XML 40 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
Segment Information
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Segment Information
Segment Information

Reporting Segments

Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the CODM in deciding how to allocate resources and assess performance. We are comprised of four reportable segments: International Services, U.S. Services, Tubular Sales and Blackhawk.

The International Services segment provides tubular services in international offshore markets and in several onshore international regions. Our customers in these international markets are primarily large exploration and production companies, including integrated oil and gas companies and national oil and gas companies.

The U.S. Services segment provides tubular services in the active onshore oil and gas drilling regions in the U.S., including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale, DJ Basin and Utica Shale, as well as in the U.S. Gulf of Mexico.

The Tubular Sales segment designs, manufactures and distributes large outside diameter ("OD") pipe, connectors and casing attachments and sells large OD pipe originally manufactured by various pipe mills. We also provide specialized fabrication and welding services in support of offshore projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long length tubulars (up to 300 feet in length) for use as caissons or pilings. This segment also designs and manufactures proprietary equipment for use in our International and U.S. Services segments.

The Blackhawk segment provides well construction and well intervention rental equipment, services and products, in addition to cementing tool expertise, in the U.S. and Mexican Gulf of Mexico, onshore U.S. and other select international locations.

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before net interest income or expense, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on sale of assets, foreign currency gain or loss, equity-based compensation, unrealized and realized gain or loss, other non-cash adjustments and other charges. We review Adjusted EBITDA on both a consolidated basis and on a segment basis. We use Adjusted EBITDA to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), income tax, foreign currency exchange rates and other charges and credits. Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP. Previously reported Adjusted EBITDA for the three months ended March 31, 2016 has been adjusted for investigation-related matters ($1.9 million) and employee stock purchase plan expense ($0.1 million) as management believes removing the effect of these items allows for better comparability across periods.

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

The following table presents a reconciliation of Segment Adjusted EBITDA to net loss (in thousands):
 
 
Three Months Ended
 
 
March 31,
 
 
2017
 
2016
Segment Adjusted EBITDA:
 
 
 
 
International Services
 
$
5,286

 
$
31,379

U.S. Services
 
(7,215
)
 
2,730

Tubular Sales
 
2,254

 
(446
)
Blackhawk
 
1,211

 
—

 
 
1,536

 
33,663

Interest income, net
 
398

 
206

Income tax benefit
 
9,118

 
806

Depreciation and amortization
 
(31,099
)
 
(29,450
)
Gain on sale of assets
 
1,472

 
770

Foreign currency gain (loss)
 
746

 
(41
)
Charges and credits (1)
 
(8,834
)
 
(8,362
)
Net loss
 
$
(26,663
)
 
$
(2,408
)

 
 
(1) Comprised of Equity-based compensation expense (for the three months ended March 31, 2017 and 2016 : $5,701 and $4,208, respectively), Mergers and acquisition expense (for the three months ended March 31, 2017 and 2016 : $449 and none, respectively), Severance and other charges (for the three months ended March 31, 2017 and 2016 : $1,037 and $606, respectively), Unrealized and realized gains (losses) (for the three months ended March 31, 2017 and 2016 : $(608) and $(1,658), respectively) and investigation-related matters (for the three months ended March 31, 2017 and 2016 : $1,039 and $1,890, respectively).

The following tables set forth certain financial information with respect to our reportable segments (in thousands):
 
International
Services
 
U.S.
Services
 
Tubular Sales
 
Blackhawk
 
Eliminations
 
Total
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
46,610

 
$
30,966

 
$
16,945

 
$
16,210

 
$
—

 
$
110,731

Inter-segment revenue
3

 
4,285

 
3,675

 
—

 
(7,963
)
 
—

Operating income (loss)
(9,513
)
 
(23,347
)
 
2,380

 
(6,130
)
 
—

 
(36,610
)
Adjusted EBITDA
5,286

 
(7,215
)
 
2,254

 
1,211

 
—

 
*
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
83,063

 
$
48,779

 
$
21,644

 
$
—

 
$
—

 
$
153,486

Inter-segment revenue
17

 
4,110

 
5,665

 
—

 
(9,792
)
 
—

Operating income (loss)
14,293

 
(15,658
)
 
(1,517
)
 
—

 
—

 
(2,882
)
Adjusted EBITDA
31,379

 
2,730

 
(446
)
 
—

 
—

 
*

* Non-GAAP financial measure not disclosed.