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Note 16 - Segment Information
 6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

Note 16—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 Company’s chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. We are comprised of three reportable segments: Tubular Running Services (“TRS”) segment, Tubulars segment and Cementing Equipment (“CE”) segment.

 

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 40 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 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. The CE segment also provides services and products utilized in the construction, completion or abandonment of the wellbore. These 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 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):

 

  

Three Months Ended June 30, 2021

  

Tubular Running Services

 

Tubulars

 

Cementing Equipment

 

Consolidated

United States

 $20,246 $10,301 $11,213 $41,760

International

 51,649 6,265 8,167 66,081

Total Revenue

 $71,895 $16,566 $19,380 $107,841

 

  

Three Months Ended June 30, 2020

  

Tubular Running Services

 

Tubulars

 

Cementing Equipment

 

Consolidated

United States

 $18,874 $4,990 $7,284 $31,148

International

 43,453 3,751 7,749 54,953

Total Revenue

 $62,327 $8,741 $15,033 $86,101

 

  

Six Months Ended June 30, 2021

  

Tubular Running Services

 

Tubulars

 

Cementing Equipment

 

Consolidated

United States

 $38,613 $18,294 $20,558 $77,465

International

 99,567 9,941 15,679 125,187

Total Revenue

 $138,180 $28,235 $36,237 $202,652

 

  

Six Months Ended June 30, 2020

  

Tubular Running Services

 

Tubulars

 

Cementing Equipment

 

Consolidated

United States

 $49,043 $14,787 $20,815 $84,645

International

 102,781 6,496 15,671 124,948

Total Revenue

 $151,824 $21,283 $36,486 $209,593

 

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

 

  

Three Months Ended

 

Six Months Ended

  

June 30,

 

June 30,

  

2021

 

2020

 

2021

 

2020

United States

 $41,760 $31,148 $77,465 $84,645

Europe/Middle East/Africa

 29,571 21,886 57,825 57,320

Latin America

 25,765 20,077 47,699 41,002

Asia Pacific

 8,588 8,734 16,241 18,303

Other countries

 2,157 4,256 3,422 8,323

Total Revenue

 $107,841 $86,101 $202,652 $209,593

 

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, net severance and other charges, 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 (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):

 

  

Three Months Ended

 

Six Months Ended

  

June 30,

 

June 30,

  

2021

 

2020

 

2021

 

2020

Segment Adjusted EBITDA:

                

Tubular Running Services

 $9,750 $4,049 $17,878 $17,354

Tubulars

 4,108 681 4,746 2,077

Cementing Equipment

 4,851 886 9,647 3,430

Corporate (1)

 (6,297) (7,308) (13,207) (17,494)
  12,412 (1,692) 19,064 5,367

Goodwill impairment

 — — — (57,146)

Severance and other charges, net

 (3,399) (5,162) (10,775) (25,887)

Interest income (expense), net

 (101) 178 (388) 711

Depreciation and amortization

 (15,332) (17,252) (31,439) (36,970)

Income tax (expense) benefit

 (6,773) (8,986) (7,843) 6,577

Gain on disposal of assets

 1,479 650 1,661 590

Foreign currency gain (loss)

 2,718 1,693 (150) (8,199)

Charges and credits (2)

 (3,621) (3,674) (6,633) (5,266)

Net loss

 $(12,617) $(34,245) $(36,503) $(120,223)

(1)

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

(2)

Comprised of Equity-based compensation expense (for the three months ended June 30, 2021 and 2020: $3,399 and $3,515, respectively, and for the six months ended June 30, 2021 and 2020: $6,297 and $5,661, respectively), Unrealized and realized gains (losses) (for the three months ended June 30, 2021 and 2020: $(108) and $(111), respectively, and for the six months ended June 30, 2021 and 2020: $(206) and $1,593, respectively) and Investigation-related matters (for the three months ended June 30, 2021 and 2020: $88 and $48, respectively, and for the six months ended June 30, 2021 and 2020: $130 and $1,198, respectively).

 

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

 

  

Tubular Running Services

 

Tubulars

 

Cementing Equipment

 

Corporate

 

Total

Three Months Ended June 30, 2021

                    

Revenue from external customers

 $71,895 $16,566 $19,380 $— $107,841

Operating income (loss)

 (2,598) 2,407 2,337 (11,011) (8,865)

Adjusted EBITDA

 9,750 4,108 4,851 (6,297) *

Three Months Ended June 30, 2020

                    

Revenue from external customers

 $62,327 $8,741 $15,033 $— $86,101

Operating income (loss)

 (13,252) (184) (2,486) (11,364) (27,286)

Adjusted EBITDA

 4,049 681 886 (7,308) *

Six Months Ended June 30, 2021

                    

Revenue from external customers

 $138,180 $28,235 $36,237 $— $202,652

Operating income (loss)

 (8,047) 1,528 4,331 (26,463) (28,651)

Adjusted EBITDA

 17,878 4,746 9,647 (13,207) *

Six Months Ended June 30, 2020

                    

Revenue from external customers

 $151,824 $21,283 $36,486 $— $209,593

Operating income (loss)

 (14,567) 467 (79,984) (27,410) (121,494)

Adjusted EBITDA

 17,354 2,077 3,430 (17,494) *

* Non-GAAP financial measure not disclosed.