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Business Segments
 9 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
Business Segments

12. Business Segments

Operating segments are defined in FASB ASC Topic 280, Segment Reporting, as components of an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

During the quarter ended March 31, 2023, the Company reorganized its structure in order to streamline operations and leadership around more focused and integrated product and service lines to align with its business strategy. To reflect the Company’s new organizational structure, the Company changed presentation of its segments in 2023 into the following three reportable business segments: Subsea Products, Subsea Services, and Well Construction. Segment operating results for the prior year comparative period have been restated to reflect this change. Previously, the Company’s operations were organized into three geographic segments.

The Company evaluates segment performance based on operating income. The accounting policies of the segments are the same as described in the summary of significant accounting policies.

Subsea Products. The Company’s Subsea Products segment designs, manufactures and sells a variety of products including subsea wellheads, connectors and surface equipment, and subsea production systems.

Subsea Services. The Company’s Subsea Services segment delivers a variety of technical services including subsea rental services, subsea rework services and subsea services shared support.

Well Construction. The Company’s Well Construction business provides products and services utilized in the construction of the wellbore such as completions, casing hardware and liner hanger systems. The Well Construction business also includes all of Great North’s operations as of the acquisition date.

Corporate. Corporate includes the expenses and assets of the Company’s corporate office functions, legal and other administrative expenses that are managed at a consolidated level.

During the three months ended September 30, 2023, the Company incurred $2.3 million of restructuring and other charges under the 2021 global strategic plan out of which approximately $2.2 million is in Corporate and $0.1 million in Subsea Services. The charges in Corporate primarily consisted of severance, office moves, site cleanup, preparation costs, consulting and legal fees. During the three months ended September 30, 2022, the Company incurred $4.1 million of additional costs under the 2021 global strategic plan. These charges were primarily related to office moves, site cleanup, preparation costs, consulting and legal fees. During the nine months ended September 30, 2023, the Company incurred $3.4 million of additional restructuring and other charges under the 2021 global strategic plan out of which approximately $4.9 million is in Corporate, ($1.9) million in Well Construction and $0.4 million in Subsea Services. The restructuring charges incurred during the current year primarily consist of office moves, site cleanup, preparation costs, severance, consulting and legal fees. During the second quarter of 2023, the Company reassessed the reasonability of a restructuring liability related to its Well Construction business. During our assessment certain market exit costs became known and the liability was adjusted accordingly, resulting in a release of approximately $2.3 million, which partially offsets the current year restructuring costs. During the nine months ended September 30, 2022, the Company incurred $9.9 million of additional costs under the 2021 global strategic plan. These charges were primarily related to a $2.6 million write down of our Houston corporate administrative building in Corporate and other long-lived asset write downs of $2.5 million in Subsea Products. In addition, there were other charges of $4.8 million primarily related to consulting and legal fees, office moves, cleanup and preparation costs, and brokerage fees in Corporate.

The following tables presents selected financial data by business segment:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(In thousands)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Subsea products

 

$

55,427

 

 

$

48,496

 

 

$

146,123

 

 

$

144,245

 

Subsea services

 

 

24,176

 

 

 

22,276

 

 

 

71,658

 

 

 

69,292

 

Well construction

 

 

37,641

 

 

 

17,369

 

 

 

79,935

 

 

 

51,719

 

Total revenue

 

$

117,244

 

 

$

88,141

 

 

$

297,716

 

 

$

265,256

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

Subsea products

 

$

1,670

 

 

$

1,623

 

 

$

5,014

 

 

$

5,196

 

Subsea services

 

 

2,595

 

 

 

2,826

 

 

 

8,122

 

 

 

8,954

 

Well construction

 

 

2,977

 

 

 

1,558

 

 

 

6,536

 

 

 

4,837

 

Corporate

 

 

657

 

 

 

1,116

 

 

 

2,165

 

 

 

3,365

 

Total depreciation and amortization

 

$

7,899

 

 

$

7,123

 

 

$

21,837

 

 

$

22,352

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Subsea products

 

$

954

 

 

$

18,007

 

 

$

555

 

 

$

11,109

 

Subsea services

 

 

885

 

 

 

676

 

 

 

11,498

 

 

 

5,859

 

Well construction

 

 

6,353

 

 

 

2,066

 

 

 

13,407

 

 

 

9,613

 

Corporate

 

 

(14,263

)

 

 

(8,318

)

 

 

(24,737

)

 

 

(23,610

)

Total operating income (loss)

 

$

(6,071

)

 

$

12,431

 

 

$

723

 

 

$

2,971

 

The Company does not allocate assets to its reportable segments as they are not included in the review performed by the Chief Operating Decision Maker (CODM) for purposes of assessing segment performance and allocating resources. The balance sheet is reviewed on a consolidated basis and is not used in the context of segment reporting.