Reportable Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Reportable Segment Information

Reportable Segment Information

The Company currently has three operating segments for which discrete financial information is readily available: hydraulic fracturing (inclusive of acidizing), cementing and wireline. These operating segments represent how the Chief Operating Decision Maker evaluates performance and allocates resources.

On September 1, 2022, the Company shut down its coiled tubing operations and disposed of its coiled tubing assets to STEP as part of a strategic repositioning, and recorded a loss on disposal of $13.8 million. The divestiture of our coiled tubing assets did not qualify for presentation and disclosure as discontinued operations, and accordingly, we have recorded the resulting loss from the disposal of assets in our condensed consolidated statement of operations. Following the divestiture of our coiled tubing operations, which were historically included in the "All Other" category, and the Silvertip Acquisition, which resulted in our new wireline operations in 2022, we have three operating segments. All three remaining operating segments are now aggregated into Completion Services, which is our only reportable segment.

In accordance with ASC 280—Segment Reporting, the Company has one reportable segment (Completion Services) comprised of the hydraulic fracturing, cementing and wireline operating segments. The Silvertip Acquisition which resulted in the addition of a new wireline operating segment, and the disposal of our coiled tubing operations (previously included in the "All Other" category), collectively resulted in a change to the structure and composition of our reportable segment and "All Other" category. Our previous Pressure Pumping reportable segment is now renamed "Completion Services" because of the inclusion of the new wireline completion services. In addition, we have reclassified all our corporate overhead costs (inclusive of income taxes and interest expense) previously included in the "All Other" category to the Completion Services reportable segment. As a result of the change in the structure and composition of our reportable segment, we have reclassified the presentation of our segment disclosure for the three and six months ended June 30, 2022 to include corporate costs in our Completion Services reportable segment to make this period comparable to the three and six months ended June 30, 2023. Total corporate administrative expense for the three and six months ended June 30, 2023 was $26.9 million and $52.2 million, respectively. Total corporate administrative expense for the three and six months ended June 30, 2022 was $7.7 million and $25.0 million, respectively.

A breakout of our Completion Services revenue by operating segment for the three and six months ended June 30, 2023 and 2022 is presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Hydraulic fracturing revenue	78.9	%	92.9	%	78.9	%	93.2	%
Cementing revenue	6.4	%	7.1	%	6.4	%	6.8	%
Wireline revenue	14.7	%	—	%	14.7	%	—	%
Total Completion Services revenue	100.0	%	100.0	%	100.0	%	100.0	%

Inter-segment revenues are not material and are not shown separately in the table below.

The Company manages and assesses the performance of the reportable segment by its adjusted EBITDA (earnings before other income (expense), interest expense, income taxes, depreciation and amortization, stock-based compensation expense, retention bonuses, severance and related expense, impairment expense, (gain)/loss on disposal of assets and other unusual or nonrecurring expenses or (income)).

A reconciliation from segment level financial information to the consolidated statements of operations is provided in the table below (in thousands):

	Three Months Ended June 30, 2023
	Completion Services		All Other		Total
Service revenue	$	435,249	$	—	$	435,249
Adjusted EBITDA	$	112,813	$	—	$	112,813
Depreciation and amortization	$	52,889	$	—	$	52,889
Capital expenditures	$	115,233	$	—	$	115,233
Goodwill at June 30, 2023	$	23,624	$	—	$	23,624
Total assets at June 30, 2023	$	1,433,379	$	—	$	1,433,379

	Three Months Ended June 30, 2022
	Completion Services		All Other		Total
Service revenue	$	309,445	$	5,638	$	315,083
Adjusted EBITDA	$	75,842	$	105	$	75,947
Depreciation and amortization	$	40,131	$	838	$	40,969
Capital expenditures	$	88,842	$	239	$	89,081
Total assets December 31, 2022	$	1,335,501	$	285	$	1,335,786

	Six Months Ended June 30, 2023
	Completion Services		All Other		Total
Service revenue	$	858,819	$	—	$	858,819
Adjusted EBITDA	$	231,978	$	—	$	231,978
Depreciation and amortization	$	103,687	$	—	$	103,687
Capital expenditures	$	212,403	$	—	$	212,403
Goodwill at June 30, 2023	$	23,624	$	—	$	23,624
Total assets June 30, 2023	$	1,433,379	$	—	$	1,433,379

	Six Months Ended June 30, 2022
	Completion Services		All Other		Total
Service revenue	$	586,557	$	11,206	$	597,763
Adjusted EBITDA	$	141,814	$	666	$	142,480
Depreciation and amortization	$	77,293	$	1,680	$	78,973
Capital expenditures	$	160,444	$	365	$	160,809
Total assets December 31, 2022	$	1,335,501	$	285	$	1,335,786

Reconciliation of net income (loss) to adjusted EBITDA (in thousands):

	Three Months Ended June 30, 2023
	Completion Services		All Other		Total
Net income	$	39,257	$	—	$	39,257
Depreciation and amortization	52,889		—		52,889
Interest expense	1,180		—		1,180
Income tax expense	12,118		—		12,118
Loss on disposal of assets	3,065		—		3,065
Stock-based compensation	3,758		—		3,758
Other income (1)	(72)		—		(72)
Other general and administrative expense, (net) (2)	263		—		263
Retention bonus and severance expense	355		—		355
Adjusted EBITDA	$	112,813	$	—	$	112,813
	Three Months Ended June 30, 2022
	Completion Services		All Other		Total
Net loss	$	(32,119)	$	(741)	$	(32,860)
Depreciation and amortization	40,131		838		40,969
Impairment expense	57,454		—		57,454
Interest expense	669		—		669
Income tax benefit	(8,069)		—		(8,069)
Loss on disposal of assets	12,970		8		12,978
Stock-based compensation	3,458		—		3,458
Other income	(6)		—		(6)
Other general and administrative expense, (net) (2)	1,345		—		1,345
Severance expense	9		—		9
Adjusted EBITDA	$	75,842	$	105	$	75,947

	Six Months Ended June 30, 2023
	Completion Services		All Other		Total
Net income	$	67,990	$	—	$	67,990
Depreciation and amortization	103,687		—		103,687
Interest expense	1,847		—		1,847
Income tax expense	20,474		—		20,474
Loss on disposal of assets	25,145		—		25,145
Stock-based compensation	7,294		—		7,294
Other expense (1)	3,632		—		3,632
Other general and administrative expense, (net) (2)	1,209		—		1,209
Severance expense	700		—		700
Adjusted EBITDA	$	231,978	$	—	$	231,978
	Six Months Ended June 30, 2022
	Completion Services		All Other		Total
Net loss	$	(20,036)	$	(1,007)	$	(21,043)
Depreciation and amortization	77,293		1,680		78,973
Impairment expense	57,454		—		57,454
Interest expense	803		—		803
Income tax benefit	(3,932)		—		(3,932)
Loss (gain) on disposal of assets	22,954		(7)		22,947
Stock-based compensation	14,822		—		14,822
Other income (3)	(10,364)		—		(10,364)
Other general and administrative expense, (net) (2)	2,791		—		2,791
Severance expense	29		—		29
Adjusted EBITDA	$	141,814	$	666	$	142,480

(1)Includes unrealized loss on short-term investment of $0.1 million and $3.9 million for the three and six months ended June 30, 2023, respectively.

(2)Other general and administrative expense, (net of reimbursement from insurance carriers) primarily relates to nonrecurring professional fees paid to external consultants in connection with our audit committee review, SEC investigation, shareholder litigation, legal settlement to a vendor and other legal matters, net of insurance recoveries. During the three and six months ended June 30, 2023, we received reimbursement of approximately $0 and $0.3 million, respectively, from our insurance carriers in connection with the SEC investigation and shareholder litigation. During the three and six months ended June 30, 2022, we received reimbursement of approximately $2.4 million and $3.5 million, respectively, from our insurance carriers in connection with the SEC investigation and shareholder litigation. See "Note 13 - Commitments and Contingencies—Contingent Liabilities—Legal Matters" for further information.

(3)Includes a $10.7 million net tax refund (net of advisory fees) received in March 2022 from the Texas Comptroller of Public Accounts in connection with limited sales, excise and use tax audit of the period July 1, 2015 through December 31, 2018.