireline operations due to financial underperformance resulting from market conditions. As a result of this decision, we recorded an asset impairment of $2.8 million and an inventory write-down of $1.4 million in the first quarter of 2019 to adjust these assets to their estimated fair market values and net realizable values, respectively. We sold substantially all of these assets in 2019 and received net proceeds of approximately $3.7 million. Risk of Future Impairments As previously discussed, we have experienced a substantial downturn in our business due to the COVID-19 pandemic and Saudi-Russia price war. We concluded that this downturn was a triggering event to test our long-lived assets and indefinite-lived tradename for impairment. After testing these assets for impairment, we concluded that no impairments were required at March 31, 2020. These tests rely on two key inputs: the estimated severity and length of the current industry downturn and the magnitude of an industry recovery. If current industry conditions continue for a prolonged period or if our estimates of these key inputs are revised unfavorably in a future quarter, we will likely incur impairments of long-lived assets or our tradename in a future period. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block | |
INCOME TAXES | NOTE 7 — INCOME TAXES In 2012, we established a full valuation allowance with respect to our U.S. federal deferred tax assets and state deferred tax assets in excess of our deferred tax liabilities. We have recorded a full valuation allowance for these net deferred tax assets for each year since 2012. As a result, we only record income tax expense for states that limit the deduction of net operating loss carryforwards and for foreign income taxes. Deferred tax assets related to our U.S. federal and state tax net operating losses are still available to us to offset future taxable income, subject to limitations in the event of a change of control under Section 382 of the Internal Revenue Code. At March 31, 2020, we had not incurred such an ownership change. At each reporting date, we consider all available positive and negative evidence to evaluate whether our deferred tax assets are more likely than not to be realized. A significant piece of negative evidence that we consider is whether we have incurred cumulative losses (generally defined as losses before income taxes) in recent years. Such negative evidence weighs heavily against other more subjective positive evidence such as our projections for future taxable income. We noted that for the three years ended December 31, 2019, we recorded cumulative income before income taxes of $391.2 million. Notwithstanding the three-year cumulative income, we concluded that a full valuation allowance was still required at March 31, 2020, because of the significant fluctuations of our business in recent years, and our losses before income taxes for the year ended December 31, 2019, and the for three months ended March 31, 2020. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | NOTE 8 — EARNINGS PER SHARE The numerators and denominators of the basic and diluted earnings per share (“EPS”) computations for our common stock are calculated as follows: Three Months Ended March 31, (In millions, except per share amounts) 2020 2019 Numerator: Net loss used for basic and diluted EPS computations $ (11.7) $ (55.0) Denominator: Weighted average shares used for 107.3 109.7 Dilutive potential of employee restricted stock units — — Number of shares used for diluted EPS computation 107.3 109.7 Basic and diluted EPS $ (0.11) $ (0.50) The following table includes common stock equivalents that were not included in the calculation of diluted EPS for the periods presented because the effect would be antidilutive. These securities could be dilutive in future periods. Three Months Ended March 31, (In millions) 2020 2019 Employee restricted stock units 3.0 1.9 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 — COMMITMENTS AND CONTINGENCIES Purchase Obligations We have purchase commitments with certain vendors to supply a significant portion of the proppant used in our operations. These agreements have remaining terms ranging from one to five years. Some of these agreements have minimum unconditional purchase obligations. See Note 6 – “Impairments and Other Charges” for more discussion of these purchase commitments. Litigation In the ordinary course of business, we are subject to various legal proceedings and claims, some of which may not be covered by insurance. Many of these legal proceedings and claims are in early stages, and many of them seek an indeterminate amount of damages. We estimate and provide for potential losses that may arise out of legal proceedings and claims to the extent that such losses are probable and can be reasonably estimated. Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different from these estimates. When preparing our estimates, we consider, among other factors, the progress of each legal proceeding and claim, our experience and the experience of others in similar legal proceedings and claims, and the opinions and views of legal counsel. Legal costs related to litigation contingencies are expensed as incurred. With respect to the litigation matters below, if there is an adverse outcome individually or collectively, there could be a material adverse effect on the Company’s consolidated financial position or results of operations. These litigation matters are subject to inherent uncertainties and management’s view of these matters may change in the future. Therefore, there can be no assurance as to the ultimate outcome of these matters. Regardless of the outcome, any such litigation and claims can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Patterson v. FTS International Manufacturing, LLC and FTS International Services, LLC : On June 24, 2015, Joshua Patterson filed a lawsuit against the Company in the 115 th Judicial District Court of Upshur County, Texas, alleging, among other things, that the Company was negligent with respect to an automobile accident in 2013. Mr. Patterson sought monetary relief of more than $1 million. On July 19, 2018, a jury returned a verdict of approximately $100 million, including punitive damages, against the Company. The trial court reduced the judgment on November 12, 2018 to approximately $33 million. The Company’s insurance carriers have been defending the suit and are appealing the final judgment. The Twelfth Court of Appeals heard oral arguments on the Company’s appeal on February 13, 2020. While the outcome of this case is uncertain, the Company has met its insurance deductible for this matter and we do not expect the ultimate resolution of this case to have a material adverse effect on our consolidated financial statements. Securities Act Litigation : On February 22, 2019, Carol Glock filed a purported securities class action in the 160th Civil District Court of Dallas County, Texas (Cause No. DC-19-02668) against the Company, certain of our officers, directors and stockholders, and certain of the underwriters of our initial public offering of common stock (“IPO”). The petition is brought on behalf of an alleged class of persons or entities who purchased our common stock in or allegedly traceable to our IPO, and purports to allege claims arising under Sections 11 and 15 of the Securities Act of 1933, as amended. The petition generally alleges that the defendants violated federal securities laws relating to the disclosure in the registration statement and prospectus filed with the Securities and Exchange Commission in connection with our IPO. The petition seeks, among other relief, class certification, damages in an amount in excess of $1.0 million, and reasonable costs and expenses, including attorneys’ fees. The Company has insurance coverage on this matter and has hired counsel to vigorously defend the case, but several of the Company’s co-defendants have tendered requests for indemnification that are not covered by the Company’s insurance. The Company has agreed to indemnify the IPO underwriter co-defendants. The Company is otherwise analyzing these indemnification requests. Defendants’ Special Exceptions to the petition requesting dismissal if the defects cannot be cured were overruled on November 22, 2019, but Defendants are appealing this ruling through a Petition for Writ of Mandamus which was filed on February 12, 2020. Mediation is presently scheduled to start April 29, 2020. While the outcome of this case is uncertain, we do not expect the ultimate resolution of this case to have a material adverse effect on our consolidated financial statements. We believe that costs associated with other legal matters will not have a material adverse effect on our consolidated financial statements. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
BASIS OF PRESENTATION | |
Fair Value Measurement, Policy [Policy Text Block] | Fair Value of Financial Instruments Money market funds, classified as cash and cash equivalents, are the only financial instruments that are measured and recorded at fair value on the Company’s balance sheets. The following table presents money market funds at their level within the fair value hierarchy. (In millions) Total Level 1 Level 2 Level 3 March 31, 2020 Money market funds $ 144.4 $ 144.4 $ — $ — December 31, 2019 Money market funds $ 193.6 $ 193.6 $ — $ — |
New Accounting Standards Updates | New Accounting Standards Updates In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments . This standard requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard also applies to financial assets arising from revenue transactions such as accounts receivables. We adopted this standard on January 1, 2020, and it had no material effect on our consolidated financial statements. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
BASIS OF PRESENTATION | |
Schedule of fair value of financial instruments | The following table presents money market funds at their level within the fair value hierarchy. (In millions) Total Level 1 Level 2 Level 3 March 31, 2020 Money market funds $ 144.4 $ 144.4 $ — $ — December 31, 2019 Money market funds $ 193.6 $ 193.6 $ — $ — |
INDEBTEDNESS AND BORROWING FA_2
INDEBTEDNESS AND BORROWING FACILITY (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Blocks | |
Summary of long-term debt | March 31, December 31, (In millions) 2020 2019 Term loan due April 2021 ("Term Loan") $ 67.4 $ 90.0 Senior notes due May 2022 ("2022 Senior Notes") 369.9 369.9 Total principal amount 437.3 459.9 Less unamortized discount and debt issuance costs (2.6) (3.0) Total long-term debt $ 434.7 $ 456.9 Estimated fair value of long-term debt $ 184.7 $ 317.2 |
IMPAIRMENTS AND OTHER CHARGES (
IMPAIRMENTS AND OTHER CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Blocks | |
Schedule of impairments and other charges | Three Months Ended March 31, (In millions) 2020 2019 Supply commitment charges $ 3.2 $ 56.6 Employee severance costs 0.5 — Impairment of assets — 2.8 Inventory write-down — 1.4 Total impairments and other charges $ 3.7 $ 60.8 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of computations for basic and diluted earnings (loss) per share | Three Months Ended March 31, (In millions, except per share amounts) 2020 2019 Numerator: Net loss used for basic and diluted EPS computations $ (11.7) $ (55.0) Denominator: Weighted average shares used for 107.3 109.7 Dilutive potential of employee restricted stock units — — Number of shares used for diluted EPS computation 107.3 109.7 Basic and diluted EPS $ (0.11) $ (0.50) |
Summary of common stock equivalents that were not included in the calculation of diluted net earnings per share | Three Months Ended March 31, (In millions) 2020 2019 Employee restricted stock units 3.0 1.9 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Other comprehensive income | |||
Other comprehensive income | $ 0 | $ 0 | |
Fair Value of Financial Assets | |||
Money market funds | 144.4 | $ 193.6 | |
Level 2 | |||
Fair Value of Financial Assets | |||
Money market funds | $ 144.4 | $ 193.6 |
INDEBTEDNESS AND BORROWING FA_3
INDEBTEDNESS AND BORROWING FACILITY - Summary of Long-term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
INDEBTEDNESS | |||
Total principal amount | $ 437.3 | $ 459.9 | |
Less unamortized discount and debt issuance costs | (2.6) | (3) | |
Total long-term debt | 434.7 | 456.9 | |
Estimated fair value of long-term debt | 184.7 | 317.2 | |
Gain on extinguishment of debt, net | 2 | $ 0.5 | |
Term Loan | |||
INDEBTEDNESS | |||
Total principal amount | 67.4 | 90 | |
Principal amount repaid | 22.6 | ||
Gain on extinguishment of debt, net | 2 | ||
2022 Senior notes | |||
INDEBTEDNESS | |||
Total principal amount | $ 369.9 | $ 369.9 |
INDEBTEDNESS AND BORROWING FA_4
INDEBTEDNESS AND BORROWING FACILITY - Revolving Credit Facility (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Revolving credit facility | |
Revolving Credit Facility | |
Borrowing base on line of credit | $ 60.6 |
Maximum borrowing capacity | $ 60.6 |
Minimum credit facility percentage | 10.00% |
Minimum maintained credit facility | $ 12.5 |
Fixed coverage ratio | 100.00% |
Revolving credit | $ 0 |
Maximum borrowing credit facility | 56.3 |
Revolving credit facility | Maximum | |
Revolving Credit Facility | |
Maximum borrowing capacity | 250 |
Letter of Credit | |
Revolving Credit Facility | |
Revolving credit | $ 4.3 |
SHARE REPURCHASE - (Details)
SHARE REPURCHASE - (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | May 31, 2019 | |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Stock Repurchase Program, Authorized Amount | $ 100 | |
Stock Repurchase Program, Shares Repurchased | 0 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 90.1 |
IMPAIRMENTS AND OTHER CHARGES -
IMPAIRMENTS AND OTHER CHARGES - Summary of Impairments and Other Charges (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
May 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Impairments and other charges | ||||
Supply commitment charges | $ 3.2 | $ 56.6 | ||
Employee severance costs | 0.5 | |||
Impairment of assets | 2.8 | |||
Inventory write-down | 1.4 | |||
Total impairments and other charges | 3.7 | 60.8 | ||
Reduction of commitments | $ 162 | |||
Liability for future severance payments | 0.5 | |||
Estimated loss from commitments under contract | 55 | |||
Proceeds from disposal of assets | $ 0.1 | 0.1 | ||
Discontinued Wireline Operations | ||||
Impairments and other charges | ||||
Inventory write-down | 1.4 | |||
Impairment of assets | $ 2.8 | |||
Proceeds from disposal of assets | $ 3.7 |
INCOME TAXES - net (Details)
INCOME TAXES - net (Details) - USD ($) $ in Millions | 3 Months Ended | 36 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest [Abstract] | |||
Cumulative income before income taxes | $ (11.7) | $ (54.8) | $ 391.2 |
EARNINGS PER SHARE - (Details)
EARNINGS PER SHARE - (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net loss used for basic and diluted EPS computations | $ (11.7) | $ (55) |
Denominator: | ||
Weighted average shares used for basic EPS computation | 107.3 | 109.7 |
Dilutive potential of employee restricted stock units | ||
Number of shares used for diluted EPS computation | 107.3 | 109.7 |
Basic and diluted EPS | $ (0.11) | $ (0.50) |
EARNINGS PER SHARE - Antidiluti
EARNINGS PER SHARE - Antidilutive Securities (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Employee restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of common stock equivalents that were not included in calculation of diluted net earnings per share | 3 | 1.9 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | Feb. 22, 2019 | Nov. 12, 2018 | Jul. 19, 2018 | Jun. 24, 2015 | Mar. 31, 2020 |
Minimum | |||||
Purchase obligations due | |||||
Duration of purchase agreement (in years) | 1 year | ||||
Maximum | |||||
Purchase obligations due | |||||
Duration of purchase agreement (in years) | 5 years | ||||
Patterson Case | |||||
Litigation | |||||
Damages sought | $ 1 | ||||
Damages awarded value | $ 33 | $ 100 | |||
Glock Case | |||||
Litigation | |||||
Damages sought | $ 1 |