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Basis of Presentation
 3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation BASIS OF PRESENTATION

Apergy Corporation (“Apergy”) is a leading provider of highly engineered equipment and technologies that help companies drill for and produce oil and gas safely and efficiently around the world. Our products provide efficient functioning throughout the lifecycle of a well—from drilling to completion to production. We report our results of operations in the following reporting segments: Production & Automation Technologies and Drilling Technologies. Our Production & Automation Technologies segment offerings consist of artificial lift equipment and solutions, including rod pumping systems, electric submersible pump systems, progressive cavity pumps and drive systems and plunger lifts, as well as a full automation and digital offerings consisting of equipment, software and Industrial Internet of Things solutions for downhole monitoring, wellsite productivity enhancement and asset integrity management. Our Drilling Technologies segment offerings provide market leading polycrystalline diamond cutters and bearings that result in cost effective and efficient drilling.

Separation and Distribution

On May 9, 2018, Apergy became an independent, publicly traded company as a result of the distribution by Dover Corporation (“Dover”) of 100% of the outstanding common stock of Apergy to Dover’s stockholders. Dover’s Board of Directors approved the distribution on April 18, 2018 and Apergy’s Registration Statement on Form 10 was declared effective by the U.S. Securities and Exchange Commission (“SEC”) on April 19, 2018. On May 9, 2018, Dover’s stockholders of record as of the close of business on the record date of April 30, 2018 received one share of Apergy stock for every two shares of Dover stock held at the close of business on the record date (the “Separation”). Following the Separation, Dover retained no ownership interest in Apergy. Apergy’s common stock began “regular-way” trading on the New York Stock Exchange (“NYSE”) under the “APY” symbol on May 9, 2018.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Apergy have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions that we may undertake in the future, actual results may differ from our estimates. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments unless otherwise specified) necessary for a fair statement of our financial condition and results of operations as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these financial statements may not be representative of the results that may be expected for the year ending December 31, 2020.

Noncontrolling Interest

For the quarters ended March 31, 2020, and 2019, we did not declare or pay distributions to the noncontrolling interest holder in Apergy Middle East Services LLC, a subsidiary in the Sultanate of Oman. We have a commission arrangement with our noncontrolling interest for 5% of certain annual product sales.

Revisions and Reclassifications

We revised our previously issued financial statements for the three months ended March 31, 2019, for the correction of immaterial errors related to: (i) the assessing and recording of liabilities for state sales tax and associated penalties and interest, primarily resulting in an understatement of our selling, general, and administrative expense and interest expense for the three
months ended March 31, 2019; and (ii) previously recorded amounts including, but not limited to, the write-off of inventory and leased assets, timing of revenue recognition, and revenue classification, that the Company concluded were immaterial to our previously filed condensed consolidated financial statements. See the following table for the impact of the corrections on our condensed consolidated financial statements:

Condensed Consolidated Statement of Income
 
Three Months Ended March 31, 2019
(in thousands, except per share data)
As Reported
 
Adjustments
 
As Revised
Product revenue
$
269,534

 
$
(192
)
 
$
269,342

Other revenue (1)
32,157

 
(1,005
)
 
31,152

Total revenue
301,691

 
(1,197
)
 
300,494

Cost of goods and services
196,142

 
1,341

 
197,483

Gross profit
105,549

 
(2,538
)
 
103,011

Selling, general and administrative expense
63,601

 
528

 
64,129

Long-lived asset impairment (2)
1,746

 
—

 
1,746

Interest expense, net
10,474

 
53

 
10,527

Other expense, net
1,090

 
12

 
1,102

Income before income taxes
28,638

 
(3,131
)
 
25,507

Provision for (benefit from) income taxes
6,069

 
(500
)
 
5,569

Net income
22,569

 
(2,631
)
 
19,938

Net income attributable to noncontrolling interest
282

 
—

 
282

Net income attributable to Apergy
$
22,287

 
$
(2,631
)
 
$
19,656

 
 
 
 
 
 
Earnings (loss) per share attributable to Apergy:
 
 
 
 
 
Basic
$
0.29

 
$
(0.04
)
 
$
0.25

Diluted
$
0.29

 
$
(0.04
)
 
$
0.25

 
 
 
 
 
 
Comprehensive income
$
23,758

 
$
(2,631
)
 
$
21,127

Comprehensive income attributable to Apergy
$
23,476

 
$
(2,631
)
 
$
20,845

_______________________
(1) Includes “Service revenue” and “Lease and other revenue” as reported in the condensed consolidated statements of income for the three months ended March 31, 2019.
(2) Long-lived asset impairment has been reclassified from selling, general, and administrative expense to conform the with our current period presentation of long-lived asset impairment on the condensed consolidated statements of income (loss).

Condensed Consolidated Statement of Changes in Stockholders’ Equity
 
March 31, 2019
(in thousands)
As Reported
 
Adjustments
 
As Revised
Stockholders’ Equity:
 
 
 
 

Capital in excess of par value of common stock
$
966,938

 
$
(4,599
)
 
$
962,339

Retained earnings
76,454

 
(1,914
)
 
74,540

Total equity
1,005,203

 
(6,513
)
 
998,690



(in thousands)
As Reported
 
Adjustments
 
As Revised
Total equity at December 31, 2018
$
981,527

 
$
(5,544
)
 
$
975,983

Cumulative effect of accounting changes
(1,662
)
 
1,662

 
—

Net income
22,569

 
(2,631
)
 
19,938

Total equity at March 31, 2019
1,005,203

 
(6,513
)
 
998,690


Condensed Consolidated Statements of Cash Flows
 
Three Months Ended March 31, 2019
(in thousands)
As Reported
 
Adjustments
 
As Revised
Cash provided (required) by operating activities:

 
 
 
 
 
Net income
$
22,569

 
$
(2,631
)
 
$
19,938

Adjustments to reconcile net income to net cash provided (required) by operating activities:

 
 
 
 
 
Depreciation
17,080

 
(9
)
 
17,071

Deferred income taxes
(5,366
)
 
(490
)
 
(5,856
)
Loss (gain) on sale of fixed assets (1)
12

 
—

 
12

Provision for losses on accounts receivable (1)
(117
)
 
—

 
(117
)
Amortization of deferred loan costs and accretion of discount (1)
648

 
—

 
648

Other
131

 
(22
)
 
109

Changes in operating assets and liabilities (net of effects of foreign exchange):

 
 
 
 
 
Receivables
(8,462
)
 
1,202

 
(7,260
)
Inventories
(2,229
)
 
2,893

 
664

Accounts payable
(6,279
)
 
(1,881
)
 
(8,160
)
Accrued compensation and employee benefits
(12,827
)
 
2,243

 
(10,584
)
Accrued expenses and other liabilities
13,849

 
(2,273
)
 
11,576

Leased assets
(21,460
)
 
959

 
(20,501
)
Other
620

 
9

 
629

_______________________
(1) Each of these amounts were included within “Other” on the condensed consolidated statements of cash flows reported for the three months ended March 31, 2019. These amounts have been reclassified consistent with the presentation in the current reporting period.