Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 05, 2019 | Jun. 29, 2018 | |
Document Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | NINE | ||
Entity Registrant Name | Nine Energy Service, Inc. | ||
Entity Central Index Key | 1,532,286 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 30,144,634 | ||
Entity Public Float | $ 497,531,771 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 63,615 | $ 17,513 |
Accounts receivable, net | 154,783 | 99,565 |
Inventories, net | 91,435 | 22,230 |
Prepaid expenses and other current assets | 15,717 | 7,929 |
Notes receivable from shareholders (Note 14) | 7,626 | 0 |
Total current assets | 333,176 | 147,237 |
Property and equipment, net | 211,644 | 259,039 |
Definite-lived intangible assets, net | 173,451 | 41,514 |
Goodwill | 307,804 | 93,756 |
Indefinite-lived intangible assets | 108,711 | 22,031 |
Other long-term assets | 6,386 | 4,806 |
Notes receivable from shareholders (Note 14) | 0 | 10,476 |
Total assets | 1,141,172 | 578,859 |
Current liabilities | ||
Current portion of long-term debt | 0 | 241,509 |
Accounts payable | 46,132 | 29,643 |
Accrued expenses | 61,434 | 14,687 |
Current portion of capital lease obligations | 665 | 0 |
Income taxes payable | 57 | 581 |
Total current liabilities | 108,288 | 286,420 |
Long-term liabilities | ||
Long-term debt | 424,978 | 0 |
Deferred income taxes | 5,915 | 5,017 |
Long-term capital lease obligations | 2,330 | 0 |
Other long-term liabilities | 4,838 | 64 |
Total liabilities | 546,349 | 291,501 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity | ||
Common stock (120,000,000 shares authorized at $.01 par value; 30,163,408 and 15,810,540 shares issued and outstanding at December 31, 2018 and 2017 respectively) | 302 | 158 |
Additional paid-in capital | 746,428 | 384,965 |
Accumulated other comprehensive loss | (4,843) | (3,684) |
Accumulated deficit | (147,064) | (94,081) |
Total stockholders’ equity | 594,823 | 287,358 |
Total liabilities and stockholders’ equity | $ 1,141,172 | $ 578,859 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock shares issued (shares) | 30,163,408 | 15,810,540 |
Common stock shares outstanding (in shares) | 30,163,408 | 15,810,540 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Revenues | $ 827,174 | $ 543,660 | $ 282,354 |
Cost and expenses | |||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 639,298 | 448,467 | 246,109 |
General and administrative expenses | 75,993 | 49,552 | 39,387 |
Depreciation | 54,257 | 53,422 | 55,260 |
Amortization of intangibles | 9,558 | 8,799 | 9,083 |
Impairment of property and equipment | 45,694 | 0 | 0 |
Impairment of goodwill | 12,986 | 31,530 | 12,207 |
Impairment of intangibles | 19,065 | 3,800 | 0 |
Loss on equity method investment | 347 | 368 | 0 |
(Gain) loss on sale of property and equipment | (1,731) | 4,688 | 3,320 |
Loss from operations | (28,293) | (56,966) | (83,012) |
Other expense | |||
Interest expense | 22,315 | 15,703 | 14,185 |
Total other expense | 22,315 | 15,703 | 14,185 |
Loss before income taxes | (50,608) | (72,669) | (97,197) |
Provision (benefit) for income taxes | 2,375 | (4,987) | (26,286) |
Net loss | $ (52,983) | $ (67,682) | $ (70,911) |
Loss per share | |||
Basic (in usd per share) | $ (2.17) | $ (4.55) | $ (5.34) |
Diluted (in usd per share) | $ (2.17) | $ (4.55) | $ (5.34) |
Weighted average shares outstanding | |||
Average shares outstanding (in shares) | 24,411,213 | 14,887,006 | 13,268,540 |
Diluted (in shares) | 24,411,213 | 14,887,006 | 13,268,540 |
Other comprehensive income (loss), net of tax | |||
Foreign currency translation adjustments, net of $0 tax in each period | $ (1,159) | $ (198) | $ 210 |
Total other comprehensive income (loss), net of tax | (1,159) | (198) | 210 |
Total comprehensive loss | $ (54,142) | $ (67,880) | $ (70,701) |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Income Statement [Abstract] | |||
Tax associated with foreign currency translation | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings (Accumulated Deficit) |
Stockholders' equity, beginning (in shares) at Dec. 31, 2015 | 13,300,214 | ||||
Stockholders' equity, beginning at Dec. 31, 2015 | $ 352,676 | $ 133 | $ 311,727 | $ (3,696) | $ 44,512 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 86,772 | ||||
Issuance of common stock | 500 | $ 1 | 499 | ||
Stock-based compensation expense | 5,711 | 5,711 | |||
Other comprehensive income (loss) | 210 | 210 | |||
Net income (loss) | (70,911) | (70,911) | |||
Stockholders' equity, ending (in shares) at Dec. 31, 2016 | 13,386,986 | ||||
Stockholders' equity, ending at Dec. 31, 2016 | 288,186 | $ 134 | 317,937 | (3,486) | (26,399) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 2,501,643 | ||||
Issuance of common stock | 61,922 | $ 25 | 61,897 | ||
Distribution to non-accredited investors (in shares) | (78,089) | ||||
Distribution to non-accredited investors | (2,438) | $ (1) | (2,437) | ||
Stock-based compensation expense | $ 7,568 | 7,568 | |||
Exercise of stock options (in shares) | 0 | ||||
Other comprehensive income (loss) | $ (198) | (198) | |||
Net income (loss) | (67,682) | (67,682) | |||
Stockholders' equity, ending (in shares) at Dec. 31, 2017 | 15,810,540 | ||||
Stockholders' equity, ending at Dec. 31, 2017 | 287,358 | $ 158 | 384,965 | (3,684) | (94,081) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 8,050,000 | ||||
Issuance of common stock | 168,261 | $ 81 | 168,180 | ||
Stock issued during stock compensation plan (in shares) | 1,166,587 | ||||
Stock issued under stock compensation plan | 0 | $ 12 | (12) | ||
Issuance of common stock for acquisitions (in shares) | 5,015,745 | ||||
Issuance of common stock for acquisitions | 177,847 | $ 50 | 177,797 | ||
Stock-based compensation expense | $ 13,221 | 13,221 | |||
Exercise of stock options (in shares) | 121,577 | 135,817 | |||
Exercise of stock options | $ 2,905 | $ 1 | 2,904 | ||
Vesting of restricted stock (in shares) | (28,324) | ||||
Vesting of restricted stock | (927) | (927) | |||
Other issuances of common stock (in shares) | 13,043 | ||||
Other issuances of common stock | 300 | 300 | |||
Other comprehensive income (loss) | (1,159) | (1,159) | |||
Net income (loss) | (52,983) | (52,983) | |||
Stockholders' equity, ending (in shares) at Dec. 31, 2018 | 30,163,408 | ||||
Stockholders' equity, ending at Dec. 31, 2018 | $ 594,823 | $ 302 | $ 746,428 | $ (4,843) | $ (147,064) |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | 22 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | |
Cash flows from operating activities | |||||
Net loss | $ (52,983) | $ (67,682) | $ (70,911) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||||
Depreciation | 54,257 | 53,422 | 55,260 | ||
Amortization of intangibles | 9,558 | 8,799 | 9,083 | ||
Amortization of deferred financing costs | 2,966 | 1,615 | 2,355 | ||
Provision for (recovery of) doubtful accounts | (268) | 176 | 0 | ||
Provision (benefit) for deferred income taxes | 898 | (5,815) | (12,159) | ||
Provision for inventory obsolescence | 844 | 1,359 | 287 | ||
Impairment of property and equipment | $ 45,700 | 45,694 | 0 | 0 | |
Impairment of goodwill | 12,986 | 31,530 | 12,207 | ||
Impairment of intangibles | 19,065 | 3,800 | 0 | ||
Stock-based compensation expense | 13,221 | 7,568 | 5,711 | ||
(Gain) loss on sale of property and equipment | (1,731) | 4,688 | 3,320 | ||
Loss on revaluation of contingent liabilities (Note 11) | 3,262 | 415 | 1,735 | ||
Loss on equity method investment | 347 | 368 | 0 | $ 700 | |
Changes in operating assets and liabilities, net of effects from acquisitions | |||||
Accounts receivable, net | (24,972) | (52,180) | 2,073 | ||
Inventories, net | (15,041) | (8,212) | (558) | ||
Prepaid expenses and other current assets | (5,722) | 1,472 | (3,172) | ||
Accounts payable and accrued expenses | 27,156 | 12,530 | (2,396) | ||
Income taxes receivable/payable | (255) | 15,158 | (5,848) | ||
Other assets and liabilities | 295 | (3,340) | (277) | ||
Net cash provided by (used in) operating activities | 89,577 | 5,671 | (3,290) | ||
Cash flows from investing activities | |||||
Acquisitions, net of cash acquired | (349,986) | 0 | 0 | ||
Proceeds from sales of property and equipment | 2,183 | 1,452 | 2,918 | ||
Proceeds from property and equipment casualty losses | 1,743 | 300 | 262 | ||
Proceeds from notes receivable payments | 2,941 | 0 | 1,774 | ||
Purchases of property and equipment | (46,646) | (45,216) | (9,130) | ||
Equity method investment | 0 | (1,000) | 0 | ||
Net cash used in investing activities | (389,765) | (44,464) | (4,176) | ||
Cash flows from financing activities | |||||
Proceeds from revolving credit facilities | 35,000 | 56,481 | 75,136 | ||
Payments on revolving credit facilities | (96,182) | (38,287) | (61,956) | ||
Proceeds from Senior Notes | 400,000 | 0 | 0 | ||
Proceeds from term loan | 125,000 | 0 | 0 | ||
Payments on term loans | (270,975) | (22,475) | (19,725) | ||
Proceeds from notes payable—insurance premium financing | 0 | 0 | 1,127 | ||
Payments on notes payable—insurance premium financing | 0 | (272) | (855) | ||
Payments on capital leases | (128) | 0 | 0 | ||
Payments of contingent liability on Scorpion purchase | (3,445) | (1,325) | (297) | ||
Proceeds from issuance of common stock in IPO, net of offering costs | 171,450 | 0 | 0 | ||
Proceeds from other issuances of common stock | 300 | 61,374 | 500 | ||
Proceeds from exercise of stock options | 2,905 | 0 | 0 | ||
Vesting of restricted stock | (927) | 0 | 0 | ||
Distribution to non-accredited investors | 0 | (2,438) | 0 | ||
Cost of debt issuance | (16,307) | (716) | (1,245) | ||
Net cash provided by (used in) financing activities | 346,691 | 52,342 | (7,315) | ||
Impact of foreign currency exchange on cash | (401) | (110) | (22) | ||
Net increase (decrease) in cash and cash equivalents | 46,102 | 13,439 | (14,803) | ||
Cash and cash equivalents | |||||
Cash and cash equivalents at beginning of period | 17,513 | 4,074 | 18,877 | ||
Cash and cash equivalents at end of period | $ 63,615 | 63,615 | 17,513 | 4,074 | $ 63,615 |
Supplemental disclosures of cash flow information: | |||||
Cash paid for interest | 5,981 | 14,987 | 12,442 | ||
Cash paid (refunded) for income taxes | 1,697 | (14,344) | (8,716) | ||
Non-cash investing and financing activities: | |||||
Issuance of common stock related to business acquisitions | 177,847 | 547 | 0 | ||
Contingent liability related to business acquisitions | 23,982 | 0 | 0 | ||
Capital expenditures in accounts payable and accrued expenses | 4,476 | 1,675 | 1,540 | ||
Property and equipment obtained by capital leases | 3,123 | 0 | 0 | ||
Receivable from property and equipment insurance | $ 1,199 | $ 0 | $ 0 |
Company and Organization
Company and Organization | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Company and Organization | Company and Organization Company Description Nine Energy Service, Inc. (the “Company” or “Nine”), a Delaware corporation, is an oilfield services business that provides services integral to the completion of unconventional wells through a full range of tools and methodologies and provides a range of production enhancement and well workover services. The Company is headquartered in Houston, Texas. Initial Public Offering In January 2018, the Company completed its initial public offering (“IPO”) of 8,050,000 shares of common stock (including 1,050,000 shares pursuant to an over-allotment option) at a price to the public of $23.00 per share pursuant to a registration statement on Form S-1 (File 333-217601), as amended and declared effective by the Securities and Exchange Commission (the “SEC”) on January 18, 2018. Magnum Acquisition On October 25, 2018, pursuant to the terms of a Securities Purchase Agreement, dated October 15, 2018 (the “Magnum Purchase Agreement”), the Company acquired all of the equity interests of Magnum Oil Tools International, LTD, Magnum Oil Tools GP, LLC, and Magnum Oil Tools Canada Ltd. (such entities collectively, “Magnum” and such acquisition, the “Magnum Acquisition”) for approximately $334.5 million in upfront cash consideration, subject to customary adjustments, and 5.0 million shares of the Company’s common stock, which were issued to the sellers of Magnum in a private placement. The Magnum Purchase Agreement also includes the potential for additional future payments in cash of (i) up to 60% of net income (before interest, taxes, and certain gains or losses) for the “E-Set” tools business in 2019 through 2025 and (ii) up to $25.0 million based on sales of certain dissolvable plug products in 2019. For additional information on the Magnum Acquisition, see Note 3 – Acquisitions and Combinations . Beckman Combination On February 28, 2017, pursuant to the terms and conditions of a combination agreement dated February 3, 2017, the Company merged with Beckman Production Services, Inc. (“Beckman”), and all of the issued and outstanding shares of Beckman common stock were converted into shares of common stock of Nine Energy Service, Inc. (the “Combination”). Prior to the Combination, SCF-VII, L.P. had controlled a majority of the voting interests of Nine and Beckman since February 28, 2011 and July 31, 2012, respectively. The merger of the entities into the combined company was accounted for using reorganization accounting (i.e., “as if” pooling of interest) for entities under common control. For additional information on the Combination, see Note 3 – Acquisitions and Combinations . |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The Consolidated Financial Statements as of December 31, 2018 and 2017 , and for the years ended December 31, 2018 , 2017 , and 2016 , include the accounts of Nine and Beckman and their wholly owned subsidiaries. For additional information on the history of Nine, see Note 1 – Company and Organization . All inter-company balances and transactions have been eliminated in the consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Such estimates include but are not limited to fair value assumptions used in purchase accounting and in analyzing goodwill, other intangible assets, and long-lived assets for possible impairment, useful lives used in depreciation and amortization expense, stock-based compensation fair value, estimated realizable value on excess and obsolete inventories, deferred taxes and income tax contingencies, and losses on accounts receivable. It is at least reasonably possible that the estimates used will change within the next year. Reclassifications Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. These reclassifications relate to the breakout of “Definite-lived intangible assets, net” and “Indefinite-lived intangible assets” in the Company’s Consolidated Balance Sheets . Revenue Recognition The Company recognizes revenue for products and services based upon purchase orders, contracts, or other persuasive evidence of an arrangement with the customer that include fixed or determinable prices and that do not include right of return or other similar provisions or other post-delivery obligations. Revenue is recognized for products upon delivery, customer acceptance, and when collectability is reasonably assured. Revenue is recognized for services when they are rendered and collectability is reasonably assured. Cash and Cash Equivalents The Company considers all highly liquid debt instruments with a maturity of three months or less when purchased to be cash equivalents. Throughout the year, the Company maintained cash balances that were in excess of their federally insured limits. The Company has not experienced any losses in such accounts. Cash flows from the Company’s Canadian subsidiary are calculated based on its functional currency. As a result, amounts related to changes in assets and liabilities reported in the Company’s Consolidated Statements of Cash Flows will not necessarily agree to changes in the corresponding balances in the Company’s Consolidated Balance Sheets . Foreign Currency The Company’s functional currency is the U.S. Dollar (“USD”). The financial position and results of operations of the Company’s Canadian subsidiary are measured using the local currency as the functional currency. Revenues and expenses of the subsidiary have been translated into USD at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the date of the Company’s Consolidated Balance Sheets . The resulting translation gain and loss adjustments have been recorded as a separate component of other comprehensive income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) and its Consolidated Statements of Changes in Stockholders’ Equity. Accounts Receivable The Company extends credit to customers in the normal course of business. Accounts receivable are carried at their estimated collectible amount. Trade credit is generally extended on a short-term basis; thus receivables do not bear interest, although a finance charge may be applied to amounts past due. The Company maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, credit approval practices, industry and customer historical experience, as well as the current and projected financial condition of the specific customer. Accounts receivable outstanding longer than contractual terms are considered past due. The Company writes off accounts receivable to the allowance for doubtful accounts when they become uncollectible. Any payments subsequently received on receivables previously written off are credited to bad debt expense. Bad debt expense recoveries was $0.3 million for the year ended December 31, 2018 , while bad debt expense was $0.2 million for the year ended December 31, 2017 . There was no bad debt expense for the year ended December 31, 2016 . The allowance for doubtful accounts was $0.5 million and $0.6 million at December 31, 2018 and 2017 , respectively. Concentration of Credit Risk The majority of the Company’s customers operate in the oil and gas industry. While current energy prices are important contributors to positive cash flow for the customers, expectations about future prices and price volatility are generally more important for determining future spending levels. Any prolonged increase or decrease in oil and natural gas prices affects the levels of exploration, development, and production activity as well as the entire health of the oil and natural gas industry and can therefore negatively impact spending by the Company’s customers. No customer accounted for at least 10% of revenues for the years ended December 31, 2018 and 2017 . Revenues for the year ended December 31, 2016 included sales to one customer that individually represented 10% or more of total revenue. Concentration of Supplier Risk Purchases during the years ended December 31, 2018 , 2017 , and 2016 included purchases from one supplier that individually represented more than 10% of total operating purchases. The accounts payable to this vendor totaled 15% and 17% of total accounts payable at December 31, 2018 and 2017 , respectively. Equity Method Investment The Company accounts for investments, which it does not control but has the ability to significantly influence, using the equity method of accounting. Under this method, the investment is carried originally at cost, increased by any allocated share of the investee’s net income and contributions made, and decreased by any allocated share of the investee’s net losses and distributions received. The investee’s allocated share of income and losses is based on the rights and priorities outlined in the equity investment agreement. On March 13, 2017, the Company entered into an agreement to acquire shares of the Series B Preferred Stock of Deep Imaging Technologies (“DIT”) for $1.0 million . DIT provides an advanced electromagnetic fracture monitoring service which allows its customers to make on-site decisions regarding efficiencies. The Company’s investment in DIT is accounted for as an equity method investment, as the Company has a non-controlling interest in DIT but has the ability to exercise significant influence. From the date of the investment through December 31, 2018 , the Company’s share of DIT’s net loss was $0.7 million , and is reported as “Loss on equity method investment” in its Consolidated Statements of Income and Comprehensive Income (Loss) and as a reduction of the investment in DIT, which is reported within “Other long-term assets” in its Consolidated Balance Sheets . Property and Equipment Property and equipment is stated at cost and depreciated under the straight-line method over the estimated useful lives of the asset. Equipment held under capital leases is stated at the present value of its future minimum lease payments and is depreciated under the straight-line method over the shorter of the lease term or the estimated useful life of the asset. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized within operating expenses. Normal repair and maintenance costs are charged to operating expense as incurred. Significant renewals and betterments are capitalized. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for impairment, future cash flows expected to result from the use of the asset and its eventual disposal are estimated. If the undiscounted future cash flows are less than the carrying amount of the assets, there is an indication that the asset may be impaired. The amount of the impairment is measured as the difference between the carrying value and the estimated fair value of the asset. The fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization. Impairment losses are reflected in operating income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). In the fourth quarter of 2018, the Company recorded a property and equipment impairment charge of $45.7 million and a definite-lived customer relationship intangible asset impairment charge of $9.8 million . These impairment charges represent the difference between the carrying value and the estimated fair value of the long-lived assets associated with the Company’s Production Solutions segment and are due to deteriorating conditions attributed to depressed commodity prices towards the end of the fourth quarter of 2018, coupled with customers focusing more on the completions business where there is more technological differentiation and value. For additional information on these impairment charges, see Note 5 – Property and Equipment . Goodwill and Intangible Assets Goodwill has an indefinite useful life and is not subject to amortization. Intangible assets with indefinite useful lives (specifically trademarks and trade names) are also not subject to amortization. For goodwill and intangible assets with indefinite useful lives, an assessment for impairment is performed annually on December 31 or when there is an indication an impairment may have occurred. Goodwill is reviewed for impairment by comparing the carrying value of each of the Company’s reporting unit’s net assets (including allocated goodwill) to the fair value of the reporting unit. The fair value of the reporting unit is determined by using a combination of both the income approach (discounted cash flows of forecasted income) and the market approach (public comparable company multiple of earnings before interest, taxes, depreciation and amortization or “EBITDA”). Intangible assets with indefinite useful lives are reviewed for impairment by comparing the carrying value of the intangible asset to the fair value of the intangible asset. The fair value of intangible assets with indefinite useful lives (specifically trademarks and trade names) is estimated upon acquisition using the relief-from-royalty method of the income approach. This approach is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty in order to exploit the related benefits of this intangible asset. Determining fair value requires the use of estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating profit margins, royalty rates, weighted average costs of capital, a terminal growth rate, and future market conditions, among others. The Company believes that the estimates and assumptions used in impairment assessments are reasonable and appropriate. The Company recognizes a goodwill impairment charge for the amount by which the carrying value of goodwill exceeds the reporting unit’s fair value. The Company recognizes an indefinite-lived intangible asset impairment charge of the amount by which the carrying value of the intangible asset exceeds the fair value of the intangible asset. Any impairment losses are reflected in in operating income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). Intangible assets with definite lives include technology, customer relationships, and non-compete agreements. The fair value of technology and the fair value of customer relationships is estimated upon acquisition using the income approach, specifically the multi-period excess earnings method. The multi-period excess earnings method consists of isolating the cash flows attributed to the intangible asset, which are then discounted to present value to calculate the fair value of the intangible asset. The fair value of non-compete agreements is estimated upon acquisition using a with and without scenario where cash flows are projected through the term of the non-compete agreement assuming the non-compete agreement is in place and compared to cash flows assuming the non-compete agreement is not in place. Intangible assets with definite lives are amortized based on the estimated consumption of the economic benefit over their estimated useful lives. Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicated that their carrying amount may not be recoverable. In the fourth quarter of 2018, in connection with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $13.0 million , which represents a full write-off of goodwill attributed to its Production Solutions segment. In addition, in the fourth quarter of 2018, in connection with its annual indefinite-lived intangible asset impairment test, the Company recorded an intangible asset impairment charge of $9.3 million associated with indefinite-lived trade names in its Production Solutions segment. As described above in “Property and Equipment” and also in the fourth quarter of 2018, the Company recorded an intangible asset impairment charge of $9.8 million related to definite-lived customer relationship intangible assets associated with its Production Solutions segment. In the fourth quarter of 2017, in connection with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $31.5 million associated with one reporting unit in its Completion Solutions segment. In the fourth quarter of 2017, the Company recorded an intangible asset impairment charge of $3.8 million related to definite-lived customer relationship intangible assets associated with one reporting unit in its Completion Solutions segment. For additional information on goodwill and both indefinite-lived and definite-lived intangible asset impairment charges, see Note 6 – Goodwill and Intangible Assets . Equity In January 2018, there was an 8.0256 for 1 stock split immediately preceding the IPO. All shares and per share data reflect the effect of the stock split. Stock-based Compensation The Company has stock-based compensation plans for certain of its employees. The Company measures employee stock-based compensation awards at fair value on the date they are granted to employees and recognizes compensation cost in its financial statements over the requisite service period. Compensation expense is recorded for restricted stock over the applicable vesting period based on the Company’s closing stock price as of the grant date. Options are issued with an exercise price equal to the fair value of the stock on the date of grant. Compensation expense is recorded for the fair value of the stock options and is recognized over the period of the underlying security’s vesting schedule. Consideration paid on the exercise of stock options is credited to share capital and additional paid-in capital. For options, fair value of the stock-based compensation is measured by use of the Black-Scholes pricing model. The following discusses the assumptions used related to the Black-Scholes pricing model. Expected Life The expected term of stock options represents the period the stock options are expected to remain outstanding and is based on the simplified method, which is the weighted average vesting term plus the original contractual term, divided by two. Expected Volatility Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. Prior to the Company’s IPO, when its stock was not publicly traded, the Company determined volatility based on an analysis of the PHLX Oil Service Index that tracks publicly traded oilfield service stocks. Subsequent to the IPO and as a publicly traded company, the Company developed its expected volatility based upon a weighted average volatility of its peer group. Dividend Yield At the time of the issuance of the options, the Company did not plan to pay cash dividends in the foreseeable future. Therefore, a zero expected dividend yield was used in the valuation model. Risk-free Interest Rate The risk-free interest rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. Forfeitures As a result of the adoption of Accounting Standards Update (‘‘ASU”) No. 2016-09, the Company elected to account for stock-based compensation forfeitures as they occur. Fair Value of Common Stock Prior to the Company’s IPO, the value of the Company’s stock at the time of each option grant used to establish the strike price was estimated by management in accordance with an internal valuation model and approved by the Company’s Board of Directors. The valuation model was based upon an average of cash flow and book value multiples of comparable companies. The comparable companies selected reflect the market’s view on key sector, geographic, and product type exposure that are similar to those that impact the Company’s business. The value was further subject to judgmental factors such as prevailing market conditions, changes in the stock prices of other oilfield service companies, and the overall outlook for the Company and its products in general. After the Company’s IPO, the stock value is the publicly traded share price. Income Taxes The Company accounts for income taxes under ASC 740. Under this method, deferred income tax assets and liabilities are determined based upon temporary differences between the carrying amounts and tax bases of the Company’s assets and liabilities at the balance sheet date and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period in which the change occurs. The Company records a valuation reserve in each reporting period when management believes that it is more likely than not that any deferred tax asset created will not be realized. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. If a tax position meets the “more likely than not” recognition criteria, the tax position is measured at the largest amount of benefit greater than 50% likely of being realized upon ultimate settlement. Fair Value of Financial Instruments The carrying amounts for financial instruments classified as current assets and current liabilities approximate fair value, due to the short maturity of such instruments. For financial assets and liabilities disclosed at fair value, fair value is determined as the exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The established fair value hierarchy divides fair value measurement into three levels: • Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly or indirectly; and • Level 3 – inputs are unobservable for the asset or liability, which reflect the best judgment of management. Financial assets and liabilities that are disclosed at fair value are categorized in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The fair value of the Company’s debt obligations is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. For additional information on the fair value of the Company’s debt obligations, see Note 8 – Debt Obligations . The fair value of the Company’s contingent consideration is classified as Level 3 in the fair value hierarchy and is established on unobservable markets which reflect the best judgment of management. For additional information on the fair value of the Company’s contingent consideration, see Note 3 – Acquisitions and Combinations and Note 11 – Commitments and Contingencies . Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. The diluted earnings (loss) per share computation is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period, taking into effect, if any, shares that would be issuable upon the exercise of outstanding stock options, reduced by the number of shares purchased by the Company at cost, when such amounts are dilutive to the earnings per share calculation. There was no dilutive effect for the year ended December 31, 2018 , 2017 , or 2016 as the Company was in a net loss position for those years. For additional information on earnings (loss) per share, see Note 13 – Earnings (Loss) Per Share . Accounting Pronouncements Recently Adopted In January 2017, the Financial Accounting Standards Board (the ‘‘FASB’’) issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the new standard, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new standard should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted ASU No. 2017-04 during the fourth quarter of 2018. For additional information on the impact of the Company’s goodwill impairment test in accordance with ASU No. 2017-04, see Note 6 – Goodwill and Intangible Assets . Accounting Pronouncements Not Yet Adopted – Revenue Recognition Background In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the current revenue recognition guidance. The standard is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and asset recognized from costs incurred to obtain or fulfill a contract. The FASB subsequently issued ASU No. 2016-08, ASU No. 2016-10, and ASU No. 2016-12 which provide additional guidance around Topic 606. These amendments are encompassed in the Company’s reference to ASU No. 2014-09 below. Quantitative Disclosures of Directional Effects of Adoption The Company, as an emerging growth company, will adopt ASU No. 2014-09 on January 1, 2019 utilizing the modified retrospective approach. Under this approach, the Company will recognize the cumulative effect of initially applying ASU 2014-09 as an increase to the opening balance of retained earnings. Although still in process of determining the impact, the Company expects this adjustment to be immaterial to its opening balance of retained earnings. Qualitative Status of Management’s Implementation Efforts During 2018, in preparation for the adoption of ASU No. 2014-09, the Company began a review of the various types of customer contract arrangements for each of its businesses. These reviews include the following: • accumulating all customer contractual arrangements; • identifying the individual performance obligations pursuant to each arrangement; • quantifying the considerations under each arrangement; • allocating the consideration under each arrangement to the identified performance obligation; and • determining the timing of revenue recognition pursuant to each arrangement. The Company has completed the majority of these contract reviews and is currently updating and implementing revised accounting system processes in order to capture information required to be disclosed under ASU No. 2014-09. The Company has begun updating its current accounting policies to align with revenue recognition practices under ASU No. 2014-09. As part of its evaluation of contracts with customers, the Company holds regular meetings with key stakeholders across the organization to determine the impact of ASU No. 2014-09 on its business processes. Additionally, the Company continues to evaluate its internal processes to address risks associated with incorporating ASU No. 2014-09. Upon adoption, the Company will also implement new internal controls associated with incorporating ASU No. 2014-09, which is not expected to result in a material change in its existing control environment. Disclosure Requirements The Company’s disclosures related to revenue recognition will be significantly expanded under ASU No. 2014-09, specifically around the quantitative and qualitative information associated with performance obligations, changes in contract assets and liabilities, and the disaggregation of revenue. As an emerging growth company, the Company will not include these expanded disclosures until its Annual Report on Form 10-K for the year ending December 31, 2019. Currently, the Company is in the process of evaluating these disclosure requirements for future reporting. Accounting Pronouncements Not Yet Adopted – Other In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), 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 standard, which requires the use of a modified retrospective transition approach, includes a number of optional practical expedients that entities may elect to apply. In July 2018, the FASB issued a new, optional transition method that will give companies the option to use the effective date as the date of initial application on transition. Based on initial evaluation, the Company expects to include operating leases with durations greater than twelve months on its Consolidated Balance Sheets. The Company is currently in the process of accumulating and evaluating all the necessary information required to properly account for its lease portfolio under the new standard. The Company will provide additional information about the expected financial impact as it progresses through the evaluation and implementation of the standard. Although the standard will be generally effective for fiscal years beginning after December 15, 2018, the Company plans to adopt for the fiscal year beginning after December 15, 2019, as an emerging growth company. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments . This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. As an emerging growth company, the Company plans to adopt the new standard for the fiscal year beginning after December 15, 2018. The Company is currently evaluating the impact of the standard on its Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The Company is currently evaluating the impact of the new standard on its Consolidated Financial Statements. Although the standard is generally effective for fiscal years beginning after December 15, 2017, the Company plans to adopt for the fiscal year beginning after December 15, 2018, as an emerging growth company. Entities will be required to apply the guidance prospectively when adopted. |
Acquisitions and Combinations
Acquisitions and Combinations | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Combinations | Acquisitions and Combinations Magnum Acquisition Purchase Consideration On October 25, 2018 (the “Closing Date”), pursuant to the terms of the Magnum Purchase Agreement, the Company acquired all of the equity interests of Magnum for approximately $334.5 million in upfront cash consideration, subject to customary adjustments, and 5.0 million shares of the Company’s common stock, which were issued to the sellers of Magnum in a private placement. The Magnum Purchase Agreement also includes the potential for additional future payments in cash of (i) up to 60% of net income (before interest, taxes, and certain gains or losses) for the “E-Set” tools business in 2019 through 2025 and (ii) up to $25.0 million based on sales of certain dissolvable plug products in 2019 (the “Magnum Earnout”). The Magnum Acquisition has been accounted for as a business combination using the acquisition method. Under the acquisition method of accounting, the fair value of the consideration transferred is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date, with the remaining unallocated amount recorded as goodwill. Transaction costs incurred by the Company related to the Magnum Acquisition amounted to $5.2 million . The following table summarizes the fair value of purchase consideration transferred on the Closing Date: Fair Value (in thousands) Proceeds from newly issued Senior Notes and 2018 ABL Credit Facility (1) $ 296,622 Cash provided from operations 58,760 Total upfront cash consideration $ 355,382 Issuance of the Company’s common shares 177,350 Contingent consideration (2) 23,029 Total purchase consideration $ 555,761 (1) Senior Notes and 2018 ABL Credit Facility are defined in Note 8 – Debt Obligations . (2) The estimated fair value of the Magnum Earnout was based on a Monte Carlo simulation model with estimated outcomes ranging from $0 to $25.0 million . The estimated fair value of the Magnum Earnout is based upon available information and certain assumptions, known at the time of this Annual Report, which management believes are reasonable. Any difference in the actual Magnum Earnout from the estimated fair value of the Magnum Earnout will be recorded in operating income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). For additional information on the Magnum Earnout, see Note 11 – Commitments and Contingencies . The final determination of the fair value of assets acquired and liabilities assumed at the Closing Date will be completed as soon as possible, but no later than one year from the Closing Date (the “Measurement Period”). The Company’s preliminary purchase price allocation is subject to revision as additional information about the fair value of assets and liabilities becomes available. Additional information that existed as of the Closing Date, but at the time was unknown to the Company, may become known to the Company during the remainder of the Measurement Period. The final determination of fair value may differ materially from these preliminary estimates. The following table summarizes the preliminary allocation of the purchase price of the Magnum Acquisition to the assets acquired and liabilities assumed based on the fair value as of the Closing Date, with the excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill: Purchase Price Allocation (in thousands) Cash and cash equivalents $ 8,509 Accounts receivable, net 30,441 Income taxes receivable 272 Inventories, net 55,169 Prepaid expenses and other current assets 1,147 Property and equipment, net 3,729 Goodwill 225,839 Definite-lived intangible, assets 148,000 Indefinite-lived intangible assets, net 96,000 Other long-term assets 1,055 Accounts payable (3,626 ) Accrued expenses (10,759 ) Other long-term liabilities (15 ) Total net assets acquired $ 555,761 All goodwill acquired is attributable to expected synergies gained through the Magnum Acquisition as well as the assembled workforce. In addition, all goodwill acquired is included in the Completion Solutions segment and is deductible for tax purposes. For additional information on goodwill, see Note 6 – Goodwill and Intangible Assets . A portion of the fair value consideration transferred has been preliminarily assigned to identifiable intangible assets as follows: Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Assets Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Assets Total (in thousands, except weighted average useful life information) Fair value $25,000 $3,000 $120,000 $148,000 $95,000 $1,000 $96,000 Weighted average useful life 9.0 2.1 15.0 Indefinite Indefinite The fair value of technology and the fair value of customer relationships was estimated using the income approach, specifically the multi-period excess earnings method. The multi-period excess earnings method consists of isolating the cash flows attributed to the intangible asset, which are then discounted to present value to calculate the fair value of the intangible asset. The fair value of trade names was estimated using the relief-from-royalty method of the income approach. This approach is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty in order to exploit the related benefits of this intangible asset. The fair value of the non-compete agreements was estimated using a with and without scenario where cash flows were projected through the term of the non-compete agreement assuming the non-compete agreement is in place and compared to cash flows assuming the non-compete agreement was not in place. Pro Forma Magnum’s results of operations since the Closing Date are included in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss), as part of its Completion Solutions segment, for the year ended December 31, 2018. It is impractical to quantify the contribution of Magnum since the Closing Date, as the business was fully integrated into the Company’s existing operations in 2018. The following unaudited pro forma condensed combined financial information was derived from the Company’s historical Consolidated Financial Statements and Magnum’s historical combined financial statements, gives effect to the Magnum Acquisition as if it had occurred on January 1, 2017, and reflects pro forma adjustments based on available information and certain assumptions the Company believes are reasonable. These pro forma adjustments include the following: • The pro forma impact of the amortization of intangible assets and depreciation of property, plant, and equipment based on the estimated fair values of the identifiable assets; • The pro forma impact of the elimination of sales commissions due from or paid by Magnum to an intercompany entity that was not included in the Magnum Acquisition; • The pro forma impact of the elimination of insurance premiums paid by Magnum to a captive insurance entity under common ownership that was not included in the Magnum Acquisition, for additional insurance coverage that was not replaced subsequent to the close of the transaction; • The pro forma impact of interest expense related to the Magnum Acquisition; • The tax benefit of the aforementioned pro forma adjustments; and • The pro forma impact to weighted average shares outstanding to reflect the issuance of 5.0 million shares to the sellers of Magnum as of the beginning of the period presented. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position that would have existed or the financial results that would have occurred if the Magnum Acquisition had been consummated on January 1, 2017, nor is it necessarily indicative of the Company’s future financial position, or operating results. Further, the unaudited pro forma condensed combined financial information does not reflect the realization of any expected cost savings or other synergies from the Magnum Acquisition as a result of restructuring activities and other planned costs savings initiatives following the completion of the Magnum Acquisition. The following table summarizes selected unaudited financial information of the Company on a pro forma basis: 2018 2017 (in thousands, except per share amounts) Revenues $ 948,282 $ 633,248 Net loss $ (55,447 ) $ (78,993 ) Loss per share Basic $ (1.89 ) $ (3.97 ) Diluted $ (1.89 ) $ (3.97 ) Frac Tech Acquisition On October 1, 2018, pursuant to the terms and conditions of a Securities Purchase Agreement (the “Frac Tech Purchase Agreement”), the Company acquired Frac Technology AS, a Norwegian private limited company (“Frac Tech”) focused on the development of downhole technology, including a casing flotation tool and a number of patented downhole completion tools. This acquisition was not material to the Company’s Consolidated Financial Statements . Beckman Combination On February 28, 2017 , pursuant to the terms and conditions of a combination agreement dated February 3, 2017 , the Company merged with Beckman and all of the issued and outstanding shares of Beckman common stock were converted into shares of common stock of Nine Energy Service, Inc. at a ratio of 0.567154 Nine shares per Beckman share, other than 1.6% of Beckman shares paid in cash. Prior to the Combination, SCF-VII, L.P. had controlled a majority of the voting interests of Nine and Beckman since February 28, 2011 and July 31, 2012 , respectively. The merger of the entities into the combined company was accounted for using reorganization accounting (i.e., “as if” pooling of interest) for entities under common control. In conjunction with the Combination, in addition to the conversion of Beckman shares into Nine shares, other events occurred, including: • The conversion of Beckman shares owned by non-accredited shareholders of Beckman at the time of the Combination into cash at a price of $17.69 per Beckman share; • Payment of cash for Beckman shares that converted into fractional Nine shares at the price of $31.18 per Nine share; • The conversion of options to purchase Beckman common stock into options to purchase Nine common stock; • The conversion of Beckman restricted shares into Nine restricted shares; • The conversion of warrants to purchase Beckman common stock into warrants to purchase Nine common stock; • The issuance of options to purchase Nine common stock; • The issuance, on a pro-rata basis, to the Company’s shareholders of Nine common stock based on a subscription amount equal to the number of common shares issued at a price of $31.18 . The subscription was offered to all shareholders of record at the time of the Combination. Any unsubscribed shares were reallocated among the shareholders; and • The issuance to the Company’s shareholders of Nine warrants equal to one half of the amount of shares issued related to the subscription described above. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories, consisting primarily of finished goods and raw materials, are stated at the lower of cost or net realizable value. Cost is determined on an average cost basis. The Company reviews its inventory balances and writes down its inventory for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. The reserve for obsolescence was $1.9 million and $2.9 million at December 31, 2018 and 2017 , respectively. Inventories, net as of December 31, 2018 and 2017 were comprised of the following: December 31, 2018 2017 (in thousands) Raw materials $ 38,890 $ 939 Work in progress 130 — Finished goods 54,301 24,197 Inventories 93,321 25,136 Reserve for obsolescence (1,886 ) (2,906 ) Inventories, net $ 91,435 $ 22,230 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment amounts as of December 31, 2018 and 2017 were as follows: December 31, Estimated Useful Lives 2018 2017 (in thousands) Operating equipment 1 to 12 years $ 394,881 $ 397,802 Autos and trucks 1 to 7 years 30,770 32,973 Furniture, fixtures, and equipment 2 to 12 years 4,330 3,179 Shop equipment 3 to 15 years 17,300 13,463 Buildings 7 to 39 years 9,784 14,260 Leasehold improvements 3 to 11 years 1,488 963 Land indefinite 1,618 2,087 460,171 464,727 Less: Accumulated depreciation (248,527 ) (205,688 ) Property and equipment, net $ 211,644 $ 259,039 Depreciation expense was $54.3 million , $53.4 million , and $55.3 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively. 2018 Property and Equipment Impairment In the fourth quarter of 2018, market conditions in the Company’s Production Solutions segment began to deteriorate due to depressed commodity prices towards the end of the fourth quarter of 2018, coupled with customers focusing more on the completions business where there is more technological differentiation and value. This weakened market outlook indicated that the carrying amount of long-lived assets associated with the Company’s Production Solutions segment may not be recoverable. As such, the Company performed an impairment assessment of all long-lived assets associated with its Production Solutions segment under ASC 360, Property, Plant and Equipment at December 31, 2018. Based on this assessment, which is in consideration of its best internal projections, the Company determined that the carrying amount of long-lived assets associated with its Production Solutions segment exceeded the estimated future undiscounted cash flows derived from the long-lived assets associated with the segment. As such, the Company determined the Level 3 fair value of the long-lived assets associated with its Production Solutions segment using a combination of the income approach (discounted cash flows of forecasted income) and the market approach (consideration of market sales values for similar assets). Determining fair value requires the use of estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating profit margins, weighted average costs of capital and future market conditions, among others. The Company believes that the estimates and assumptions used in determining fair value are reasonable and appropriate. Based on its fair value determination, the Company recorded an impairment charge of $45.7 million related to property and equipment associated with its Production Solutions segment and an impairment charge of $9.8 million related to definite-lived customer relationship intangible assets associated with its Production Solutions segment. The property and equipment impairment charge is included in the line item “Impairment of property and equipment” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2018 , and the definite-lived intangible asset impairment charge is included in the line item “Impairment of intangibles” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2018 . The total impairment charge represents the difference between the carrying value and the estimated fair value of the long-lived assets associated with its Production Solutions segment and was allocated across the long-lived asset classifications in the Production Solutions segment. The occurrence of future events or deteriorating conditions could result in additional impairment assessments and related charges subsequent to December 31, 2018. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The changes in the net carrying amount of the components of goodwill for the years ended December 31, 2018 and 2017 were as follows: Goodwill Gross Value Accumulated Impairment Loss Net (in thousands) Balance as of December 31, 2016 $ 173,033 $ (47,747 ) $ 125,286 Impairment — (31,530 ) (31,530 ) Balance as of December 31, 2017 $ 173,033 $ (79,277 ) $ 93,756 Additions 227,034 — 227,034 Impairment — (12,986 ) (12,986 ) Balance as of December 31, 2018 $ 400,067 $ (92,263 ) $ 307,804 Goodwill by segment for the years ended December 31, 2018 and 2017 was as follows: Completion Solutions Production Solutions Total (in thousands) 2018 2017 2018 2017 2018 2017 Balance as of January 1 $ 80,770 $ 112,300 $ 12,986 $ 12,986 $ 93,756 $ 125,286 Additions 227,034 — — — 227,034 — Impairment — (31,530 ) (12,986 ) — (12,986 ) (31,530 ) Balance as of December 31 $ 307,804 $ 80,770 $ — $ 12,986 $ 307,804 $ 93,756 The Company performs its annual goodwill impairment test on December 31 or when there is an indication an impairment may have occurred. Prior to 2017 , Beckman performed its annual goodwill impairment test as of October 31. In the fourth quarter of 2017, the goodwill impairment test date for Beckman was changed to December 31 in order to align more closely with the Company’s planning and forecasting process. 2018 Goodwill Impairment In the fourth quarter of 2018, due to deteriorating market conditions in the Company’s Production Solutions segment attributed to depressed commodity prices towards the end of the fourth quarter of 2018, coupled with customers focusing more on the completions business where there is more technological differentiation and value, there was a reduction in the outlook for expected future cash flows in the segment and as a result, the segment’s carrying value exceeded its estimated fair value. As such, in the fourth quarter of 2018, in connection with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $13.0 million , which represented a full write-off of goodwill attributed to its Production Solutions segment. This goodwill impairment charge is included in the line item “Impairment of goodwill” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2018 . 2017 Goodwill Impairment In the fourth quarter of 2017, due to declining profitability and deteriorating market conditions, which included a shift from open hole completions to significantly less profitable cemented liners, there was a reduction in the outlook for expected future cash flows in one reporting unit in the Company’s Completion Solutions segment and as a result, the reporting unit’s carrying value exceeded its estimated fair value. As such, in the fourth quarter of 2017, in connection with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $31.5 million associated with the reporting unit. This goodwill impairment charge is included in the line item “Impairment of goodwill” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2017 . Intangible Assets The changes in the net carrying amount of the components of intangible assets for the years ended December 31, 2018 and 2017 were as follows: 2018 Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Asset Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Asset Total (in thousands, except weighted average amortization period information) Balance as of December 31, 2017 $ 39,645 $ 725 $ 1,144 $ 41,514 $ 22,020 $ 11 $ 22,031 Additions 25,000 3,000 123,240 151,240 95,000 1,000 96,000 Amortization expense (6,962 ) (849 ) (1,747 ) (9,558 ) — — — Impairment (9,719 ) (26 ) — (9,745 ) (9,320 ) — (9,320 ) Balance as of December 31, 2018 $ 47,964 $ 2,850 $ 122,637 $ 173,451 $ 107,700 $ 1,011 $ 108,711 Weighted average amortization period 7.3 3.5 14.6 Indefinite Indefinite 2017 Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Asset Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Asset Total (in thousands, except weighted average amortization period information) Balance as of December 31, 2016 $ 51,144 $ 1,514 $ 1,455 $ 54,113 $ 22,020 $ 11 $ 22,031 Additions — — — — — — — Amortization expense (7,699 ) (789 ) (311 ) (8,799 ) — — — Impairment (3,800 ) — — (3,800 ) — — — Balance as of December 31, 2017 $ 39,645 $ 725 $ 1,144 $ 41,514 $ 22,020 $ 11 $ 22,031 Weighted average amortization period 7.7 1.1 3.7 Indefinite Indefinite 2018 Indefinite-Lived Intangible Asset Impairment In the fourth quarter of 2018, due to deteriorating market conditions in the Company’s Production Solutions segment attributed to depressed commodity prices towards the end of the fourth quarter of 2018, coupled with customers focusing more on the completions business where there is more technological differentiation and value, there was a reduction in the outlook for expected future cash flows attributed to indefinite-lived trade names associated with the segment, and as a result, the trade names’ carrying value exceeded its estimated fair value. As such, in the fourth quarter of 2018, in connection with its annual indefinite-lived intangible asset impairment test, the Company recorded an intangible asset impairment charge of $9.3 million associated with the indefinite-lived trade names in its Production Solutions segment. This indefinite-lived intangible asset impairment charge is included in the line item “Impairment of intangibles” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2018 . 2018 Definite-Lived Intangible Asset Impairment In the fourth quarter of 2018, the Company also recorded an impairment charge of $9.8 million related to definite-lived customer relationship intangible assets associated with its Production Solutions segment. This definite-lived intangible asset impairment charge is included in the line item “Impairment of intangibles” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2018 . For additional information on this definite-lived impairment charge, see Note 5 – Property and Equipment . 2017 Definite-Lived Intangible Asset Impairment In the fourth quarter of 2017, completions methodology in the area of one of the Completion Solutions segment’s reporting units began to shift from open hole completions to significantly less profitable cemented liners, which resulted in declining revenue and profitability within the reporting unit. The Company determined that these factors indicate that the carrying amount of long-lived assets associated with the reporting unit may not be recoverable. As such, the Company performed an impairment assessment of all long-lived assets associated with the reporting unit under ASC 360, Property, Plant and Equipment at December 31, 2017. Fair value of the long-lived assets associated with the reporting unit was determined by estimating the net present value of the future cash flows over the life of the long-lived assets. Using Level 3 inputs of the fair value hierarchy, critical assumptions for those valuations include estimated activity levels, revenue, and operating expenses. Based on this valuation, the Company recorded an impairment charge of $3.8 million related to definite-lived customer relationship intangible assets associated with this reporting unit. This definite-lived intangible asset impairment charge is included in the line item “Impairment of intangibles” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2017. Amortization of Intangibles Amortization of intangibles was $9.6 million , $8.8 million , and $9.1 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively. Future estimated amortization of intangibles is as follows: (in thousands) Year Ending December 31, 2019 $ 18,368 2020 17,227 2021 16,876 2022 14,222 2023 12,276 Thereafter 94,482 $ 173,451 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses as of December 31, 2018 and 2017 consisted of the following: 2018 2017 (in thousands) Accrued compensation and benefits $ 11,930 $ 6,923 Accrued bonus 13,250 1,351 Sales tax payable 1,185 767 Magnum contingent liability 20,922 — Scorpion contingent liability — 1,730 Accrued interest 7,031 148 Other accrued expenses 7,116 3,768 Total accrued expenses $ 61,434 $ 14,687 |
Debt Obligations
Debt Obligations | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations The Company’s debt obligations as of December 31, 2018 and 2017 were as follows: 2018 2017 (in thousands) Senior Notes $ 400,000 $ — 2018 ABL Credit Facility 35,000 — 2018 IPO Term Loan Credit Facility — — Legacy Term Loans — 145,975 Legacy Revolving Credit Facilities — 96,260 Total debt before deferred financing costs $ 435,000 $ 242,235 Deferred financing costs (10,022 ) (726 ) Total debt $ 424,978 $ 241,509 Less: Current portion of long-term debt — (241,509 ) Long-term debt $ 424,978 $ — Senior Notes On October 25, 2018, the Company issued $400.0 million principal amount of 8.750% Senior Notes due 2023 (the “Senior Notes”). The Senior Notes were issued under an indenture, dated as of October 25, 2018 (the “Indenture”), by and among the Company, certain subsidiaries of the Company and Wells Fargo, National Association, as Trustee. The Senior Notes bear interest at an annual rate of 8.750% payable on May 1 and November 1 of each year with the first interest payment being due on May 1, 2019 . The Senior Notes are senior unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s current domestic subsidiaries and by certain future subsidiaries. At any time prior to November 1, 2020, the Company may, from time to time, redeem up to 35% of the aggregate principal amount of the Senior Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 108.750% of the principal amount of the Senior Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding the date of redemption, provided that at least 65% of the aggregate principal amount of the Senior Notes issued under the Indenture remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering. Also, at any time prior to November 1, 2020, the Company may, on any one or more occasions, redeem all or a part of the Senior Notes at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed, plus a “make-whole” premium plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. On and after November 1, 2020, the Company may redeem the Senior Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the Senior Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption if redeemed during the 12-month period beginning on November 1 of the years indicated below: Year Redemption Price 2020 104.375 % 2021 102.188 % 2022 and thereafter 100.000 % If the Company experiences certain changes of control, each holder of Senior Notes may require the Company to repurchase all or a portion of its Senior Notes for cash at a price equal to 101% of the principal amount of such Senior Notes, plus any accrued but unpaid interest, if any, to, but excluding, the date of repurchase. The Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or make other distributions or repurchase or redeem their capital stock; (iii) transfer or sell assets; (iv) make loans and investments; (v) incur liens; (vi) enter into agreements that restrict dividends or other payments from their non-guarantor restricted subsidiaries to them; (vii) consolidate, merge, or transfer all or substantially all of their assets; (viii) prepay, redeem, or repurchase certain debt; (ix) issue certain preferred stock or similar equity securities, (x) make certain acquisitions and investments; (xi) engage in transactions with affiliates; and (xii) create unrestricted subsidiaries. The Company was in compliance with the provisions of the Indenture at December 31, 2018 . Upon an event of default, the trustee or the holders of at least 25% in aggregate principal amount of then outstanding Senior Notes may declare the Senior Notes immediately due and payable, except that a default resulting from certain events of bankruptcy or insolvency with respect to the Company, any restricted subsidiary of the Company that is a significant subsidiary or any group of restricted subsidiaries that, taken together, would constitute a significant subsidiary, will automatically cause all outstanding Senior Notes to become due and payable. The proceeds from the Senior Notes, together with cash on hand and borrowings under the 2018 ABL Credit Facility (as defined and described below), were used to (i) fund a portion of the upfront cash purchase price of the Magnum Acquisition, (ii) repay all indebtedness under the 2018 IPO Credit Agreement (as defined and described below) and (iii) pay fees and expenses associated with the issuance of the Senior Notes, the Magnum Acquisition, and the 2018 ABL Credit Facility. During the year ended December 31, 2018 , the Company paid approximately $10.4 million of deferred financing costs in connection with the issuance of the Senior Notes. These costs are direct deductions from the carrying amount of the Senior Notes and are being amortized through interest expense through the maturity date of the Senior Notes using the effective interest method. The unamortized portion of these deferred financing costs was $10.0 million at December 31, 2018 . 2018 ABL Credit Facility On October 25, 2018, the Company entered into a credit agreement dated as of October 25, 2018 (the “2018 ABL Credit Agreement”), by and among the Company, Nine Energy Canada, Inc., JP Morgan Chase Bank, N.A. as administrative agent and as an issuing lender, and certain other financial institutions party thereto as lenders and issuing lenders. The 2018 ABL Credit Agreement permits aggregate borrowings of up to $200.0 million , subject to a borrowing base, including a Canadian tranche with a sub-limit of up to $25.0 million and a sub-limit of $50.0 million for letters of credit (the “2018 ABL Credit Facility”). The 2018 ABL Credit Facility will mature on October 25, 2023 or, if earlier, on the date that is 180 days before the scheduled maturity date of the Senior Notes if they have not been redeemed or repurchased by such date. Loans to the Company and its domestic related subsidiaries (the “U.S. Credit Parties”) under the 2018 ABL Credit Facility may be base rate loans or LIBOR loans; and loans to Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada, and its restricted subsidiaries (the “Canadian Credit Parties”) under the Canadian tranche may be CDOR loans or Canadian prime rate loans. The applicable margin for base rate loans and Canadian prime rate loans vary from 0.75% to 1.25% and the applicable margin for LIBOR loans or CDOR loans vary from 1.75% to 2.25% , in each depending on the Company’s leverage ratio. The Company is permitted to repay any amounts borrowed prior to the maturity date without any premium or penalty subject to minimum amounts of prepayments and customary LIBOR breakage costs. In addition, a commitment fee of 0.50% per annum will be charged on the average daily unused portion of the revolving commitments. Such commitment fee is payable quarterly in arrears. At December 31, 2018, the interest rate on the 2018 ABL Credit Facility was 4.69% . The 2018 ABL Credit Agreement contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions), and transactions with affiliates. In addition, the 2018 ABL Credit Agreement contains a minimum fixed charge ratio covenant that is tested quarterly when the availability under the 2018 ABL Credit Facility drops below a certain threshold or a default has occurred until the availability exceeds such threshold for 30 consecutive days and such default is no longer outstanding. The Company was in compliance with all covenants under the 2018 ABL Credit Agreement as of December 31, 2018 . The Company’s obligations under the 2018 ABL Credit Facility may be accelerated, subject to customary grace and cure periods, upon the occurrence of certain events of default. Such events of default include customary events for a financing agreement of this type, including payment defaults, the inaccuracy of representation and warranties, defaults in the performance of affirmative or negative covenants, defaults on other material indebtedness of the Company or certain of its subsidiaries, defaults related to judgments, and the occurrence of a change in control. All of the obligations under the 2018 ABL Credit Facility are secured by first priority perfected security interests (subject to permitted liens) in substantially all of the personal property of U.S. Credit Parties, excluding certain assets. The obligations under the Canadian tranche are further secured by first priority perfected security interests (subject to permitted liens) in substantially all of the personal property of Canadian Credit Parties, excluding certain assets. The 2018 ABL Credit Facility is guaranteed by the U.S. Credit Parties, and the Canadian tranche is further guaranteed by the Canadian Credit Parties and the U.S. Credit Parties. Concurrent with the effectiveness of the 2018 ABL Credit Facility, the Company borrowed approximately $35.0 million to fund a portion of the upfront cash purchase price of the Magnum Acquisition. At December 31, 2018 , the Company’s availability under the 2018 ABL Credit Facility was approximately $83.5 million , net of outstanding revolver borrowings of $35.0 million and an outstanding letter of credit of $0.5 million . 2018 IPO Credit Agreement On September 14, 2017, the Company entered into a credit agreement (as amended on November 20, 2017, the “2018 IPO Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JP Morgan”) as administrative agent and certain other financial institutions that became effective upon the consummation of the IPO in January 2018 (the “Effective Date”). Pursuant to the terms of the 2018 IPO Credit Agreement, the Company and its domestic restricted subsidiaries were entitled to borrow $125.0 million of term loans (the “2018 IPO Term Loan Credit Facility”), which the Company drew in full on the Effective Date. In January 2018, the Company also made a mandatory prepayment of $9.7 million against the 2018 IPO Term Loan Credit Facility, which approximated 50.0% of the estimated net proceeds from the IPO in excess of $150.0 million , as prescribed under the 2018 IPO Credit Agreement. In addition, under the 2018 IPO Credit Agreement, the Company and its domestic restricted subsidiaries were entitled to borrow up to $50.0 million (including letters of credit) as revolving credit loans under the revolving commitments (the “2018 IPO Revolving Credit Facility”). On October 25, 2018, the Company fully repaid and terminated the 2018 IPO Credit Agreement as more fully described above. In the first quarter of 2018, concurrent with the effectiveness of the 2018 IPO Credit Agreement, using proceeds received from the IPO and borrowings under the 2018 IPO Term Loan Credit Facility, the Company fully repaid and terminated the term loans (the “Legacy Term Loans”) and revolving credit facilities (the “Legacy Revolving Credit Facilities”) under the Legacy Nine Credit Agreement (as defined below) and the Legacy Beckman Credit Agreement (as defined below). All of the obligations under the 2018 IPO Credit Agreement were secured by first priority perfected security interests (subject to permitted liens) in substantially all of the personal property of the Company and its domestic restricted subsidiaries, excluding certain assets. Loans to the Company and its domestic restricted subsidiaries under the 2018 IPO Credit Agreement were either base rate loans or LIBOR loans. The applicable margin for base rate loans varied from 1.50% to 2.75% , and the applicable margin for LIBOR loans varied from 2.50% to 3.75% , in each case depending on the Company’s leverage ratio. The Company was permitted to repay any amounts borrowed prior to the maturity date without any premium or penalty other than customary LIBOR breakage costs. In addition, a commitment fee of 0.50% per annum was charged on the average daily unused portion of the revolving commitments. Such commitment fee was payable quarterly in arrears. Legacy Term Loans and Legacy Revolving Credit Facilities In 2014, the Company entered into the Amended and Restated Credit Agreement (as amended, the “Legacy Nine Credit Agreement”) with HSBC Bank USA, N.A., as U.S. administrative agent, HSBC Bank Canada, as Canadian agent, and certain other financial institutions. As of December 31, 2017, the Company had a $35.2 million term loan and $84.8 million in outstanding revolving borrowings (including letters of credit) under the Legacy Nine Credit Agreement. All loans and other obligations under the Legacy Nine Credit Agreement were scheduled to mature on May 31, 2018. In 2014, Beckman entered into a credit agreement (as amended, the “Legacy Beckman Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, and certain other financial institutions. As of December 31, 2017, Beckman had $110.8 million of term loans and $11.5 million in outstanding revolving borrowings under the Legacy Beckman Credit Agreement. All loans and other obligations under the Legacy Beckman Credit Agreement were scheduled to mature on June 30, 2018. As described above, in the first quarter of 2018, concurrent with the effectiveness of the 2018 IPO Credit Agreement, using proceeds received from the IPO and borrowings under the 2018 IPO Term Loan Credit Facility, the Company fully repaid and terminated the Legacy Term Loans and the Legacy Revolving Credit Facilities under the Legacy Nine Credit Agreement and the Legacy Beckman Credit Agreement. Debt Extinguishment Costs During the year ended December 31, 2018 , the Company recorded debt extinguishment costs of approximately $8.8 million , which consisted of a $6.9 million commitment fee associated with a potential bridge financing in the fourth quarter of 2018, as well as $1.2 million in unamortized deferred financing costs associated with the termination of the 2018 IPO Credit Agreement in the fourth quarter of 2018 and $0.7 million in unamortized deferred financing costs associated with the termination of the Legacy Nine Credit Agreement and the Legacy Beckman Credit Agreement in the first quarter of 2018. The unamortized deferred financing costs were being amortized through the maturity dates of each agreement using the effective interest method. These debt extinguishment costs are included in the interest expense line item in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2018 . Fair Value of Debt Instruments The estimated fair value of the Company’s debt obligations as of December 31, 2018 and 2017 was as follows: 2018 2017 (in thousands) Senior Notes $ 376,000 $ — 2018 ABL Credit Facility 35,000 — 2018 IPO Term Loan Credit Facility — — Legacy Term Loans — 145,975 Legacy Revolving Credit Facilities $ — $ 96,260 The fair value of the Company’s debt obligations is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. The 2018 ABL Credit Facility is also classified within Level 2 of the fair value hierarchy. Due to the short-term maturity of the 2018 ABL Credit Facility, its fair value approximates its carrying value. |
Defined Contribution Plans
Defined Contribution Plans | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plans | Defined Contribution Plans Background Nine, Beckman, and Magnum sponsored defined contribution plans under Section 401(k) of the Internal Revenue Code of 1986, as amended, for all qualified employees. Effective January 1, 2018, the existing Nine Energy Service 401(k) Plan (the “Existing Nine Plan”) was terminated and merged with the Beckman 401(k) Plan (the “Beckman Plan”) into the new Nine Energy Service 401(k) Plan (the “New Nine Plan”). Under the New Nine Plan, employee contributions were matched by the Company as they were matched under the Existing Nine Plan, at 100% of the first 3% and 50% of the remaining up to 5% of compensation that a participant contributed to the plan. Under the Beckman Plan, the Company matched employee contributions at 50% of the first 5% of compensation that a participant contributed to the plan. Under the Magnum 401(k) Plan (the “Magnum Plan”), the Company matched employee contributions at 100% of the first 3% of compensation and 50% of the remaining up to 5% of compensation that a participant contributed to the plan. Contributions For the year ended December 31, 2018 , the Company made employer contributions of $3.2 million under the New Nine Plan and $0.2 million of contributions under the Magnum Plan. For the year ended December 31, 2017 , the Company made no contributions under the Existing Nine Plan. During 2017 , for the Beckman Plan, the Company incurred a liability of $0.6 million for contributions that were made in 2018. For the year ended December 31, 2016 , the Company made no contributions under the Existing Nine Plan. Under the Beckman Plan, the Company made no contributions during 2016, but incurred a liability of $0.4 million for contributions that were made in 2017. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation Nine Stock Options Information about stock option activity during the years ended December 31, 2018 and 2017 was as follows: 2018 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 1,068,791 $ 30.79 7.6 $ 3,282 Granted 32,102 23.01 6.0 — Exercised (121,577 ) 20.71 — 1,728 Forfeited (21,657 ) 29.17 — 5 Total outstanding 957,659 $ 31.98 6.9 $ 6 Options exercisable 667,922 $ 33.20 6.2 $ 3 2017 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 656,646 $ 31.26 6.9 $ 2,863 Beckman options converted to Nine options 78,714 27.03 5.9 360 Granted 471,456 30.94 9.2 113 Exercised — — — — Forfeited (138,025 ) 31.38 — 55 Total outstanding 1,068,791 $ 30.79 7.6 $ 3,282 Options exercisable 347,225 $ 23.77 6.1 $ 2,571 The intrinsic value at December 31, 2018 and 2017 is the amount by which the fair value of the underlying share exceeds the exercise price of an option as of December 31, 2018 and 2017 , respectively. The assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted in 2018 , 2017 , and 2016 are as follows: 2018 2017 2016 Weighted average grant-date fair value $ 13.11 $ 14.70 $ 10.44 Assumptions Expected life (in years) 6.0 6.0 6.0 Volatility 47.0 % 47.1 % 47.0 % Dividend yield 0.0 % 0.0 % 0.0 % Risk free interest rate 2.47 % 2.16 % 1.46 % Compensation expense recorded was approximately $3.5 million , $3.3 million , and $2.7 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively. As of December 31, 2018 , the Company expects to record compensation expense of approximately $2.6 million over the remaining options term of approximately 1.3 years . Future stock option grants will result in additional compensation expense. Restricted Stock Information about restricted stock activity during the years ended December 31, 2018 , 2017 , and 2016 was as follows: 2018 2017 2016 Nonvested at the beginning of the year 373,861 131,179 146,074 Beckman restricted stock converted to Nine restricted stock — 91,961 — Granted 805,897 302,797 24,157 Vested (148,740 ) (77,093 ) (39,052 ) Cancelled (13,073 ) (74,983 ) — Nonvested at the end of the year 1,017,945 373,861 131,179 The weighted-average grant date fair value of the restricted stock was $26.01 , $31.18 , and $22.63 during the years ended December 31, 2018 , 2017 , and 2016 , respectively. The total amount of compensation expense related to the restricted stock awards recorded was approximately $9.7 million , $4.3 million , and $1.7 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively. As of December 31, 2018 , the Company expects to record compensation expense related to restricted stock of approximately $17.9 million over the remaining restricted stock term of approximately 2.1 years . Beckman Stock Options During 2017 , concurrent with the combination of Nine and Beckman, all Beckman stock options were converted to Nine stock options. All information related to Company stock option activity for the year ended December 31, 2018 is shown in the “Nine – Stock Options” section above, and the Beckman stock option activity for the year ended December 31, 2017 was as follows: 2017 Activity Number of Weighted Remaining Intrinsic Value Beginning balance 17,313 $ 123.02 5.9 $ — Beckman options converted to Nine options (17,313 ) 123.02 5.9 — Granted — — — — Exercised — — — — Forfeited — — — — Total outstanding — $ — — $ — Options exercisable — $ — — $ — The intrinsic value at December 31, 2017 is the amount by which the fair value of the underlying share exceeds the exercise price of an option as December 31, 2017 . All options granted in 2018 and 2017 by the Company are shown in the “Nine – Stock Options” section above. The assumptions used in the Black-Scholes pricing model to estimate the fair value of the Beckman options granted in 2016 were as follows: 2016 Weighted average grant-date fair value $ 86.18 Assumptions Expected life (in years) 7.0 Volatility 98.6 % Dividend yield 0.0 % Risk free interest rate 2.00 % Compensation expense for the Beckman stock options was approximately $0.2 million for the year ended December 31, 2016 . Restricted Stock During 2017 , concurrent with the combination of Nine and Beckman, all Beckman restricted stock was converted to Nine restricted stock. All restricted stock granted in 2018 by the Company is shown in the “Nine – Restricted Stock” section above. Information about Beckman restricted stock activity during the years ended December 31, 2017 and 2016 was as follows: 2017 2016 Nonvested at the beginning of the year 20,225 17,576 Beckman restricted stock converted to Nine restricted stock (20,225 ) — Granted — 9,092 Vested — (5,631 ) Cancelled — (812 ) Nonvested at the end of the year — 20,225 The weighted average grant date fair value of the Beckman restricted stock was $77.00 during the year ended December 31, 2016 . The total amount of compensation expense related to the Beckman restricted stock awards was approximately $0 million and $1.0 million for the years ended December 31, 2017 and 2016 , respectively. |
Commitment and Contingencies
Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and Contingencies | Commitments and Contingencies Litigation From time to time, the Company has various claims, lawsuits, and administrative proceedings that are pending or threatened with respect to personal injury, workers’ compensation, contractual matters, and other matters. Although no assurance can be given with respect to the outcome of these claims, lawsuits, or proceedings or the effect such outcomes may have, the Company believes any ultimate liability resulting from the outcome of such claims, lawsuits, or administrative proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on its business, operating results, or financial condition. On August 31, 2017, an accident occurred while a five-employee crew of Big Lake Services, LLC, a subsidiary of Nine (“Big Lake Services”), was performing workover services at an oil and gas wellsite near Midland, Texas, operated by Pioneer Natural Resources USA, Inc. (“Pioneer Natural Resources”), resulting in the death of a Big Lake Services employee, Juan De La Rosa. On December 7, 2017 , a lawsuit was filed on behalf of Mr. De La Rosa’s minor children in the Midland County District Court against Pioneer Natural Resources, Big Lake Services, and Phillip Hamilton related to this accident. The petition alleges, among other things, that the defendants acted negligently, resulting in the death of Mr. De La Rosa. On March 14, 2018, a plea in intervention was filed on behalf of Mr. De La Rosa’s parents, alleging similar claims. The plaintiffs and intervenors sought money damages, including punitive damages. On December 17, 2018, a mediation was held, and the parties reached an agreement in principle to settle this matter. The Company has tendered this matter to its insurance company for defense and indemnification of Big Lake Services and the other defendants and expects this settlement will be fully funded by the Company’s insurance company. Finalization of the settlement is subject to the execution of definitive documentation and approval by the court. Leases The Company leases equipment, vehicles, office space, yard facilities, and employee housing in the United States and in Canada where the Company operates, under leases classified as operating. The original lease terms require monthly rental payments and expire from 2018 through 2029. Other leases for various equipment and facilities are on a month-to-month basis or have expired during 2018 . Total rent expense for all operating leases was approximately $13.0 million , $7.2 million , and $6.3 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively. The following schedule shows the future total minimum lease payments under these non-cancelable leases as of December 31, 2018 : (in thousands) Year ending December 31, 2019 $ 10,204 2020 6,568 2021 5,566 2022 4,893 2023 4,760 Thereafter 15,005 $ 46,996 Self-Insurance The Company uses a combination of third-party insurance and self-insurance for health insurance clams. The self-insured liability represents an estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date. The estimate is based on an analysis of trailing months of incurred medical claims to project the amount of incurred but not reported claims liability. The estimated liability for self-insured medical claims was $1.6 million and $1.3 million at December 31, 2018 and 2017 , respectively, and is included under the caption “Accrued expenses” in the Company’s Consolidated Balance Sheets . Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, the self-insurance liability could be affected if future claims experience differs significantly from historical trends and actuarial assumptions. Contingent Liabilities The Company has recorded the following contingent liabilities at December 31, 2018 : Magnum Earnout The Magnum Purchase Agreement includes the potential for additional future payments in cash of (i) up to 60% of net income (before interest, taxes, and certain gains or losses) for the “E-Set” tools business in 2019 through 2025 and (ii) up to $25.0 million based on sales of certain dissolvable plug products in 2019. For additional information on the Magnum Acquisition, see Note 3 – Acquisitions and Combinations . Frac Tech Earnout On October 1, 2018, pursuant to the terms and conditions of the Frac Tech Purchase Agreement, the Company acquired Frac Tech. The Frac Tech Purchase Agreement includes, among other things, the potential for additional future payments, based on certain Frac Tech sales volume metrics through December 31, 2023. Scorpion Earnout In connection with the acquisition of Pat Greenlee Builders, LLC (“Scorpion”) in 2015 , the Company recorded a liability for contingent consideration to be paid in shares of Company common stock and in cash, contingent upon quantities of Scorpion Composite Plugs ™ sold during 2016 and gross margin related to the product sales for three years following the acquisition. A cash payment of $1.3 million was made during 2017 , and common stock was issued based on gross margin on sales of Scorpion plugs in the second year following acquisition. The forecasted quantities of plug sales and the related gross margin increased again during the year ended December 31, 2017 , resulting in a revaluation loss of $0.4 million . During the year ended December 31, 2018 , a revaluation loss of $1.7 million occurred. In the fourth quarter of 2018 , the Company paid out the contingent liability in the amount of $3.4 million . The following is a reconciliation of the beginning and ending amounts of the contingent liabilities (level 3) for the year ended December 31, 2018 : Magnum Frac Tech Scorpion Total (in thousands) Balance at January 1, 2018 $ — $ — $ 1,730 $ 1,730 Fair value of contingent earnout liability initially recorded in connection with the acquisitions 23,029 953 — 23,982 Payment — — (3,445 ) (3,445 ) Revaluation adjustments 1,492 55 1,715 3,262 Balance at December 31, 2018 $ 24,521 $ 1,008 $ — $ 25,529 The following is a reconciliation of the beginning and ending amounts of the contingent liabilities (level 3) for the year ended December 31, 2017 : Magnum Frac Tech Scorpion Total (in thousands) Balance at January 1 $ — $ — $ 3,187 $ 3,187 Common stock issuance — — (547 ) (547 ) Payment — — (1,325 ) (1,325 ) Revaluation adjustments — — 415 415 Balance at December 31 $ — $ — $ 1,730 $ 1,730 The contingent consideration related to the contingent liabilities is reported at fair value, based on a Monte Carlo simulation model. Significant inputs used in the fair value measurement include estimated gross margin related to forecasted sales of the plugs, term of the agreement, and a risk adjusted discount factor. Contingent liabilities include $20.9 million and $1.7 million reported in “Accrued expenses” at December 2018 and 2017 , respectively, and $4.6 million and $0.0 million reported in “Other long-term liabilities” at December 2018 and 2017 , respectively, in the Company’s Consolidated Balance Sheets . The impact of the revaluation adjustments is included in “General and administrative expenses” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) . |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Taxes | Taxes On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Tax Act”) with some provisions effective as early as 2017 while others were delayed until 2018. This change in U.S. tax law included a reduction in the federal corporate tax rate from 35% to 21% for years beginning after 2017, which resulted in the remeasurement of the Company’s U.S. net deferred income tax liabilities. The Company’s 2017 income tax provision includes a provisional $3.0 million net income tax benefit related to the remeasurement of its U.S. net deferred income tax liabilities. During 2018, the Company completed its analysis of the provisional items, resulting in immaterial adjustments primarily related to cumulative temporary differences. In addition, the Company has elected to treat the global intangible low-taxed income provisions of the Tax Act as a period cost in the year incurred. The components of the provision (benefit) for income taxes for the years ended December 31, 2018 , 2017 , and 2016 were as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Current US Federal $ (93 ) $ (50 ) $ (14,295 ) US State 1,558 878 168 Foreign 12 — — Total current provision (benefit) 1,477 828 (14,127 ) Deferred US Federal 767 (5,455 ) (14,206 ) US State 131 (360 ) 2,047 Foreign — — — Total deferred provision (benefit) 898 (5,815 ) (12,159 ) Total provision (benefit) for income taxes $ 2,375 $ (4,987 ) $ (26,286 ) The provision (benefit) for income taxes for the years ended December 31, 2018 , 2017 , and 2016 differed from the provision (benefit) calculated using the applicable statutory federal income tax rate as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Tax benefit at statutory rate $ (10,628 ) $ (25,434 ) $ (33,689 ) Foreign rate differential (56 ) 241 367 State income taxes, net of federal benefit 108 70 766 Impact on deferred taxes from Combination — (2,025 ) — Effect of Tax Act Effect of tax rate reduction on deferred tax — 6,649 — Effect of tax rate reduction on deferred tax valuation — (9,668 ) — Nondeductible expenses 1,426 1,559 1,660 Impact from goodwill impairment 1,030 — — Loss of tax benefits due to carryback — — 998 Valuation allowance (excluding impact of Tax Act) 10,137 24,066 2,804 Adoption of ASU 2016-09 — — 141 Other 358 (445 ) 667 $ 2,375 $ (4,987 ) $ (26,286 ) The tax effects of the cumulative temporary differences resulting in the net deferred tax asset (liabilities) at December 31, 2018 and 2017 were as follows: December 31, 2018 2017 (in thousands) Deferred income tax assets: Inventories $ 626 $ 500 Goodwill and intangible assets 13,581 8,837 Deferred tax benefit from net losses 30,139 31,112 Stock-based compensation 4,635 3,129 Tax credit carryforwards 660 677 Accrued expenses 4,188 1,390 Other 168 86 Total deferred income tax assets 53,997 45,731 Less: Valuation allowance (28,862 ) (18,950 ) Net deferred income tax assets 25,135 26,781 Deferred income tax liabilities: Property and equipment (31,050 ) (31,798 ) Prepaid expenses and other — — Total deferred income tax liabilities (31,050 ) (31,798 ) Net deferred income tax liability $ (5,915 ) $ (5,017 ) As of December 31, 2018 , the Company had federal and state net operating losses of approximately $163.6 million . The federal net operating loss related to tax years 2017 and prior can be used for a 20 -year period and, if unused, will begin to expire in 2034. The state net operating losses can be used from 10 to 20 years and vary by state. A small portion of state net operating losses will begin to expire in 2023. The Company evaluates its deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. The Company assesses whether a valuation allowance should be established based on its determination of whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and prior to the expiration of its net operating loss carry forwards (“NOLs”) and tax credit carryforwards. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Due to recent operating results and goodwill impairments recorded during 2018 , 2017 , and 2016, the Company continues to be in a three -year cumulative loss position for the year ending December 31, 2018 . According to FASB ASC 740, Income Taxes, cumulative losses in recent years represent significant negative evidence in considering whether deferred tax assets are realizable. As a result, the Company continues to record a valuation allowance against its U.S. domestic and Canadian deferred tax assets. The Company has excluded the deferred tax liabilities related to certain indefinite-lived intangible assets when calculating the amount of valuation allowance needed as these liabilities cannot be considered as a source of income when determining the realizability of the net deferred tax assets. The 2018 results include an increase in the Company’s valuation allowance of approximately $10.0 million primarily due to the impairment recorded during 2018 in the Production Solutions segment. If the Company is able to generate sufficient taxable income in the future, and it becomes more likely than not that the Company will be able to fully utilize the net deferred tax assets on which a valuation allowance was recorded, the allowance will be released resulting in a potential decrease to its effective tax rate. The Company is subject to U.S. federal income tax as well as income tax in multiple state jurisdictions. The earliest period the Company is subject to examination of federal income tax returns by the Internal Revenue Service is 2015. The state income tax returns and other state tax filings of the Company are subject to examination by the state taxing authorities for various periods, generally up to four years after they are filed. The Company accounts for uncertain tax positions in accordance with guidance in FASB ASC 740, which prescribes the minimum recognition threshold a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the financial statements. A reconciliation of the beginning and ending amount of uncertain tax positions is as follows: 2018 (in thousands) Balance at January 1, 2018 $ 568 Additional based on tax positions related to prior years — Additional based on tax positions related to current year — Reduction based on tax positions related to prior years — Lapse of statute of limitations — Balance at December 31, 2018 $ 568 The total amount of unrecognized tax benefits at December 31, 2018 was $0.6 million . The total balance of unrecognized tax benefit would impact the Company’s future effective income tax rate if recognized. The Company recognizes interest and penalties related to uncertain tax positions within the provision for income taxes in its Consolidated Statements of Income and Comprehensive Income (Loss) . As of December 31, 2018 , no interest and penalties have been accrued. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is based on the weighted average number of shares outstanding during each period and the assumed exercise of potentially dilutive stock options and restricted stock. Basic and diluted earnings (loss) per common share was computed as follows: 2018 2017 2016 (in thousands, except for share and per share amounts) Net loss $ (52,983 ) $ (67,682 ) $ (70,911 ) Average shares outstanding 24,411,213 14,887,006 13,268,540 Loss per share (basic and diluted) $ (2.17 ) $ (4.55 ) $ (5.34 ) The diluted earnings per share calculation excludes all stock options and unvested restricted stock for 2018 , 2017 , and 2016 because there is a net loss for each period and their inclusion would be anti-dilutive. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions During 2014, in conjunction with an exercise of warrants to provide a capital infusion, the Company issued promissory notes totaling $2.5 million to both a former executive officer of the Company and a current manager of the Company. The principal was due on June 30, 2019 (the “Maturity Date”), and interest of 4% per annum had been due and was payable on the Maturity Date. During the fourth quarter of 2018, the Company received full payment on the notes, resulting in no outstanding balance and no unpaid interest at December 31, 2018 . At December 31, 2017 , the outstanding balance of the notes, including principal and unpaid interest, totaled $2.9 million and unpaid interest totaled $0.4 million . As part of the acquisition of Crest Pumping Technologies, LLC (“Crest”) in 2014, the Company issued promissory notes totaling $9.4 million to former owners of Crest, including David Crombie, who is an executive officer of the Company. The principal is due on June 30, 2019 . The interest rate is based on the prime rate, the federal funds rate, or LIBOR, plus a margin to be determined in connection with the Company’s credit agreement and is due quarterly. Mr. Crombie paid $1.8 million during 2016 to pay his promissory note in full. At December 31, 2018 and 2017 , the outstanding principal balance of the notes of the remaining individuals totaled $7.6 million . Unpaid interest, included in “Prepaid expenses and other current assets” in the Company’s Consolidated Balance Sheets , totaled $10,000 and $8,000 at December 31, 2018 and 2017 , respectively. The Company leases office space, yard facilities, and equipment and purchases building maintenance services from entities owned by Mr. Crombie. Total lease expense and building maintenance expense was $0.8 million , $0.8 million , and $0.7 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively. There were no payables and payables of $13,000 at December 31, 2018 and 2017 , respectively. The Company also purchased $1.0 million of equipment during the year ended December 31, 2018 from an entity in which Mr. Crombie is a limited partner. In addition, the Company leases office space in Corpus Christi and Midland, Texas from an entity affiliated with Lynn Frazier, a beneficial owner of more than 5% of the Company’s stock. Total rental expense associated with this office space was $0.2 million for the year ended December 31, 2018 . At December 31, 2018 , the Company recorded a receivable of $1.8 million due from the sellers of Magnum primarily attributed to sales commissions paid to an intercompany entity that was not included in the Magnum Acquisition. The Company provides services to Citation Oil & Gas Corp., an entity owned by Curtis F. Harrell, a director of the Company. The Company billed $0.7 million , $0.7 million , and $0.4 million for services provided to this entity during the years ended December 31, 2018 , 2017 , and 2016 , respectively. There was an outstanding receivable due from such entity $0.1 million and $0.2 million as of December 31, 2018 and 2017 , respectively. The Company provides services in the ordinary course of business to EOG Resources, Inc. Gary L. Thomas, a director of the Company, acted as the President of EOG Resources, Inc. in the years ended December 31, 2018 , 2017 , and 2016 . The Company generated revenue from EOG Resources, Inc. of $45.0 million , $34.4 million , and $13.7 million in the years ended December 31, 2018 , 2017 , and 2016 , respectively. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Beginning with the first quarter of 2017, the Company realigned its segments due to the acquisition of Beckman. This change is reflected on a retrospective basis in accordance with GAAP. The Company is reporting its results of operations in the following two segments: Completion Solutions and Production Solutions . The Completion Solutions segment consists primarily of cementing, completion tools, wireline, and coiled tubing services, while the Production Solutions consists of rig-based well maintenance and workover services. The Company’s reportable segments are strategic units that offer distinct products and services. They are managed separately since each business segment requires different marketing strategies. Operating segments have not been aggregated as part of a reportable segment. The Company evaluates the performance of its reportable segments based on adjusted gross profit. This segmentation is representative of the manner in which the Chief Operating Decision Maker (“CODM”) and its Board of Directors view the business. The Company considers the CODM to be its Chief Executive Officer. Summary financial data by segment is as follows. The amounts labeled “Corporate” relate to assets not allocated to the reportable segments. Year Ended December 31, 2018 2017 2016 (in thousands) Revenues Completion Solutions $ 745,316 $ 465,773 $ 221,468 Production Solutions 81,858 77,887 60,886 $ 827,174 $ 543,660 282,354 Cost of revenues (exclusive of depreciation and amortization shown separately below) Completion Solutions $ 568,497 $ 384,641 $ 194,436 Production Solutions 70,801 63,826 51,673 $ 639,298 $ 448,467 246,109 Adjusted gross profit Completion Solutions $ 176,819 $ 81,132 $ 27,032 Production Solutions 11,057 14,061 9,213 $ 187,876 $ 95,193 $ 36,245 General and administrative expenses 75,993 49,552 39,387 Depreciation 54,257 53,422 55,260 Amortization of intangibles 9,558 8,799 9,083 Impairment of property and equipment 45,694 — — Impairment of goodwill 12,986 31,530 12,207 Impairment of intangibles 19,065 3,800 — Loss on equity method investment 347 368 — (Gain) loss on sale of property and equipment (1,731 ) 4,688 3,320 Loss from operations $ (28,293 ) $ (56,966 ) $ (83,012 ) Other expense Interest expense 22,315 15,703 14,185 Total other expense 22,315 15,703 14,185 Loss before income taxes (50,608 ) (72,669 ) (97,197 ) Provision (benefit) for income taxes 2,375 (4,987 ) (26,286 ) Net loss $ (52,983 ) $ (67,682 ) $ (70,911 ) Capital expenditures by segment for years ended December 31, 2018 , 2017 , and 2016 were as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Completion Solutions $ 48,361 $ 40,626 $ 7,358 Production Solutions 3,548 4,590 1,772 Corporate 661 — — $ 52,570 $ 45,216 $ 9,130 Total assets by segment as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 (in thousands) Completion Solutions $ 1,045,643 $ 428,702 Production Solutions 35,086 119,607 Corporate 60,443 30,550 $ 1,141,172 $ 578,859 Revenue by country for the years ended December 31, 2018 , 2017 , and 2016 were as follows: 2018 2017 2016 Amount Percentage Amount Percentage Amount Percentage (in thousands) (in thousands) (in thousands) United States $ 796,221 96.3 % $ 521,914 96.0 % $ 269,893 95.6 % Canada and other 30,953 3.7 % 21,746 4.0 % 12,461 4.4 % $ 827,174 100.0 % $ 543,660 100.0 % $ 282,354 100.0 % Long-lived assets (defined as property and equipment and definite-lived intangible assets) by country as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 (in thousands) United States $ 377,623 $ 295,939 Canada and other 7,472 4,614 $ 385,095 $ 300,553 |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) Summarized quarterly financial data for the years ended December 31, 2018 and 2017 are presented below. March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 (in thousands, except per share amounts) Revenue $ 173,807 $ 205,492 $ 218,427 $ 229,448 Income (loss) from operations 4,698 11,486 16,356 (60,833 ) Income (loss) before income taxes 1,768 9,671 14,788 (76,835 ) Net income (loss) 1,675 9,019 13,658 (77,335 ) Earnings (loss) per common share Basic (1) $ 0.08 $ 0.38 $ 0.57 $ (2.78 ) Diluted (1) $ 0.08 $ 0.37 $ 0.56 $ (2.78 ) March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 (in thousands, except per share amounts) Revenue $ 105,353 $ 135,860 $ 148,167 $ 154,280 Loss from operations (14,790 ) (8,141 ) (193 ) (33,842 ) Loss before income taxes (18,548 ) (12,070 ) (4,286 ) (37,765 ) Net loss (20,714 ) (12,105 ) (5,052 ) (29,811 ) Net loss per common share Basic and diluted $ (1.50 ) $ (0.82 ) $ (0.34 ) $ (1.89 ) (1) As a result of the shares issued during the year, earnings per share for each of the year’s four quarters, which are based on weighted average shares outstanding during each quarter, may not equal the annual loss per share as reflected on the Company’s Consolidated Balance Sheets . |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Condensed Consolidated Financial Information | Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements as of December 31, 2018 and 2017 , and for the years ended December 31, 2018 , 2017 , and 2016 , include the accounts of Nine and Beckman and their wholly owned subsidiaries. For additional information on the history of Nine, see Note 1 – Company and Organization . All inter-company balances and transactions have been eliminated in the consolidation. |
Use of Estimates | The Consolidated Financial Statements as of December 31, 2018 and 2017 , and for the years ended December 31, 2018 , 2017 , and 2016 , include the accounts of Nine and Beckman and their wholly owned subsidiaries. For additional information on the history of Nine, see Note 1 – Company and Organization . All inter-company balances and transactions have been eliminated in the consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Such estimates include but are not limited to fair value assumptions used in purchase accounting and in analyzing goodwill, other intangible assets, and long-lived assets for possible impairment, useful lives used in depreciation and amortization expense, stock-based compensation fair value, estimated realizable value on excess and obsolete inventories, deferred taxes and income tax contingencies, and losses on accounts receivable. It is at least reasonably possible that the estimates used will change within the next year. |
Reclassifications | Reclassifications Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. These reclassifications relate to the breakout of “Definite-lived intangible assets, net” and “Indefinite-lived intangible assets” in the Company’s Consolidated Balance Sheets . |
Revenue Recognition | Revenue Recognition The Company recognizes revenue for products and services based upon purchase orders, contracts, or other persuasive evidence of an arrangement with the customer that include fixed or determinable prices and that do not include right of return or other similar provisions or other post-delivery obligations. Revenue is recognized for products upon delivery, customer acceptance, and when collectability is reasonably assured. Revenue is recognized for services when they are rendered and collectability is reasonably assured. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid debt instruments with a maturity of three months or less when purchased to be cash equivalents. Throughout the year, the Company maintained cash balances that were in excess of their federally insured limits. The Company has not experienced any losses in such accounts. Cash flows from the Company’s Canadian subsidiary are calculated based on its functional currency. As a result, amounts related to changes in assets and liabilities reported in the Company’s Consolidated Statements of Cash Flows will not necessarily agree to changes in the corresponding balances in the Company’s Consolidated Balance Sheets . |
Foreign Currency | Foreign Currency The Company’s functional currency is the U.S. Dollar (“USD”). The financial position and results of operations of the Company’s Canadian subsidiary are measured using the local currency as the functional currency. Revenues and expenses of the subsidiary have been translated into USD at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the date of the Company’s Consolidated Balance Sheets . The resulting translation gain and loss adjustments have been recorded as a separate component of other comprehensive income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) and its Consolidated Statements of Changes in Stockholders’ Equity. |
Accounts Receivable | Accounts Receivable The Company extends credit to customers in the normal course of business. Accounts receivable are carried at their estimated collectible amount. Trade credit is generally extended on a short-term basis; thus receivables do not bear interest, although a finance charge may be applied to amounts past due. The Company maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, credit approval practices, industry and customer historical experience, as well as the current and projected financial condition of the specific customer. Accounts receivable outstanding longer than contractual terms are considered past due. The Company writes off accounts receivable to the allowance for doubtful accounts when they become uncollectible. Any payments subsequently received on receivables previously written off are credited to bad debt expense. |
Concentration of Credit Risk and Concentration of Supplier Risk | Concentration of Credit Risk The majority of the Company’s customers operate in the oil and gas industry. While current energy prices are important contributors to positive cash flow for the customers, expectations about future prices and price volatility are generally more important for determining future spending levels. Any prolonged increase or decrease in oil and natural gas prices affects the levels of exploration, development, and production activity as well as the entire health of the oil and natural gas industry and can therefore negatively impact spending by the Company’s customers. No customer accounted for at least 10% of revenues for the years ended December 31, 2018 and 2017 . Revenues for the year ended December 31, 2016 included sales to one customer that individually represented 10% or more of total revenue. Concentration of Supplier Risk Purchases during the years ended December 31, 2018 , 2017 , and 2016 included purchases from one supplier that individually represented more than 10% of total operating purchases. The accounts payable to this vendor totaled 15% and 17% of total accounts payable at December 31, 2018 and 2017 , respectively. |
Equity Method Investment | Equity Method Investment The Company accounts for investments, which it does not control but has the ability to significantly influence, using the equity method of accounting. Under this method, the investment is carried originally at cost, increased by any allocated share of the investee’s net income and contributions made, and decreased by any allocated share of the investee’s net losses and distributions received. The investee’s allocated share of income and losses is based on the rights and priorities outlined in the equity investment agreement. On March 13, 2017, the Company entered into an agreement to acquire shares of the Series B Preferred Stock of Deep Imaging Technologies (“DIT”) for $1.0 million . DIT provides an advanced electromagnetic fracture monitoring service which allows its customers to make on-site decisions regarding efficiencies. The Company’s investment in DIT is accounted for as an equity method investment, as the Company has a non-controlling interest in DIT but has the ability to exercise significant influence. From the date of the investment through December 31, 2018 , the Company’s share of DIT’s net loss was $0.7 million , and is reported as “Loss on equity method investment” in its Consolidated Statements of Income and Comprehensive Income (Loss) and as a reduction of the investment in DIT, which is reported within “Other long-term assets” in its Consolidated Balance Sheets . |
Property and Equipment | Property and Equipment Property and equipment is stated at cost and depreciated under the straight-line method over the estimated useful lives of the asset. Equipment held under capital leases is stated at the present value of its future minimum lease payments and is depreciated under the straight-line method over the shorter of the lease term or the estimated useful life of the asset. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized within operating expenses. Normal repair and maintenance costs are charged to operating expense as incurred. Significant renewals and betterments are capitalized. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for impairment, future cash flows expected to result from the use of the asset and its eventual disposal are estimated. If the undiscounted future cash flows are less than the carrying amount of the assets, there is an indication that the asset may be impaired. The amount of the impairment is measured as the difference between the carrying value and the estimated fair value of the asset. The fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization. Impairment losses are reflected in operating income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). In the fourth quarter of 2018, the Company recorded a property and equipment impairment charge of $45.7 million and a definite-lived customer relationship intangible asset impairment charge of $9.8 million . These impairment charges represent the difference between the carrying value and the estimated fair value of the long-lived assets associated with the Company’s Production Solutions segment and are due to deteriorating conditions attributed to depressed commodity prices towards the end of the fourth quarter of 2018, coupled with customers focusing more on the completions business where there is more technological differentiation and value. For additional information on these impairment charges, see Note 5 – Property and Equipment . |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill has an indefinite useful life and is not subject to amortization. Intangible assets with indefinite useful lives (specifically trademarks and trade names) are also not subject to amortization. For goodwill and intangible assets with indefinite useful lives, an assessment for impairment is performed annually on December 31 or when there is an indication an impairment may have occurred. Goodwill is reviewed for impairment by comparing the carrying value of each of the Company’s reporting unit’s net assets (including allocated goodwill) to the fair value of the reporting unit. The fair value of the reporting unit is determined by using a combination of both the income approach (discounted cash flows of forecasted income) and the market approach (public comparable company multiple of earnings before interest, taxes, depreciation and amortization or “EBITDA”). Intangible assets with indefinite useful lives are reviewed for impairment by comparing the carrying value of the intangible asset to the fair value of the intangible asset. The fair value of intangible assets with indefinite useful lives (specifically trademarks and trade names) is estimated upon acquisition using the relief-from-royalty method of the income approach. This approach is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty in order to exploit the related benefits of this intangible asset. Determining fair value requires the use of estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating profit margins, royalty rates, weighted average costs of capital, a terminal growth rate, and future market conditions, among others. The Company believes that the estimates and assumptions used in impairment assessments are reasonable and appropriate. The Company recognizes a goodwill impairment charge for the amount by which the carrying value of goodwill exceeds the reporting unit’s fair value. The Company recognizes an indefinite-lived intangible asset impairment charge of the amount by which the carrying value of the intangible asset exceeds the fair value of the intangible asset. Any impairment losses are reflected in in operating income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). Intangible assets with definite lives include technology, customer relationships, and non-compete agreements. The fair value of technology and the fair value of customer relationships is estimated upon acquisition using the income approach, specifically the multi-period excess earnings method. The multi-period excess earnings method consists of isolating the cash flows attributed to the intangible asset, which are then discounted to present value to calculate the fair value of the intangible asset. The fair value of non-compete agreements is estimated upon acquisition using a with and without scenario where cash flows are projected through the term of the non-compete agreement assuming the non-compete agreement is in place and compared to cash flows assuming the non-compete agreement is not in place. Intangible assets with definite lives are amortized based on the estimated consumption of the economic benefit over their estimated useful lives. Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicated that their carrying amount may not be recoverable. In the fourth quarter of 2018, in connection with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $13.0 million , which represents a full write-off of goodwill attributed to its Production Solutions segment. In addition, in the fourth quarter of 2018, in connection with its annual indefinite-lived intangible asset impairment test, the Company recorded an intangible asset impairment charge of $9.3 million associated with indefinite-lived trade names in its Production Solutions segment. As described above in “Property and Equipment” and also in the fourth quarter of 2018, the Company recorded an intangible asset impairment charge of $9.8 million related to definite-lived customer relationship intangible assets associated with its Production Solutions segment. In the fourth quarter of 2017, in connection with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $31.5 million associated with one reporting unit in its Completion Solutions segment. In the fourth quarter of 2017, the Company recorded an intangible asset impairment charge of $3.8 million related to definite-lived customer relationship intangible assets associated with one reporting unit in its Completion Solutions segment. For additional information on goodwill and both indefinite-lived and definite-lived intangible asset impairment charges, see Note 6 – Goodwill and Intangible Assets . |
Equity | Equity In January 2018, there was an 8.0256 for 1 stock split immediately preceding the IPO. All shares and per share data reflect the effect of the stock split. |
Stock-based Compensation | Stock-based Compensation The Company has stock-based compensation plans for certain of its employees. The Company measures employee stock-based compensation awards at fair value on the date they are granted to employees and recognizes compensation cost in its financial statements over the requisite service period. Compensation expense is recorded for restricted stock over the applicable vesting period based on the Company’s closing stock price as of the grant date. Options are issued with an exercise price equal to the fair value of the stock on the date of grant. Compensation expense is recorded for the fair value of the stock options and is recognized over the period of the underlying security’s vesting schedule. Consideration paid on the exercise of stock options is credited to share capital and additional paid-in capital. For options, fair value of the stock-based compensation is measured by use of the Black-Scholes pricing model. The following discusses the assumptions used related to the Black-Scholes pricing model. Expected Life The expected term of stock options represents the period the stock options are expected to remain outstanding and is based on the simplified method, which is the weighted average vesting term plus the original contractual term, divided by two. Expected Volatility Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. Prior to the Company’s IPO, when its stock was not publicly traded, the Company determined volatility based on an analysis of the PHLX Oil Service Index that tracks publicly traded oilfield service stocks. Subsequent to the IPO and as a publicly traded company, the Company developed its expected volatility based upon a weighted average volatility of its peer group. Dividend Yield At the time of the issuance of the options, the Company did not plan to pay cash dividends in the foreseeable future. Therefore, a zero expected dividend yield was used in the valuation model. Risk-free Interest Rate The risk-free interest rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. Forfeitures As a result of the adoption of Accounting Standards Update (‘‘ASU”) No. 2016-09, the Company elected to account for stock-based compensation forfeitures as they occur. Fair Value of Common Stock Prior to the Company’s IPO, the value of the Company’s stock at the time of each option grant used to establish the strike price was estimated by management in accordance with an internal valuation model and approved by the Company’s Board of Directors. The valuation model was based upon an average of cash flow and book value multiples of comparable companies. The comparable companies selected reflect the market’s view on key sector, geographic, and product type exposure that are similar to those that impact the Company’s business. The value was further subject to judgmental factors such as prevailing market conditions, changes in the stock prices of other oilfield service companies, and the overall outlook for the Company and its products in general. After the Company’s IPO, the stock value is the publicly traded share price. |
Income Taxes | Income Taxes The Company accounts for income taxes under ASC 740. Under this method, deferred income tax assets and liabilities are determined based upon temporary differences between the carrying amounts and tax bases of the Company’s assets and liabilities at the balance sheet date and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period in which the change occurs. The Company records a valuation reserve in each reporting period when management believes that it is more likely than not that any deferred tax asset created will not be realized. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. If a tax position meets the “more likely than not” recognition criteria, the tax position is measured at the largest amount of benefit greater than 50% likely of being realized upon ultimate settlement. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts for financial instruments classified as current assets and current liabilities approximate fair value, due to the short maturity of such instruments. For financial assets and liabilities disclosed at fair value, fair value is determined as the exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The established fair value hierarchy divides fair value measurement into three levels: • Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly or indirectly; and • Level 3 – inputs are unobservable for the asset or liability, which reflect the best judgment of management. Financial assets and liabilities that are disclosed at fair value are categorized in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The fair value of the Company’s debt obligations is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. For additional information on the fair value of the Company’s debt obligations, see Note 8 – Debt Obligations . The fair value of the Company’s contingent consideration is classified as Level 3 in the fair value hierarchy and is established on unobservable markets which reflect the best judgment of management. For additional information on the fair value of the Company’s contingent consideration, see Note 3 – Acquisitions and Combinations and Note 11 – Commitments and Contingencies . |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. The diluted earnings (loss) per share computation is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period, taking into effect, if any, shares that would be issuable upon the exercise of outstanding stock options, reduced by the number of shares purchased by the Company at cost, when such amounts are dilutive to the earnings per share calculation. There was no dilutive effect for the year ended December 31, 2018 , 2017 , or 2016 as the Company was in a net loss position for those years. For additional information on earnings (loss) per share, see Note 13 – Earnings (Loss) Per Share . |
Recently Issued Accounting Pronouncements | Accounting Pronouncements Recently Adopted In January 2017, the Financial Accounting Standards Board (the ‘‘FASB’’) issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the new standard, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new standard should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted ASU No. 2017-04 during the fourth quarter of 2018. For additional information on the impact of the Company’s goodwill impairment test in accordance with ASU No. 2017-04, see Note 6 – Goodwill and Intangible Assets . Accounting Pronouncements Not Yet Adopted – Revenue Recognition Background In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the current revenue recognition guidance. The standard is based on the principle that revenue is recognized to depict the transfer of goods and services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and asset recognized from costs incurred to obtain or fulfill a contract. The FASB subsequently issued ASU No. 2016-08, ASU No. 2016-10, and ASU No. 2016-12 which provide additional guidance around Topic 606. These amendments are encompassed in the Company’s reference to ASU No. 2014-09 below. Quantitative Disclosures of Directional Effects of Adoption The Company, as an emerging growth company, will adopt ASU No. 2014-09 on January 1, 2019 utilizing the modified retrospective approach. Under this approach, the Company will recognize the cumulative effect of initially applying ASU 2014-09 as an increase to the opening balance of retained earnings. Although still in process of determining the impact, the Company expects this adjustment to be immaterial to its opening balance of retained earnings. Qualitative Status of Management’s Implementation Efforts During 2018, in preparation for the adoption of ASU No. 2014-09, the Company began a review of the various types of customer contract arrangements for each of its businesses. These reviews include the following: • accumulating all customer contractual arrangements; • identifying the individual performance obligations pursuant to each arrangement; • quantifying the considerations under each arrangement; • allocating the consideration under each arrangement to the identified performance obligation; and • determining the timing of revenue recognition pursuant to each arrangement. The Company has completed the majority of these contract reviews and is currently updating and implementing revised accounting system processes in order to capture information required to be disclosed under ASU No. 2014-09. The Company has begun updating its current accounting policies to align with revenue recognition practices under ASU No. 2014-09. As part of its evaluation of contracts with customers, the Company holds regular meetings with key stakeholders across the organization to determine the impact of ASU No. 2014-09 on its business processes. Additionally, the Company continues to evaluate its internal processes to address risks associated with incorporating ASU No. 2014-09. Upon adoption, the Company will also implement new internal controls associated with incorporating ASU No. 2014-09, which is not expected to result in a material change in its existing control environment. Disclosure Requirements The Company’s disclosures related to revenue recognition will be significantly expanded under ASU No. 2014-09, specifically around the quantitative and qualitative information associated with performance obligations, changes in contract assets and liabilities, and the disaggregation of revenue. As an emerging growth company, the Company will not include these expanded disclosures until its Annual Report on Form 10-K for the year ending December 31, 2019. Currently, the Company is in the process of evaluating these disclosure requirements for future reporting. Accounting Pronouncements Not Yet Adopted – Other In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), 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 standard, which requires the use of a modified retrospective transition approach, includes a number of optional practical expedients that entities may elect to apply. In July 2018, the FASB issued a new, optional transition method that will give companies the option to use the effective date as the date of initial application on transition. Based on initial evaluation, the Company expects to include operating leases with durations greater than twelve months on its Consolidated Balance Sheets. The Company is currently in the process of accumulating and evaluating all the necessary information required to properly account for its lease portfolio under the new standard. The Company will provide additional information about the expected financial impact as it progresses through the evaluation and implementation of the standard. Although the standard will be generally effective for fiscal years beginning after December 15, 2018, the Company plans to adopt for the fiscal year beginning after December 15, 2019, as an emerging growth company. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments . This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice, including: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. As an emerging growth company, the Company plans to adopt the new standard for the fiscal year beginning after December 15, 2018. The Company is currently evaluating the impact of the standard on its Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business , in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not a business. The Company is currently evaluating the impact of the new standard on its Consolidated Financial Statements. Although the standard is generally effective for fiscal years beginning after December 15, 2017, the Company plans to adopt for the fiscal year beginning after December 15, 2018, as an emerging growth company. Entities will be required to apply the guidance prospectively when adopted. |
Acquisitions and Combinations (
Acquisitions and Combinations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Consideration Transferred in Business Combination | The following table summarizes the fair value of purchase consideration transferred on the Closing Date: Fair Value (in thousands) Proceeds from newly issued Senior Notes and 2018 ABL Credit Facility (1) $ 296,622 Cash provided from operations 58,760 Total upfront cash consideration $ 355,382 Issuance of the Company’s common shares 177,350 Contingent consideration (2) 23,029 Total purchase consideration $ 555,761 (1) Senior Notes and 2018 ABL Credit Facility are defined in Note 8 – Debt Obligations . (2) The estimated fair value of the Magnum Earnout was based on a Monte Carlo simulation model with estimated outcomes ranging from $0 to $25.0 million . The estimated fair value of the Magnum Earnout is based upon available information and certain assumptions, known at the time of this Annual Report, which management believes are reasonable. Any difference in the actual Magnum Earnout from the estimated fair value of the Magnum Earnout will be recorded in operating income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). For additional information on the Magnum Earnout, see Note 11 – Commitments and Contingencies . |
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary allocation of the purchase price of the Magnum Acquisition to the assets acquired and liabilities assumed based on the fair value as of the Closing Date, with the excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill: Purchase Price Allocation (in thousands) Cash and cash equivalents $ 8,509 Accounts receivable, net 30,441 Income taxes receivable 272 Inventories, net 55,169 Prepaid expenses and other current assets 1,147 Property and equipment, net 3,729 Goodwill 225,839 Definite-lived intangible, assets 148,000 Indefinite-lived intangible assets, net 96,000 Other long-term assets 1,055 Accounts payable (3,626 ) Accrued expenses (10,759 ) Other long-term liabilities (15 ) Total net assets acquired $ 555,761 |
Intangible Assets Acquired | A portion of the fair value consideration transferred has been preliminarily assigned to identifiable intangible assets as follows: Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Assets Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Assets Total (in thousands, except weighted average useful life information) Fair value $25,000 $3,000 $120,000 $148,000 $95,000 $1,000 $96,000 Weighted average useful life 9.0 2.1 15.0 Indefinite Indefinite |
Pro Forma Information | The following table summarizes selected unaudited financial information of the Company on a pro forma basis: 2018 2017 (in thousands, except per share amounts) Revenues $ 948,282 $ 633,248 Net loss $ (55,447 ) $ (78,993 ) Loss per share Basic $ (1.89 ) $ (3.97 ) Diluted $ (1.89 ) $ (3.97 ) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net as of December 31, 2018 and 2017 were comprised of the following: December 31, 2018 2017 (in thousands) Raw materials $ 38,890 $ 939 Work in progress 130 — Finished goods 54,301 24,197 Inventories 93,321 25,136 Reserve for obsolescence (1,886 ) (2,906 ) Inventories, net $ 91,435 $ 22,230 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment amounts as of December 31, 2018 and 2017 were as follows: December 31, Estimated Useful Lives 2018 2017 (in thousands) Operating equipment 1 to 12 years $ 394,881 $ 397,802 Autos and trucks 1 to 7 years 30,770 32,973 Furniture, fixtures, and equipment 2 to 12 years 4,330 3,179 Shop equipment 3 to 15 years 17,300 13,463 Buildings 7 to 39 years 9,784 14,260 Leasehold improvements 3 to 11 years 1,488 963 Land indefinite 1,618 2,087 460,171 464,727 Less: Accumulated depreciation (248,527 ) (205,688 ) Property and equipment, net $ 211,644 $ 259,039 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of components of goodwill | The changes in the net carrying amount of the components of goodwill for the years ended December 31, 2018 and 2017 were as follows: Goodwill Gross Value Accumulated Impairment Loss Net (in thousands) Balance as of December 31, 2016 $ 173,033 $ (47,747 ) $ 125,286 Impairment — (31,530 ) (31,530 ) Balance as of December 31, 2017 $ 173,033 $ (79,277 ) $ 93,756 Additions 227,034 — 227,034 Impairment — (12,986 ) (12,986 ) Balance as of December 31, 2018 $ 400,067 $ (92,263 ) $ 307,804 Goodwill by segment for the years ended December 31, 2018 and 2017 was as follows: Completion Solutions Production Solutions Total (in thousands) 2018 2017 2018 2017 2018 2017 Balance as of January 1 $ 80,770 $ 112,300 $ 12,986 $ 12,986 $ 93,756 $ 125,286 Additions 227,034 — — — 227,034 — Impairment — (31,530 ) (12,986 ) — (12,986 ) (31,530 ) Balance as of December 31 $ 307,804 $ 80,770 $ — $ 12,986 $ 307,804 $ 93,756 |
Schedule of components of intangible assets | The changes in the net carrying amount of the components of intangible assets for the years ended December 31, 2018 and 2017 were as follows: 2018 Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Asset Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Asset Total (in thousands, except weighted average amortization period information) Balance as of December 31, 2017 $ 39,645 $ 725 $ 1,144 $ 41,514 $ 22,020 $ 11 $ 22,031 Additions 25,000 3,000 123,240 151,240 95,000 1,000 96,000 Amortization expense (6,962 ) (849 ) (1,747 ) (9,558 ) — — — Impairment (9,719 ) (26 ) — (9,745 ) (9,320 ) — (9,320 ) Balance as of December 31, 2018 $ 47,964 $ 2,850 $ 122,637 $ 173,451 $ 107,700 $ 1,011 $ 108,711 Weighted average amortization period 7.3 3.5 14.6 Indefinite Indefinite 2017 Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Asset Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Asset Total (in thousands, except weighted average amortization period information) Balance as of December 31, 2016 $ 51,144 $ 1,514 $ 1,455 $ 54,113 $ 22,020 $ 11 $ 22,031 Additions — — — — — — — Amortization expense (7,699 ) (789 ) (311 ) (8,799 ) — — — Impairment (3,800 ) — — (3,800 ) — — — Balance as of December 31, 2017 $ 39,645 $ 725 $ 1,144 $ 41,514 $ 22,020 $ 11 $ 22,031 Weighted average amortization period 7.7 1.1 3.7 Indefinite Indefinite |
Schedule of components of intangible assets | The changes in the net carrying amount of the components of intangible assets for the years ended December 31, 2018 and 2017 were as follows: 2018 Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Asset Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Asset Total (in thousands, except weighted average amortization period information) Balance as of December 31, 2017 $ 39,645 $ 725 $ 1,144 $ 41,514 $ 22,020 $ 11 $ 22,031 Additions 25,000 3,000 123,240 151,240 95,000 1,000 96,000 Amortization expense (6,962 ) (849 ) (1,747 ) (9,558 ) — — — Impairment (9,719 ) (26 ) — (9,745 ) (9,320 ) — (9,320 ) Balance as of December 31, 2018 $ 47,964 $ 2,850 $ 122,637 $ 173,451 $ 107,700 $ 1,011 $ 108,711 Weighted average amortization period 7.3 3.5 14.6 Indefinite Indefinite 2017 Customer Relationships Non-Compete Agreements Technology Definite-Lived Intangible Asset Total Trade Names Other Intangible Assets Indefinite-Lived Intangible Asset Total (in thousands, except weighted average amortization period information) Balance as of December 31, 2016 $ 51,144 $ 1,514 $ 1,455 $ 54,113 $ 22,020 $ 11 $ 22,031 Additions — — — — — — — Amortization expense (7,699 ) (789 ) (311 ) (8,799 ) — — — Impairment (3,800 ) — — (3,800 ) — — — Balance as of December 31, 2017 $ 39,645 $ 725 $ 1,144 $ 41,514 $ 22,020 $ 11 $ 22,031 Weighted average amortization period 7.7 1.1 3.7 Indefinite Indefinite |
Schedule of future estimated amortization expense | Future estimated amortization of intangibles is as follows: (in thousands) Year Ending December 31, 2019 $ 18,368 2020 17,227 2021 16,876 2022 14,222 2023 12,276 Thereafter 94,482 $ 173,451 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses as of December 31, 2018 and 2017 consisted of the following: 2018 2017 (in thousands) Accrued compensation and benefits $ 11,930 $ 6,923 Accrued bonus 13,250 1,351 Sales tax payable 1,185 767 Magnum contingent liability 20,922 — Scorpion contingent liability — 1,730 Accrued interest 7,031 148 Other accrued expenses 7,116 3,768 Total accrued expenses $ 61,434 $ 14,687 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Summary of Debt Obligations | The Company’s debt obligations as of December 31, 2018 and 2017 were as follows: 2018 2017 (in thousands) Senior Notes $ 400,000 $ — 2018 ABL Credit Facility 35,000 — 2018 IPO Term Loan Credit Facility — — Legacy Term Loans — 145,975 Legacy Revolving Credit Facilities — 96,260 Total debt before deferred financing costs $ 435,000 $ 242,235 Deferred financing costs (10,022 ) (726 ) Total debt $ 424,978 $ 241,509 Less: Current portion of long-term debt — (241,509 ) Long-term debt $ 424,978 $ — |
Summary of redemption of debt | On and after November 1, 2020, the Company may redeem the Senior Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the Senior Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption if redeemed during the 12-month period beginning on November 1 of the years indicated below: Year Redemption Price 2020 104.375 % 2021 102.188 % 2022 and thereafter 100.000 % |
Fair value of debt obligations | The estimated fair value of the Company’s debt obligations as of December 31, 2018 and 2017 was as follows: 2018 2017 (in thousands) Senior Notes $ 376,000 $ — 2018 ABL Credit Facility 35,000 — 2018 IPO Term Loan Credit Facility — — Legacy Term Loans — 145,975 Legacy Revolving Credit Facilities $ — $ 96,260 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock options activity | All information related to Company stock option activity for the year ended December 31, 2018 is shown in the “Nine – Stock Options” section above, and the Beckman stock option activity for the year ended December 31, 2017 was as follows: 2017 Activity Number of Weighted Remaining Intrinsic Value Beginning balance 17,313 $ 123.02 5.9 $ — Beckman options converted to Nine options (17,313 ) 123.02 5.9 — Granted — — — — Exercised — — — — Forfeited — — — — Total outstanding — $ — — $ — Options exercisable — $ — — $ — Information about stock option activity during the years ended December 31, 2018 and 2017 was as follows: 2018 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 1,068,791 $ 30.79 7.6 $ 3,282 Granted 32,102 23.01 6.0 — Exercised (121,577 ) 20.71 — 1,728 Forfeited (21,657 ) 29.17 — 5 Total outstanding 957,659 $ 31.98 6.9 $ 6 Options exercisable 667,922 $ 33.20 6.2 $ 3 2017 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 656,646 $ 31.26 6.9 $ 2,863 Beckman options converted to Nine options 78,714 27.03 5.9 360 Granted 471,456 30.94 9.2 113 Exercised — — — — Forfeited (138,025 ) 31.38 — 55 Total outstanding 1,068,791 $ 30.79 7.6 $ 3,282 Options exercisable 347,225 $ 23.77 6.1 $ 2,571 |
Schedule of assumptions used to estimate fair value of stock options granted | The assumptions used in the Black-Scholes pricing model to estimate the fair value of the Beckman options granted in 2016 were as follows: 2016 Weighted average grant-date fair value $ 86.18 Assumptions Expected life (in years) 7.0 Volatility 98.6 % Dividend yield 0.0 % Risk free interest rate 2.00 % The assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted in 2018 , 2017 , and 2016 are as follows: 2018 2017 2016 Weighted average grant-date fair value $ 13.11 $ 14.70 $ 10.44 Assumptions Expected life (in years) 6.0 6.0 6.0 Volatility 47.0 % 47.1 % 47.0 % Dividend yield 0.0 % 0.0 % 0.0 % Risk free interest rate 2.47 % 2.16 % 1.46 % |
Schedule of nonvested restricted stock activity | Information about Beckman restricted stock activity during the years ended December 31, 2017 and 2016 was as follows: 2017 2016 Nonvested at the beginning of the year 20,225 17,576 Beckman restricted stock converted to Nine restricted stock (20,225 ) — Granted — 9,092 Vested — (5,631 ) Cancelled — (812 ) Nonvested at the end of the year — 20,225 Information about restricted stock activity during the years ended December 31, 2018 , 2017 , and 2016 was as follows: 2018 2017 2016 Nonvested at the beginning of the year 373,861 131,179 146,074 Beckman restricted stock converted to Nine restricted stock — 91,961 — Granted 805,897 302,797 24,157 Vested (148,740 ) (77,093 ) (39,052 ) Cancelled (13,073 ) (74,983 ) — Nonvested at the end of the year 1,017,945 373,861 131,179 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | The following schedule shows the future total minimum lease payments under these non-cancelable leases as of December 31, 2018 : (in thousands) Year ending December 31, 2019 $ 10,204 2020 6,568 2021 5,566 2022 4,893 2023 4,760 Thereafter 15,005 $ 46,996 |
Schedule of the Beginning and Ending Amount of Contingent Consideration Obligation (Level 3) Related to Acquisition | The following is a reconciliation of the beginning and ending amounts of the contingent liabilities (level 3) for the year ended December 31, 2018 : Magnum Frac Tech Scorpion Total (in thousands) Balance at January 1, 2018 $ — $ — $ 1,730 $ 1,730 Fair value of contingent earnout liability initially recorded in connection with the acquisitions 23,029 953 — 23,982 Payment — — (3,445 ) (3,445 ) Revaluation adjustments 1,492 55 1,715 3,262 Balance at December 31, 2018 $ 24,521 $ 1,008 $ — $ 25,529 The following is a reconciliation of the beginning and ending amounts of the contingent liabilities (level 3) for the year ended December 31, 2017 : Magnum Frac Tech Scorpion Total (in thousands) Balance at January 1 $ — $ — $ 3,187 $ 3,187 Common stock issuance — — (547 ) (547 ) Payment — — (1,325 ) (1,325 ) Revaluation adjustments — — 415 415 Balance at December 31 $ — $ — $ 1,730 $ 1,730 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of the provision (benefit) for income taxes | The components of the provision (benefit) for income taxes for the years ended December 31, 2018 , 2017 , and 2016 were as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Current US Federal $ (93 ) $ (50 ) $ (14,295 ) US State 1,558 878 168 Foreign 12 — — Total current provision (benefit) 1,477 828 (14,127 ) Deferred US Federal 767 (5,455 ) (14,206 ) US State 131 (360 ) 2,047 Foreign — — — Total deferred provision (benefit) 898 (5,815 ) (12,159 ) Total provision (benefit) for income taxes $ 2,375 $ (4,987 ) $ (26,286 ) |
Schedule of effective income tax rate reconciliation | The provision (benefit) for income taxes for the years ended December 31, 2018 , 2017 , and 2016 differed from the provision (benefit) calculated using the applicable statutory federal income tax rate as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Tax benefit at statutory rate $ (10,628 ) $ (25,434 ) $ (33,689 ) Foreign rate differential (56 ) 241 367 State income taxes, net of federal benefit 108 70 766 Impact on deferred taxes from Combination — (2,025 ) — Effect of Tax Act Effect of tax rate reduction on deferred tax — 6,649 — Effect of tax rate reduction on deferred tax valuation — (9,668 ) — Nondeductible expenses 1,426 1,559 1,660 Impact from goodwill impairment 1,030 — — Loss of tax benefits due to carryback — — 998 Valuation allowance (excluding impact of Tax Act) 10,137 24,066 2,804 Adoption of ASU 2016-09 — — 141 Other 358 (445 ) 667 $ 2,375 $ (4,987 ) $ (26,286 ) |
Schedule of deferred tax assets (liabilities) | The tax effects of the cumulative temporary differences resulting in the net deferred tax asset (liabilities) at December 31, 2018 and 2017 were as follows: December 31, 2018 2017 (in thousands) Deferred income tax assets: Inventories $ 626 $ 500 Goodwill and intangible assets 13,581 8,837 Deferred tax benefit from net losses 30,139 31,112 Stock-based compensation 4,635 3,129 Tax credit carryforwards 660 677 Accrued expenses 4,188 1,390 Other 168 86 Total deferred income tax assets 53,997 45,731 Less: Valuation allowance (28,862 ) (18,950 ) Net deferred income tax assets 25,135 26,781 Deferred income tax liabilities: Property and equipment (31,050 ) (31,798 ) Prepaid expenses and other — — Total deferred income tax liabilities (31,050 ) (31,798 ) Net deferred income tax liability $ (5,915 ) $ (5,017 ) |
Schedule of reconciliation of uncertain tax positions | A reconciliation of the beginning and ending amount of uncertain tax positions is as follows: 2018 (in thousands) Balance at January 1, 2018 $ 568 Additional based on tax positions related to prior years — Additional based on tax positions related to current year — Reduction based on tax positions related to prior years — Lapse of statute of limitations — Balance at December 31, 2018 $ 568 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Income (Loss) per Common Share | Basic and diluted earnings (loss) per common share was computed as follows: 2018 2017 2016 (in thousands, except for share and per share amounts) Net loss $ (52,983 ) $ (67,682 ) $ (70,911 ) Average shares outstanding 24,411,213 14,887,006 13,268,540 Loss per share (basic and diluted) $ (2.17 ) $ (4.55 ) $ (5.34 ) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of Financial Data by Segment | Summary financial data by segment is as follows. The amounts labeled “Corporate” relate to assets not allocated to the reportable segments. Year Ended December 31, 2018 2017 2016 (in thousands) Revenues Completion Solutions $ 745,316 $ 465,773 $ 221,468 Production Solutions 81,858 77,887 60,886 $ 827,174 $ 543,660 282,354 Cost of revenues (exclusive of depreciation and amortization shown separately below) Completion Solutions $ 568,497 $ 384,641 $ 194,436 Production Solutions 70,801 63,826 51,673 $ 639,298 $ 448,467 246,109 Adjusted gross profit Completion Solutions $ 176,819 $ 81,132 $ 27,032 Production Solutions 11,057 14,061 9,213 $ 187,876 $ 95,193 $ 36,245 General and administrative expenses 75,993 49,552 39,387 Depreciation 54,257 53,422 55,260 Amortization of intangibles 9,558 8,799 9,083 Impairment of property and equipment 45,694 — — Impairment of goodwill 12,986 31,530 12,207 Impairment of intangibles 19,065 3,800 — Loss on equity method investment 347 368 — (Gain) loss on sale of property and equipment (1,731 ) 4,688 3,320 Loss from operations $ (28,293 ) $ (56,966 ) $ (83,012 ) Other expense Interest expense 22,315 15,703 14,185 Total other expense 22,315 15,703 14,185 Loss before income taxes (50,608 ) (72,669 ) (97,197 ) Provision (benefit) for income taxes 2,375 (4,987 ) (26,286 ) Net loss $ (52,983 ) $ (67,682 ) $ (70,911 ) Capital expenditures by segment for years ended December 31, 2018 , 2017 , and 2016 were as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Completion Solutions $ 48,361 $ 40,626 $ 7,358 Production Solutions 3,548 4,590 1,772 Corporate 661 — — $ 52,570 $ 45,216 $ 9,130 Total assets by segment as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 (in thousands) Completion Solutions $ 1,045,643 $ 428,702 Production Solutions 35,086 119,607 Corporate 60,443 30,550 $ 1,141,172 $ 578,859 |
Schedule of Revenue and Long-Lived Assets, by Geographical Area | Revenue by country for the years ended December 31, 2018 , 2017 , and 2016 were as follows: 2018 2017 2016 Amount Percentage Amount Percentage Amount Percentage (in thousands) (in thousands) (in thousands) United States $ 796,221 96.3 % $ 521,914 96.0 % $ 269,893 95.6 % Canada and other 30,953 3.7 % 21,746 4.0 % 12,461 4.4 % $ 827,174 100.0 % $ 543,660 100.0 % $ 282,354 100.0 % Long-lived assets (defined as property and equipment and definite-lived intangible assets) by country as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 (in thousands) United States $ 377,623 $ 295,939 Canada and other 7,472 4,614 $ 385,095 $ 300,553 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of summarized quarterly financial data | Summarized quarterly financial data for the years ended December 31, 2018 and 2017 are presented below. March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 (in thousands, except per share amounts) Revenue $ 173,807 $ 205,492 $ 218,427 $ 229,448 Income (loss) from operations 4,698 11,486 16,356 (60,833 ) Income (loss) before income taxes 1,768 9,671 14,788 (76,835 ) Net income (loss) 1,675 9,019 13,658 (77,335 ) Earnings (loss) per common share Basic (1) $ 0.08 $ 0.38 $ 0.57 $ (2.78 ) Diluted (1) $ 0.08 $ 0.37 $ 0.56 $ (2.78 ) March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 (in thousands, except per share amounts) Revenue $ 105,353 $ 135,860 $ 148,167 $ 154,280 Loss from operations (14,790 ) (8,141 ) (193 ) (33,842 ) Loss before income taxes (18,548 ) (12,070 ) (4,286 ) (37,765 ) Net loss (20,714 ) (12,105 ) (5,052 ) (29,811 ) Net loss per common share Basic and diluted $ (1.50 ) $ (0.82 ) $ (0.34 ) $ (1.89 ) (1) As a result of the shares issued during the year, earnings per share for each of the year’s four quarters, which are based on weighted average shares outstanding during each quarter, may not equal the annual loss per share as reflected on the Company’s Consolidated Balance Sheets . |
Company and Organization (Detai
Company and Organization (Details) - USD ($) | Oct. 25, 2018 | Jan. 31, 2018 |
IPO | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Issuance of common stock (in shares) | 8,050,000 | |
Public offer price per share (in dollars per share) | $ 23 | |
Over-Allotment Option | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Issuance of common stock (in shares) | 1,050,000 | |
Magnum Acquisition | ||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Upfront cash consideration | $ 334,500,000 | |
Share issued for acquisition | 5,000,000 | |
Percentage of potential future payment of net income in 2019 through 2025 | 60.00% | |
Sale on dissolvable plug products in 2019 | $ 25,000,000 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) | Mar. 13, 2017USD ($) | Jan. 31, 2018 | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018USD ($) |
Accounting Policies [Abstract] | |||||||
Bad debt expense | $ 300,000 | $ 200,000 | $ 0 | ||||
Allowance for doubtful accounts | $ 500,000 | 500,000 | 600,000 | $ 500,000 | |||
Concentration Risk [Line Items] | |||||||
Impairment of intangibles | 19,065,000 | 3,800,000 | 0 | ||||
Payments to acquire equity method investments | $ 1,000,000 | 0 | 1,000,000 | 0 | |||
Income (loss) from equity method investments | (347,000) | (368,000) | 0 | $ (700,000) | |||
Impairment of property and equipment | 45,700,000 | 45,694,000 | 0 | 0 | |||
Impairment of intangibles | 9,800,000 | 9,745,000 | 3,800,000 | ||||
Impairment of goodwill | 12,986,000 | 31,530,000 | $ 12,207,000 | ||||
Impairment of indefinite-lived intangible assets | $ 9,300,000 | $ 9,320,000 | $ 0 | ||||
Stock split ratio | 8.0256 | ||||||
Vendor 1 | Accounts Payable | Supplier Concentration Risk | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk, percentage | 15.00% | 17.00% |
Acquisitions and Combinations -
Acquisitions and Combinations - Magnum Acquisition (Details) - Magnum Acquisition - USD ($) shares in Millions | Oct. 25, 2018 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||
Upfront cash consideration | $ 334,500,000 | |
Share issued for acquisition | 5 | |
Percentage of potential future payment of net income in 2019 through 2025 | 60.00% | |
Sale on dissolvable plug products in 2019 | $ 25,000,000 | |
Transaction cost associated with acquisition | $ 5,200,000 |
Acquisitions and Combinations_2
Acquisitions and Combinations - Purchase Consideration (Details) - USD ($) | Oct. 25, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||
Contingent liability related to business acquisitions | $ 23,982,000 | $ 0 | $ 0 | |
Magnum Acquisition | ||||
Business Acquisition [Line Items] | ||||
Proceeds from newly issued Senior Notes and 2018 ABL Credit Facility | $ 296,622,000 | |||
Cash provided from operations | 58,760,000 | |||
Total upfront cash consideration | 355,382,000 | |||
Issuance of the Company’s common shares | 177,350,000 | |||
Contingent liability related to business acquisitions | 23,029,000 | |||
Total purchase consideration | 555,761,000 | |||
Minimum | Magnum Acquisition | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | 0 | |||
Maximum | Magnum Acquisition | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 25,000,000 |
Acquisitions and Combinations_3
Acquisitions and Combinations - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Oct. 25, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 307,804 | $ 93,756 | $ 125,286 | |
Magnum Acquisition | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 8,509 | |||
Accounts receivable, net | 30,441 | |||
Income taxes receivable | 272 | |||
Inventories, net | 55,169 | |||
Prepaid expenses and other current assets | 1,147 | |||
Property and equipment, net | 3,729 | |||
Goodwill | 225,839 | |||
Definite-lived intangible, assets | 148,000 | |||
Indefinite-lived intangible assets, net | 96,000 | |||
Other long-term assets | 1,055 | |||
Accounts payable | (3,626) | |||
Accrued expenses | (10,759) | |||
Other long-term liabilities | (15) | |||
Total net assets acquired | $ 555,761 |
Acquisitions and Combinations_4
Acquisitions and Combinations - Intangible Assets Acquired (Details) - Magnum Acquisition $ in Thousands | Oct. 25, 2018USD ($) |
Business Acquisition [Line Items] | |
Definite-lived intangible, assets | $ 148,000 |
Indefinite-lived intangible assets, net | 96,000 |
Trade Names | |
Business Acquisition [Line Items] | |
Indefinite-lived intangible assets, net | 95,000 |
Other Intangible Assets | |
Business Acquisition [Line Items] | |
Indefinite-lived intangible assets, net | 1,000 |
Customer Relationships | |
Business Acquisition [Line Items] | |
Definite-lived intangible, assets | $ 25,000 |
Weighted average useful life | 9 years |
Non-Compete Agreements | |
Business Acquisition [Line Items] | |
Definite-lived intangible, assets | $ 3,000 |
Weighted average useful life | 2 years 1 month 6 days |
Technology | |
Business Acquisition [Line Items] | |
Definite-lived intangible, assets | $ 120,000 |
Weighted average useful life | 15 years |
Acquisitions and Combinations_5
Acquisitions and Combinations - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Combinations [Abstract] | ||
Revenues | $ 948,282 | $ 633,248 |
Net loss | $ (55,447) | $ (78,993) |
Earnings (loss) per share, Basic (usd per share) | $ (1.89) | $ (3.97) |
Earnings (loss) per share, Diluted (usd per share) | $ (1.89) | $ (3.97) |
Acquisitions and Combinations_6
Acquisitions and Combinations - Beckman Combination (Details) | Feb. 28, 2018$ / shares |
Business Acquisition [Line Items] | |
Conversion ratio | 0.567154 |
Business acquisition percentage of shares paid in cash | 1.60% |
Beckman | |
Business Acquisition [Line Items] | |
Business acquisition, conversion of share price into cash (usd per share) | $ 17.69 |
Common shares issued amount per share (usd per share) | $ 31.18 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 38,890 | $ 939 |
Work in progress | 130 | 0 |
Finished goods | 54,301 | 24,197 |
Inventories | 93,321 | 25,136 |
Reserve for obsolescence | (1,886) | (2,906) |
Inventories, net | $ 91,435 | $ 22,230 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | $ 460,171 | $ 460,171 | $ 464,727 | |
Less: Accumulated depreciation | (248,527) | (248,527) | (205,688) | |
Property and equipment, net | 211,644 | 211,644 | 259,039 | |
Depreciation | 54,257 | 53,422 | $ 55,260 | |
Impairment of property and equipment | 45,700 | 45,694 | 0 | $ 0 |
Impairment of intangibles | 9,800 | 9,745 | 3,800 | |
Operating equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 394,881 | $ 394,881 | 397,802 | |
Operating equipment | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 1 year | |||
Operating equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 12 years | |||
Autos and trucks | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 30,770 | $ 30,770 | 32,973 | |
Autos and trucks | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 1 year | |||
Autos and trucks | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 7 years | |||
Furniture, fixtures, and equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 4,330 | $ 4,330 | 3,179 | |
Furniture, fixtures, and equipment | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 2 years | |||
Furniture, fixtures, and equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 12 years | |||
Shop equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 17,300 | $ 17,300 | 13,463 | |
Shop equipment | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 3 years | |||
Shop equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 15 years | |||
Buildings | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 9,784 | $ 9,784 | 14,260 | |
Buildings | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 7 years | |||
Buildings | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 39 years | |||
Leasehold improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 1,488 | $ 1,488 | 963 | |
Leasehold improvements | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 3 years | |||
Leasehold improvements | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated Useful Lives | 11 years | |||
Land | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | $ 1,618 | $ 1,618 | $ 2,087 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Changes in Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Roll Forward] | |||
Gross Value, Beginning balance | $ 173,033 | $ 173,033 | |
Goodwill, Accumulated Impairment Loss, Beginning balance | (79,277) | (47,747) | |
Goodwill, Net, Beginning balance | 93,756 | 125,286 | |
Impairment of goodwill | (12,986) | (31,530) | $ (12,207) |
Additions | 227,034 | 0 | |
Gross Value, Ending balance | 400,067 | 173,033 | 173,033 |
Goodwill, Accumulated Impairment Loss, Ending balance | (92,263) | (79,277) | (47,747) |
Goodwill, Net, Ending balance | $ 307,804 | $ 93,756 | $ 125,286 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Impairment of goodwill | $ 12,986 | $ 31,530 | $ 12,207 | |
Impairment of intangibles | $ 9,800 | 9,745 | 3,800 | |
Impairment of indefinite-lived intangible assets | $ 9,300 | 9,320 | 0 | |
Amortization expense | $ 9,558 | $ 8,799 | $ 9,083 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Goodwill by Segment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Roll Forward] | |||
Goodwill, Net, Beginning balance | $ 93,756 | $ 125,286 | |
Additions | 227,034 | 0 | |
Impairment of goodwill | (12,986) | (31,530) | $ (12,207) |
Goodwill, Net, Ending balance | 307,804 | 93,756 | 125,286 |
Completion Solutions | |||
Goodwill [Roll Forward] | |||
Goodwill, Net, Beginning balance | 80,770 | 112,300 | |
Additions | 227,034 | 0 | |
Impairment of goodwill | 0 | (31,530) | |
Goodwill, Net, Ending balance | 307,804 | 80,770 | 112,300 |
Production Solutions | |||
Goodwill [Roll Forward] | |||
Goodwill, Net, Beginning balance | 12,986 | 12,986 | |
Additions | 0 | 0 | |
Impairment of goodwill | (12,986) | 0 | |
Goodwill, Net, Ending balance | $ 0 | $ 12,986 | $ 12,986 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Schedule of Changes in Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Finite Lived, Intangible assets, Beginning balance | $ 41,514 | $ 54,113 | ||
Indefinite Lived, Intangible assets, Beginning balance | 22,031 | 22,031 | ||
Finite lived, Additions | 151,240 | 0 | ||
Indefinite lived, Additions | 96,000 | 0 | ||
Amortization expense | (9,558) | (8,799) | $ (9,083) | |
Impairment of intangibles | $ (9,800) | (9,745) | (3,800) | |
Impairment of indefinite-lived intangible assets | (9,300) | (9,320) | 0 | |
Finite Lived, Intangible assets, Ending balance | 173,451 | 173,451 | 41,514 | 54,113 |
Indefinite Lived, Intangible assets, Ending balance | 108,711 | 108,711 | 22,031 | 22,031 |
Trademarks | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Indefinite Lived, Intangible assets, Beginning balance | 22,020 | 22,020 | ||
Indefinite lived, Additions | 95,000 | 0 | ||
Impairment of indefinite-lived intangible assets | (9,320) | 0 | ||
Indefinite Lived, Intangible assets, Ending balance | 107,700 | 107,700 | 22,020 | 22,020 |
Other intangible assets | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Indefinite Lived, Intangible assets, Beginning balance | 11 | 11 | ||
Indefinite lived, Additions | 1,000 | 0 | ||
Impairment of indefinite-lived intangible assets | 0 | 0 | ||
Indefinite Lived, Intangible assets, Ending balance | 1,011 | 1,011 | 11 | 11 |
Customer Relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite Lived, Intangible assets, Beginning balance | 39,645 | 51,144 | ||
Finite lived, Additions | 25,000 | 0 | ||
Amortization expense | (6,962) | (7,699) | ||
Impairment of intangibles | (9,719) | (3,800) | ||
Finite Lived, Intangible assets, Ending balance | 47,964 | $ 47,964 | $ 39,645 | 51,144 |
Weighted average amortization period | 7 years 3 months 18 days | 7 years 8 months 12 days | ||
Non-Compete Agreements | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite Lived, Intangible assets, Beginning balance | $ 725 | $ 1,514 | ||
Finite lived, Additions | 3,000 | 0 | ||
Amortization expense | (849) | (789) | ||
Impairment of intangibles | (26) | 0 | ||
Finite Lived, Intangible assets, Ending balance | 2,850 | $ 2,850 | $ 725 | 1,514 |
Weighted average amortization period | 3 years 6 months | 1 year 1 month 6 days | ||
Technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite Lived, Intangible assets, Beginning balance | $ 1,144 | $ 1,455 | ||
Finite lived, Additions | 123,240 | 0 | ||
Amortization expense | (1,747) | (311) | ||
Impairment of intangibles | 0 | 0 | ||
Finite Lived, Intangible assets, Ending balance | $ 122,637 | $ 122,637 | $ 1,144 | $ 1,455 |
Weighted average amortization period | 14 years 7 months 6 days | 3 years 8 months 12 days |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of intangibles | $ 9,558 | $ 8,799 | $ 9,083 |
2,019 | 18,368 | ||
2,020 | 17,227 | ||
2,021 | 16,876 | ||
2,022 | 14,222 | ||
2,023 | 12,276 | ||
Thereafter | 94,482 | ||
Net | $ 173,451 | $ 41,514 | $ 54,113 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition, Contingent Consideration [Line Items] | ||
Accrued compensation and benefits | $ 11,930 | $ 6,923 |
Accrued bonus | 13,250 | 1,351 |
Sales tax payable | 1,185 | 767 |
Accrued interest | 7,031 | 148 |
Other accrued expenses | 7,116 | 3,768 |
Total accrued expenses | 61,434 | 14,687 |
Magnum | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent liability | 20,922 | 0 |
Scorpion | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent liability | $ 0 | $ 1,730 |
Debt Obligations - Summary of D
Debt Obligations - Summary of Debt Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | $ 435,000 | $ 242,235 |
Deferred financing costs | (10,022) | (726) |
Total debt | 424,978 | 241,509 |
Less: Current portion of long-term debt | 0 | (241,509) |
Long-term debt | 424,978 | 0 |
Senior Notes | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 400,000 | 0 |
Line of Credit | 2018 ABL Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 35,000 | 0 |
Line of Credit | 2018 IPO Term Loan Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 0 | 0 |
Line of Credit | Legacy Term Loans | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 0 | 145,975 |
Line of Credit | Legacy Revolving Credit Facilities | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | $ 0 | $ 96,260 |
Debt Obligations - Additional I
Debt Obligations - Additional Information (Details) | Oct. 25, 2018USD ($)day | Sep. 14, 2017USD ($) | Dec. 31, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2018USD ($) | Jan. 31, 2018USD ($) |
Debt Instrument [Line Items] | |||||||||
Deferred finance costs | $ 10,400,000 | $ 10,400,000 | |||||||
Unamortized deferred finance costs | 10,022,000 | 10,022,000 | $ 726,000 | ||||||
Debt related commitment fees | 6,900,000 | ||||||||
Extinguishment of debt | 8,800,000 | ||||||||
Write off of deferred debt issuance cost | $ 1,200,000 | $ 700,000 | |||||||
Proceeds from initial public offering | $ 171,450,000 | 0 | $ 0 | ||||||
Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, face amount | $ 400,000,000 | ||||||||
Debt instrument, annual interest rate | 8.75% | ||||||||
Debt instrument, redemption price percentage | 35.00% | ||||||||
Redemption Price | 108.75% | ||||||||
Debt instrument, redemption price, percentage of principal required to be outstanding to redeem | 65.00% | ||||||||
Debt instrument, redemption price, percentage of principal, premium and interest | 100.00% | ||||||||
Debt instrument, redemption price, percentage of principal, change of control trigger | 101.00% | ||||||||
Debt instrument, redemption price, percentage of principal, default trigger | 25.00% | ||||||||
Line of Credit | 2018 ABL Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 200,000,000 | ||||||||
Commitment fee percentage | 0.50% | ||||||||
Interest rate at end of period | 4.69% | 4.69% | |||||||
Debt instrument, convertible, threshold consecutive trading days | day | 30 | ||||||||
Amount borrowed to fund portion of upfront cash consideration | $ 35,000,000 | ||||||||
Credit facility, borrowing base amount | 83,500,000 | ||||||||
Letters of credit outstanding, amount | $ 500,000 | $ 500,000 | |||||||
Line of Credit | 2018 ABL Credit Facility | Canadian Tranche | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 25,000,000 | ||||||||
Line of Credit | 2018 ABL Credit Facility | Canadian Tranche | Minimum | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 0.75% | ||||||||
Line of Credit | 2018 ABL Credit Facility | Canadian Tranche | Maximum | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 1.25% | ||||||||
Line of Credit | 2018 ABL Credit Facility | Letters of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||||
Line of Credit | 2018 ABL Credit Facility | Letters of Credit | Minimum | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 1.75% | ||||||||
Line of Credit | 2018 ABL Credit Facility | Letters of Credit | Maximum | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 2.25% | ||||||||
Line of Credit | 2018 IPO Term Loan Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, face amount | $ 125,000,000 | ||||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||||
Commitment fee percentage | 0.50% | ||||||||
Prepayment term loan | $ 9,700,000 | ||||||||
Percentage of estimated net proceeds from IPO in excess of $150 million | 50.00% | ||||||||
Proceeds from initial public offering | $ 150,000,000 | ||||||||
Line of Credit | 2018 IPO Term Loan Credit Facility | Minimum | Base Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 1.50% | ||||||||
Line of Credit | 2018 IPO Term Loan Credit Facility | Minimum | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 2.50% | ||||||||
Line of Credit | 2018 IPO Term Loan Credit Facility | Maximum | Base Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 2.75% | ||||||||
Line of Credit | 2018 IPO Term Loan Credit Facility | Maximum | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 3.75% | ||||||||
Line of Credit | Legacy Nine Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit outstanding | 84,800,000 | ||||||||
Line of Credit | Legacy Beckman Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit outstanding | 11,500,000 | ||||||||
Term Loan | Legacy Nine Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit outstanding | 35,200,000 | ||||||||
Term Loan | Legacy Beckman Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit outstanding | $ 110,800,000 |
Debt Obligations - Redemption P
Debt Obligations - Redemption Prices (Details) - Senior Notes | 12 Months Ended |
Dec. 31, 2018 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 108.75% |
2,020 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 104.375% |
2,021 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 102.188% |
2022 and thereafter | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 100.00% |
Debt Obligations - Fair Value (
Debt Obligations - Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | $ 376,000 | $ 0 |
Line of Credit | 2018 ABL Credit Facility | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | 35,000 | 0 |
Line of Credit | 2018 IPO Term Loan Credit Facility | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | 0 | 0 |
Line of Credit | Legacy Term Loans | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | 0 | 145,975 |
Line of Credit | Legacy Revolving Credit Facilities | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | $ 0 | $ 96,260 |
Defined Contribution Plans (Det
Defined Contribution Plans (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Nine Energy Service 401k Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contributions | $ 3,200,000 | $ 0 | $ 0 |
Nine Energy Service 401k Plan | Matching Contribution Tranche One | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of employees' gross pay | 100.00% | ||
Employer matching contribution, percent of match | 3.00% | ||
Nine Energy Service 401k Plan | Matching Contribution Tranche Two | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of employees' gross pay | 50.00% | ||
Employer matching contribution, percent of match | 5.00% | ||
Beckman Defined Contribution Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of employees' gross pay | 50.00% | ||
Employer matching contribution, percent of match | 5.00% | ||
Employer contributions | 0 | ||
Liability incurred from defined benefit plan | $ 600,000 | $ 400,000 | |
Magnum 401k Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contributions | $ 200,000 | ||
Magnum 401k Plan | Matching Contribution Tranche One | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of employees' gross pay | 100.00% | ||
Employer matching contribution, percent of match | 3.00% | ||
Magnum 401k Plan | Matching Contribution Tranche Two | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of employees' gross pay | 50.00% | ||
Employer matching contribution, percent of match | 5.00% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares in Underlying Options | |||
Beginning balance (in shares) | 1,068,791 | 656,646 | |
Beckman options converted to Nine options (in shares) | 78,714 | ||
Granted (in shares) | 32,102 | 471,456 | |
Exercised (in shares) | (121,577) | 0 | |
Forfeited (in shares) | (21,657) | (138,025) | |
Ending balance (in shares) | 957,659 | 1,068,791 | 656,646 |
Options exercisable (in shares) | 667,922 | 347,225 | |
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 30.79 | $ 31.26 | |
Beckman options converted to Nine options (in dollars per share) | 27.03 | ||
Granted (in dollars per share) | 23.01 | 30.94 | |
Exercised (in dollars per share) | 20.71 | 0 | |
Forfeited (in dollars per share) | 29.17 | 31.38 | |
Ending balance (in dollars per share) | 31.98 | 30.79 | $ 31.26 |
Options exercisable (in dollars per share) | $ 33.20 | $ 23.77 | |
Remaining Weighted Average Contractual Life in Years | |||
Outstanding (in years) | 6 years 11 months | 7 years 7 months | 6 years 11 months |
Beckman options converted to Nine options (in years) | 5 years 11 months | ||
Granted (in years) | 6 years | 9 years 2 months | |
Options exercisable (in years) | 6 years 2 months | 6 years 1 month | |
Intrinsic Value | |||
Beginning balance | $ 3,282 | $ 2,863 | |
Beckman options converted to Nine options | 360 | ||
Granted | 0 | 113 | |
Exercised | 1,728 | 0 | |
Forfeited | 5 | 55 | |
Ending balance | 6 | 3,282 | $ 2,863 |
Options exercisable | $ 3 | $ 2,571 | |
Beckman | |||
Number of Shares in Underlying Options | |||
Beginning balance (in shares) | 0 | 17,313 | |
Beckman options converted to Nine options (in shares) | 17,313 | ||
Granted (in shares) | 0 | ||
Exercised (in shares) | 0 | ||
Forfeited (in shares) | 0 | ||
Ending balance (in shares) | 0 | 17,313 | |
Options exercisable (in shares) | 0 | ||
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 0 | $ 123.02 | |
Beckman options converted to Nine options (in dollars per share) | 123.02 | ||
Granted (in dollars per share) | 0 | ||
Exercised (in dollars per share) | 0 | ||
Forfeited (in dollars per share) | 0 | ||
Ending balance (in dollars per share) | 0 | $ 123.02 | |
Options exercisable (in dollars per share) | $ 0 | ||
Remaining Weighted Average Contractual Life in Years | |||
Outstanding (in years) | 0 years | 5 years 10 months 24 days | |
Beckman options converted to Nine options (in years) | 5 years 10 months 24 days | ||
Granted (in years) | 0 years | ||
Options exercisable (in years) | 0 years | ||
Intrinsic Value | |||
Beginning balance | $ 0 | $ 0 | |
Beckman options converted to Nine options | 0 | ||
Granted | 0 | ||
Exercised | 0 | ||
Forfeited | 0 | ||
Ending balance | 0 | $ 0 | |
Options exercisable | $ 0 |
Stock-based Compensation - St_2
Stock-based Compensation - Stock Option Fair Value Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair value (in dollars per share) | $ 13.11 | $ 14.70 | $ 10.44 |
Assumptions | |||
Expected life (in years) | 6 years | 6 years | 6 years |
Volatility | 47.00% | 47.10% | 47.00% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Risk free interest rate | 2.47% | 2.16% | 1.46% |
Beckman | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair value (in dollars per share) | $ 86.18 | ||
Assumptions | |||
Expected life (in years) | 7 years | ||
Volatility | 98.60% | ||
Dividend yield | 0.00% | ||
Risk free interest rate | 2.00% |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Activity (Details) - Restricted Stock - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Nonvested at the beginning of the year | 373,861 | 131,179 | 146,074 |
Beckman restricted stock converted to Nine restricted stock | 0 | 91,961 | 0 |
Granted | 805,897 | 302,797 | 24,157 |
Vested | (148,740) | (77,093) | (39,052) |
Cancelled | (13,073) | (74,983) | 0 |
Nonvested at the end of the year | 1,017,945 | 373,861 | 131,179 |
Beckman | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Nonvested at the beginning of the year | 0 | 20,225 | 17,576 |
Beckman restricted stock converted to Nine restricted stock | 20,225 | 0 | |
Granted | 0 | 9,092 | |
Vested | 0 | (5,631) | |
Cancelled | 0 | (812) | |
Nonvested at the end of the year | 0 | 20,225 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average grant date fair value (in dollars per share) | $ 26.01 | $ 31.18 | $ 22.63 |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 3.5 | $ 3.3 | $ 2.7 |
Expected future compensation expense | $ 2.6 | ||
Expected future compensation expense, period for recognition | 1 year 3 months | ||
Stock Options | Beckman | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 0.2 | ||
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 9.7 | 4.3 | 1.7 |
Expected future compensation expense | $ 17.9 | ||
Expected future compensation expense, period for recognition | 2 years 1 month | ||
Restricted Stock | Beckman | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 0 | $ 1 | |
Weighted average grant date fair value (in dollars per share) | $ 77 |
Commitment and Contingencies -
Commitment and Contingencies - Lease Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,019 | $ 10,204 |
2,020 | 6,568 |
2,021 | 5,566 |
2,022 | 4,893 |
2,023 | 4,760 |
Thereafter | 15,005 |
Total future minimum lease payments | $ 46,996 |
Commitment and Contingencies _2
Commitment and Contingencies - Contingent Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | $ 1,730 | $ 3,187 |
Common stock issuance | (547) | |
Fair value of contingent earnout liability initially recorded in connection with the acquisitions | 23,982 | |
Payment | (3,445) | (1,325) |
Revaluation adjustments | 3,262 | 415 |
Balance at end of the period | 25,529 | 1,730 |
Magnum | ||
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | 0 | 0 |
Common stock issuance | 0 | |
Fair value of contingent earnout liability initially recorded in connection with the acquisitions | 23,029 | |
Payment | 0 | 0 |
Revaluation adjustments | 1,492 | 0 |
Balance at end of the period | 24,521 | 0 |
Frac Tech | ||
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | 0 | 0 |
Common stock issuance | 0 | |
Fair value of contingent earnout liability initially recorded in connection with the acquisitions | 953 | |
Payment | 0 | 0 |
Revaluation adjustments | 55 | 0 |
Balance at end of the period | 1,008 | 0 |
Scorpion | ||
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | 1,730 | 3,187 |
Common stock issuance | (547) | |
Fair value of contingent earnout liability initially recorded in connection with the acquisitions | 0 | |
Payment | (3,445) | (1,325) |
Revaluation adjustments | 1,715 | 415 |
Balance at end of the period | $ 0 | $ 1,730 |
Commitment and Contingencies _3
Commitment and Contingencies - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 25, 2018 | |
Loss Contingencies [Line Items] | ||||
Operating leases, rent expense | $ 13,000,000 | $ 7,200,000 | $ 6,300,000 | |
Loss contingency payments | 3,445,000 | 1,325,000 | ||
Contingent consideration revaluation gain (loss) | (3,262,000) | (415,000) | ||
Contingent liabilities | 25,529,000 | 1,730,000 | 3,187,000 | |
Accrued Expenses | ||||
Loss Contingencies [Line Items] | ||||
Contingent liabilities | 20,900,000 | 1,700,000 | ||
Other long term liabilities | ||||
Loss Contingencies [Line Items] | ||||
Contingent liabilities | 4,600,000 | 0 | ||
Scorpion | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency payments | 3,445,000 | 1,325,000 | ||
Contingent consideration revaluation gain (loss) | (1,715,000) | (415,000) | ||
Contingent liabilities | 0 | 1,730,000 | 3,187,000 | |
Scorpion | Accrued Expenses | ||||
Loss Contingencies [Line Items] | ||||
Estimated liability for self-insured medical claims | 1,600,000 | 1,300,000 | ||
Magnum Acquisition | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency payments | 0 | 0 | ||
Contingent consideration revaluation gain (loss) | (1,492,000) | 0 | ||
Contingent liabilities | $ 24,521,000 | $ 0 | $ 0 | |
Percentage of potential future payment of net income in 2019 through 2025 | 60.00% | |||
Sale on dissolvable plug products in 2019 | $ 25,000,000 |
Taxes - Additional Information
Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Tax cuts and jobs act of 2017, change in tax rate income tax expense (benefit) | $ 3,000,000 | |
Net operating loss carryforwards | $ 163,600,000 | |
Operating Loss Carryforwards [Line Items] | ||
Valuation allowance, increase (decrease) | $ 10,000,000 | |
Tax positions cumulative loss period | 3 years | |
Unrecognized tax benefits | $ 568,000 | $ 568,000 |
Unrecognized tax benefits, accrued income tax penalties and interest | $ 0 | |
Domestic | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards, periods of use | 20 years | |
State | Minimum | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards, periods of use | 10 years | |
State | Maximum | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards, periods of use | 20 years |
Taxes - Components of Income Ta
Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current | |||
US Federal | $ (93) | $ (50) | $ (14,295) |
US State | 1,558 | 878 | 168 |
Foreign | 12 | 0 | 0 |
Total current provision (benefit) | 1,477 | 828 | (14,127) |
Deferred | |||
US Federal | 767 | (5,455) | (14,206) |
US State | 131 | (360) | 2,047 |
Foreign | 0 | 0 | 0 |
Total deferred provision (benefit) | 898 | (5,815) | (12,159) |
Total provision (benefit) for income taxes | $ 2,375 | $ (4,987) | $ (26,286) |
Taxes - Effective Income Tax Ra
Taxes - Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Tax benefit at statutory rate | $ (10,628) | $ (25,434) | $ (33,689) |
Foreign rate differential | (56) | 241 | 367 |
State income taxes, net of federal benefit | 108 | 70 | 766 |
Impact on deferred taxes from Combination | 0 | (2,025) | 0 |
Effect of Tax Act | |||
Effect of tax rate reduction on deferred tax | 0 | 6,649 | 0 |
Effect of tax rate reduction on deferred tax valuation | 0 | (9,668) | 0 |
Nondeductible expenses | 1,426 | 1,559 | 1,660 |
Impact from goodwill impairment | 1,030 | 0 | 0 |
Loss of tax benefits due to carryback | 0 | 0 | 998 |
Valuation allowance (excluding impact of Tax Act) | 10,137 | 24,066 | 2,804 |
Adoption of ASU 2016-09 | 0 | 0 | 141 |
Other | 358 | (445) | 667 |
Total provision (benefit) for income taxes | $ 2,375 | $ (4,987) | $ (26,286) |
Taxes - Deferred Income Tax Lia
Taxes - Deferred Income Tax Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred income tax assets: | ||
Inventories | $ 626 | $ 500 |
Goodwill and intangible assets | 13,581 | 8,837 |
Deferred tax benefit from net losses | 30,139 | 31,112 |
Stock-based compensation | 4,635 | 3,129 |
Tax credit carryforwards | 660 | 677 |
Accrued expenses | 4,188 | 1,390 |
Other | 168 | 86 |
Total deferred income tax assets | (53,997) | (45,731) |
Less: Valuation allowance | (28,862) | (18,950) |
Net deferred income tax assets | 25,135 | 26,781 |
Deferred income tax liabilities: | ||
Property and equipment | (31,050) | (31,798) |
Prepaid expenses and other | 0 | 0 |
Total deferred income tax liabilities | (31,050) | (31,798) |
Net deferred income tax liability | $ (5,915) | $ (5,017) |
Taxes - Uncertain Tax Positions
Taxes - Uncertain Tax Positions (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Uncertain tax positions, beginning balance | $ 568 |
Additional based on tax positions related to prior years | 0 |
Additional based on tax positions related to current year | 0 |
Reduction based on tax positions related to prior years | 0 |
Lapse of statute of limitations | 0 |
Uncertain tax positions, ending balance | $ 568 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||||||
Net loss | $ (52,983) | $ (67,682) | $ (70,911) | ||||
Average shares outstanding (in shares) | 24,411,213 | 14,887,006 | 13,268,540 | ||||
Basic and diluted (in dollars per share) | $ (1.89) | $ (0.34) | $ (0.82) | $ (1.50) | $ (2.17) | $ (4.55) | $ (5.34) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2014 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | |||||
Unpaid interest of notes payable | $ 0 | $ 400,000 | |||
Notes paid | 0 | 272,000 | $ 855,000 | ||
Magnum Acquisition | |||||
Related Party Transaction [Line Items] | |||||
Receivable due from entity | 1,800,000 | ||||
Curtis F. Harrell | |||||
Related Party Transaction [Line Items] | |||||
Cost of services | 700,000 | 700,000 | 400,000 | ||
Receivable due from entity | 100,000 | 200,000 | |||
EOG Resources, Inc. | |||||
Related Party Transaction [Line Items] | |||||
Revenue from related parties | 45,000,000 | 34,400,000 | 13,700,000 | ||
Prepaid Expenses and Other | |||||
Related Party Transaction [Line Items] | |||||
Unpaid interest of notes payable | 10,000 | 8,000 | |||
Former Executive Officer and Manger | |||||
Related Party Transaction [Line Items] | |||||
Outstanding notes | 0 | 2,900,000 | |||
Mr. Crombie | |||||
Related Party Transaction [Line Items] | |||||
Outstanding notes | 7,600,000 | 7,600,000 | |||
Lease and building maintenance expense | 800,000 | 800,000 | 700,000 | ||
Payables due to entities | 0 | $ 13,000 | |||
Equipment purchased | $ 1,000,000 | ||||
Percent of company stock owned (more than) | 5.00% | ||||
Rental expense | $ 200,000 | ||||
Promissory Notes | |||||
Related Party Transaction [Line Items] | |||||
Maturity date | Jun. 30, 2019 | Jun. 30, 2019 | |||
Debt instrument, annual interest rate | 4.00% | ||||
Promissory Notes | Former Executive Officer and Manger | |||||
Related Party Transaction [Line Items] | |||||
Notes issued | $ 2,500,000 | ||||
Promissory Notes | Former owners of Crest and Mr.Crombie | |||||
Related Party Transaction [Line Items] | |||||
Notes issued | $ 9,400,000 | ||||
Promissory Notes | Mr. Crombie | |||||
Related Party Transaction [Line Items] | |||||
Notes paid | $ 1,800,000 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2018segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Summary o
Segment Information - Summary of Financial Data by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | 22 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | $ 229,448 | $ 218,427 | $ 205,492 | $ 173,807 | $ 154,280 | $ 148,167 | $ 135,860 | $ 105,353 | $ 827,174 | $ 543,660 | $ 282,354 | |
Cost of revenues | 639,298 | 448,467 | 246,109 | |||||||||
Adjusted gross profit | 187,876 | 95,193 | 36,245 | |||||||||
General and administrative expenses | 75,993 | 49,552 | 39,387 | |||||||||
Depreciation | 54,257 | 53,422 | 55,260 | |||||||||
Amortization of intangibles | 9,558 | 8,799 | 9,083 | |||||||||
Impairment of property and equipment | 45,700 | 45,694 | 0 | 0 | ||||||||
Impairment of goodwill | 12,986 | 31,530 | 12,207 | |||||||||
Impairment of intangibles | 19,065 | 3,800 | 0 | |||||||||
Loss on equity method investment | 347 | 368 | 0 | $ 700 | ||||||||
(Gain) loss on sale of property and equipment | (1,731) | 4,688 | 3,320 | |||||||||
Loss from operations | (60,833) | 16,356 | 11,486 | 4,698 | (33,842) | (193) | (8,141) | (14,790) | (28,293) | (56,966) | (83,012) | |
Other Expense, Nonoperating [Abstract] | ||||||||||||
Interest expense | 22,315 | 15,703 | 14,185 | |||||||||
Total other expense | 22,315 | 15,703 | 14,185 | |||||||||
Loss before income taxes | (76,835) | 14,788 | 9,671 | 1,768 | (37,765) | (4,286) | (12,070) | (18,548) | (50,608) | (72,669) | (97,197) | |
Provision (benefit) for income taxes | 2,375 | (4,987) | (26,286) | |||||||||
Net loss | (77,335) | $ 13,658 | $ 9,019 | $ 1,675 | (29,811) | $ (5,052) | $ (12,105) | $ (20,714) | (52,983) | (67,682) | (70,911) | |
Capital expenditures | 52,570 | 45,216 | 9,130 | |||||||||
Total Assets | 1,141,172 | 578,859 | 1,141,172 | 578,859 | 1,141,172 | |||||||
Corporate | ||||||||||||
Other Expense, Nonoperating [Abstract] | ||||||||||||
Capital expenditures | 661 | 0 | 0 | |||||||||
Total Assets | 60,443 | 30,550 | 60,443 | 30,550 | 60,443 | |||||||
Completion Solutions | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 745,316 | 465,773 | 221,468 | |||||||||
Cost of revenues | 568,497 | 384,641 | 194,436 | |||||||||
Adjusted gross profit | 176,819 | 81,132 | 27,032 | |||||||||
Impairment of goodwill | 0 | 31,530 | ||||||||||
Completion Solutions | Operating Segments | ||||||||||||
Other Expense, Nonoperating [Abstract] | ||||||||||||
Capital expenditures | 48,361 | 40,626 | 7,358 | |||||||||
Total Assets | 1,045,643 | 428,702 | 1,045,643 | 428,702 | 1,045,643 | |||||||
Production Solutions | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 81,858 | 77,887 | 60,886 | |||||||||
Cost of revenues | 70,801 | 63,826 | 51,673 | |||||||||
Adjusted gross profit | 11,057 | 14,061 | 9,213 | |||||||||
Impairment of goodwill | 12,986 | 0 | ||||||||||
Production Solutions | Operating Segments | ||||||||||||
Other Expense, Nonoperating [Abstract] | ||||||||||||
Capital expenditures | 3,548 | 4,590 | $ 1,772 | |||||||||
Total Assets | $ 35,086 | $ 119,607 | $ 35,086 | $ 119,607 | $ 35,086 |
Segment Information - Geographi
Segment Information - Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-Lived Assets | $ 385,095 | $ 300,553 | $ 385,095 | $ 300,553 | |||||||
Revenues | 229,448 | $ 218,427 | $ 205,492 | $ 173,807 | 154,280 | $ 148,167 | $ 135,860 | $ 105,353 | $ 827,174 | $ 543,660 | $ 282,354 |
Geographic Concentration Risk | Revenue | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | ||||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-Lived Assets | 377,623 | 295,939 | $ 377,623 | $ 295,939 | |||||||
Revenues | $ 796,221 | $ 521,914 | $ 269,893 | ||||||||
United States | Geographic Concentration Risk | Revenue | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Concentration risk, percentage | 96.30% | 96.00% | 95.60% | ||||||||
Canada and other | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Long-Lived Assets | $ 7,472 | $ 4,614 | $ 7,472 | $ 4,614 | |||||||
Revenues | $ 30,953 | $ 21,746 | $ 12,461 | ||||||||
Canada and other | Geographic Concentration Risk | Revenue | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Concentration risk, percentage | 3.70% | 4.00% | 4.40% |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 229,448 | $ 218,427 | $ 205,492 | $ 173,807 | $ 154,280 | $ 148,167 | $ 135,860 | $ 105,353 | $ 827,174 | $ 543,660 | $ 282,354 |
Income (loss) from operations | (60,833) | 16,356 | 11,486 | 4,698 | (33,842) | (193) | (8,141) | (14,790) | (28,293) | (56,966) | (83,012) |
Loss before income taxes | (76,835) | 14,788 | 9,671 | 1,768 | (37,765) | (4,286) | (12,070) | (18,548) | (50,608) | (72,669) | (97,197) |
Net income (loss) | $ (77,335) | $ 13,658 | $ 9,019 | $ 1,675 | $ (29,811) | $ (5,052) | $ (12,105) | $ (20,714) | $ (52,983) | $ (67,682) | $ (70,911) |
Net income (loss) per common share | |||||||||||
Basic (in usd per share) | $ (2.78) | $ 0.57 | $ 0.38 | $ 0.08 | $ (2.17) | $ (4.55) | $ (5.34) | ||||
Diluted (in usd per share) | $ (2.78) | $ 0.56 | $ 0.37 | $ 0.08 | (2.17) | (4.55) | (5.34) | ||||
Basic and diluted (in dollars per share) | $ (1.89) | $ (0.34) | $ (0.82) | $ (1.50) | $ (2.17) | $ (4.55) | $ (5.34) |