Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 04, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | TISI | |
Entity Registrant Name | TEAM INC | |
Entity Central Index Key | 318,833 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,987,391 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | |
Current assets: | |||
Cash and cash equivalents | $ 18,183 | $ 26,552 | |
Receivables, net of allowance of $13,157 and $11,308 | 288,980 | [1] | 301,963 |
Inventory | 51,447 | 49,703 | |
Income tax receivable | 0 | 892 | |
Prepaid expenses and other current assets | 31,029 | 17,950 | |
Total current assets | 389,639 | 397,060 | |
Property, plant and equipment, net | 199,812 | 203,219 | |
Intangible assets, net of accumulated amortization of $61,358 and $54,184 | 153,130 | 160,161 | |
Goodwill | 285,096 | 284,804 | |
Other assets, net | 6,918 | 5,798 | |
Deferred income taxes | 6,560 | 4,793 | |
Total assets | 1,041,155 | 1,055,835 | |
Current liabilities: | |||
Accounts payable | 48,478 | 55,312 | |
Other accrued liabilities | 92,980 | 92,472 | |
Income taxes payable | 4,269 | 0 | |
Total current liabilities | 145,727 | 147,784 | |
Deferred income taxes | 37,943 | 38,100 | |
Long-term debt | 382,895 | 387,749 | |
Defined benefit pension liability | 14,488 | 14,976 | |
Other long-term liabilities | 10,166 | 9,758 | |
Total liabilities | 591,219 | 598,367 | |
Commitments and contingencies | |||
Equity: | |||
Preferred stock, 500,000 shares authorized, none issued | 0 | 0 | |
Common stock, par value $0.30 per share, 60,000,000 shares authorized; 29,987,232 and 29,953,041 shares issued | 8,994 | 8,984 | |
Additional paid-in capital | 354,685 | 352,500 | |
Retained earnings | 106,370 | 115,780 | |
Accumulated other comprehensive loss | (20,113) | (19,796) | |
Total equity | 449,936 | 457,468 | |
Total liabilities and equity | $ 1,041,155 | $ 1,055,835 | |
[1] | Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Receivables, allowance | $ 13,157 | $ 11,308 |
Intangible assets, accumulated amortization | $ 61,358 | $ 54,184 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.30 | $ 0.30 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 29,987,232 | 29,953,041 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues | $ 302,385 | $ 286,554 |
Operating expenses | 226,851 | 211,750 |
Gross margin | 75,534 | 74,804 |
Selling, general and administrative expenses | 89,659 | 89,313 |
Restructuring and other related charges (credits), net | 0 | (1,247) |
Gain on revaluation of contingent consideration | 0 | (1,174) |
Operating loss | (14,125) | (12,088) |
Interest expense, net | 7,597 | 3,158 |
Gain on convertible debt embedded derivative | (4,547) | 0 |
Other expense, net | 47 | 341 |
Loss before income taxes | (17,222) | (15,587) |
Less: Provision (benefit) for income taxes | 623 | (6,079) |
Net loss | $ (17,845) | $ (9,508) |
Basic loss per share | $ (0.60) | $ (0.32) |
Diluted loss per share | $ (0.60) | $ (0.32) |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (17,845) | $ (9,508) |
Foreign currency translation adjustment | (126) | 2,108 |
Foreign currency hedge | (421) | (166) |
Amortization of net actuarial loss on defined benefit pension plans | 0 | 17 |
Other comprehensive income (loss), before tax | (547) | 1,959 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 230 | (448) |
Other comprehensive income (loss), net of tax | (317) | 1,511 |
Total comprehensive loss | $ (18,162) | $ (7,997) |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net loss | $ (17,845) | $ (9,508) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 16,455 | 12,961 |
Amortization of deferred loan costs and debt discount | 1,668 | 157 |
Provision for doubtful accounts | 2,422 | 1,774 |
Foreign currency loss | 412 | 334 |
Deferred income taxes | (1,644) | (4,835) |
Gain on revaluation of contingent consideration | 0 | (1,174) |
Loss (gain) on asset disposal | 44 | (976) |
Gain on convertible debt embedded derivative | (4,547) | 0 |
Non-cash compensation cost | 2,420 | 1,747 |
Other, net | (1,025) | (497) |
(Increase) decrease: | ||
Receivables | 11,674 | (6,919) |
Inventory | (1,904) | (795) |
Prepaid expenses and other current assets | (4,381) | 1,746 |
Increase (decrease): | ||
Accounts payable | (6,922) | (7,210) |
Other accrued liabilities | 506 | 12,681 |
Income taxes | 4,818 | (2,036) |
Net cash provided by (used in) operating activities | 2,151 | (2,550) |
Cash flows from investing activities: | ||
Capital expenditures | (5,487) | (10,718) |
Proceeds from disposal of assets | 18 | 533 |
Other | (436) | (570) |
Net cash used in investing activities | (5,905) | (10,755) |
Cash flows from financing activities: | ||
Net payments under revolving credit agreement | (2,630) | (5,100) |
Payments under term loan | 0 | (5,000) |
Contingent consideration payments | (668) | 0 |
Debt issuance costs on Credit Facility | (855) | (10) |
Issuance of common stock from share-based payment arrangements | 0 | 449 |
Payments related to withholding tax for share-based payment arrangements | (225) | (249) |
Net cash used in financing activities | (4,378) | (9,910) |
Effect of exchange rate changes on cash | (237) | 739 |
Net decrease in cash or cash equivalents | (8,369) | (22,476) |
Cash and cash equivalents at beginning of period | 26,552 | 46,216 |
Cash and cash equivalents at end of period | $ 18,183 | $ 23,740 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES Description of business. Unless otherwise indicated, the terms “Team, Inc.,” “Team,” “the Company,” “we,” “our” and “us” are used in this report to refer to Team, Inc., to one or more of our consolidated subsidiaries or to all of them taken as a whole. We are a leading provider of standard to specialty industrial services, including inspection, engineering assessment and mechanical repair and remediation required in maintaining high temperature and high pressure piping systems and vessels that are utilized extensively in the refining, petrochemical, power, pipeline and other heavy industries. We conduct operations in three segments: Inspection and Heat Treating Group (“IHT”) (formerly TeamQualspec), Mechanical Services Group (“MS”) (formerly TeamFurmanite) and Quest Integrity Group (“Quest Integrity”). IHT provides standard and advanced non-destructive testing (“NDT”) services for the process, pipeline and power sectors, pipeline integrity management services, field heat treating services, as well as associated engineering and assessment services. These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities. MS provides primarily call-out and turnaround services under both on-stream and off-line/shut down circumstances. Turnaround services are project-related and demand is a function of the number and scope of scheduled and unscheduled facility turnarounds as well as new industrial facility construction or expansion activities. The turnaround and call-out services MS provides include field machining, technical bolting, field valve repair and isolation test plugging services. On-stream services offered by MS represent the services offered while plants are operating and under pressure. These services include leak repair, fugitive emissions control and hot tapping. Quest Integrity provides integrity and reliability management solutions for the process, pipeline and power sectors. These solutions encompass two broadly-defined disciplines: (1) highly specialized in-line inspection services for unpiggable process piping and pipelines using proprietary in-line inspection tools and analytical software; and (2) advanced condition assessment services through a multi-disciplined engineering team. We offer these services globally through over 220 locations in 20 countries throughout the world with more than 7,300 employees. We market our services to companies in a diverse array of heavy industries which include the petrochemical, refining, power, pipeline, steel, pulp and paper industries, as well as municipalities, shipbuilding, original equipment manufacturers (“OEMs”), distributors, and some of the world’s largest engineering and construction firms. Basis for presentation. These interim financial statements are unaudited, but in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The condensed consolidated balance sheet at December 31, 2017 is derived from the December 31, 2017 audited consolidated financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017 . Use of estimates. Our accounting policies conform to Generally Accepted Accounting Principles in the United States (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect our reported financial position and results of operations. We review significant estimates and judgments affecting our consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Estimates and judgments are based on information available at the time such estimates and judgments are made. Adjustments made with respect to the use of these estimates and judgments often relate to information not previously available. Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements. Estimates and judgments are used in, among other things, (1) aspects of revenue recognition, (2) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (3) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical and general liability, (4) establishing an allowance for uncollectible accounts receivable, (5) estimating the useful lives of our assets, (6) assessing future tax exposure and the realization of tax assets, (7) the valuation of the embedded derivative liability in our convertible debt and (8) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans. Fair value of financial instruments . Our financial instruments consist primarily of cash, cash equivalents, accounts receivable, accounts payable and debt obligations. The carrying amount of cash, cash equivalents, trade accounts receivable and trade accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of our credit facility is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the banking facility. The fair value of our convertible senior notes as of March 31, 2018 is $228.9 million (inclusive of the fair value of the conversion option) and is a “Level 2” (as defined in Note 10) measurement, determined based on the observed trading price of these instruments. Goodwill and intangible assets. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but are instead tested for impairment at least annually in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350 Intangibles—Goodwill and Other (“ASC 350”). Intangible assets with estimated useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with ASC 350. We assess goodwill for impairment at the reporting unit level, which we have determined to be the same as our operating segments. Each reporting unit has goodwill relating to past acquisitions. Our goodwill annual test date is December 1. We measure goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. We performed our most recent annual impairment test as of December 1, 2017 and concluded that there was no impairment based upon a qualitative assessment to determine if it was more likely than not (that is, a likelihood of more than 50 percent) that the fair values of the reporting units were less than their respective carrying values as of the reporting date. There have been no events that have required an interim assessment of the carrying value of goodwill during 2018. There was $285.1 million and $284.8 million of goodwill at March 31, 2018 and December 31, 2017 , respectively. A rollforward of goodwill for the three months ended March 31, 2018 is as follows (in thousands): Three Months Ended (unaudited) IHT MS Quest Integrity Total Balance at beginning of period $ 194,211 $ 56,600 $ 33,993 $ 284,804 Foreign currency adjustments (275 ) 350 217 292 Balance at end of period $ 193,936 $ 56,950 $ 34,210 $ 285,096 There was $75.2 million of accumulated impairment losses at March 31, 2018 and December 31, 2017 , comprised of $21.1 million and $54.1 million for IHT and MS, respectively, which relate to impairment losses recognized in the third quarter of 2017. Income taxes. The 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted on December 22, 2017 and represents a significant change to the United States (“U.S.”) corporate income tax system including: a federal corporate rate reduction from 35% to 21% ; limitations on the deductibility of interest expense and executive compensation; creation of new minimum taxes such as the base erosion anti-abuse tax (“BEAT”) and Global Intangible Low Taxed Income (“GILTI”) tax; and the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system, which will result in a one-time U.S. tax liability on those earnings that have not previously been repatriated to the U.S. Due to the complexities involved in accounting for the 2017 Tax Act, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which requires companies include in their financial statements reasonable estimates of the impacts of the 2017 Tax Act to the extent such reasonable estimates have been determined. Under SAB 118, companies are allowed a measurement period of up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related tax impacts. Accordingly, the Company previously recorded certain reasonable estimates of the tax impact in its consolidated statement of operations for the fourth quarter of 2017. As of year ended December 31, 2017, we had not yet completed our accounting for the income tax effects of certain elements of the 2017 Tax Act, including the new GILTI and BEAT taxes. Due to the complexity of these new tax rules, we continue to evaluate the provisions of the 2017 Tax Act and will record any resulting adjustments to our provisional estimates initially made during the fourth quarter of 2017, during the remainder of 2018, which may materially impact our income tax expense (benefit). Starting in the first quarter of 2018, we have recorded the GILTI tax as a current period expense as incurred. No adjustments to the provisional estimates determined as of December 31, 2017 were recorded during the three months ended March 31, 2018. The effective tax rate was negative 3.6% for the three months ended March 31, 2018 , compared to the effective tax rate of 39.0% for the three months ended March 31, 2017 . The decrease in the effective tax rate was primarily due to increases in valuation allowances on deferred tax assets related to both U.S. net operating losses and recently enacted interest expense limitation carryovers under the 2017 Tax Act. The effective tax rate for the three months ended March 31, 2018 also reflects the reduced federal corporate income tax rate that resulted from the enactment of the 2017 Tax Act in December 2017. Allowance for doubtful accounts. In the ordinary course of business, a portion of our accounts receivable are not collected due to billing disputes, customer bankruptcies, dissatisfaction with the services we performed and other various reasons. We establish an allowance to account for those accounts receivable that we estimate will eventually be deemed uncollectible. The allowance for doubtful accounts is based on a combination of our historical experience and management’s review of long outstanding accounts receivable. Concentration of credit risk. No single customer accounts for more than 10% of consolidated revenues. Earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to Team stockholders by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing net income (loss) available to Team stockholders by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed conversion of our convertible senior notes under the treasury stock method. The Company’s intent is to settle the principal amount of the convertible senior notes in cash upon conversion. If the conversion value exceeds the principal amount, the Company may elect to deliver shares of its common stock with respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). Accordingly, the conversion spread is included in the denominator for the computation of diluted earnings per common share using the treasury stock method and the numerator is adjusted for any recorded gain or loss, net of tax, on the embedded derivative associated with the conversion feature. Amounts used in basic and diluted loss per share, for the three months ended March 31, 2018 and 2017 , are as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Weighted-average number of basic shares outstanding 29,974 29,804 Stock options, stock units and performance awards — — Convertible senior notes — — Total shares and dilutive securities 29,974 29,804 For both the three months ended March 31, 2018 and 2017, all outstanding share-based compensation awards were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the net loss in both periods. Also, the effect of our convertible senior notes was excluded from the calculation of diluted earnings (loss) per share since the conversion price exceeded the average price of our commo n stock during the applicable period. For information on our convertible senior notes and our share-based compensation awards, refer to Note 8 and Note 11, resp ectively. Reclassifications . Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have any effect on the Company’s financial condition or results of operations as previously reported. Newly Adopted Accounting Principles ASU No. 2014-09 . In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires the Company to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 establishes ASC Topic 606, Revenue from Contracts with Customers. (“ASC 606”). We adopted ASC 606 effective January 1, 2018. ASC 606 replaces most of the previous revenue recognition guidance under GAAP. Most of our contracts with customers are short-term in nature and billed on a time and materials basis, while certain other contracts are at a fixed price. For these fixed price contracts, ASC 606 generally results in the recognition of revenue as the services are provided compared to recognition of revenue at the time of completion of those contracts, under previous guidance. The adoption of ASC 606 has not resulted in significant changes to the overall pattern or timing of our revenue recognition. To account for the cumulative effect of initially applying ASC 606 as of January 1, 2018, we recognized a pre-tax increase to the opening balance of retained earnings of $8.8 million , pursuant to the modified retrospective transition method, for certain fixed-price contracts that were not yet completed as of the date of adoption. The cumulative effect of adoption resulted in a net increase to prepaid expenses and other current assets of $8.5 million , a reduction to inventory of $0.4 million and a reduction to other accrued liabilities of $0.7 million . Also, we recorded the related tax impacts as of January 1, 2018, which resulted in a net reduction to the opening balance of retained earnings of $0.4 million and a corresponding increase to deferred tax liabilities. Because we have applied the modified retrospective transition method of adoption, comparative periods prior to January 1, 2018 were not retrospectively adjusted to reflect adoption of ASU 2014-09 and are presented in accordance with our historical accounting. The effect of ASC 606 on our condensed consolidated balance sheet as of March 31, 2018 and our condensed consolidated statement of operations for the three months ended March 31, 2018 were as follows (in thousands): March 31, 2018 Without adoption of ASC 606 Adjustments to apply ASC 606 As reported (unaudited) (unaudited) (unaudited) Effect on condensed consolidated balance sheet Assets Prepaid expenses and other current assets $ 18,330 $ 12,699 $ 31,029 Inventory $ 52,119 $ (672 ) $ 51,447 Liabilities and Equity Other accrued liabilities $ 94,226 $ (1,246 ) $ 92,980 Income taxes payable $ 4,090 $ 179 $ 4,269 Deferred income taxes $ 37,584 $ 359 $ 37,943 Retained earnings $ 93,635 $ 12,735 $ 106,370 Three Months Ended March 31, 2018 Without adoption of ASC 606 Adjustments to apply ASC 606 As reported (unaudited) (unaudited) (unaudited) Effect on condensed consolidated statement of operations Revenues $ 296,857 $ 5,528 $ 302,385 Operating expenses $ 225,802 $ 1,049 $ 226,851 Provision for income taxes $ 444 $ 179 $ 623 Net loss $ (22,145 ) $ 4,300 $ (17,845 ) Refer to Note 2 for additional disclosures required by ASC 606. ASU No. 2016-15 . In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies the classification in the statement of cash flows of certain items, including debt prepayment or extinguishment costs, settlement of contingent consideration arising from a business combination, insurance settlement proceeds, and cash receipts and payments having aspects of more than one class of cash flows. The adoption of this ASU on January 1, 2018 had no impact on our consolidated statements of cash flows. ASU No. 2016-16 . In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. Adoption of ASU 2016-16 on January 1, 2018 did not have a material impact on our consolidated financial statements. ASU No. 2017-07 . In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”), which prescribes where in the statement of operations the components of net periodic pension cost and net periodic postretirement benefit cost should be reported. Under ASU 2017-07, the service cost component is required to be reported in the same line or line items that other compensation costs of the associated employees are reported, while the other components are reported outside of operating income (loss), in the “Other expense, net” line item of our consolidated statements of operations. Adoption of ASU 2017-07 on January 1, 2018 did not have a material impact on our consolidated statements of operations. ASU No. 2017-09. In May 2017, the FASB issued ASU No. 2017-09, Compensation–Stock Compensation: Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity apply modification accounting in Topic 718. Under ASU 2017-09, modification accounting is required unless the effect of the modification does not impact the award’s fair value, vesting conditions and its classification as an equity instrument or liability instrument. Our adoption of ASU 2017-09 on January 1, 2018 on a prospective basis did not have any impact on our share-based compensation expense. Accounting Principles Not Yet Adopted ASU No. 2016-02. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which changes the accounting for leases, including a requirement to record essentially all leases on the consolidated balance sheets as assets and liabilities. This ASU is effective for fiscal years beginning after December 15, 2018. We will adopt ASU 2016-02 effective January 1, 2019. We are currently evaluating the impact this ASU will have on our ongoing financial reporting, however we expect a significant amount of assets and liabilities will be recognized on our consolidated balance sheet upon adoption. ASU No. 2016-13. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends GAAP by introducing a new impairment model for financial instruments that is based on expected credit losses rather than incurred credit losses. The new impairment model applies to most financial assets, including trade accounts receivable. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, although it may be adopted one year earlier, and requires a modified retrospective transition approach. We are currently evaluating the impact this ASU will have on our ongoing financial reporting. ASU No. 2017-12 . In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedge Activities (“ASU 2017-12”). This update makes certain targeted improvements to the accounting and presentation of certain hedging relationships. For net investment hedges, ASU 2017-12 requires that the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness be recorded in the currency translation adjustment section of other comprehensive income (loss). ASU 2017-12 is required to be adopted for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this ASU will have on our ongoing financial reporting. ASU No. 2018-02 . In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 introduces the option to reclassify from accumulated other comprehensive income (loss) to retained earnings the “stranded” tax effects resulting from the 2017 Tax Act. Under GAAP, certain deferred tax assets or liabilities may originate through income tax activity recognized in other comprehensive income (loss). However, because the adjustment of deferred tax assets and liabilities due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate is required to be included in income (loss) from continuing operations, the tax effects of items within accumulated other comprehensive income (loss) are not adjusted to reflect the new tax rate, resulting in “stranded” tax effects. ASU 2018-02 provides an option to reclassify such tax effects from accumulated other comprehensive income (loss) to retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating whether to elect the option set forth in ASU 2018-02. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE As discussed in “Newly Adopted Accounting Principles—ASU No. 2014-09” in Note 1, on January 1, 2018, we adopted ASC 606 using the modified retrospective method, which was applied to those contracts that were not completed as of January 1, 2018. In accordance with ASC 606, we follow a five-step process to recognize revenue: 1) identify the contract with the customer, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations and 5) recognize revenue when the performance obligations are satisfied. Most of our contracts with customers are short-term in nature and billed on a time and materials basis, while certain other contracts are at a fixed price. Certain contracts may contain a combination of fixed and variable elements. We act as a principal and have performance obligations to provide the service itself or oversee the services provided by any subcontractors. Revenue is measured based on consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties, such as taxes assessed by governmental authorities. In contracts where the amount of consideration is variable, we consider our experience with similar contracts in estimating the amount to which we will be entitled and recognize revenues accordingly. As most of our contracts contain only one performance obligation, the allocation of a contracts transaction price to multiple performance obligations is generally not applicable. Customers are generally billed as we satisfy our performance obligations and payment terms typically range from 30 to 90 days from the invoice date. Billings under certain fixed-price contracts may be based upon the achievement of specified milestones, while some arrangements may require advance customer payment. Our contracts do not include significant financing components since the contracts typically span less than one year. Contracts generally include an assurance type warranty clause to guarantee that the services comply with agreed specifications. The warranty period typically is 12 months or less from the date of service. Warranty expenses were not material for the three months ended March 31, 2018 and 2017 . Revenue is recognized as (or when) the performance obligations are satisfied by transferring control over a service or product to the customer. Revenue recognition guidance prescribes two recognition methods (over time or point in time). Most of our performance obligations qualify for recognition over time because we typically perform our services on customer facilities or assets and customers receive the benefits of our services as we perform. Where a performance obligation is satisfied over time, the related revenue is also recognized over time using the method deemed most appropriate to reflect the measure of progress and transfer of control. For our time and materials contracts, we are generally able to elect the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date. For our fixed price contracts, we typically recognize revenue using the cost-to-cost method, which measures the extent of progress towards completion based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Under this method, revenue is recognized proportionately as costs are incurred. For contracts where control is transferred at a point in time, revenue is recognized at the time control of the asset is transferred to the customer, which is typically upon delivery and acceptance by the customer. Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands). Three Months Ended March 31, 2018 (unaudited) United States and Canada Other Countries Total Revenue: IHT $ 148,210 $ 3,209 $ 151,419 MS 99,824 33,077 132,901 Quest Integrity 12,710 5,355 18,065 Total $ 260,744 $ 41,641 $ 302,385 Three Months Ended March 31, 2018 (unaudited) Asset Integrity Management Repair and Maintenance Services Heat Treating Non-Destructive Evaluation Other Total Revenue: IHT $ 9,156 $ 846 $ 19,296 $ 114,380 $ 7,741 $ 151,419 MS — 131,199 504 — 1,198 132,901 Quest Integrity 18,065 — — — — 18,065 Total $ 27,221 $ 132,045 $ 19,800 $ 114,380 $ 8,939 $ 302,385 For additional information on our reportable operating segments and geographic information, refer to Note 14. Contract balances. The timing of revenue recognition, billings and cash collections results in trade accounts receivable, contract assets and contract liabilities on the consolidated balance sheets. Trade accounts receivable include billed and unbilled amounts currently due from customers and represent unconditional rights to receive consideration. The amounts due are stated at their net estimated realizable value. Refer to Notes 1 and 3 for additional information on our trade receivables and the allowance for doubtful accounts. Contract assets include unbilled amounts typically resulting from sales under fixed-price contracts when the cost-to-cost method of revenue recognition is utilized, the revenue recognized exceeds the amount billed to the customer and the right to payment is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. If we receive advances or deposits from our customers, a contract liability is recorded. Additionally, a contract liability arises if items of variable consideration result in less revenue being recorded than what is billed. Contract assets and contract liabilities are generally classified as current. The following table provides information about trade accounts receivable, contract assets and contract liabilities as of March 31, 2018 and January 1, 2018, the date of adoption of ASC 606, (in thousands): March 31, 2018 January 1, 2018 (unaudited) (unaudited) Trade accounts receivable, net 1 $ 288,980 $ 301,963 Contract assets 2 $ 14,792 $ 9,823 Contract liabilities 3 $ 3,799 $ 5,415 _________________ 1 Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. 2 Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheet. 3 Included in the “Other accrued liabilities” line of the condensed consolidated balance sheet. The $5.0 million increase in our contract assets from January 1, 2018 to March 31, 2018 was due to additional contracts in process, reflecting higher activity levels attributable to the 2018 spring turnaround season. Due to the short-term nature of our contracts, contract liability balances as of the end of any period are generally recognized as revenue in the following quarter. Contract costs. The Company recognizes the incremental costs of obtaining contracts as selling, general and administrative expenses when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less. Assets recognized for costs to obtain a contract were not material as of March 31, 2018 or January 1, 2018. Costs to fulfill a contract are recorded as assets if they relate directly to a contract or a specific anticipated contract, the costs generate or enhance resources that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. Costs to fulfill recognized as assets primarily consist of labor and materials costs and generally relate to engineering and set-up costs incurred prior to the satisfaction of performance obligations begins. Assets recognized for costs to fulfill a contract are included in the “Prepaid expenses and other current assets” line of the condensed consolidated balance sheets and were not material as of March 31, 2018 and January 1, 2018. Such assets are recognized as expenses as we transfer the related goods or services to the customer. All other costs to fulfill a contract are expensed as incurred. Remaining performance obligations. As of March 31, 2018 and January 1, 2018, there were no material amounts of remaining performance obligations that are required to be disclosed. As permitted by ASC 606, we have elected not to disclose information about remaining performance obligations where i) the performance obligation is part of a contract that has an original expected duration of one year or less or ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient. |
RECEIVABLES
RECEIVABLES | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
RECEIVABLES | RECEIVABLES A summary of accounts receivable as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Trade accounts receivable $ 209,766 $ 244,133 Unbilled receivables 92,371 69,138 Allowance for doubtful accounts (13,157 ) (11,308 ) Total $ 288,980 $ 301,963 |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY A summary of inventory as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Raw materials $ 9,137 $ 8,707 Work in progress 2,771 2,836 Finished goods 39,539 38,160 Total $ 51,447 $ 49,703 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Land $ 6,705 $ 6,698 Buildings and leasehold improvements 49,881 47,924 Machinery and equipment 265,775 261,343 Furniture and fixtures 9,751 9,405 Capitalized ERP system development costs 46,637 46,637 Computers and computer software 13,405 13,052 Automobiles 4,989 5,070 Construction in progress 10,998 12,613 Total 408,141 402,742 Accumulated depreciation and amortization (208,329 ) (199,523 ) Property, plant, and equipment, net $ 199,812 $ 203,219 Depreciation expense for the three months ended March 31, 2018 and 2017 was $9.3 million and $8.7 million , respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS A summary of intangible assets as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 175,305 $ (41,811 ) $ 133,494 $ 175,226 $ (38,712 ) $ 136,514 Non-compete agreements 5,560 (4,625 ) 935 5,563 (4,509 ) 1,054 Trade names 24,879 (9,896 ) 14,983 24,830 (6,211 ) 18,619 Technology 7,880 (4,529 ) 3,351 7,867 (4,292 ) 3,575 Licenses 864 (497 ) 367 859 (460 ) 399 Total $ 214,488 $ (61,358 ) $ 153,130 $ 214,345 $ (54,184 ) $ 160,161 Amortization expense for the three months ended March 31, 2018 and 2017 was $7.2 million and $4.3 million , respectively. With respect to our intangible asset associated with the Furmanite trade name, management has determined that, as a result of initiatives to consolidate the Company’s branding, the useful life of this intangible asset is not expected to extend beyond December 31, 2018. In accordance with ASC 350, we are accounting for the change in useful life prospectively effective January 1, 2018 and are amortizing the remaining balance over 2018. For the three months ended March 31, 2018 , the change in estimate resulted in $3.1 million of incremental amortization expense. |
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
OTHER ACCRUED LIABILITIES | OTHER ACCRUED LIABILITIES A summary of other accrued liabilities as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Payroll and other compensation expenses $ 50,272 $ 40,988 Insurance accruals 14,790 15,799 Property, sales and other non-income related taxes 4,685 6,483 Lease commitments 1,399 1,616 Contract liabilities 3,799 6,102 Accrued commission 1,263 1,473 Accrued interest 2,632 5,950 Volume discount 2,684 1,545 Contingent consideration 616 1,246 Professional fees 1,784 1,098 Other 9,056 10,172 Total $ 92,980 $ 92,472 |
LONG-TERM DEBT, DERIVATIVES AND
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT | LONG-TERM DEBT, LETTERS OF CREDIT AND DERIVATIVES As of March 31, 2018 and December 31, 2017 , our long-term debt is summarized as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Credit Facility $ 176,122 $ 177,857 Convertible debt 1 206,773 209,892 Total long-term debt 382,895 387,749 Less: current portion of long-term debt — — Total long-term debt, less current portion $ 382,895 $ 387,749 _________________ 1 Comprised of principal amount outstanding plus embedded derivative liability, less unamortized discount and issuance costs. See Convertible Debt section below for additional information. Credit Facility In July 2015, we renewed our banking credit facility (the “Credit Facility”). In accordance with the second amendment to the Credit Facility, which was signed in February 2016, the Credit Facility had a borrowing capacity of up to $600 million and consisted of a $400 million , five -year revolving loan facility and a $200 million five -year term loan facility. The swing line facility is $35.0 million . On July 31, 2017, we completed the issuance of $230.0 million of 5.00% convertible senior notes in a private offering (the “Offering,” which is described further below) and used the proceeds from the Offering to repay in full the then-outstanding term-loan portion of our Credit Facility and a portion of the outstanding revolving borrowings. Concurrent with the completion of the Offering and the repayment of outstanding borrowings discussed above, we entered into the sixth amendment to the Credit Facility, effective as of June 30, 2017, which reduced the capacity of the Credit Facility to a $300 million revolving loan facility, subject to a borrowing availability test (based on eligible accounts, inventory and fixed assets). The Credit Facility matures in July 2020 , bears interest based on a variable Eurodollar rate option (LIBOR plus 3.75% margin at March 31, 2018 ) and has commitment fees on unused borrowing capacity ( 0.75% at March 31, 2018 ). The Credit Facility limits our ability to pay cash dividends. The Credit Facility also contains financial covenants, which were amended in March 2018 pursuant to the seventh amendment (the “Seventh Amendment”) to the Credit Facility. The Seventh Amendment eliminated the ratio of consolidated funded debt to consolidated EBITDA (the “Total Leverage Ratio,” as defined in the Credit Facility agreement) covenant through the remainder of the term of the Credit Facility and also modified both the ratio of senior secured debt to consolidated EBITDA (the “Senior Secured Leverage Ratio,” as defined in the Credit Facility agreement) and the ratio of consolidated EBITDA to consolidated interest charges (the “Interest Coverage Ratio,” as defined in the Credit Facility agreement) as follows. First, the Company is required to maintain a maximum Senior Secured Leverage Ratio of not more than 4.25 to 1.00 as of March 31, 2018 and June 30, 2018, not more than 3.50 to 1.00 as of September 30, 2018 and each quarter thereafter through June 30, 2019 and not more than 2.75 to 1.00 as of September 30, 2019 and each quarter thereafter. With respect to the Interest Coverage Ratio, the Company is required to maintain a ratio of not less than 2.25 to 1.00 as of March 31, 2018 and each quarter thereafter through December 31, 2018 and not less than 2.50 to 1.00 as of March 31, 2019 and each quarter thereafter. As of March 31, 2018 , we are in compliance with the covenants in effect as of such date. The Senior Secured Leverage Ratio and the Interest Coverage Ratio stood at 3.27 to 1.00 and 2.80 to 1.00, respectively, as of March 31, 2018 . At March 31, 2018 , we had $18.2 million of cash on hand and had approximately $60 million of available borrowing capacity through our Credit Facility. As of March 31, 2018 , we had $2.7 million of unamortized debt issuance costs that are being amortized over the life of the Credit Facility. Our ability to maintain compliance with the financial covenants is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties. Accordingly, there can be no assurance that we will be able to maintain compliance with the Credit Facility covenants as of any future date. In the event we are unable to maintain compliance with our financial covenants, we would seek to enter into an amendment to the Credit Facility with our bank group in order to modify and/or to provide relief from the financial covenants for an additional period of time. Although we have entered into amendments in the past, there can be no assurance that any future amendments would be available on terms acceptable to us, if at all. In order to secure our casualty insurance programs we are required to post letters of credit generally issued by a bank as collateral. A letter of credit commits the issuer to remit specified amounts to the holder, if the holder demonstrates that we failed to meet our obligations under the letter of credit. If this were to occur, we would be obligated to reimburse the issuer for any payments the issuer was required to remit to the holder of the letter of credit. We were contingently liable for outstanding stand-by letters of credit totaling $22.5 million at both March 31, 2018 and December 31, 2017 . Outstanding letters of credit reduce amounts available under our Credit Facility and are considered as having been funded for purposes of calculating our financial covenants under the Credit Facility. Convertible Debt Description of the Notes On July 31, 2017, we issued $230.0 million principal amount of 5.00% Convertible Senior Notes due 2023 (the “Notes”). The Notes, which are senior unsecured obligations of the Company, bear interest at rate of 5.0% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2018. The Notes will mature on August 1, 2023 unless repurchased, redeemed or converted in accordance with their terms prior to such date. The Notes will be convertible at an initial conversion rate of 46.0829 shares of our common stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $21.70 per share. The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the indenture governing the Notes. Holders may convert their Notes at their option prior to the close of business on the business day immediately preceding May 1, 2023, but only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of such measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on such trading day; • if we call any or all of the Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or; • upon the occurrence of specified corporate events described in the indenture governing the Notes. On or after May 1, 2023 until the close of business on the business day immediately preceding the maturity date, holders may, at their option, convert their Notes at any time, regardless of the foregoing circumstances. Because the Notes could be convertible in full into more than 19.99 percent of our outstanding common stock, we are required by the listing rules of the New York Stock Exchange to obtain the approval of the holders of our outstanding shares of common stock before the Notes may be converted into more than 5,964,858 shares of common stock. The Notes are initially convertible into 10,599,067 shares of common stock. We have agreed to seek approval of the holders of our outstanding shares of common stock at our next annual shareholders’ meeting, which will be held on May 17, 2018. The Notes will be convertible into, subject to various conditions, cash or shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, in each case, at the Company’s election, except that prior to receipt of the requisite stockholder approval, the Company will settle conversion in cash or a combination of cash and shares of common stock. If holders elect to convert the Notes in connection with certain fundamental change transactions described in the indenture governing the Notes, we will, under certain circumstances described in the indenture governing the Notes, increase the conversion rate for the Notes so surrendered for conversion. We may not redeem the Notes prior to August 5, 2021. We will have the option to redeem all or any portion of the Notes on or after August 5, 2021, if certain conditions (including that our common stock is trading at or above 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive)), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Accounting Treatment of the Notes As of March 31, 2018 , the Notes were recorded in our condensed consolidated balance sheet as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Liability component: Principal $ 230,000 $ 230,000 Unamortized issuance costs (6,581 ) (6,820 ) Unamortized discount (32,693 ) (33,882 ) Net carrying amount of the liability component 190,726 189,298 Embedded derivative liability 16,047 20,594 Total 1 $ 206,773 $ 209,892 Equity component: Carrying amount of the equity component, net of issuance costs 2 $ 13,912 $ 13,912 _________________ 1 Included in the “Long-term debt” line of the condensed consolidated balance sheet. 2 Included in the “Additional paid-in capital” line of the condensed consolidated balance sheet. Under ASC 470-20, Debt with Conversion and Other Options , (“ASC 470-20”), an entity must separately account for the liability and equity components of convertible debt instruments that may be settled entirely or partially in cash upon conversion (such as the Notes) in a manner that reflects the issuer’s economic interest cost. However, entities must first consider the guidance in ASC 815-15, Embedded Derivatives (“ASC 815-15”), to determine if an instrument contains an embedded feature that should be separately accounted for as a derivative. After considering the guidance, we concluded that for the conversion feature for a portion of the Notes, we must recognize an embedded derivative under ASC 815-15 while the remainder of the Notes are subject to ASC 470-20. The Company determined the portions of the Notes subject to ASC 815-15 and ASC 470-20 as follows. First, while the Notes are initially convertible into 10,599,067 shares of common stock, the occurrence of certain corporate events could increase the conversion rate, which could result in the Notes becoming convertible into a maximum of 14,838,703 shares. As noted above, we must obtain stockholder approval to issue more than 5,964,858 shares of stock to settle the Notes upon conversion. Therefore, approximately 40% of the maximum number of shares is authorized for issuance without shareholder approval, while 8,873,845 shares, or approximately 60% would be required to be settled in cash. Therefore, the Company concluded that embedded derivative accounting under ASC 815-15 is applicable to approximately 60% of the Notes, while the remaining 40% of the Notes are subject to ASC 470-20. The Company will reassess the classification of the Notes each reporting period considering changes in facts and circumstances, if any. Once (and if) we receive stockholder approval to issue more than 19.99 percent of our outstanding common stock upon conversion of the Notes, we will reclassify the embedded derivative, at its then-current fair value, to stockholders’ equity, and it will no longer be marked to fair value each period. The following table sets forth interest expense information related to the Notes (in thousands, except percentage): Three Months Ended March 31, 2018 (unaudited) Coupon interest $ 2,875 Amortization of debt discount and issuance costs 1,428 Total interest expense on convertible senior notes $ 4,303 Effective interest rate 9.12 % As of March 31, 2018, the remaining amortization period for the debt discount and issuance costs is 64 months. Derivatives and Hedging ASC 815, Derivatives and Hedging (“ASC 815”), requires that derivative instruments be recorded at fair value and included in the balance sheet as assets or liabilities. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation, which is established at the inception date of a derivative. Special accounting for derivatives qualifying as fair value hedges allows derivatives’ gains and losses to offset related results on the hedged item in the statement of operations. For derivative instruments designated as cash flow hedges, changes in fair value, to the extent the hedge is effective, are recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. Hedge effectiveness is measured at least quarterly based on the relative cumulative changes in fair value between the derivative contract and the hedged item over time. Credit risks related to derivatives include the possibility that the counter-party will not fulfill the terms of the contract. We consider counterparty credit risk to our derivative contracts when valuing our derivative instruments. Our borrowing of €12.3 million under the Credit Facility serves as an economic hedge of our net investment in our European operations as fluctuations in the fair value of the borrowing attributable to the U.S. Dollar/Euro spot rate will offset translation gains or losses attributable to our investment in our European operations. At March 31, 2018 , the €12.3 million borrowing had a U.S. Dollar value of $15.2 million . As discussed above, we have recorded an embedded derivative for a portion of the Notes. The embedded derivative represents conversion features to the purchasers of the Notes that provide an opportunity to profit if the value of the shares that may be attained from the conversion of the Notes is higher than the redemption amount of the Notes. In accordance with ASC 815-15, the embedded derivative instrument is recorded at fair value each period with changes in fair value reflected in our results of operations. No hedge accounting is applied. The amounts recognized in other comprehensive income (loss), reclassified into income (loss) and the amounts recognized in income (loss) for the three months ended March 31, 2018 and 2017 , are as follows (in thousands): Gain (Loss) Recognized in Other Comprehensive Income (Loss) Gain (Loss) Reclassified from Other Comprehensive Income (Loss) to Earnings Three Months Ended Three Months Ended (unaudited) (unaudited) 2018 2017 2018 2017 Derivatives Classified as Hedging Instruments Net investment hedge $ (421 ) $ (166 ) $ — $ — Gain (Loss) Recognized in Income (Loss) 1 Three Months Ended March 31, (unaudited) 2018 2017 Derivatives Not Classified as Hedging Instruments Embedded derivative in convertible debt $ 4,547 $ — _________________ 1 Reflected as “Gain on convertible debt embedded derivative” in the condensed consolidated statements of operations. The following table presents the fair value totals and balance sheet classification for derivatives designated as hedges and derivatives not designated as hedges under ASC 815 (in thousands): March 31, 2018 December 31, 2017 (unaudited) Classification Balance Sheet Location Fair Value Classification Balance Sheet Location Fair Derivatives Classified as Hedging Instruments Net investment hedge Liability Long-term debt $ (2,825 ) Liability Long-term debt $ (3,246 ) Derivatives Not Classified as Hedging Instruments Embedded derivative in convertible debt Liability Long-term debt $ 16,047 Liability Long-term debt $ 20,594 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS We have defined benefit pension plans in two foreign subsidiaries, one plan covering certain United Kingdom employees (the “U.K. Plan”) and the other covering certain Norwegian employees (the “Norwegian Plan”). As the Norwegian Plan represents approximately one percent of both the Company’s total pension plan liabilities and total pension plan assets, only the schedule of net periodic pension credit includes combined amounts from the two plans, while assumption and narrative information relates solely to the U.K. Plan. Net periodic pension credit for the U.K. and Norwegian Plans includes the following components (in thousands): Three Months Ended March 31, 2018 2017 (unaudited) (unaudited) Service cost $ 24 $ 4 Interest cost 601 579 Expected return on plan assets (970 ) (738 ) Amortization of net actuarial loss — 17 Net periodic pension credit $ (345 ) $ (138 ) The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories as follows: 4.7% overall, 5.8% for equities and 1.8% for debt securities. We expect to contribute $2.5 million to the pension plan for 2018 , of which $0.6 million has been contributed through March 31, 2018 . |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS We apply the provisions of ASC 820, which among other things, requires certain disclosures about assets and liabilities carried at fair value. As defined in ASC 820, fair value is 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. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information available. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The use of unobservable inputs is intended to allow for fair value determinations in situations in which there is little, if any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy such that “Level 1” measurements include unadjusted quoted market prices for identical assets or liabilities in an active market, “Level 2” measurements include quoted market prices for identical assets or liabilities in an active market which have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets, and “Level 3” measurements include those that are unobservable and of a highly subjective measure. The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 . As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands): March 31, 2018 (unaudited) Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Contingent consideration 1 $ — $ — $ 1,127 $ 1,127 Net investment hedge $ — $ (2,825 ) $ — $ (2,825 ) Embedded derivative in convertible debt $ — $ 16,047 $ — $ 16,047 December 31, 2017 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Contingent consideration 1 $ — $ — $ 1,712 $ 1,712 Net investment hedge $ — $ (3,246 ) $ — $ (3,246 ) Embedded derivative in convertible debt $ — $ 20,594 $ — $ 20,594 __________________________ 1 Inclusive of both current and noncurrent portions. There were no transfers in and out of Level 1, Level 2 and Level 3 during the three months ended March 31, 2018 and 2017 . The fair value of the convertible debt embedded derivative liability is estimated using a lattice model with inputs including our stock price, our stock price volatility and interest rates. As the assumptions used in the valuation are primarily derived from observable market data, the fair value measurement is classified as Level 2 in the fair value hierarchy. The fair value of contingent consideration liabilities classified in the table above were estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include a combination of actual cash flows and probability-weighted assessments of expected future cash flows related to the acquired businesses, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the acquisition agreements. The following table represents the changes in the fair value of Level 3 contingent consideration liabilities (in thousands): Three Months Ended (unaudited) Balance, beginning of period $ 1,712 Accretion of liability 31 Foreign currency effects 52 Payment (668 ) Balance, end of period $ 1,127 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION We have adopted stock incentive plans and other arrangements pursuant to which our Board of Directors (the “Board”) may grant stock options, restricted stock, stock units, stock appreciation rights, common stock or performance awards to officers, directors and key employees. At March 31, 2018 , there were approximately 1.6 million restricted stock units, performance awards and stock options outstanding to officers, directors and key employees. The exercise price, terms and other conditions applicable to each form of share-based compensation under our plans are generally determined by the Compensation Committee of our Board at the time of grant and may vary. Our share-based payments consist primarily of stock units, performance awards, common stock and stock options. In May 2016, our shareholders approved the 2016 Team, Inc. Equity Incentive Plan (the “Plan”), which replaced all of our previous equity compensation plans. The Plan authorizes the issuance of share-based awards representing up to 2,000,000 shares of common stock. Shares issued in connection with our share-based compensation are issued out of authorized but unissued common stock. Compensation expense related to share-based compensation totaled $2.4 million and $1.7 million for the three months ended March 31, 2018 and 2017 , respectively. Share-based compensation expense reflects an estimate of expected forfeitures. At March 31, 2018 , $21.1 million of unrecognized compensation expense related to share-based compensation is expected to be recognized over a remaining weighted-average period of 2.3 years . The excess tax benefit derived when share-based awards result in a tax deduction for the Company was not material for the three months ended March 31, 2018 and 2017 . Stock units are settled with common stock upon vesting unless it is not legally feasible to issue shares, in which case the value of the award is settled in cash. We determine the fair value of each stock unit based on the market price on the date of grant. Stock units generally vest in annual installments over four years and the expense associated with the units is recognized over the same vesting period. We also grant common stock to our directors, which typically vests immediately. Compensation expense related to stock units and director stock grants totaled $1.7 million in each of the three months ended March 31, 2018 and 2017 . Transactions involving our stock units and director stock grants during the three months ended March 31, 2018 are summarized below: Three Months Ended (unaudited) No. of Stock Units Weighted Average Fair Value (in thousands) Stock and stock units, beginning of period 854 $ 21.42 Changes during the period: Granted 5 $ 16.68 Vested and settled (33 ) $ 20.05 Cancelled (2 ) $ 21.26 Stock and stock units, end of period 824 $ 21.38 We have a performance stock unit award program whereby we grant Long-Term Performance Stock Unit (“LTPSU”) awards to our executive officers. Under this program, the Company communicates “target awards” to the executive officers at the beginning of a performance period. LTPSU awards cliff vest with the achievement of the performance goals and completion of the required service period. Settlement occurs with common stock as soon as practicable following the vesting date. LTPSU awards granted on October 15, 2015 are subject to a three -year performance period and a concurrent three -year service period. The performance target is based on results of operations over the three -year performance period with possible payouts ranging from 0% to 300% of the target awards. LTPSU awards granted on March 15, 2017 and March 21, 2018 are subject to a two -year performance period and a concurrent two -year service period. For March 15, 2017 awards, the performance goal is separated into three independent performance factors based on (i) relative total shareholder total return (“RTSR”) as measured against a designated peer group, (ii) RTSR as measured against a designated index and (iii) results of operations over the two -year performance period, with possible payouts ranging from 0% to 200% of the target awards for the first two performance factors and ranging from 0% to 300% of the target awards for the third performance factor. For the March 21, 2018 awards, the performance goal is separated into two independent performance factors based on (i) RTSR as measured against a designated peer group and (ii) results of operations over the two-year performance period, with possible payouts ranging from 0% to 200% of the target awards for each of the two performance factors. On January 24, 2018, we granted 350,000 performance units to our Chief Executive Officer (“CEO”) that vest in 20% increments upon the achievement of five specified Company stock price milestones, subject to a minimum vesting period of one year and the provision of service through each of the vesting dates. Settlement occurs with common stock within 30 days of the respective vesting dates. Any outstanding unvested performance units are forfeited on the fifth anniversary of the grant date. The RTSR and the stock price milestone factors are considered to be market conditions under GAAP. For performance units subject to market conditions, we determine the fair value of the performance units based on the results of a Monte Carlo simulation, which uses market-based inputs as of the date of grant to simulate future stock returns. Compensation expense for awards with market conditions is recognized on a straight-line basis over the longer of (i) the minimum required service period and (ii) the service period derived from the Monte Carlo simulation, separately for each vesting tranche. For performance units subject to market conditions, because the expected outcome is incorporated into the grant date fair value through the Monte Carlo simulation, compensation expense is not subsequently adjusted for changes in the expected or actual performance outcome. For performance units not subject to market conditions, we determine the fair value of each performance unit based on the market price of our common stock on the date of grant. For these awards, we recognize compensation expense over the vesting term on a straight-line basis based upon the performance target that is probable of being met, subject to adjustment for changes in the expected or actual performance outcome. Compensation expense related to performance awards totaled $0.7 million and $0.1 million for the three months ended March 31, 2018 and 2017 , respectively. Transactions involving our performance awards during the three months ended March 31, 2018 are summarized below: Three Months Ended (unaudited) Performance Units Subject to Market Conditions Performance Units Not Subject to Market Conditions No. of Stock Units 1 Weighted Average Fair Value No. of Stock Units 1 Weighted Average Fair Value (in thousands) (in thousands) Performance stock units, beginning of period 45 $ 17.66 84 $ 25.76 Changes during the period: Granted 453 $ 13.94 103 $ 14.15 Vested and settled — $ — (15 ) $ 13.45 Cancelled — $ — — $ — Performance stock units, end of period 498 $ 14.26 172 $ 19.89 _________________ 1 Performance units with variable payouts are shown at target level of performance. We determine the fair value of each stock option at the grant date using a Black-Scholes model and recognize the resulting expense of our stock option awards over the period during which an employee is required to provide services in exchange for the awards, usually the vesting period. Compensation expense related to stock options for the three months ended March 31, 2018 and 2017 was not material. Our options typically vest in equal annual installments over a four -year service period. Expense related to an option grant is recognized on a straight line basis over the specified vesting period for those options. Stock options generally have a ten -year term. Transactions involving our stock options during the three months ended March 31, 2018 are summarized below: Three Months Ended (unaudited) No. of Options Weighted Average Exercise Price (in thousands) Shares under option, beginning of period 79 $ 31.94 Changes during the period: Granted — $ — Exercised — $ — Cancelled — $ — Expired (2 ) $ 34.19 Shares under option, end of period 77 $ 31.88 Exercisable at end of period 77 $ 31.88 Options exercisable at March 31, 2018 had a weighted-average remaining contractual life of 3.7 years , and exercise prices ranged from $21.12 to $50.47 . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Balance, beginning of period $ (21,366 ) $ 3,246 $ (7,221 ) $ 5,545 $ (19,796 ) $ (31,973 ) $ 5,048 $ (10,518 ) $ 8,443 $ (29,000 ) Other comprehensive income (loss) (126 ) (421 ) — 230 (317 ) 2,108 (166 ) 17 (448 ) 1,511 Balance, end of period $ (21,492 ) $ 2,825 $ (7,221 ) $ 5,775 $ (20,113 ) $ (29,865 ) $ 4,882 $ (10,501 ) $ 7,995 $ (27,489 ) The following table represents the related tax effects allocated to each component of other comprehensive income (loss) (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Gross Amount Tax Effect Net Amount Gross Amount Tax Effect Net Amount Foreign currency translation adjustments $ (126 ) $ 124 $ (2 ) $ 2,108 $ (508 ) $ 1,600 Foreign currency hedge (421 ) 106 (315 ) (166 ) 63 (103 ) Defined benefit pension plans — — — 17 (3 ) 14 Total $ (547 ) $ 230 $ (317 ) $ 1,959 $ (448 ) $ 1,511 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Con Ed Matter —We have, from time to time, provided temporary leak repair services to the steam system of Consolidated Edison Company of New York (“Con Ed”) located in New York City. In July 2007, a Con Ed steam main located in midtown Manhattan ruptured resulting in one death and other injuries and property damage. As of March 31, 2018 , eighty-three lawsuits are currently pending against Con Ed, the City of New York and Team in the Supreme Court of New York, alleging that our temporary leak repair services may have contributed to the cause of the rupture, allegations which we dispute. The lawsuits seek generally unspecified compensatory damages for personal injury, property damage and business interruption. Additionally, Con Ed is alleging that our contract with Con Ed requires us to fully indemnify and defend Con Ed for all claims asserted against Con Ed including those amounts that Con Ed has paid to settle with certain plaintiffs for undisclosed sums as well as Con Ed’s own alleged damages to its infrastructure. Con Ed filed an action to join Team and the City of New York as defendants in all lawsuits filed against Con Ed that did not include Team and the City of New York as direct defendants. We are vigorously defending the lawsuits and Con Ed’s claim for indemnification. We are unable to estimate the amount of liability to us, if any, associated with these lawsuits and the claim for indemnification. We filed a motion to dismiss in April 2016. We maintain insurance coverage, subject to a deductible limit of $250,000 , which we believe should cover these claims. We have not accrued any liability in excess of the deductible limit for the lawsuits. We do not believe the ultimate outcome of these matters will have a material adverse effect on our financial position, results of operations, or cash flows. Patent Infringement Matters —In December 2014, our subsidiary, Quest Integrity Group, LLC, filed three patent infringement lawsuits against three different defendants, two in the U.S. District of Delaware (the “Delaware Cases”) and one in the U.S. District of Western Washington (the “Washington Case”). Quest Integrity alleges that the three defendants infringed Quest Integrity’s patent, entitled “2D and 3D Display System and Method for Furnace Tube Inspection”. This Quest Integrity patent generally teaches a system and method for displaying inspection data collected during the inspection of furnace tubes in petroleum and petro-chemical refineries. The subject patent litigation is specific to the visual display of the collected data and does not relate to Quest Integrity’s underlying advanced inspection technology. In these lawsuits Quest Integrity is seeking temporary and permanent injunctive relief, as well as monetary damages. Defendants have denied they infringe any valid claim of Quest Integrity’s patent, and have asserted declaratory judgment counterclaims that the patent at issue is invalid and/or unenforceable, and not infringed. In June 2015, the U.S. District of Delaware denied our motions for preliminary injunctive relief in the Delaware Cases (that is, our request that the defendants stop using our patented systems and methods during the pendency of the actions). In March 2017, the judge in the Delaware Cases granted summary judgment against Quest Integrity, finding certain patent claims of the asserted patent invalid. In August 2017, the judge in the Washington Case granted summary judgment against Quest Integrity based on the Delaware Cases ruling. Quest Integrity is in the process of appealing both Delaware Cases and the Washington Case. We are involved in various other lawsuits and are subject to various claims and proceedings encountered in the normal conduct of business. In our opinion, any uninsured losses that might arise from these lawsuits and proceedings will not have a materially adverse effect on our consolidated financial statements. We establish a liability for loss contingencies, when information available to us indicates that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. |
SEGMENT AND GEOGRAPHIC DISCLOSU
SEGMENT AND GEOGRAPHIC DISCLOSURES | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC DISCLOSURES | SEGMENT AND GEOGRAPHIC DISCLOSURES ASC 280, Segment Reporting , requires us to disclose certain information about our operating segments where operating segments are defined as “components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.” We conduct operations in three segments: IHT, MS and Quest Integrity. All three operating segments operate under a business segment manager who reports directly to Team’s CEO who operates as the chief operating decision maker. Segment data for our three operating segments are as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Revenues: IHT $ 151,419 $ 142,956 MS 132,901 121,822 Quest Integrity 18,065 21,776 Total $ 302,385 $ 286,554 Three Months Ended 2018 2017 (unaudited) (unaudited) Operating income (loss): IHT $ 6,740 $ 8,125 MS 2,518 451 Quest Integrity 1,094 4,191 Corporate and shared support services (24,477 ) (24,855 ) Total $ (14,125 ) $ (12,088 ) Three Months Ended 2018 2017 (unaudited) (unaudited) Capital expenditures: IHT $ 2,335 $ 2,512 MS 1,656 4,320 Quest Integrity 621 446 Corporate and shared support services 875 3,440 Total $ 5,487 $ 10,718 Three Months Ended 2018 2017 (unaudited) (unaudited) Depreciation and amortization: IHT $ 4,805 $ 4,855 MS 9,278 5,863 Quest Integrity 999 1,269 Corporate and shared support services 1,373 974 Total $ 16,455 $ 12,961 Separate measures of Team’s assets by operating segment are not produced or utilized by management to evaluate segment performance. A geographic breakdown of our revenues for the three months ended March 31, 2018 and 2017 is as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Total Revenues: 1 United States $ 233,376 $ 215,212 Canada 27,368 27,248 Europe 28,225 25,999 Other foreign countries 13,416 18,095 Total $ 302,385 $ 286,554 ___________ 1 Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. |
RESTRUCTURING AND OTHER RELATED
RESTRUCTURING AND OTHER RELATED CHARGES | 3 Months Ended |
Mar. 31, 2018 | |
RESTRUCTURING AND OTHER RELATED CHARGES [Abstract] | |
RESTRUCTURING AND OTHER RELATED CHARGES (CREDITS) | RESTRUCTURING AND OTHER RELATED CHARGES (CREDITS) Our restructuring and other related charges (credits), net for the three months ended March 31, 2018 and 2017 are summarized by segment as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Furmanite Belgium and Netherlands Exit Severance and related costs (credits) MS $ — $ (191 ) Disposal gain MS — (1,056 ) Total $ — $ (1,247 ) Furmanite Belgium and Netherlands Exit Due to continued economic softness and unfavorable costs structures, we committed to a plan to exit the acquired Furmanite operations in Belgium and the Netherlands in the fourth quarter of 2016 and communicated the plan to the affected employees. The closures are now complete. During the three months ended March 31, 2017, we recorded a reduction to severance costs of $0.2 million and a disposal gain of $1.1 million . The disposal gain resulted from an asset sale of the Furmanite operations in Belgium, which was completed during the first quarter of 2017, whereby we conveyed the business operations and certain assets to the purchaser in exchange for the assumption by the purchaser of certain liabilities, primarily severance-related liabilities associated with the employees who transferred to the purchaser in connection with the transaction. With respect to these exit activities, to date we have incurred cumulatively $4.7 million of severance-related costs and an impairment loss on property, plant and equipment of $0.7 million , partially offset by a disposal gain of $1.1 million . 2017 Cost Savings Initiative In July 2017, we announced our commitment to a cost savings initiative to take direct actions to reduce our overall cost structure given the recent weak and uncertain macro environment in the industries in which we operate. This initiative was completed in the latter part of 2017. No costs or expenses were recognized in the condensed consolidated statements of operations for this initiative during the three months ended March 31, 2018 or 2017. A rollforward of our accrued severance liability associated with this initiative is presented below (in thousands): Three Months Ended (unaudited) Balance, beginning of period $ 588 Charges — Payments (197 ) Balance, end of period $ 391 With respect to this initiative, to date we have incurred cumulatively $3.9 million in severance and related expenses. |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis for presentation | Basis for presentation. These interim financial statements are unaudited, but in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The condensed consolidated balance sheet at December 31, 2017 is derived from the December 31, 2017 audited consolidated financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017 . |
Use of estimates | Use of estimates. Our accounting policies conform to Generally Accepted Accounting Principles in the United States (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect our reported financial position and results of operations. We review significant estimates and judgments affecting our consolidated financial statements on a recurring basis and record the effect of any necessary adjustments prior to their publication. Estimates and judgments are based on information available at the time such estimates and judgments are made. Adjustments made with respect to the use of these estimates and judgments often relate to information not previously available. Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements. Estimates and judgments are used in, among other things, (1) aspects of revenue recognition, (2) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (3) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical and general liability, (4) establishing an allowance for uncollectible accounts receivable, (5) estimating the useful lives of our assets, (6) assessing future tax exposure and the realization of tax assets, (7) the valuation of the embedded derivative liability in our convertible debt and (8) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans. |
Fair value of financial instruments | Fair value of financial instruments . Our financial instruments consist primarily of cash, cash equivalents, accounts receivable, accounts payable and debt obligations. The carrying amount of cash, cash equivalents, trade accounts receivable and trade accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of our credit facility is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the banking facility. The fair value of our convertible senior notes as of March 31, 2018 is $228.9 million (inclusive of the fair value of the conversion option) and is a “Level 2” (as defined in Note 10) measurement, determined based on the observed trading price of these instruments. |
Goodwill and intangible assets | Goodwill and intangible assets. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but are instead tested for impairment at least annually in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350 Intangibles—Goodwill and Other (“ASC 350”). Intangible assets with estimated useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with ASC 350. We assess goodwill for impairment at the reporting unit level, which we have determined to be the same as our operating segments. Each reporting unit has goodwill relating to past acquisitions. Our goodwill annual test date is December 1. We measure goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. We performed our most recent annual impairment test as of December 1, 2017 and concluded that there was no impairment based upon a qualitative assessment to determine if it was more likely than not (that is, a likelihood of more than 50 percent) that the fair values of the reporting units were less than their respective carrying values as of the reporting date. There have been no events that have required an interim assessment of the carrying value of goodwill during 2018. There was $285.1 million and $284.8 million of goodwill at March 31, 2018 and December 31, 2017 , respectively. A rollforward of goodwill for the three months ended March 31, 2018 is as follows (in thousands): Three Months Ended (unaudited) IHT MS Quest Integrity Total Balance at beginning of period $ 194,211 $ 56,600 $ 33,993 $ 284,804 Foreign currency adjustments (275 ) 350 217 292 Balance at end of period $ 193,936 $ 56,950 $ 34,210 $ 285,096 There was $75.2 million of accumulated impairment losses at March 31, 2018 and December 31, 2017 , comprised of $21.1 million and $54.1 million for IHT and MS, respectively, which relate to impairment losses recognized in the third quarter of 2017. |
Income taxes | Income taxes. The 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted on December 22, 2017 and represents a significant change to the United States (“U.S.”) corporate income tax system including: a federal corporate rate reduction from 35% to 21% ; limitations on the deductibility of interest expense and executive compensation; creation of new minimum taxes such as the base erosion anti-abuse tax (“BEAT”) and Global Intangible Low Taxed Income (“GILTI”) tax; and the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system, which will result in a one-time U.S. tax liability on those earnings that have not previously been repatriated to the U.S. Due to the complexities involved in accounting for the 2017 Tax Act, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which requires companies include in their financial statements reasonable estimates of the impacts of the 2017 Tax Act to the extent such reasonable estimates have been determined. Under SAB 118, companies are allowed a measurement period of up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related tax impacts. Accordingly, the Company previously recorded certain reasonable estimates of the tax impact in its consolidated statement of operations for the fourth quarter of 2017. As of year ended December 31, 2017, we had not yet completed our accounting for the income tax effects of certain elements of the 2017 Tax Act, including the new GILTI and BEAT taxes. Due to the complexity of these new tax rules, we continue to evaluate the provisions of the 2017 Tax Act and will record any resulting adjustments to our provisional estimates initially made during the fourth quarter of 2017, during the remainder of 2018, which may materially impact our income tax expense (benefit). Starting in the first quarter of 2018, we have recorded the GILTI tax as a current period expense as incurred. No adjustments to the provisional estimates determined as of December 31, 2017 were recorded during the three months ended March 31, 2018. The effective tax rate was negative 3.6% for the three months ended March 31, 2018 , compared to the effective tax rate of 39.0% for the three months ended March 31, 2017 . The decrease in the effective tax rate was primarily due to increases in valuation allowances on deferred tax assets related to both U.S. net operating losses and recently enacted interest expense limitation carryovers under the 2017 Tax Act. The effective tax rate for the three months ended March 31, 2018 also reflects the reduced federal corporate income tax rate that resulted from the enactment of the 2017 Tax Act in December 2017. |
Allowance for doubtful accounts | Allowance for doubtful accounts. In the ordinary course of business, a portion of our accounts receivable are not collected due to billing disputes, customer bankruptcies, dissatisfaction with the services we performed and other various reasons. We establish an allowance to account for those accounts receivable that we estimate will eventually be deemed uncollectible. The allowance for doubtful accounts is based on a combination of our historical experience and management’s review of long outstanding accounts receivable. |
Concentration of credit risk | Concentration of credit risk. No single customer accounts for more than 10% of consolidated revenues. |
Earnings (loss) per share | Earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to Team stockholders by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing net income (loss) available to Team stockholders by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed conversion of our convertible senior notes under the treasury stock method. The Company’s intent is to settle the principal amount of the convertible senior notes in cash upon conversion. If the conversion value exceeds the principal amount, the Company may elect to deliver shares of its common stock with respect to the remainder of its conversion obligation in excess of the aggregate principal amount (the “conversion spread”). Accordingly, the conversion spread is included in the denominator for the computation of diluted earnings per common share using the treasury stock method and the numerator is adjusted for any recorded gain or loss, net of tax, on the embedded derivative associated with the conversion feature. Amounts used in basic and diluted loss per share, for the three months ended March 31, 2018 and 2017 , are as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Weighted-average number of basic shares outstanding 29,974 29,804 Stock options, stock units and performance awards — — Convertible senior notes — — Total shares and dilutive securities 29,974 29,804 For both the three months ended March 31, 2018 and 2017, all outstanding share-based compensation awards were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the net loss in both periods. Also, the effect of our convertible senior notes was excluded from the calculation of diluted earnings (loss) per share since the conversion price exceeded the average price of our commo n stock during the applicable period. For information on our convertible senior notes and our share-based compensation awards, refer to Note 8 and Note 11, resp ectively. |
Reclassifications | Reclassifications . Certain amounts in prior periods have been reclassified to conform to the current year presentation. Such reclassifications did not have any effect on the Company’s financial condition or results of operations as previously reported |
Newly Adopted Accounting Principles and Accounting Principles Not Yet Adopted | Newly Adopted Accounting Principles ASU No. 2014-09 . In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires the Company to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 establishes ASC Topic 606, Revenue from Contracts with Customers. (“ASC 606”). We adopted ASC 606 effective January 1, 2018. ASC 606 replaces most of the previous revenue recognition guidance under GAAP. Most of our contracts with customers are short-term in nature and billed on a time and materials basis, while certain other contracts are at a fixed price. For these fixed price contracts, ASC 606 generally results in the recognition of revenue as the services are provided compared to recognition of revenue at the time of completion of those contracts, under previous guidance. The adoption of ASC 606 has not resulted in significant changes to the overall pattern or timing of our revenue recognition. To account for the cumulative effect of initially applying ASC 606 as of January 1, 2018, we recognized a pre-tax increase to the opening balance of retained earnings of $8.8 million , pursuant to the modified retrospective transition method, for certain fixed-price contracts that were not yet completed as of the date of adoption. The cumulative effect of adoption resulted in a net increase to prepaid expenses and other current assets of $8.5 million , a reduction to inventory of $0.4 million and a reduction to other accrued liabilities of $0.7 million . Also, we recorded the related tax impacts as of January 1, 2018, which resulted in a net reduction to the opening balance of retained earnings of $0.4 million and a corresponding increase to deferred tax liabilities. Because we have applied the modified retrospective transition method of adoption, comparative periods prior to January 1, 2018 were not retrospectively adjusted to reflect adoption of ASU 2014-09 and are presented in accordance with our historical accounting. The effect of ASC 606 on our condensed consolidated balance sheet as of March 31, 2018 and our condensed consolidated statement of operations for the three months ended March 31, 2018 were as follows (in thousands): March 31, 2018 Without adoption of ASC 606 Adjustments to apply ASC 606 As reported (unaudited) (unaudited) (unaudited) Effect on condensed consolidated balance sheet Assets Prepaid expenses and other current assets $ 18,330 $ 12,699 $ 31,029 Inventory $ 52,119 $ (672 ) $ 51,447 Liabilities and Equity Other accrued liabilities $ 94,226 $ (1,246 ) $ 92,980 Income taxes payable $ 4,090 $ 179 $ 4,269 Deferred income taxes $ 37,584 $ 359 $ 37,943 Retained earnings $ 93,635 $ 12,735 $ 106,370 Three Months Ended March 31, 2018 Without adoption of ASC 606 Adjustments to apply ASC 606 As reported (unaudited) (unaudited) (unaudited) Effect on condensed consolidated statement of operations Revenues $ 296,857 $ 5,528 $ 302,385 Operating expenses $ 225,802 $ 1,049 $ 226,851 Provision for income taxes $ 444 $ 179 $ 623 Net loss $ (22,145 ) $ 4,300 $ (17,845 ) Refer to Note 2 for additional disclosures required by ASC 606. ASU No. 2016-15 . In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies the classification in the statement of cash flows of certain items, including debt prepayment or extinguishment costs, settlement of contingent consideration arising from a business combination, insurance settlement proceeds, and cash receipts and payments having aspects of more than one class of cash flows. The adoption of this ASU on January 1, 2018 had no impact on our consolidated statements of cash flows. ASU No. 2016-16 . In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. Adoption of ASU 2016-16 on January 1, 2018 did not have a material impact on our consolidated financial statements. ASU No. 2017-07 . In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”), which prescribes where in the statement of operations the components of net periodic pension cost and net periodic postretirement benefit cost should be reported. Under ASU 2017-07, the service cost component is required to be reported in the same line or line items that other compensation costs of the associated employees are reported, while the other components are reported outside of operating income (loss), in the “Other expense, net” line item of our consolidated statements of operations. Adoption of ASU 2017-07 on January 1, 2018 did not have a material impact on our consolidated statements of operations. ASU No. 2017-09. In May 2017, the FASB issued ASU No. 2017-09, Compensation–Stock Compensation: Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity apply modification accounting in Topic 718. Under ASU 2017-09, modification accounting is required unless the effect of the modification does not impact the award’s fair value, vesting conditions and its classification as an equity instrument or liability instrument. Our adoption of ASU 2017-09 on January 1, 2018 on a prospective basis did not have any impact on our share-based compensation expense. Accounting Principles Not Yet Adopted ASU No. 2016-02. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which changes the accounting for leases, including a requirement to record essentially all leases on the consolidated balance sheets as assets and liabilities. This ASU is effective for fiscal years beginning after December 15, 2018. We will adopt ASU 2016-02 effective January 1, 2019. We are currently evaluating the impact this ASU will have on our ongoing financial reporting, however we expect a significant amount of assets and liabilities will be recognized on our consolidated balance sheet upon adoption. ASU No. 2016-13. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends GAAP by introducing a new impairment model for financial instruments that is based on expected credit losses rather than incurred credit losses. The new impairment model applies to most financial assets, including trade accounts receivable. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, although it may be adopted one year earlier, and requires a modified retrospective transition approach. We are currently evaluating the impact this ASU will have on our ongoing financial reporting. ASU No. 2017-12 . In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedge Activities (“ASU 2017-12”). This update makes certain targeted improvements to the accounting and presentation of certain hedging relationships. For net investment hedges, ASU 2017-12 requires that the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness be recorded in the currency translation adjustment section of other comprehensive income (loss). ASU 2017-12 is required to be adopted for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this ASU will have on our ongoing financial reporting. ASU No. 2018-02 . In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 introduces the option to reclassify from accumulated other comprehensive income (loss) to retained earnings the “stranded” tax effects resulting from the 2017 Tax Act. Under GAAP, certain deferred tax assets or liabilities may originate through income tax activity recognized in other comprehensive income (loss). However, because the adjustment of deferred tax assets and liabilities due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate is required to be included in income (loss) from continuing operations, the tax effects of items within accumulated other comprehensive income (loss) are not adjusted to reflect the new tax rate, resulting in “stranded” tax effects. ASU 2018-02 provides an option to reclassify such tax effects from accumulated other comprehensive income (loss) to retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating whether to elect the option set forth in ASU 2018-02. |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Rollforward Goodwill | A rollforward of goodwill for the three months ended March 31, 2018 is as follows (in thousands): Three Months Ended (unaudited) IHT MS Quest Integrity Total Balance at beginning of period $ 194,211 $ 56,600 $ 33,993 $ 284,804 Foreign currency adjustments (275 ) 350 217 292 Balance at end of period $ 193,936 $ 56,950 $ 34,210 $ 285,096 |
Amounts Used In Basic and Diluted Earnings (Loss) Per Share | Amounts used in basic and diluted loss per share, for the three months ended March 31, 2018 and 2017 , are as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Weighted-average number of basic shares outstanding 29,974 29,804 Stock options, stock units and performance awards — — Convertible senior notes — — Total shares and dilutive securities 29,974 29,804 |
Effect of ASC 606 on Financial Statements | The effect of ASC 606 on our condensed consolidated balance sheet as of March 31, 2018 and our condensed consolidated statement of operations for the three months ended March 31, 2018 were as follows (in thousands): March 31, 2018 Without adoption of ASC 606 Adjustments to apply ASC 606 As reported (unaudited) (unaudited) (unaudited) Effect on condensed consolidated balance sheet Assets Prepaid expenses and other current assets $ 18,330 $ 12,699 $ 31,029 Inventory $ 52,119 $ (672 ) $ 51,447 Liabilities and Equity Other accrued liabilities $ 94,226 $ (1,246 ) $ 92,980 Income taxes payable $ 4,090 $ 179 $ 4,269 Deferred income taxes $ 37,584 $ 359 $ 37,943 Retained earnings $ 93,635 $ 12,735 $ 106,370 Three Months Ended March 31, 2018 Without adoption of ASC 606 Adjustments to apply ASC 606 As reported (unaudited) (unaudited) (unaudited) Effect on condensed consolidated statement of operations Revenues $ 296,857 $ 5,528 $ 302,385 Operating expenses $ 225,802 $ 1,049 $ 226,851 Provision for income taxes $ 444 $ 179 $ 623 Net loss $ (22,145 ) $ 4,300 $ (17,845 ) |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands). Three Months Ended March 31, 2018 (unaudited) United States and Canada Other Countries Total Revenue: IHT $ 148,210 $ 3,209 $ 151,419 MS 99,824 33,077 132,901 Quest Integrity 12,710 5,355 18,065 Total $ 260,744 $ 41,641 $ 302,385 Three Months Ended March 31, 2018 (unaudited) Asset Integrity Management Repair and Maintenance Services Heat Treating Non-Destructive Evaluation Other Total Revenue: IHT $ 9,156 $ 846 $ 19,296 $ 114,380 $ 7,741 $ 151,419 MS — 131,199 504 — 1,198 132,901 Quest Integrity 18,065 — — — — 18,065 Total $ 27,221 $ 132,045 $ 19,800 $ 114,380 $ 8,939 $ 302,385 |
Contract with Customer, Asset and Liability | The following table provides information about trade accounts receivable, contract assets and contract liabilities as of March 31, 2018 and January 1, 2018, the date of adoption of ASC 606, (in thousands): March 31, 2018 January 1, 2018 (unaudited) (unaudited) Trade accounts receivable, net 1 $ 288,980 $ 301,963 Contract assets 2 $ 14,792 $ 9,823 Contract liabilities 3 $ 3,799 $ 5,415 _________________ 1 Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. 2 Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheet. 3 Included in the “Other accrued liabilities” line of the condensed consolidated balance sheet. |
RECEIVABLES (Tables)
RECEIVABLES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Summary of Accounts Receivable | A summary of accounts receivable as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Trade accounts receivable $ 209,766 $ 244,133 Unbilled receivables 92,371 69,138 Allowance for doubtful accounts (13,157 ) (11,308 ) Total $ 288,980 $ 301,963 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Summary of Inventory | A summary of inventory as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Raw materials $ 9,137 $ 8,707 Work in progress 2,771 2,836 Finished goods 39,539 38,160 Total $ 51,447 $ 49,703 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | A summary of property, plant and equipment as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Land $ 6,705 $ 6,698 Buildings and leasehold improvements 49,881 47,924 Machinery and equipment 265,775 261,343 Furniture and fixtures 9,751 9,405 Capitalized ERP system development costs 46,637 46,637 Computers and computer software 13,405 13,052 Automobiles 4,989 5,070 Construction in progress 10,998 12,613 Total 408,141 402,742 Accumulated depreciation and amortization (208,329 ) (199,523 ) Property, plant, and equipment, net $ 199,812 $ 203,219 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | A summary of intangible assets as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 175,305 $ (41,811 ) $ 133,494 $ 175,226 $ (38,712 ) $ 136,514 Non-compete agreements 5,560 (4,625 ) 935 5,563 (4,509 ) 1,054 Trade names 24,879 (9,896 ) 14,983 24,830 (6,211 ) 18,619 Technology 7,880 (4,529 ) 3,351 7,867 (4,292 ) 3,575 Licenses 864 (497 ) 367 859 (460 ) 399 Total $ 214,488 $ (61,358 ) $ 153,130 $ 214,345 $ (54,184 ) $ 160,161 |
OTHER ACCRUED LIABILITIES (Tabl
OTHER ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Summary of Other Accrued Liabilities | A summary of other accrued liabilities as of March 31, 2018 and December 31, 2017 is as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Payroll and other compensation expenses $ 50,272 $ 40,988 Insurance accruals 14,790 15,799 Property, sales and other non-income related taxes 4,685 6,483 Lease commitments 1,399 1,616 Contract liabilities 3,799 6,102 Accrued commission 1,263 1,473 Accrued interest 2,632 5,950 Volume discount 2,684 1,545 Contingent consideration 616 1,246 Professional fees 1,784 1,098 Other 9,056 10,172 Total $ 92,980 $ 92,472 |
LONG-TERM DEBT, DERIVATIVES A30
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | As of March 31, 2018 and December 31, 2017 , our long-term debt is summarized as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Credit Facility $ 176,122 $ 177,857 Convertible debt 1 206,773 209,892 Total long-term debt 382,895 387,749 Less: current portion of long-term debt — — Total long-term debt, less current portion $ 382,895 $ 387,749 _________________ 1 Comprised of principal amount outstanding plus embedded derivative liability, less unamortized discount and issuance costs. See Convertible Debt section below for additional information. |
Convertible Debt | As of March 31, 2018 , the Notes were recorded in our condensed consolidated balance sheet as follows (in thousands): March 31, 2018 December 31, 2017 (unaudited) Liability component: Principal $ 230,000 $ 230,000 Unamortized issuance costs (6,581 ) (6,820 ) Unamortized discount (32,693 ) (33,882 ) Net carrying amount of the liability component 190,726 189,298 Embedded derivative liability 16,047 20,594 Total 1 $ 206,773 $ 209,892 Equity component: Carrying amount of the equity component, net of issuance costs 2 $ 13,912 $ 13,912 _________________ 1 Included in the “Long-term debt” line of the condensed consolidated balance sheet. 2 Included in the “Additional paid-in capital” line of the condensed consolidated balance sheet. The following table sets forth interest expense information related to the Notes (in thousands, except percentage): Three Months Ended March 31, 2018 (unaudited) Coupon interest $ 2,875 Amortization of debt discount and issuance costs 1,428 Total interest expense on convertible senior notes $ 4,303 Effective interest rate 9.12 % |
Amounts Recognized In Other Comprehensive Income, Reclassified Into Income (Loss) and Amounts Recognized in Income (Loss) | The amounts recognized in other comprehensive income (loss), reclassified into income (loss) and the amounts recognized in income (loss) for the three months ended March 31, 2018 and 2017 , are as follows (in thousands): Gain (Loss) Recognized in Other Comprehensive Income (Loss) Gain (Loss) Reclassified from Other Comprehensive Income (Loss) to Earnings Three Months Ended Three Months Ended (unaudited) (unaudited) 2018 2017 2018 2017 Derivatives Classified as Hedging Instruments Net investment hedge $ (421 ) $ (166 ) $ — $ — Gain (Loss) Recognized in Income (Loss) 1 Three Months Ended March 31, (unaudited) 2018 2017 Derivatives Not Classified as Hedging Instruments Embedded derivative in convertible debt $ 4,547 $ — _________________ 1 Reflected as “Gain on convertible debt embedded derivative” in the condensed consolidated statements of operations. |
Fair Value Totals and Balance Sheet Classification for Derivatives Designated As Hedges and Derivatives Not Designated as Hedges | The following table presents the fair value totals and balance sheet classification for derivatives designated as hedges and derivatives not designated as hedges under ASC 815 (in thousands): March 31, 2018 December 31, 2017 (unaudited) Classification Balance Sheet Location Fair Value Classification Balance Sheet Location Fair Derivatives Classified as Hedging Instruments Net investment hedge Liability Long-term debt $ (2,825 ) Liability Long-term debt $ (3,246 ) Derivatives Not Classified as Hedging Instruments Embedded derivative in convertible debt Liability Long-term debt $ 16,047 Liability Long-term debt $ 20,594 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of Net Periodic Pension Cost (Credit) | Net periodic pension credit for the U.K. and Norwegian Plans includes the following components (in thousands): Three Months Ended March 31, 2018 2017 (unaudited) (unaudited) Service cost $ 24 $ 4 Interest cost 601 579 Expected return on plan assets (970 ) (738 ) Amortization of net actuarial loss — 17 Net periodic pension credit $ (345 ) $ (138 ) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | The following table sets forth, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 . As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands): March 31, 2018 (unaudited) Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Contingent consideration 1 $ — $ — $ 1,127 $ 1,127 Net investment hedge $ — $ (2,825 ) $ — $ (2,825 ) Embedded derivative in convertible debt $ — $ 16,047 $ — $ 16,047 December 31, 2017 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Contingent consideration 1 $ — $ — $ 1,712 $ 1,712 Net investment hedge $ — $ (3,246 ) $ — $ (3,246 ) Embedded derivative in convertible debt $ — $ 20,594 $ — $ 20,594 __________________________ 1 Inclusive of both current and noncurrent portions. |
Summary of Changes in Fair Value of Level 3 Contingent Consideration | The following table represents the changes in the fair value of Level 3 contingent consideration liabilities (in thousands): Three Months Ended (unaudited) Balance, beginning of period $ 1,712 Accretion of liability 31 Foreign currency effects 52 Payment (668 ) Balance, end of period $ 1,127 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Transactions Involving Stock Units and Director Stock Grants | Transactions involving our stock units and director stock grants during the three months ended March 31, 2018 are summarized below: Three Months Ended (unaudited) No. of Stock Units Weighted Average Fair Value (in thousands) Stock and stock units, beginning of period 854 $ 21.42 Changes during the period: Granted 5 $ 16.68 Vested and settled (33 ) $ 20.05 Cancelled (2 ) $ 21.26 Stock and stock units, end of period 824 $ 21.38 |
Summary of Transactions Involving Performance Awards | Transactions involving our performance awards during the three months ended March 31, 2018 are summarized below: Three Months Ended (unaudited) Performance Units Subject to Market Conditions Performance Units Not Subject to Market Conditions No. of Stock Units 1 Weighted Average Fair Value No. of Stock Units 1 Weighted Average Fair Value (in thousands) (in thousands) Performance stock units, beginning of period 45 $ 17.66 84 $ 25.76 Changes during the period: Granted 453 $ 13.94 103 $ 14.15 Vested and settled — $ — (15 ) $ 13.45 Cancelled — $ — — $ — Performance stock units, end of period 498 $ 14.26 172 $ 19.89 _________________ 1 Performance units with variable payouts are shown at target level of performance. |
Summary of Transactions Involving Stock Options | Transactions involving our stock options during the three months ended March 31, 2018 are summarized below: Three Months Ended (unaudited) No. of Options Weighted Average Exercise Price (in thousands) Shares under option, beginning of period 79 $ 31.94 Changes during the period: Granted — $ — Exercised — $ — Cancelled — $ — Expired (2 ) $ 34.19 Shares under option, end of period 77 $ 31.88 Exercisable at end of period 77 $ 31.88 |
ACCUMULATED OTHER COMPREHENSI34
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Loss Included Within Shareholders' Equity | A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Foreign Currency Translation Adjustments Foreign Currency Hedge Defined Benefit Pension Plans Tax Provision Total Balance, beginning of period $ (21,366 ) $ 3,246 $ (7,221 ) $ 5,545 $ (19,796 ) $ (31,973 ) $ 5,048 $ (10,518 ) $ 8,443 $ (29,000 ) Other comprehensive income (loss) (126 ) (421 ) — 230 (317 ) 2,108 (166 ) 17 (448 ) 1,511 Balance, end of period $ (21,492 ) $ 2,825 $ (7,221 ) $ 5,775 $ (20,113 ) $ (29,865 ) $ 4,882 $ (10,501 ) $ 7,995 $ (27,489 ) |
Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) | The following table represents the related tax effects allocated to each component of other comprehensive income (loss) (in thousands): Three Months Ended Three Months Ended (unaudited) (unaudited) Gross Amount Tax Effect Net Amount Gross Amount Tax Effect Net Amount Foreign currency translation adjustments $ (126 ) $ 124 $ (2 ) $ 2,108 $ (508 ) $ 1,600 Foreign currency hedge (421 ) 106 (315 ) (166 ) 63 (103 ) Defined benefit pension plans — — — 17 (3 ) 14 Total $ (547 ) $ 230 $ (317 ) $ 1,959 $ (448 ) $ 1,511 |
SEGMENT AND GEOGRAPHIC DISCLO35
SEGMENT AND GEOGRAPHIC DISCLOSURES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Data for our Three Operating Segments | Segment data for our three operating segments are as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Revenues: IHT $ 151,419 $ 142,956 MS 132,901 121,822 Quest Integrity 18,065 21,776 Total $ 302,385 $ 286,554 Three Months Ended 2018 2017 (unaudited) (unaudited) Operating income (loss): IHT $ 6,740 $ 8,125 MS 2,518 451 Quest Integrity 1,094 4,191 Corporate and shared support services (24,477 ) (24,855 ) Total $ (14,125 ) $ (12,088 ) Three Months Ended 2018 2017 (unaudited) (unaudited) Capital expenditures: IHT $ 2,335 $ 2,512 MS 1,656 4,320 Quest Integrity 621 446 Corporate and shared support services 875 3,440 Total $ 5,487 $ 10,718 Three Months Ended 2018 2017 (unaudited) (unaudited) Depreciation and amortization: IHT $ 4,805 $ 4,855 MS 9,278 5,863 Quest Integrity 999 1,269 Corporate and shared support services 1,373 974 Total $ 16,455 $ 12,961 |
Geographic Breakdown of Revenues | A geographic breakdown of our revenues for the three months ended March 31, 2018 and 2017 is as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Total Revenues: 1 United States $ 233,376 $ 215,212 Canada 27,368 27,248 Europe 28,225 25,999 Other foreign countries 13,416 18,095 Total $ 302,385 $ 286,554 ___________ 1 Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work. |
RESTRUCTURING AND OTHER RELAT36
RESTRUCTURING AND OTHER RELATED CHARGES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Costs | Our restructuring and other related charges (credits), net for the three months ended March 31, 2018 and 2017 are summarized by segment as follows (in thousands): Three Months Ended 2018 2017 (unaudited) (unaudited) Furmanite Belgium and Netherlands Exit Severance and related costs (credits) MS $ — $ (191 ) Disposal gain MS — (1,056 ) Total $ — $ (1,247 ) |
2017 Cost Savings Initiative | |
Restructuring Cost and Reserve [Line Items] | |
Schedule of Accrued Severance Liability | A rollforward of our accrued severance liability associated with this initiative is presented below (in thousands): Three Months Ended (unaudited) Balance, beginning of period $ 588 Charges — Payments (197 ) Balance, end of period $ 391 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Additional Information (Details) $ in Thousands | Dec. 01, 2017USD ($) | Mar. 31, 2018USD ($)employeecountrysegmentLocationcustomer | Mar. 31, 2017 | Dec. 31, 2017USD ($) |
Accounting Policies [Abstract] | ||||
Number of operating segments | segment | 3 | |||
Number of locations in which company operates (more than) | Location | 220 | |||
Number of countries in which the company operates | country | 20 | |||
Number of employees (more than) | employee | 7,300 | |||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill impairment loss | $ 0 | |||
Goodwill | $ 285,096 | $ 284,804 | ||
Accumulated impairment loss | $ 75,200 | $ 75,200 | ||
Income Tax Disclosure [Abstract] | ||||
Federal corporate tax rate | 21.00% | 35.00% | ||
Adjustments to December 31, 2017 provisional estimates | $ 0 | |||
Effective tax rate | (3.60%) | 39.00% | ||
Sales Revenue, Net | Customer Concentration Risk | ||||
Significant Accounting Policies [Line Items] | ||||
Number of customers accounted for more than specified percentage of consolidated revenues | customer | 0 | |||
IHT | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill | $ 193,936 | $ 194,211 | ||
Accumulated impairment loss | 21,100 | 21,100 | ||
MS | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill | 56,950 | 56,600 | ||
Accumulated impairment loss | $ 54,100 | $ 54,100 |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Fair Value Measurements (Details) $ in Millions | Mar. 31, 2018USD ($) |
Convertible debt | Significant Other Observable Inputs (Level 2) | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Fair value of our convertible senior notes | $ 228.9 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Schedule of Rollforward Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 75,200 | $ 75,200 |
Goodwill [Roll Forward] | ||
Balance at beginning of period | 284,804 | |
Foreign currency adjustments | 292 | |
Balance at end of period | 285,096 | |
IHT | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | 21,100 | 21,100 |
Goodwill [Roll Forward] | ||
Balance at beginning of period | 194,211 | |
Foreign currency adjustments | (275) | |
Balance at end of period | 193,936 | |
MS | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | 54,100 | $ 54,100 |
Goodwill [Roll Forward] | ||
Balance at beginning of period | 56,600 | |
Foreign currency adjustments | 350 | |
Balance at end of period | 56,950 | |
Quest Integrity | ||
Goodwill [Roll Forward] | ||
Balance at beginning of period | 33,993 | |
Foreign currency adjustments | 217 | |
Balance at end of period | $ 34,210 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - Amounts Used In Basic and Diluted Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Accounting Policies [Abstract] | ||
Weighted-average number of basic shares outstanding (in shares) | 29,974 | 29,804 |
Stock options, stock units and performance awards (in shares) | 0 | 0 |
Convertible senior notes (in shares) | 0 | 0 |
Total shares and dilutive securities (in shares) | 29,974 | 29,804 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - New Accounting Standards - Cumulative Effect at Adoption Date of Applying ASU 2014-09 (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
ASSETS | |||
Prepaid expenses and other current assets | $ 31,029 | $ 17,950 | |
Inventory | 51,447 | 49,703 | |
LIABILITIES AND EQUITY | |||
Other accrued liabilities | 92,980 | $ 92,472 | |
Adjustments to apply ASC 606 | ASU 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Pre-tax increase to the opening balance of retained earnings | $ 8,800 | ||
Tax impact resulting in reduction to opening balance of retained earnings | 400 | ||
ASSETS | |||
Prepaid expenses and other current assets | 12,699 | 8,500 | |
Inventory | (672) | (400) | |
LIABILITIES AND EQUITY | |||
Other accrued liabilities | $ (1,246) | $ (700) |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - New Accounting Standards - Effects of Adoption of ASU 2014-09 on Condensed Consolidated Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
ASSETS | ||||
Prepaid expenses and other current assets | $ 31,029 | $ 17,950 | ||
Inventory | 51,447 | 49,703 | ||
LIABILITIES AND EQUITY | ||||
Other accrued liabilities | 92,980 | 92,472 | ||
Income taxes payable | 4,269 | 0 | ||
Deferred income taxes | 37,943 | 38,100 | ||
Retained earnings | 106,370 | $ 115,780 | ||
Statement of Operations [Abstract] | ||||
Revenues | 302,385 | $ 286,554 | ||
Operating expenses | 226,851 | 211,750 | ||
Provision for income taxes | 623 | (6,079) | ||
Net loss | (17,845) | $ (9,508) | ||
Adjustments to apply ASC 606 | ASU 2014-09 | ||||
ASSETS | ||||
Prepaid expenses and other current assets | 12,699 | $ 8,500 | ||
Inventory | (672) | (400) | ||
LIABILITIES AND EQUITY | ||||
Other accrued liabilities | (1,246) | $ (700) | ||
Income taxes payable | 179 | |||
Deferred income taxes | 359 | |||
Retained earnings | 12,735 | |||
Statement of Operations [Abstract] | ||||
Revenues | 5,528 | |||
Operating expenses | 1,049 | |||
Provision for income taxes | 179 | |||
Net loss | $ 4,300 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - New Accounting Standards - Condensed Consolidated Financial Statements - Without Adoption of ASU 2014-09 (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
ASSETS | |||
Prepaid expenses and other current assets | $ 31,029 | $ 17,950 | |
Inventory | 51,447 | 49,703 | |
LIABILITIES AND EQUITY | |||
Other accrued liabilities | 92,980 | 92,472 | |
Income taxes payable | 4,269 | 0 | |
Deferred income taxes | 37,943 | 38,100 | |
Retained earnings | 106,370 | $ 115,780 | |
Statement of Operations [Abstract] | |||
Revenues | 302,385 | $ 286,554 | |
Operating expenses | 226,851 | 211,750 | |
Provision for income taxes | 623 | (6,079) | |
Net loss | (17,845) | $ (9,508) | |
Without adoption of ASC 606 | ASU 2014-09 | |||
ASSETS | |||
Prepaid expenses and other current assets | 18,330 | ||
Inventory | 52,119 | ||
LIABILITIES AND EQUITY | |||
Other accrued liabilities | 94,226 | ||
Income taxes payable | 4,090 | ||
Deferred income taxes | 37,584 | ||
Retained earnings | 93,635 | ||
Statement of Operations [Abstract] | |||
Revenues | 296,857 | ||
Operating expenses | 225,802 | ||
Provision for income taxes | 444 | ||
Net loss | $ (22,145) |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 302,385 | $ 286,554 |
Asset Integrity Management | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 27,221 | |
Repair and Maintenance Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 132,045 | |
Heat Treating | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 19,800 | |
Non-Destructive Evaluation | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 114,380 | |
Other Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 8,939 | |
United States and Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 260,744 | |
Other Countries | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 41,641 | |
IHT | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 151,419 | |
IHT | Asset Integrity Management | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 9,156 | |
IHT | Repair and Maintenance Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 846 | |
IHT | Heat Treating | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 19,296 | |
IHT | Non-Destructive Evaluation | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 114,380 | |
IHT | Other Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 7,741 | |
IHT | United States and Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 148,210 | |
IHT | Other Countries | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3,209 | |
MS | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 132,901 | |
MS | Asset Integrity Management | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | |
MS | Repair and Maintenance Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 131,199 | |
MS | Heat Treating | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 504 | |
MS | Non-Destructive Evaluation | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | |
MS | Other Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,198 | |
MS | United States and Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 99,824 | |
MS | Other Countries | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 33,077 | |
Quest Integrity | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 18,065 | |
Quest Integrity | Asset Integrity Management | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 18,065 | |
Quest Integrity | Repair and Maintenance Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | |
Quest Integrity | Heat Treating | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | |
Quest Integrity | Non-Destructive Evaluation | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | |
Quest Integrity | Other Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | |
Quest Integrity | United States and Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 12,710 | |
Quest Integrity | Other Countries | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 5,355 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | ||||
Contract with Customer, Asset and Liability [Abstract] | ||||||
Trade accounts receivable, net | $ 288,980 | [1] | $ 301,963 | [1] | $ 301,963 | |
Contract assets | [2] | 14,792 | 9,823 | |||
Contract liabilities | 3,799 | [3] | $ 5,415 | [3] | $ 6,102 | |
Change in Contract with Customer, Asset [Abstract] | ||||||
Contract asset, increase from beginning of period | $ 5,000 | |||||
[1] | Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. | |||||
[2] | Included in the “Prepaid expenses and other current assets” line on the condensed consolidated balance sheet. | |||||
[3] | Included in the “Other accrued liabilities” line of the condensed consolidated balance sheet. |
RECEIVABLES (Details)
RECEIVABLES (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | [1] | Dec. 31, 2017 | |
Receivables [Abstract] | |||||
Trade accounts receivable | $ 209,766 | $ 244,133 | |||
Unbilled receivables | 92,371 | 69,138 | |||
Allowance for doubtful accounts | (13,157) | (11,308) | |||
Total | $ 288,980 | [1] | $ 301,963 | $ 301,963 | |
[1] | Includes billed and unbilled amounts, net of allowance for doubtful accounts. See Note 3 for details. |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 9,137 | $ 8,707 |
Work in progress | 2,771 | 2,836 |
Finished goods | 39,539 | 38,160 |
Total | $ 51,447 | $ 49,703 |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 408,141 | $ 402,742 |
Accumulated depreciation and amortization | (208,329) | (199,523) |
Property, plant, and equipment, net | 199,812 | 203,219 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total | 6,705 | 6,698 |
Buildings and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 49,881 | 47,924 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 265,775 | 261,343 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | 9,751 | 9,405 |
Capitalized ERP system development costs | ||
Property, Plant and Equipment [Line Items] | ||
Total | 46,637 | 46,637 |
Computers and computer software | ||
Property, Plant and Equipment [Line Items] | ||
Total | 13,405 | 13,052 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Total | 4,989 | 5,070 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 10,998 | $ 12,613 |
PROPERTY, PLANT AND EQUIPMENT49
PROPERTY, PLANT AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 9.3 | $ 8.7 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 214,488 | $ 214,345 |
Accumulated Amortization | (61,358) | (54,184) |
Net Carrying Amount | 153,130 | 160,161 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 175,305 | 175,226 |
Accumulated Amortization | (41,811) | (38,712) |
Net Carrying Amount | 133,494 | 136,514 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,560 | 5,563 |
Accumulated Amortization | (4,625) | (4,509) |
Net Carrying Amount | 935 | 1,054 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 24,879 | 24,830 |
Accumulated Amortization | (9,896) | (6,211) |
Net Carrying Amount | 14,983 | 18,619 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 7,880 | 7,867 |
Accumulated Amortization | (4,529) | (4,292) |
Net Carrying Amount | 3,351 | 3,575 |
Licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 864 | 859 |
Accumulated Amortization | (497) | (460) |
Net Carrying Amount | $ 367 | $ 399 |
INTANGIBLE ASSETS - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Change in Accounting Estimate [Line Items] | ||
Amortization expense | $ 7.2 | $ 4.3 |
Intangible Assets, Amortization Period [Member] | ||
Change in Accounting Estimate [Line Items] | ||
Incremental amortization expense | $ 3.1 |
OTHER ACCRUED LIABILITIES (Deta
OTHER ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | [1] | Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |||||
Payroll and other compensation expenses | $ 50,272 | $ 40,988 | |||
Insurance accruals | 14,790 | 15,799 | |||
Property, sales and other non-income related taxes | 4,685 | 6,483 | |||
Lease commitments | 1,399 | 1,616 | |||
Contract liabilities | 3,799 | [1] | $ 5,415 | 6,102 | |
Accrued commission | 1,263 | 1,473 | |||
Accrued interest | 2,632 | 5,950 | |||
Volume discount | 2,684 | 1,545 | |||
Contingent consideration | 616 | 1,246 | |||
Professional fees | 1,784 | 1,098 | |||
Other accrued liabilities | 9,056 | 10,172 | |||
Total | $ 92,980 | $ 92,472 | |||
[1] | Included in the “Other accrued liabilities” line of the condensed consolidated balance sheet. |
LONG-TERM DEBT, DERIVATIVES A53
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT - Long-Term Debt Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Total long-term debt | $ 382,895 | $ 387,749 | |
Less: current portion of long-term debt | 0 | 0 | |
Total long-term debt, less current portion | 382,895 | 387,749 | |
Credit Facility | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 176,122 | 177,857 | |
Convertible debt | |||
Debt Instrument [Line Items] | |||
Total long-term debt | [1],[2] | $ 206,773 | $ 209,892 |
[1] | Comprised of principal amount outstanding plus embedded derivative liability, less unamortized discount and issuance costs. See Convertible Debt section below for additional information. | ||
[2] | Included in the “Long-term debt” line of the condensed consolidated balance sheet. |
LONG-TERM DEBT, DERIVATIVES A54
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT - Additional Information (Details) € in Millions | 3 Months Ended | ||||||
Mar. 31, 2018USD ($) | Mar. 31, 2018EUR (€) | Dec. 31, 2017USD ($) | Jul. 31, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Feb. 29, 2016USD ($) | |
Line of Credit Facility [Line Items] | |||||||
Borrowing capacity | $ 600,000,000 | ||||||
Commitment fee percentage | 0.75% | ||||||
Ratio of Senior Secured Debt To EBITDA | 3.27 | 3.27 | |||||
Interest Coverage Ratio | 2.80 | 2.80 | |||||
Cash on hand | $ 18,183,000 | $ 26,552,000 | $ 23,740,000 | $ 46,216,000 | |||
Available borrowing capacity | 60,000,000 | ||||||
Net Investment Hedge | |||||||
Line of Credit Facility [Line Items] | |||||||
Borrowing under credit facility | $ 15,200,000 | € 12.3 | |||||
LIBOR | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 3.75% | ||||||
Revolving Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Borrowing capacity | $ 300,000,000 | 400,000,000 | |||||
Debt term | 5 years | ||||||
Term Loan Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Borrowing capacity | $ 200,000,000 | ||||||
Debt term | 5 years | ||||||
Swing Line Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Borrowing capacity | $ 35,000,000 | ||||||
Standby Letters of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding letters of credit | $ 22,500,000 | 22,500,000 | |||||
March 31, 2018 | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum ratio of senior secured debt to consolidated EBITDA | 4.25 | 4.25 | |||||
Minimum interest coverage ratio | 2.25 | 2.25 | |||||
June 30, 2018 | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum ratio of senior secured debt to consolidated EBITDA | 4.25 | 4.25 | |||||
Minimum interest coverage ratio | 2.25 | 2.25 | |||||
September 30, 2018 | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum ratio of senior secured debt to consolidated EBITDA | 3.50 | 3.50 | |||||
Minimum interest coverage ratio | 2.25 | 2.25 | |||||
December 31, 2018 | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum ratio of senior secured debt to consolidated EBITDA | 3.50 | 3.50 | |||||
Minimum interest coverage ratio | 2.25 | 2.25 | |||||
March 31, 2019 | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum ratio of senior secured debt to consolidated EBITDA | 3.50 | 3.50 | |||||
June 30, 2019 | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum ratio of senior secured debt to consolidated EBITDA | 3.50 | 3.50 | |||||
September 30, 2019 and thereafter | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum ratio of senior secured debt to consolidated EBITDA | 2.75 | 2.75 | |||||
March 31, 2019 and thereafter | |||||||
Line of Credit Facility [Line Items] | |||||||
Minimum interest coverage ratio | 2.50 | 2.50 | |||||
Convertible debt | |||||||
Line of Credit Facility [Line Items] | |||||||
Principal amount, long-term debt issued | $ 230,000,000 | ||||||
Interest rate on convertible debt | 5.00% | 5.00% | 5.00% | ||||
Unamortized issuance costs | $ 6,581,000 | $ 6,820,000 | |||||
Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Unamortized issuance costs | $ 2,700,000 |
LONG-TERM DEBT, DERIVATIVES A55
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT - Convertible Debt (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)sharesdays$ / shares | Dec. 31, 2017USD ($) | Jul. 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||
Percentage of the maximum number of shares authorized for issuance | 40.00% | ||
Percentage of maximum number of shares that would require cash settlement | 60.00% | ||
Debt instrument, convertible, threshold percentage of stock price trigger for redemption | 130.00% | ||
Debt instrument, convertible, threshold trading days for redemption | days | 20 | ||
Debt Instrument, Convertible, Threshold Consecutive Trading Days for redemption | 30 days | ||
Remaining amortization period of convertible debt | 64 months | ||
Convertible debt | |||
Debt Instrument [Line Items] | |||
Principal amount, long-term debt issued | $ | $ 230,000 | ||
Interest rate on convertible debt | 5.00% | 5.00% | |
Initial conversion rate, convertible debt | 46.0829 | ||
Initial conversion price, convertible debt | $ / shares | $ 21.70 | ||
Debt Instrument, Convertible, Threshold Trading Days | days | 20 | ||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | days | 30 | ||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 130.00% | ||
Number of business days after the specified trading price criteria met that notes may be converted | days | 5 | ||
Consecutive trading days, trading price criteria | 5 days | ||
Convertible debt, threshold percentage, product of common stock price and conversion price | 98.00% | ||
Shares outstanding, percentage threshold | 19.99% | ||
Convertible debt, threshold shares, approval of shareholders | shares | 5,964,858 | ||
Number of shares into which debt is convertible | shares | 10,599,067 | ||
Debt Instrument, Redemption Price, Percentage | 100.00% | ||
Embedded derivative liability | $ | $ 16,047 | $ 20,594 | |
Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Debt term | 5 years | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Debt term | 5 years | ||
Maximum | Convertible debt | |||
Debt Instrument [Line Items] | |||
Number of shares into which debt is convertible | shares | 14,838,703 | ||
Number of shares that would require cash settlement | shares | 8,873,845 |
LONG-TERM DEBT, DERIVATIVES A56
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT - Detail of Convertible Debt Carrying Amount (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Total | $ 382,895 | $ 387,749 | |
Carrying amount of the equity component, net of issuance costs | [1] | 13,912 | 13,912 |
Convertible debt | |||
Debt Instrument [Line Items] | |||
Principal | 230,000 | 230,000 | |
Unamortized issuance costs | (6,581) | (6,820) | |
Unamortized discount | (32,693) | (33,882) | |
Net carrying amount of the liability component | 190,726 | 189,298 | |
Embedded derivative liability | 16,047 | 20,594 | |
Total | [2],[3] | $ 206,773 | $ 209,892 |
[1] | Included in the “Additional paid-in capital” line of the condensed consolidated balance sheet. | ||
[2] | Comprised of principal amount outstanding plus embedded derivative liability, less unamortized discount and issuance costs. See Convertible Debt section below for additional information. | ||
[3] | Included in the “Long-term debt” line of the condensed consolidated balance sheet. |
LONG-TERM DEBT, DERIVATIVES A57
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT - Components of Convertible Debt Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||
Amortization of debt discount and issuance costs | $ 1,668 | $ 157 |
Total interest expense | 7,597 | $ 3,158 |
Convertible debt | ||
Debt Instrument [Line Items] | ||
Coupon interest | 2,875 | |
Amortization of debt discount and issuance costs | 1,428 | |
Total interest expense | $ 4,303 | |
Effective interest rate | 9.12% |
LONG-TERM DEBT, DERIVATIVES A58
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT - Amounts Recognized in Other Comprehensive Income (Loss), and Reclassified Into Income (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (Loss) Recognized in Other Comprehensive Income (Loss) | $ (421) | $ (166) | |
Net Investment Hedge | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (Loss) Recognized in Other Comprehensive Income (Loss) | (421) | (166) | |
Gain (Loss) Reclassified from Other Comprehensive Income (Loss) to Earnings | 0 | 0 | |
Convertible debt embedded derivative | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | [1] | $ 4,547 | $ 0 |
[1] | Reflected as “Gain on convertible debt embedded derivative” in the condensed consolidated statements of operations. |
LONG-TERM DEBT, DERIVATIVES A59
LONG-TERM DEBT, DERIVATIVES AND LETTERS OF CREDIT - Fair Value Totals and Balance Sheet Classification for Derivatives Designated as Hedges (Details) - Long-term Debt - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Designated as Hedging Instrument | Net Investment Hedge | ||
Derivatives, Fair Value [Line Items] | ||
Fair value liability | $ (2,825) | $ (3,246) |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Convertible debt embedded derivative liability | $ 16,047 | $ 20,594 |
EMPLOYEE BENEFIT PLANS - Additi
EMPLOYEE BENEFIT PLANS - Additional Information (Details) - Defined Benefit Pension Plan $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($)plan | |
Defined Benefit Plan Disclosure [Line Items] | |
Number of defined benefit pension plans | plan | 2 |
Weighted-average of expected returns on asset investment, percentage | 4.70% |
Expected contributions for current year | $ | $ 2.5 |
Total contributions to date | $ | $ 0.6 |
Equities | |
Defined Benefit Plan Disclosure [Line Items] | |
Weighted-average of expected returns on asset investment, percentage | 5.80% |
Debt Security | |
Defined Benefit Plan Disclosure [Line Items] | |
Weighted-average of expected returns on asset investment, percentage | 1.80% |
United Kingdom | |
Defined Benefit Plan Disclosure [Line Items] | |
Number of defined benefit pension plans | plan | 1 |
Norway | |
Defined Benefit Plan Disclosure [Line Items] | |
Subsidiary's percentage of total defined benefit pension plans | 1.00% |
EMPLOYEE BENEFIT PLANS - Net Pe
EMPLOYEE BENEFIT PLANS - Net Periodic Pension Cost (Credit) (Details) - Defined Benefit Pension Plan - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 24 | $ 4 |
Interest cost | 601 | 579 |
Expected return on plan assets | (970) | (738) |
Amortization of net actuarial loss | 0 | 17 |
Net periodic pension credit | $ (345) | $ (138) |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value of Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | |
Contingent consideration | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | [1] | $ 1,127 | $ 1,712 |
Net investment hedge | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | (2,825) | (3,246) | |
Embedded derivative in convertible debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | 16,047 | 20,594 | |
Quoted Prices in Active Markets for Identical Items (Level 1) | Contingent consideration | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | 0 | 0 | |
Quoted Prices in Active Markets for Identical Items (Level 1) | Net investment hedge | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | 0 | 0 | |
Quoted Prices in Active Markets for Identical Items (Level 1) | Embedded derivative in convertible debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Contingent consideration | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Net investment hedge | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | (2,825) | (3,246) | |
Significant Other Observable Inputs (Level 2) | Embedded derivative in convertible debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | 16,047 | 20,594 | |
Significant Unobservable Inputs (Level 3) | Contingent consideration | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | [1] | 1,127 | 1,712 |
Significant Unobservable Inputs (Level 3) | Net investment hedge | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Embedded derivative in convertible debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Net liabilities | $ 0 | $ 0 | |
[1] | Inclusive of both current and noncurrent portions. |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | ||
Transfer from Level 1 to Level 2 | $ 0 | $ 0 |
Transfer from Level 2 to Level 1 | 0 | 0 |
Transfer out of Level 3 measurement | 0 | 0 |
Transfer in to Level 3 measurement | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Changes in Fair Value of Level 3 Contingent Consideration (Details) - Contingent consideration $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance, beginning of period | $ 1,712 |
Accretion of liability | 31 |
Foreign currency effects | 52 |
Payment | (668) |
Balance, end of period | $ 1,127 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2018USD ($)perfconditionsshares | Mar. 31, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards outstanding to officers, directors and key employees (in shares) | shares | 1,600,000 | |
Total number of shares authorized to be issued under Equity Incentive Plan | shares | 2,000,000 | |
Share-based compensation | $ | $ 2.4 | $ 1.7 |
Employee service share-based compensation, nonvested awards, compensation not yet recognized, share-based awards other than options | $ | $ 21.1 | |
Remaining weighted-average period | 2 years 3 months 17 days | |
Stock and stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ | $ 1.7 | 1.7 |
Award vesting period | 4 years | |
Granted | shares | 5,000 | |
Long-term performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ | $ 0.7 | $ 0.1 |
Long-term performance stock units | CEO | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 5 years | |
Granted | shares | 350,000 | |
Vesting increment of performance units granted to CEO | 20.00% | |
Number of stock price milestones | 5 | |
Common stock settlement period | 30 days | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 4 years | |
Award contractual term | 10 years | |
October 15, 2015 [Member] | Long-term performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Performance period | 3 years | |
October 15, 2015 [Member] | Long-term performance stock units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 0.00% | |
October 15, 2015 [Member] | Long-term performance stock units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 300.00% | |
March 21, 2018 | Long-term performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation award, number of performance conditions | perfconditions | 2 | |
March 21, 2018 | Long-term performance stock units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 0.00% | |
March 21, 2018 | Long-term performance stock units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 200.00% | |
March 15, 2017 and March 21, 2018 | Long-term performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 2 years | |
Performance period | 2 years | |
March 15, 2017 | Long-term performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation award, number of performance conditions | perfconditions | 3 | |
Performance period | 2 years | |
Relative total shareholder return | March 15, 2017 | Long-term performance stock units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 0.00% | |
Relative total shareholder return | March 15, 2017 | Long-term performance stock units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 200.00% | |
Company's results of operations | March 15, 2017 | Long-term performance stock units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 0.00% | |
Company's results of operations | March 15, 2017 | Long-term performance stock units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Possible payouts | 300.00% |
SHARE-BASED COMPENSATION - Summ
SHARE-BASED COMPENSATION - Summary of Transactions Involving Stock Units and Director Stock Grants (Details) - Stock and stock units shares in Thousands | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
No. of Stock Units | |
Balance at beginning of period | shares | 854 |
Changes during the period: | |
Granted | shares | 5 |
Vested and settled | shares | (33) |
Cancelled | shares | (2) |
Balance at end of period | shares | 824 |
Weighted Average Fair Value | |
Balance at beginning of period (in usd per share) | $ / shares | $ 21.42 |
Changes during the period: | |
Granted | $ / shares | 16.68 |
Vested and settled | $ / shares | 20.05 |
Cancelled | $ / shares | 21.26 |
Balance at end of period (in usd per share) | $ / shares | $ 21.38 |
SHARE-BASED COMPENSATION - Su67
SHARE-BASED COMPENSATION - Summary of Transactions Involving Performance Awards (Details) - Long-term performance stock units shares in Thousands | 3 Months Ended | |
Mar. 31, 2018$ / sharesshares | ||
Market Conditions | ||
No. of Units/Awards | ||
Balance at beginning of period | 45 | |
Changes during the period: | ||
Granted | 453 | |
Vested and settled | 0 | |
Cancelled | 0 | |
Balance at end of period | 498 | [1] |
Weighted Average Fair Value | ||
Balance at beginning of period (in usd per share) | $ / shares | $ 17.66 | |
Changes during the period: | ||
Granted | $ / shares | 13.94 | |
Cancelled | $ / shares | 0 | |
Balance at end of period (in usd per share) | $ / shares | $ 14.26 | |
Other than Market Conditions | ||
No. of Units/Awards | ||
Balance at beginning of period | 84 | |
Changes during the period: | ||
Granted | 103 | |
Vested and settled | (15) | |
Cancelled | 0 | |
Balance at end of period | 172 | [1] |
Weighted Average Fair Value | ||
Balance at beginning of period (in usd per share) | $ / shares | $ 25.76 | |
Changes during the period: | ||
Granted | $ / shares | 14.15 | |
Vested and settled | $ / shares | 13.45 | |
Cancelled | $ / shares | 0 | |
Balance at end of period (in usd per share) | $ / shares | $ 19.89 | |
[1] | Performance units with variable payouts are shown at target level of performance. |
SHARE-BASED COMPENSATION - Su68
SHARE-BASED COMPENSATION - Summary of Transactions Involving Stock Options (Details) shares in Thousands | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
No. of Options | |
Shares under option, beginning of period | shares | 79 |
Changes during the period: | |
Granted | shares | 0 |
Exercised | shares | 0 |
Cancelled | shares | 0 |
Expired | shares | (2) |
Shares under option, end of period | shares | 77 |
Exercisable at end of period (in shares) | shares | 77 |
Weighted Average Exercise Price | |
Shares under option, beginning of period | $ / shares | $ 31.94 |
Changes during the period: | |
Granted | $ / shares | 0 |
Exercised | $ / shares | 0 |
Cancelled | $ / shares | 0 |
Expired | $ / shares | 34.19 |
Shares under option, end of period | $ / shares | 31.88 |
Exercisable at end of period | $ / shares | $ 31.88 |
SHARE-BASED COMPENSATION - Tota
SHARE-BASED COMPENSATION - Total Options Outstanding, Range of Exercise Prices and Remaining Contractual Lives (Details) | 3 Months Ended |
Mar. 31, 2018$ / shares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted-average remaining contractual life of options exercisable | 3 years 8 months 16 days |
Range of Prices, Lower limit | $ 21.12 |
Range of Prices, Upper limit | $ 50.47 |
ACCUMULATED OTHER COMPREHENSI70
ACCUMULATED OTHER COMPREHENSIVE LOSS - Summary of Changes in Accumulated Other Comprehensive Loss Included Within Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Accumulated Other Comprehensive Loss [Line Items] | ||
Balance, beginning of period | $ 457,468 | |
Other comprehensive income (loss) before tax | (547) | $ 1,959 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 230 | (448) |
Balance, end of period | 449,936 | |
Foreign currency translation adjustments | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Balance, beginning of period | (21,366) | (31,973) |
Other comprehensive income (loss) before tax | (126) | 2,108 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 124 | (508) |
Balance, end of period | (21,492) | (29,865) |
Foreign currency hedge | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Balance, beginning of period | 3,246 | 5,048 |
Other comprehensive income (loss) before tax | (421) | (166) |
Tax (provision) benefit attributable to other comprehensive income (loss) | 106 | 63 |
Balance, end of period | 2,825 | 4,882 |
Defined benefit pension plans | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Balance, beginning of period | (7,221) | (10,518) |
Other comprehensive income (loss) before tax | 0 | 17 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 0 | (3) |
Balance, end of period | (7,221) | (10,501) |
Tax provision | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Balance, beginning of period | 5,545 | 8,443 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 230 | (448) |
Balance, end of period | 5,775 | 7,995 |
Accumulated other comprehensive loss | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Balance, beginning of period | (19,796) | (29,000) |
Other comprehensive income (loss) | (317) | 1,511 |
Balance, end of period | $ (20,113) | $ (27,489) |
ACCUMULATED OTHER COMPREHENSI71
ACCUMULATED OTHER COMPREHENSIVE LOSS - Related Tax Effects Allocated to Each Component of Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Accumulated Other Comprehensive Loss [Line Items] | ||
Gross Amount | $ (547) | $ 1,959 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 230 | (448) |
Other comprehensive income (loss), net of tax | (317) | 1,511 |
Foreign currency translation adjustments | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Gross Amount | (126) | 2,108 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 124 | (508) |
Other comprehensive income (loss), net of tax | (2) | 1,600 |
Foreign currency hedge | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Gross Amount | (421) | (166) |
Tax (provision) benefit attributable to other comprehensive income (loss) | 106 | 63 |
Other comprehensive income (loss), net of tax | (315) | (103) |
Defined benefit pension plans | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Gross Amount | 0 | 17 |
Tax (provision) benefit attributable to other comprehensive income (loss) | 0 | (3) |
Other comprehensive income (loss), net of tax | $ 0 | $ 14 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | ||
Dec. 31, 2014defendantpatent | Mar. 31, 2018USD ($)lawsuit | Jul. 31, 2007death | |
Quest Integrity | |||
Loss Contingencies [Line Items] | |||
Number of patents allegedly infringed upon | patent | 3 | ||
Number of defendants | 3 | ||
Con Ed Matter | |||
Loss Contingencies [Line Items] | |||
Number of deaths | death | 1 | ||
Number of lawsuits | lawsuit | 83 | ||
Insurance coverage subject to deductible limit | $ | $ 250,000 | ||
Delaware Cases | Quest Integrity | |||
Loss Contingencies [Line Items] | |||
Number of defendants | 2 | ||
Washington Case | Quest Integrity | |||
Loss Contingencies [Line Items] | |||
Number of defendants | 1 | ||
Con Ed Matter | |||
Loss Contingencies [Line Items] | |||
Liability accrual in excess of the deductible limit for the lawsuits | $ | $ 0 |
SEGMENT AND GEOGRAPHIC DISCLO73
SEGMENT AND GEOGRAPHIC DISCLOSURES - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2018segment | |
Number of operating segments | 3 |
SEGMENT AND GEOGRAPHIC DISCLO74
SEGMENT AND GEOGRAPHIC DISCLOSURES - Segment Data for our Three Operating Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 302,385 | $ 286,554 |
Operating income (loss) | (14,125) | (12,088) |
Capital expenditures | 5,487 | 10,718 |
Depreciation and amortization | 16,455 | 12,961 |
IHT | ||
Segment Reporting Information [Line Items] | ||
Revenues | 151,419 | |
MS | ||
Segment Reporting Information [Line Items] | ||
Revenues | 132,901 | |
Quest Integrity | ||
Segment Reporting Information [Line Items] | ||
Revenues | 18,065 | |
Operating segments | IHT | ||
Segment Reporting Information [Line Items] | ||
Revenues | 151,419 | 142,956 |
Operating income (loss) | 6,740 | 8,125 |
Capital expenditures | 2,335 | 2,512 |
Depreciation and amortization | 4,805 | 4,855 |
Operating segments | MS | ||
Segment Reporting Information [Line Items] | ||
Revenues | 132,901 | 121,822 |
Operating income (loss) | 2,518 | 451 |
Capital expenditures | 1,656 | 4,320 |
Depreciation and amortization | 9,278 | 5,863 |
Operating segments | Quest Integrity | ||
Segment Reporting Information [Line Items] | ||
Revenues | 18,065 | 21,776 |
Operating income (loss) | 1,094 | 4,191 |
Capital expenditures | 621 | 446 |
Depreciation and amortization | 999 | 1,269 |
Corporate and shared support services | ||
Segment Reporting Information [Line Items] | ||
Operating income (loss) | (24,477) | (24,855) |
Capital expenditures | 875 | 3,440 |
Depreciation and amortization | $ 1,373 | $ 974 |
SEGMENT AND GEOGRAPHIC DISCLO75
SEGMENT AND GEOGRAPHIC DISCLOSURES - Geographic Breakdown of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues from External Customers [Line Items] | ||
Total revenues | $ 302,385 | $ 286,554 |
United States | ||
Revenues from External Customers [Line Items] | ||
Total revenues | 233,376 | 215,212 |
Canada | ||
Revenues from External Customers [Line Items] | ||
Total revenues | 27,368 | 27,248 |
Europe | ||
Revenues from External Customers [Line Items] | ||
Total revenues | 28,225 | 25,999 |
Other foreign countries | ||
Revenues from External Customers [Line Items] | ||
Total revenues | $ 13,416 | $ 18,095 |
RESTRUCTURING AND OTHER RELAT76
RESTRUCTURING AND OTHER RELATED CHARGES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other related charges (credits), net | $ 0 | $ (1,247) | |
Furmanite Netherlands and Belgium Exit | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other related charges (credits), net | 0 | (1,247) | |
Gain on disposal | 1,100 | $ 1,100 | |
2017 Cost Savings Initiative | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other related charges (credits), net | 0 | ||
Employee Severance | Furmanite Netherlands and Belgium Exit | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other related charges (credits), net | (200) | ||
Exit activities, costs incurred to date | 4,700 | ||
Employee Severance | 2017 Cost Savings Initiative | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other related charges (credits), net | 0 | ||
Exit activities, costs incurred to date | 3,900 | ||
Impairment Loss On Property, Plant And Equipment | Furmanite Netherlands and Belgium Exit | |||
Restructuring Cost and Reserve [Line Items] | |||
Exit activities, costs incurred to date | 700 | ||
MS | Furmanite Netherlands and Belgium Exit | |||
Restructuring Cost and Reserve [Line Items] | |||
Gain on disposal | 0 | (1,056) | |
MS | Employee Severance | Furmanite Netherlands and Belgium Exit | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other related charges (credits), net | $ 0 | $ (191) |
RESTRUCTURING AND OTHER RELAT77
RESTRUCTURING AND OTHER RELATED CHARGES Rollforward of Liability - 2017 Cost Savings Initiative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||
Charges | $ 0 | $ (1,247) |
2017 Cost Savings Initiative | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 0 | |
Employee Severance | 2017 Cost Savings Initiative | ||
Restructuring Cost and Reserve [Line Items] | ||
Balance, beginning of period | 588 | |
Charges | 0 | |
Payments | (197) | |
Balance, end of period | $ 391 |