Segment Information

12 Months Ended

Dec. 31, 2019

Reporting Segments

Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s CODM in deciding how to allocate resources and assess performance. During 2018, changes to the Company’s organizational structure were internally announced. These changes allow each segment to operate as an “independent” business in order to drive accountability and streamline decision-making, while leveraging the advantages of our global infrastructure. During the first quarter of 2019, the Company’s CODM changed the information he regularly reviews to allocate resources and assess performance and we accordingly realigned our reporting segments into three reportable segments: Tubular Running Services (“TRS”) segment, Tubulars segment and Cementing Equipment (“CE”) segment. The TRS segment represents the prior International Services and U.S. Services segments, as well as the costs associated with manufacturing the TRS equipment. Corporate costs that were previously included in the International Services and U.S. Services segments are now included in a separate Corporate component. The Tubulars segment represents the prior Tubular Sales segment and the Drilling Tools business which was previously included within the International Services and U.S. Services segments, less costs associated with TRS equipment manufacturing. The CE segment is comprised of the prior Blackhawk segment. In addition, regional support costs that were previously included in the International Services and U.S. Services segments are now allocated amongst the three current segments, generally based on revenue or headcount. We have revised our segment reporting to reflect our current management approach and recast prior periods to conform to the current segment presentation.

The TRS segment provides tubular running services globally. Internationally, the TRS segment operates in the majority of the offshore oil and gas markets and also in several onshore regions with operations in approximately 50 countries on six continents. In the U.S., the TRS segment provides services in the active onshore oil and gas drilling regions, including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale and Utica Shale, and in the U.S. Gulf of Mexico. Our customers are primarily large exploration and production companies, including international oil and gas companies, national oil and gas companies, major independents and other oilfield service companies.

The Tubulars segment designs, manufactures and distributes connectors and casing attachments for large outside diameter (“OD”) heavy wall pipe. Additionally, the Tubulars segment sells large OD pipe originally manufactured by various pipe mills, as plain end or fully fabricated with proprietary welded or thread-direct connector solutions and provides specialized fabrication and welding services in support of offshore deepwater projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long-length tubular assemblies up to 400 feet in length. The Tubulars segment also specializes in the development, manufacture and supply of proprietary drilling tool solutions that focus on improving drilling productivity through eliminating or mitigating traditional drilling operational risks.

The CE segment provides specialty equipment to enhance the safety and efficiency of rig operations. It provides specialized equipment, services and products utilized in the construction, completion and abandonment of the wellbore in both onshore and offshore environments. The product portfolio includes casing accessories that serve to improve the installation of casing, centralization and wellbore zonal isolation, as well as enhance cementing operations through advance wiper plug and float equipment technology. Abandonment solutions are primarily used to isolate portions of the wellbore through the setting of barriers downhole to allow for rig evacuation in case of inclement weather, maintenance work on other rig equipment, squeeze cementing, pressure testing within the wellbore, hydraulic fracturing and temporary and permanent abandonments. These offerings improve operational efficiencies and limit non-productive time if unscheduled events are encountered at the wellsite.

Revenue

We disaggregate our revenue from contracts with customers by geography for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Intersegment revenue is immaterial.

The following tables presents our revenue disaggregated by geography, based on the location where our services were provided and products sold (in thousands):



	Year Ended December 31, 2019
	Tubular Running Services		Tubulars		Cementing Equipment		Consolidated
United States	$	147,547	$	63,087	$	82,538	$	293,172
International	252,780		11,600		22,368		286,748
Total Revenue	$	400,327	$	74,687	$	104,906	$	579,920



	Year Ended December 31, 2018
	Tubular Running Services		Tubulars		Cementing Equipment		Consolidated
United States	$	142,262	$	66,017	$	72,316	$	280,595
International	218,783		6,286		16,829		241,898
Total Revenue	$	361,045	$	72,303	$	89,145	$	522,493



	Year Ended December 31, 2017
	Tubular Running Services		Tubulars		Cementing Equipment		Consolidated
United States	$	116,795	$	57,882	$	70,007	$	244,684
International	203,583		5,511		1,017		210,111
Total Revenue	$	320,378	$	63,393	$	71,024	$	454,795

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



	Year Ended
	December 31,
	2019		2018		2017
United States	$	293,172	$	280,595	$	244,684
Europe/Middle East/Africa	155,278		127,968		132,768
Latin America	72,720		46,553		33,131
Asia Pacific	35,909		35,327		26,109
Other countries	22,841		32,050		18,103
Total Revenue	$	579,920	$	522,493	$	454,795

We are a Netherlands based company and we derive our revenue from services and product sales to clients primarily in the oil and gas industry. No single customer accounted for more than 10% of our revenue for the years ended December 31, 2019 and 2018. For the year ended December 31, 2017, one customer accounted for 10% of our revenue and all three of our segments generated revenue from this customer.

The revenue generated in the Netherlands was immaterial for the years ended December 31, 2019, 2018 and 2017. Other than the United States, no individual country represented more than 10% of our revenue for the years ended December 31, 2019, 2018 and 2017.

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before interest income, net, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on disposal of assets, foreign currency gain or loss, equity-based compensation, unrealized and realized gain or loss, the effects of the TRA, other non-cash adjustments and other charges or credits. 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 (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP.

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):



	Year Ended December 31,
	2019			2018			2017
Segment Adjusted EBITDA:
Tubular Running Services	$	85,601		$	62,515		$	39,586
Tubulars	11,575			11,246			3,602
Cementing Equipment	14,089			8,617			6,421
Corporate ⁽¹⁾	(53,744		)	(49,146		)	(43,894		)
Total	57,521			33,232			5,715
Goodwill impairment	(111,108		)	—			—
Severance and other (charges) credits, net	(50,430		)	310			(75,354		)
Interest income, net	2,265			4,243			2,309
Income tax benefit (expense)	(23,794		)	2,950			(72,918		)
Depreciation and amortization	(92,800		)	(111,292		)	(122,102		)
Gain (loss) on disposal of assets	(1,037		)	1,309			2,045
Foreign currency gain (loss)	(2,233		)	(5,675		)	2,075
TRA related adjustments ⁽²⁾	220			(1,359		)	122,515
Charges and credits ⁽³⁾	(13,933		)	(14,451		)	(23,742		)
Net loss	$	(235,329	)	$	(90,733	)	$	(159,457	)


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


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


(3)	Comprised of Equity-based compensation expense (2019: $11,280; 2018: $10,621; 2017: $13,862), Mergers and acquisition expense (2019: none; 2018: $58; 2017: $459), Unrealized and realized gains (losses) (2019: $228; 2018: $1,682; 2017: $(2,791)), Investigation-related matters (2019: $3,838; 2018: $5,454; 2017: $6,143) and Other adjustments (2019: $957; 2018: none; 2017: $(487)).

The following table sets forth certain financial information with respect to our reportable segments (in thousands):



	Tubular Running Services			Tubulars			Cementing Equipment			Corporate			Total

Year Ended December 31, 2019
Revenue from external customers	$	400,327		$	74,687		$	104,906		$	—		$	579,920
Operating income (loss)	(3,900		)	7,344			(124,597		)	(91,737		)	(212,890		)
Adjusted EBITDA	85,601			11,575			14,089			(53,744		)	*
Depreciation and amortization	61,036			2,903			16,130			12,731			92,800
Purchases of property, plant and equipment and intangibles	16,086			2,859			16,374			1,623			36,942

Year Ended December 31, 2018
Revenue from external customers	$	361,045		$	72,303		$	89,145		$	—		$	522,493
Operating income (loss)	(16,886		)	7,616			(9,313		)	(74,298		)	(92,881		)
Adjusted EBITDA	62,515			11,246			8,617			(49,146		)	*
Depreciation and amortization	80,009			3,371			16,324			11,588			111,292
Purchases of property, plant and equipment and intangibles	7,824			1,838			7,583			39,226			56,471

Year Ended December 31, 2017
Revenue from external customers	$	320,378		$	63,393		$	71,024		$	—		$	454,795
Operating loss	(72,524		)	(49,902		)	(19,571		)	(72,745		)	(214,742		)
Adjusted EBITDA	39,586			3,602			6,421			(43,894		)	*
Depreciation and amortization	84,219			3,557			22,739			11,587			122,102
Purchases of property, plant and equipment and intangibles	14,437			362			4,885			2,306			21,990

* Non-GAAP financial measure not disclosed.

The CODM does not review total assets by segment as part of their review of segment results. The following table presents property, plant and equipment (“PP&E”) by segment.



	December 31,
	2019		2018
Long-Lived Assets (PP&E)
Tubular Running Services	$	132,626	$	202,874
Tubulars	15,162		12,921
Cementing Equipment	34,184		27,509
Corporate and shared assets	146,460		173,186
Total	$	328,432	$	416,490



	December 31,
	2019		2018
Long-Lived Assets (PP&E)
United States	$	207,227	$	272,476
International	121,205		144,014
	$	328,432	$	416,490

Based on the unique nature of our operating structure, revenue generating assets are interchangeable between two categories: (i) offshore and (ii) onshore. In addition, some of the U.S. land onshore assets cannot be deployed into offshore markets, based upon certification. Such equipment does have application in certain international land markets. Long-lived assets in the Netherlands were insignificant in each of the years presented.