FORM |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FLOTEK INDUSTRIES, INC. | ||
(Exact name of registrant as specified in its charter) |
(State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Forward-Looking Statements | ||||||||
Unaudited Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020 | ||||||||
Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 | ||||||||
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 | ||||||||
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 | ||||||||
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 | ||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | |||||||||||
Inventories, net | |||||||||||
Income taxes receivable | |||||||||||
Other current assets | |||||||||||
Assets held for sale | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Deferred tax assets, net | |||||||||||
Other long-term assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Income taxes payable | |||||||||||
Interest payable | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Current portion of finance lease liabilities | |||||||||||
Current portion of long-term debt | |||||||||||
Total current liabilities | |||||||||||
Deferred revenue, long-term | |||||||||||
Long-term operating lease liabilities | |||||||||||
Long-term finance lease liabilities | |||||||||||
Long-term debt | |||||||||||
TOTAL LIABILITIES | |||||||||||
Commitments and contingencies (See Note 13) | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Accumulated deficit | ( | ( | |||||||||
Treasury stock, at cost; | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ |
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Revenue | $ | $ | |||||||||
Costs and expenses: | |||||||||||
Operating expenses (excluding depreciation and amortization) | |||||||||||
Corporate general and administrative | |||||||||||
Depreciation and amortization | |||||||||||
Research and development | |||||||||||
Loss (gain) on disposal of long-lived assets | ( | ||||||||||
Impairment of fixed, long-lived and intangible assets | |||||||||||
Total costs and expenses | |||||||||||
Loss from operations | ( | ( | |||||||||
Other (expense) income: | |||||||||||
Interest expense | ( | ( | |||||||||
Other expense, net | ( | ( | |||||||||
Total other (expense) income, net | ( | ( | |||||||||
Loss before income taxes | ( | ( | |||||||||
Income tax (expense) benefit | ( | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Loss per common share: | |||||||||||
Basic | $ | ( | $ | ( | |||||||
Diluted | $ | ( | $ | ( | |||||||
Weighted average common shares: | |||||||||||
Weighted average common shares used in computing basic loss per common share | |||||||||||
Weighted average common shares used in computing diluted loss per common share |
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Other comprehensive (loss) income: | |||||||||||
Foreign currency translation adjustment | ( | ||||||||||
Comprehensive loss | $ | ( | $ | ( | |||||||
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Change in fair value of contingent consideration | ( | ||||||||||
Depreciation and amortization | |||||||||||
Provision for doubtful accounts | |||||||||||
Provision for excess and obsolete inventory | |||||||||||
Impairment of right-of-use assets | |||||||||||
Impairment of fixed assets | |||||||||||
Impairment of intangible assets | |||||||||||
Loss (gain) on sale of assets | ( | ||||||||||
Non-cash lease expense | |||||||||||
Stock compensation expense | |||||||||||
Deferred income tax provision (benefit) | ( | ||||||||||
Changes in current assets and liabilities: | |||||||||||
Accounts receivable, net | |||||||||||
Inventories, net | ( | ||||||||||
Income taxes receivable | ( | ||||||||||
Other current assets | |||||||||||
Other long-term assets | |||||||||||
Accounts payable | ( | ||||||||||
Accrued liabilities | ( | ( | |||||||||
Income taxes payable | |||||||||||
Interest payable | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | ( | ( | |||||||||
Proceeds from sale of business | |||||||||||
Proceeds from sale of assets | |||||||||||
Abandonment of patents and other intangible assets | |||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Purchase of treasury stock | ( | ( | |||||||||
Proceeds from sale of common stock | |||||||||||
Payments for finance leases | ( | ( | |||||||||
Net cash (used in) provided by financing activities | ( | ||||||||||
Effect of changes in exchange rates on cash and cash equivalents | ( | ||||||||||
Net change in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash and cash equivalents at the beginning of period | |||||||||||
Restricted cash at the beginning of period | |||||||||||
Cash and cash equivalents and restricted cash at beginning of period | |||||||||||
Cash and cash equivalents at end of period | |||||||||||
Restricted cash at the end of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ |
Three months ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares Issued | Par Value | Shares | Cost | ||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock issued under employee stock purchase plan | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Restricted stock granted | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Restricted stock forfeited | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Treasury stock purchased | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other (1) | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | $ | $ | ( | $ | $ | $ | ( | $ |
Three months ended March 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares Issued | Par Value | Shares | Cost | ||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock issued under employee stock purchase plan | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Restricted stock granted | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Restricted stock forfeited | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Treasury stock purchased | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 | $ | $ | ( | $ | $ | $ | ( | $ |
Tradenames and trademarks | $ | |||||||
Technology and know-how | ||||||||
Customer lists | ||||||||
Inventories | ||||||||
Cash | ||||||||
Net working capital, net of cash and inventories | ( | |||||||
Fixed assets | ||||||||
Long-term debt assumed and other assets (liabilities) | ( | |||||||
Goodwill | ||||||||
Net assets acquired | $ |
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Revenue: | |||||||||||
Products | $ | $ | |||||||||
Services | |||||||||||
$ | $ | ||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
Raw materials | $ | $ | |||||||||
Finished goods | |||||||||||
Inventories | |||||||||||
Less reserve for excess and obsolete inventory | ( | ( | |||||||||
Inventories, net | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
Land | $ | $ | |||||||||
Land improvements | |||||||||||
Buildings and leasehold improvements | |||||||||||
Machinery and equipment | |||||||||||
Furniture and fixtures | |||||||||||
Transportation equipment | |||||||||||
Computer equipment and software | |||||||||||
Property and equipment | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ |
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Operating lease expense | $ | $ | |||||||||
Finance lease expense: | |||||||||||
Amortization of right-of-use assets | |||||||||||
Interest on lease liabilities | |||||||||||
Total finance lease expense | |||||||||||
Short-term lease expense | |||||||||||
Total lease expense | $ | $ | |||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Operating cash flows from finance leases | ( | ||||||||||
Financing cash flows from finance leases | ( | ( |
Years ending December 31, | Operating Leases | Finance Leases | ||||||||||||
2021 (excluding the three months ended March 31, 2021) | $ | $ | ||||||||||||
2022 | ||||||||||||||
2023 | ||||||||||||||
2024 | ||||||||||||||
2025 | ||||||||||||||
Thereafter | ||||||||||||||
Total lease payments | $ | $ | ||||||||||||
Less: Interest | ( | ( | ||||||||||||
Present value of lease liabilities | $ | $ |
March 31, 2021 | December 31, 2020 | |||||||
Operating Leases | ||||||||
Operating lease right-of-use assets | $ | $ | ||||||
Current portion of operating lease liabilities | $ | $ | ||||||
Long-term operating lease liabilities | ||||||||
Total operating lease liabilities | $ | $ | ||||||
Finance Leases | ||||||||
Property and equipment | $ | $ | ||||||
Accumulated depreciation | ( | ( | ||||||
Property and equipment, net | $ | $ | ||||||
Current portion of finance lease liabilities | $ | $ | ||||||
Long-term finance lease liabilities | ||||||||
Total finance lease liabilities | $ | $ | ||||||
Weighted Average Remaining Lease Term | ||||||||
Operating leases | ||||||||
Finance leases | ||||||||
Weighted Average Discount Rate | ||||||||
Operating leases | % | % | ||||||
Finance leases | % | % |
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Property and equipment, net | $ | $ | |||||||||
Operating lease right-of-use assets | |||||||||||
Other Intangibles: | |||||||||||
Patents and technology | |||||||||||
Customer relationships | |||||||||||
Intangible assets in progress | |||||||||||
Trademarks and brand names | |||||||||||
Total other intangibles | |||||||||||
Total impairment of fixed, long-lived and intangible assets | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
Loss on purchase commitments (Note 13) | $ | $ | |||||||||
Severance costs | |||||||||||
Payroll and benefits | |||||||||||
Contingent liability for earn-out provision | |||||||||||
Taxes other than income taxes | |||||||||||
Due to third parties | |||||||||||
Legal costs | |||||||||||
Deferred revenue, current | |||||||||||
Other | |||||||||||
Total current accrued liabilities | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
Long-term debt | |||||||||||
Flotek PPP loan | $ | $ | |||||||||
JP3 PPP loan | |||||||||||
Total | |||||||||||
Less current maturities | ( | ( | |||||||||
Total long-term debt, net of current portion | $ | $ | |||||||||
Balance at March 31, | Balance at December 31, | |||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | 2021 | Level 1 | Level 2 | Level 3 | 2020 | |||||||||||||||||||||||||||||||||||||
Contingent consideration | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Balance - beginning of period | $ | $ | |||||||||
Additions / issuances | |||||||||||
Change in fair value | ( | ||||||||||
Transfer out of Level 3 | |||||||||||
Balance - end of period | $ | $ |
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
U.S. federal statutory tax rate | % | % | |||||||||
State income taxes, net of federal benefit | ( | ( | |||||||||
Non-U.S. income taxed at different rates | |||||||||||
Increase (reduction) in tax benefit related to stock-based awards | ( | ||||||||||
Non-deductible expenses | ( | ||||||||||
Research and development credit | |||||||||||
Increase in valuation allowance | ( | ( | |||||||||
Effect of tax rate differences of NOL carryback | |||||||||||
Effective income tax rate | ( | % | % |
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Supplemental cash payment information: | |||||||||||
Interest paid | $ | $ | |||||||||
Income taxes (received, net of payments) paid | ( | ( | |||||||||
For the three months ended March 31, | Chemistry Technologies | Data Analytics (1) | Corporate and Other | Total | |||||||||||||||||||
2021 | |||||||||||||||||||||||
Net revenue from external customers | $ | $ | $ | $ | |||||||||||||||||||
Loss from operations, including impairment | ( | ( | ( | ( | |||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Additions to long-lived assets | |||||||||||||||||||||||
2020 | |||||||||||||||||||||||
Net revenue from external customers | $ | $ | $ | $ | |||||||||||||||||||
Loss from operations, including impairment | ( | ( | |||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Additions to long-lived assets |
March 31, 2021 | December 31, 2020 | ||||||||||
Chemistry Technologies | $ | $ | |||||||||
Data Analytics | |||||||||||
Corporate and Other | |||||||||||
Total assets | $ | $ | |||||||||
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
U.S. | $ | $ | |||||||||
UAE | |||||||||||
Other countries | |||||||||||
Total revenue | $ | $ |
For the Three Months Ended March 31, | Chemistry Technologies | % of Total Revenue | Data Analytics | % of Total Revenue | ||||||||||||||||||||||
2021 | ||||||||||||||||||||||||||
Customer A | $ | % | * | * | ||||||||||||||||||||||
Customer B | % | * | * | |||||||||||||||||||||||
2020 | ||||||||||||||||||||||||||
Customer A | $ | % | * (1) | * (1) | ||||||||||||||||||||||
Customer B | % | * (1) | * (1) | |||||||||||||||||||||||
Three months ended March 31, | |||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | ||||||||||||||||||||
Revenue | $ | 11,770 | $ | 19,416 | $ | (7,646) | (39.4) | % | |||||||||||||||
Operating expenses (excluding depreciation and amortization) | 13,801 | 22,841 | (9,040) | (39.6) | % | ||||||||||||||||||
Operating expenses % | 117.3 | % | 117.6 | % | |||||||||||||||||||
Corporate general and administrative costs | 4,361 | 4,493 | (132) | (2.9) | % | ||||||||||||||||||
Corporate general and administrative % | 37.1 | % | 23.1 | % | |||||||||||||||||||
Depreciation and amortization | 307 | 2,191 | (1,884) | (86.0) | % | ||||||||||||||||||
Research and development | 1,542 | 2,555 | (1,013) | (39.6) | % | ||||||||||||||||||
Loss (gain) on disposal of long-lived assets | 2 | (33) | 35 | (106.1) | % | ||||||||||||||||||
Impairment of fixed assets and long-lived assets | — | 57,454 | (57,454) | (100.0) | % | ||||||||||||||||||
Loss from operations | (8,243) | (70,085) | (61,842) | 88.2 | % | ||||||||||||||||||
Operating margin % | (70.0) | % | (361.0) | % | |||||||||||||||||||
Interest and other income (expense), net | (51) | (51) | — | — | % | ||||||||||||||||||
Loss before income taxes | (8,294) | (70,136) | (61,842) | 88.2 | % | ||||||||||||||||||
Income tax (expense) benefit | (6) | 6,169 | (6,175) | (100.1) | % | ||||||||||||||||||
Net loss | $ | (8,300) | $ | (63,967) | $ | (55,667) | 87.0 | % | |||||||||||||||
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Revenue | $ | 10,302 | $ | 19,416 | |||||||
Loss from operations | (3,589) | (70,269) | |||||||||
Three months ended March 31, 2021 | |||||
Revenue | $ | 1,468 | |||
Loss from operations | (292) | ||||
Three months ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net cash used in operating activities | $ | (5,265) | $ | (23,777) | |||||||
Net cash (used in) provided by investing activities | (17) | 3,322 | |||||||||
Net cash (used in) provided by financing activities | (81) | 253 | |||||||||
Effect of changes in exchange rates on cash and cash equivalents | 23 | (109) | |||||||||
Net change in cash, cash equivalents and restricted cash | $ | (5,340) | $ | (20,311) |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | |||||||||
January 1 to January 31, 2021 | 4,053 | $ | 1.90 | ||||||||
February 1 to February 28, 2021 | — | — | |||||||||
March 1 to March 31, 2021 | 40,811 | 2.28 | |||||||||
Total | 44,864 |
Exhibit Number | Description of Exhibit | |||||||
2.1 | ||||||||
2.2 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
4.1 | ||||||||
10.1 | ||||||||
31.1 | * | |||||||
31.2 | * | |||||||
32.1 | ** | |||||||
32.2 | ** | |||||||
101 | * | The following financial information from Flotek Industries, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Unaudited Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020, (ii) the Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020, (v) the Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020, and (vi) Notes to Condensed Consolidated Financial Statements. | ||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* | Filed herewith. | |||||||
** | This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act. | |||||||
1 | Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC. |
FLOTEK INDUSTRIES, INC. | ||||||||
By: | /s/ JOHN W. GIBSON, JR. | |||||||
John W. Gibson, Jr. | ||||||||
President, Chief Executive Officer and | ||||||||
Chairman of the Board | ||||||||
Date: | May 10, 2021 |
FLOTEK INDUSTRIES, INC. | ||||||||
By: | /s/ MICHAEL E. BORTON | |||||||
Michael E. Borton | ||||||||
Chief Financial Officer | ||||||||
Date: | May 10, 2021 |
/s/ JOHN W. GIBSON, JR. | ||
John W. Gibson, Jr. | ||
President, Chief Executive Officer and Chairman of the Board |
/s/ MICHAEL BORTON | ||
Michael Borton | ||
Chief Financial Officer |
/s/ JOHN W. GIBSON, JR. | ||
John W. Gibson, Jr. | ||
President, Chief Executive Officer and Chairman of the Board |
/s/ MICHAEL BORTON | ||
Michael Borton | ||
Chief Financial Officer |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,320 | $ 1,316 |
Preferred stock, at par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 100,000 | 100,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 140,000,000 | 140,000,000 |
Common stock, shares issued (in shares) | 78,275,814 | 78,669,414 |
Common stock, shares outstanding (in shares) | 72,702,298 | 73,088,494 |
Treasury stock, shares (in shares) | 5,573,516 | 5,580,920 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (8,300) | $ (63,967) |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | 49 | (123) |
Comprehensive loss | $ (8,251) | $ (64,090) |
Organization and Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Significant Accounting Policies | Organization and Significant Accounting Policies Organization and Nature of Operations Flotek Industries, Inc. (“Flotek” or the “Company”) is a technology-driven chemistry, equipment and data company that serves customers in industrial, commercial and consumer markets. The Company’s Chemistry Technologies (“CT”) segment develops, manufactures, packages, distributes, delivers, and markets green specialty chemicals that enhance the profitability of hydrocarbon producers and cleans surfaces in both commercial and personal settings to help reduce the spread of bacteria, viruses and germs. The Company’s Data Analytics (“DA”) segment enables users to maximize the value of their hydrocarbon associated processes by providing analytics associated with the streams in seconds rather than minutes or days. The real-time access to information prevents waste, reduces reprocessing and allows users to pursue automation of their hydrocarbon streams to maximize their profitability. The Company formed the DA segment during the second quarter of 2020, after acquiring JP3 Measurement, LLC (“JP3”). The Company’s two operating segments, CT and DA, are both supported by its continuing Research & Innovation advanced laboratory capabilities. For further discussion of our operations and segments, see Note 18, “Business Segment, Geographic and Major Customer Information.” For further discussion of the JP3 acquisition, see Note 3, “Business Combination.” The Company was initially incorporated under the laws of the Province of British Columbia in 1985. In October 2001, the Company changed its corporate domicile to the State of Delaware. Basis of Presentation The accompanying unaudited financial statements reflect all adjustments, in the opinion of management, necessary for fair statement of the financial condition and results of operations for the periods presented. All such adjustments are normal and recurring in nature. The financial statements, including selected notes, have been prepared in accordance with applicable rules and regulations of the SEC regarding interim financial reporting and do not include all information and disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for comprehensive financial statement reporting. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report. A copy of the 2020 Annual Report is available on the SEC’s website, www.sec.gov, under the Company’s ticker symbol (“FTK”) or on Flotek’s website, www.flotekind.com. The information contained on the Company’s website does not form a part of this Quarterly Report. During the first quarter of 2021, the Company classified its warehouse facility in Monahans, Texas, as held for sale based on the criteria outlined in Accounting Standard Codification (“ASC”) 360, Property, Plant and Equipment. During the first quarter, the Company committed to a plan to sell the asset in its present condition. The Company engaged with a commercial real estate agent and is actively looking for a buyer. As such, the Company reclassified the related property, plant and equipment of $0.5 million as held for sale in the current assets of the consolidated balance sheet as of March 31, 2021, as the Company expects to complete the asset sale within one year. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company does not have investments in any unconsolidated subsidiaries. Impact of COVID-19 In March 2020, the World Health Organization declared the outbreak of the novel coronavirus (“COVID-19”) a global pandemic. The pandemic negatively impacted the U.S. and global economy, disrupted domestic and international oil and gas markets, and increased volatility in financial markets. These effects materially and adversely affected, and may continue to materially and adversely affect, the demand for oil and natural gas as well as for our services and products. The Company’s primary markets in the U.S. are particularly subject to the impacts on the oil and gas industry. In the first quarter of 2020, the Company recorded impairments to property, plant and equipment; intangible assets; and operating right-of-use assets. In the second half of 2020 the Company recorded additional impairment charges of goodwill and intangible assets as well as an increase to the provision of excess and obsolete inventory. The Company expects the current economic situation to negatively impact the energy sector for an extended period of time, with oil demand recovering during 2021 but not returning to the pre-COVID-19 level. Any further material COVID-19 disruption or significant setback in oil and gas demand arising from a slower economic recovery could negatively impact the Company and could result in additional impairments in the future. Future developments of the COVID-19 crisis are uncertain and related implications could materially and adversely affect the Company’s business, operations, operating results, financial condition, liquidity and/or capital levels. The Company continues to monitor the impact of COVID-19 on the business, suppliers and customers. Future developments and effects are highly uncertain and cannot be predicted, including the scope and duration of the pandemic. This uncertainty could have a material impact on accounting estimates and assumptions used in our consolidated financial statements. Sources and Uses of Liquidity The Company currently funds its operations and growth primarily from cash on hand. The ability of the Company to grow and be competitive in the marketplace is dependent on the availability of adequate capital. Access to capital is dependent, in large part, on the Company’s operating cash flows, the monetization of excess and non-core assets, and the availability of and access to debt and equity financing. The Company has a history of losses and negative operating cash flows from operations and expects to utilize a significant amount of cash in operations in the following year. While we believe that our cash and liquid assets will provide us with sufficient financial resources to fund operations and meet our capital requirements and anticipated obligations as they become due, a prolonged COVID-19 impact, a slower than expected recovery of oil and gas markets, or reduced spending by our customers could have a negative impact on our liquidity. Accordingly, while the Company believes that its existing cash will enable it to fund its operations and growth, the Company cannot guarantee the level of cash flows in the future. In the event that the Company’s existing cash on hand is not sufficient to fund operations, meet its capital requirements or satisfy the anticipated obligations as they become due, the Company expects to take further action to protect its liquidity position. Such actions may include, but are not limited to: •Sale of non-core real estate properties; •Sale-leaseback transactions of facilities; •Sale of excess inventory and/or raw materials; •Entry into a borrowing facility with one or more lenders; •Reducing executive salaries and/or board of directors’ fees, or making a portion of those fees or salaries in equity instead of cash; and •Reducing professional advisory fees and headcount; •Raising equity either in the public markets or via a private placement offering; However, with respect to anticipated transactions, there can be no assurance that such matters can be implemented on acceptable terms or at all. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications did not impact previously reported net loss and stockholders’ equity.
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Recent Accounting Pronouncements |
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Mar. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”). We evaluate the applicability and impact of all authoritative guidance issued by the FASB. Guidance not listed below was assessed and determined to be either not applicable, clarifications of items listed below, immaterial or already adopted by the Company. New Accounting Standards Issued But Not Adopted as of March 31, 2021 The FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard removes specific exceptions to the general principles in Topic 740. The pronouncement is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted for public companies for periods in which financial statements have not yet been issued. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures. The FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects estimates of expected credit losses over their contractual life that are recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. The pronouncement is effective for smaller reporting companies for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of this standard, including subsequent amendments, on the consolidated financial statements and related disclosures.
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Business Combination |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination | Business Combination During the second quarter of 2020, the Company acquired 100% ownership of JP3, a privately-held data and analytics technology company, in a cash-and-stock transaction. JP3’s real-time data platforms combine the energy industry’s only field-deployable, inline optical analyzer with proprietary cloud visualization and analytics, targeting an increase of processing efficiencies and valuation of natural gas, crude oil and refined fuels. The transaction was valued at approximately $36.6 million as of the transaction closing date, comprised of $25.0 million in cash, subject to certain adjustments and contingent consideration as described below, and 11.5 million shares in Flotek common stock with an estimated fair value of $8.5 million, net of a discount for marketability due to a lock-up period. The payment of $25.0 million was subject to certain purchase price adjustments, and the total non-equity consideration at closing was comprised of $25.0 million plus net working capital in excess of the target net working capital of $1.9 million. Additionally, the Company was subject to contingent consideration with an estimated fair value of $1.2 million for two potential earn-out provisions totaling $5.0 million based on certain stock performance targets. The first and second earn-out provisions occur if the ten-day volume-weighted average share price equals or exceeds $2 per share and $3 per share, respectively, before May 18, 2025. See Note 11, “Fair Value Measurements,” for additional information on the estimated fair value of the contingent consideration. The following table summarizes the fair value of JP3’s assets acquired as of the closing date of May 18, 2020 (in thousands):
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Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with CustomersRevenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services. In recognizing revenue for products and services, the Company determines the transaction price of purchase orders or contracts with customers, which may consist of fixed and variable consideration. Determining the transaction price may require significant judgment by management, which includes identifying performance obligations, estimating variable consideration to include in the transaction price, and determining whether promised goods or services can be distinguished in the context of the contract. Variable consideration typically consists of product returns and is estimated based on the amount of consideration the Company expects to receive. Revenue accruals are recorded on an ongoing basis to reflect updated variable consideration information. The majority of the products from the CT segment are sold at a point in time and service contracts are short-term in nature. The DA segment recognizes revenue for sales of equipment at the time of sale. Revenue related to service and support is recognized over time. The Company bills sales on a monthly basis with payment terms customarily 30-45 days for domestic and 60 days for international from invoice receipt. In addition, sales taxes are excluded from revenues. Disaggregation of Revenue The Company differentiates revenue based on whether the source of revenue is attributable to product sales (point-in-time revenue recognition) or service revenue (over-time revenue recognition). Product sales accounted for over 90% of total revenue for the three months ended March 31, 2021 and 2020. Revenue disaggregated by revenue source is as follows (in thousands):
Arrangements with Multiple Performance Obligations The CT and DA segments primarily sell chemicals and equipment recognized at a point in time based on when control transfers to the customer determined by agreed upon delivery terms. Additionally, both segments offer various services associated to products sold which includes field services, installation, maintenance, and other functions. Service revenue is recognized on an over time basis for CT as services are performed as the customer is simultaneously benefiting as the Company performs. For DA, services are recognized upon completion of commissioning and installation due to the short-term nature of the performance obligation. DA has additional performance obligations related to providing ongoing or reoccurring maintenance. Revenue for these types of arrangements is recognized ratably over time throughout the contract period. Additionally, DA may provide subscription-type arrangements with customers in which monthly reoccurring revenue is recognized ratably over time in accordance with agreed upon terms and conditions. Subscription-type arrangements were not a material revenue stream in 2020. Contract Balances Under revenue contracts for both products and services, customers are invoiced once the performance obligations have been satisfied, at which point payment is unconditional. Contract liabilities associated with incomplete performance obligations are not material.
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories are as follows (in thousands):
The provision recorded in the first quarter of 2021 includes charges of $0.3 million for the CT segment and zero for the DA segment. The increase in excess and obsolescence is attributable to the Company’s continued product rationalization efforts, which included a reduction in the number of materials carried within the portfolio and identification of those materials for which the Company will no longer actively market or carry quantities in excess of current and estimated future usage requirements.
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment are as follows (in thousands):
Depreciation expense totaled $0.3 million and $1.7 million for the three months ended March 31, 2021 and 2020, respectively. During the first quarter of 2020, the Company recognized an impairment of property and equipment of $30.2 million. See Note 8, “Impairment of Fixed and Long-lived Assets.” No impairment was recognized for the three months ended March 31, 2021.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases During the first quarter of 2020, the Company ceased use of the corporate headquarters leased offices and moved corporate employees to the Global Research and Innovation Center (“GRIC”) during the second quarter of 2020. In addition, the lease liability and corresponding right-of-use (“ROU”) assets for the corporate headquarters and GRIC were remeasured to remove the anticipated term extensions as the Company determined it was no longer reasonably certain to utilize the extension at the GRIC. The remeasurement resulted in adjustments to lease liabilities and ROU assets totaling of $6.2 million each as of March 31, 2020. During the second quarter of 2020, the Company terminated the lease of the corporate headquarters office and moved all employees to the GRIC facility effective June 29, 2020. In addition, during the three months ended March 31, 2020, the Company recorded an impairment of the ROU assets totaling $7.4 million. For further discussion, refer to Note 8, “Impairment of Fixed and Long-lived Assets.” No impairment was recognized for the three months ended March 31, 2021. The components of lease expense and supplemental cash flow information are as follows (in thousands):
Maturities of lease liabilities are as follows (in thousands):
Supplemental balance sheet information related to leases is as follows (in thousands):
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Leases | Leases During the first quarter of 2020, the Company ceased use of the corporate headquarters leased offices and moved corporate employees to the Global Research and Innovation Center (“GRIC”) during the second quarter of 2020. In addition, the lease liability and corresponding right-of-use (“ROU”) assets for the corporate headquarters and GRIC were remeasured to remove the anticipated term extensions as the Company determined it was no longer reasonably certain to utilize the extension at the GRIC. The remeasurement resulted in adjustments to lease liabilities and ROU assets totaling of $6.2 million each as of March 31, 2020. During the second quarter of 2020, the Company terminated the lease of the corporate headquarters office and moved all employees to the GRIC facility effective June 29, 2020. In addition, during the three months ended March 31, 2020, the Company recorded an impairment of the ROU assets totaling $7.4 million. For further discussion, refer to Note 8, “Impairment of Fixed and Long-lived Assets.” No impairment was recognized for the three months ended March 31, 2021. The components of lease expense and supplemental cash flow information are as follows (in thousands):
Maturities of lease liabilities are as follows (in thousands):
Supplemental balance sheet information related to leases is as follows (in thousands):
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Impairment of Fixed and Long-lived Assets |
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Impairment of Fixed and Long-lived Assets | Impairment of Fixed and Long-lived Assets The Company recorded impairment charges of fixed and intangible assets as follows (in thousands):
During the first quarter of 2020, the price of crude oil declined by over 50%, trading below $25 per barrel, causing a significant disruption across the energy industry, which began to negatively impact the Company’s results of operations. The decline of results of operations were driven by market factors, including an oversupply of oil, insufficient storage and demand destruction resulting from the reaction to COVID-19. Based on these factors, the Company concluded that a triggering event occurred and, accordingly, an interim quantitative impairment test was performed as of March 31, 2020. Using the income approach, the fair value of the reporting unit was determined based on the present value of future cash flows. The Company utilized internal forecast trends and potential growth rates to estimate future cash flows of the asset group. Based on the results of the quantitative assessment, the Company concluded the carrying value of the asset group exceeded its fair value as of March 31, 2020, and an impairment loss of $57.5 million was recorded as a result of the adverse effect of the COVID-19 pandemic, estimated effect on the economy, and the related negative impact on oil and natural gas prices on projections of future cash flows. Prior to the impairment, the Company recognized amortization expense for finite-lived intangible assets acquired of $0.5 million for the three months ended March 31, 2020. The Company noted no triggering events during the first quarter of 2021.
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Accrued Liabilities |
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Accrued Liabilities | Accrued LiabilitiesCurrent accrued liabilities are as follows (in thousands):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt In April 2020, the Company received a $4.8 million loan under the Payroll Protection Program (“PPP”), which was created through the Coronavirus Aid, Relief, and Economic Act (“CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). In connection with the acquisition of JP3 in May 2020, the Company assumed a PPP loan of $0.9 million obtained by JP3 in April 2020. The PPP loans have a fixed interest rate of 1% and have a two-year term, maturing in 2022. No payments of principal or interest were required during the year ended December 31, 2020, or the three months ended March 31, 2021. A portion of the loans may be eligible for forgiveness by the SBA depending on the extent of proceeds used for payroll costs and other designated expenses incurred for up to 24 weeks following loan origination, subject to adjustments for headcount reductions and compensation limits and provided that at least 60% of the eligible costs incurred are used for payroll. Receipt of these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support ongoing operations of the Company. This certification further required the Company to take into account current business activity and the ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. As of March 31, 2021, the Company had not applied for or estimated the potential forgiveness on the PPP loans. The receipt of these funds, and the forgiveness of the loans attendant to these funds, is dependent on the Company having initially qualified for the loans and qualifying for the forgiveness of such loans based on our past and future adherence to the forgiveness criteria. The PPP loans are subject to any new guidance and new requirements released by the Department of the Treasury, which initially indicated that all companies that have received funds in excess of $2.0 million will be subject to audit by the SBA to further ensure PPP loans are limited to eligible borrowers in need. Long-term debt, including current portion, is as follows (in thousands):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement. •Level 1 — Quoted prices in active markets for identical assets or liabilities; •Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and •Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs. Fair Value of Other Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these accounts. The PPP loans for Flotek and JP3 also approximate fair value due to maturity in less than fifteen months. Liabilities Measured at Fair Value on a Recurring Basis The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy (in thousands):
At March 31, 2021, and December 31, 2020, the estimated fair value of the remaining stock performance earn-out provision, with respect to the JP3 transaction, was recorded as a contingent liability. The estimated fair value of the earn-out provision at the end of each period was valued using the Monte Carlo model analyzing 20,000 simulations performed using Geometric Brownian Motion with inputs such as risk-neutral expected growth and volatility. There were no transfers in or out of either Level 1, Level 2, or Level 3 fair value measurements during the periods ending March 31, 2021 and 2020. Assets Measured at Fair Value on a Nonrecurring Basis The Company’s non-financial assets, including property and equipment, goodwill and other intangible assets, are measured at fair value on a non-recurring basis and are subject to fair value adjustment in certain circumstances. During the three months ended March 31, 2020, the Company recorded an impairment of $57.5 million for impairment of long-lived assets. Management inputs used in fair value measurements were classified as Level 3. Level 3 Rollforward for Assets and Liabilities Measured at Fair Value on a Recurring Basis In conjunction with the May 2020 acquisition of JP3, the Company recorded contingent consideration of $1.2 million. Management inputs used in the fair value measurement were classified as Level 3. During 2020, the first stock performance target for the contingent consideration was achieved and settled. The Company estimated the fair value of the remaining stock performance earn-out provision at March 31, 2021, and decreased the estimated fair value of the contingent liability to $1.1 million. The Company records changes in the fair value of the contingent consideration and achievement of performance targets in operating expenses. The following table presents the changes in contingent consideration balances classified as Level 3 balances for the three months ended March 31, 2021 and 2020 (in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows:
On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. Among other things, the CARES Act provided the ability for taxpayers to carryback a net operating loss (“NOL”) arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 to each of the five years preceding the year of the loss. Based on analysis of the extended NOL carryback provision, the Company recorded a tax receivable of $6.1 million as of March 31, 2020, which was received in July 2020. Fluctuations in effective tax rates have historically been impacted by permanent tax differences with no associated income tax impact, changes in state apportionment factors, including the effect on state deferred tax assets and liabilities, and non-U.S. income taxed at different rates, except for the NOL carryback claim discussed above. Deferred income taxes reflect the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the value reported for income tax purposes, at the enacted tax rates expected to be in effect when the differences reverse. GAAP provides for the recognition of deferred tax assets if realization of such assets is more likely than not. In assessing the need for a valuation allowance, the Company considers all available objective and verifiable evidence, both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, and expectations and risks associated with estimates of future pre-tax income. The Company continues to have a full valuation allowance against net deferred tax assets as it is not more-likely-than-not they will be utilized.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation On March 26, 2021, the Company and Flotek Chemistry, LLC (“Flotek Chemistry”), a wholly-owned subsidiary of the Company, filed a lawsuit against Archer-Daniels-Midland Company (“ADM”), Florida Chemical Company, LLC (“FCC”) and Joshua A. Snively in state court in Harris County, Texas. The lawsuit claims damages relating to the terpene supply agreement between Flotek Chemistry and FCC and related breaches of fiduciary duty by Mr. Snively. Contemporaneously with the filing of the suit, Flotek Chemistry delivered a notice of termination of the terpene supply agreement. Subsequent to the lawsuit described above, on April 5, 2021, ADM and FCC filed a lawsuit in the Delaware Court of Chancery seeking to enjoin the lawsuit filed in Texas and claiming damages under the terpene supply agreement and other matters. The Company is subject to other routine litigation and other claims that arise in the normal course of business. Except as disclosed above, management is not aware of any pending or threatened lawsuits or proceedings that are expected to have a material effect on the Company’s financial position, results of operations or liquidity. Other Commitments and Contingencies Terpene Supply Agreement At December 31, 2020, the Company’s balance sheet included an accrued liability of $9.4 million associated with the terpene supply agreement with FCC. The Company calculated the liability based on the Company’s expected usage of terpene in blended products being less than the minimum quantities of terpene required to be purchased and expected selling prices of the excess terpene as such loss was not considered recoverable. The Company’s balance sheet at March 31, 2021 included an accrued liability of $9.4 million as it did not make any payments for, or purchases of, terpene during the first quarter of 2021. The Company expects that settlement of the accrued liability, if any, will be determined through the litigation disclosed in the “Litigation” section of this Note. Indemnification The Company agreed to provide indemnification to National Oilwell DHT, L.P. for certain intellectual property-related claims in connection with sale of its Teledrift business unit in 2017. The expenses incurred by the Company were $0.5 million and $0.2 million for the three months ended March 31, 2021 and 2020, respectively. Concentrations and Credit Risk The majority of the Company’s revenue is derived from its CT segment, which consists predominantly of customers within the oil and gas industry and the sanitizer, surface cleaner and disinfectant industry to a lesser extent. Customers within the oil and gas industry include oilfield services companies, integrated oil and natural gas companies, independent oil and natural gas companies, and state-owned national oil companies. Customers within the sanitizer, surface cleaner and disinfectant industry typically include industrial and consumer markets, including hospitals, travel and hospitality, food services, e-commerce and retail, sports and entertainment. The concentration in the oil and gas industry increases credit and business risk. See Note 18, “Business Segment, Geographic and Major Customer Information,” for concentration of segment revenue from major customers. The Company is subject to concentrations of credit risk within trade accounts receivable, as the Company does not generally require collateral as support for trade receivables. In addition, the majority of the Company’s cash is invested in three major U.S. financial institutions and balances often exceed insurable amounts.
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Stockholders’ Equity |
3 Months Ended |
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Mar. 31, 2021 | |
Equity [Abstract] | |
Stockholders’ Equity | Stockholders’ Equity On May 5, 2020, the shareholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation, as previously amended, to increase the authorized shares of common stock from 80,000,000 to 140,000,000, par value $0.0001 per share, and 100,000 of preferred stock, par value $0.0001 per share. The additional authorized shares are available for corporate purposes, including acquisitions. During the first quarter of 2021, the Company identified 0.6 million shares that were improperly included in the December 31, 2020 issued share count, and the Company adjusted the issued share count presented on the statement of stockholders’ equity. This adjustment was not material to the December 31, 2020 consolidated financial statements or basic and diluted earnings per share.
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Earnings (Loss) Per Share |
3 Months Ended |
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Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive.Potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2021 and 2020, since including them would have an anti-dilutive effect on loss per share due to the net loss incurred during the periods. Securities convertible into shares of common stock that were not considered in the diluted loss per share calculations were zero for restricted stock units and stock options for the three months ended March 31, 2021 and 0.4 million restricted stock units and 3.0 million stock options for the three months ended March 31, 2020. |
Supplemental Cash Flow Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Supplemental Cash Flow Information Supplemental cash flow information is as follows (in thousands):
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Related Party Transaction |
3 Months Ended |
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Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | Related Party Transaction In January 2017, the Internal Revenue Service (“IRS”) notified the Company that it was examining the Company’s federal tax returns for the year ended December 31, 2014. As a result of this examination, the IRS informed the Company on May 1, 2019, that certain employment taxes related to the compensation of our former CEO, Mr. Chisholm, were not properly withheld in 2014 and proposed an adjustment. Mr. Chisholm’s affiliated companies through which he provided his services have agreed to indemnify the Company for any such taxes, and Mr. Chisholm executed a personal guaranty in favor of the Company, supporting this indemnification. In October 2019, an amendment to the employment agreement of Mr. Chisholm was executed, giving the Company the contractual right of offset for any amounts owed to the Company, and giving the Company the right to withhold payments equal to amounts reasonably estimated to potentially become due to the Company by the affiliated companies from any amounts owed under the employment agreement. At December 31, 2019, the Company netted the related party receivable against the severance payable and recorded $1.8 million for potential liability to the IRS. On January 5, 2020, Mr. Chisholm ceased to be an employee of the Company. In September 2020, the Company informed Mr. Chisholm it would cease payment of future severance. During first quarter of 2020, an additional accrual was recorded for $0.2 million related to potential penalties and interest on the IRS obligation. As of March 31, 2021 and December 31, 2020, the receivable from Mr. Chisholm was $1.4 million, which equaled the payable to the IRS and netted with Mr. Chisholm’s severance liability. Both the IRS and severance liabilities are recorded in accrued liabilities on the consolidated balance sheet.
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Business Segment, Geographic and Major Customer Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment, Geographic and Major Customer Information | Business Segment, Geographic and Major Customer Information Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision-maker in deciding how to allocate resources and assess performance. The operations of the Company are categorized into the following reportable segments: CT and DA. Chemistry Technologies. The CT segment includes green specialty chemistries, logistics and technology services, which enable its customers to pursue improved efficiencies in the drilling and completion of their wells. The Company designs, develops, manufactures, packages, distributes, delivers and markets reservoir-centric fluid systems, including specialty and conventional chemistries, for use in oil and gas well drilling, cementing, completion, remediation and stimulation activities designed to maximize recovery in both new and mature fields. Customers of the CT segment include major integrated oil and gas companies, oilfield services companies, independent oil and gas companies, national and state-owned oil companies, and international supply chain management companies. In 2020, the Company leveraged historical expertise, existing infrastructure, personnel, supply chain, research and resident consumer market experience to address the emerging demand for sanitizers, surface cleaners and disinfectants for industrial, commercial and consumer use. Rather than operating under relaxed pandemic-related guidelines, the Company sought to produce Food and Drug Administration and Environmental Protection Agency compliant products by completing all necessary upgrades to its already ISO 9001:2015 certified facility in Marlow, Oklahoma. Today the Company has a portfolio of specialty chemical products to address the long-term challenges created by the current COVID-19 pandemic and in preparation for future outbreaks. Data Analytics. The DA segment, created in the second quarter of 2020 in conjunction with the acquisition of JP3 on May 18, 2020, includes the design, development, production, sale and support of equipment and services that create and provide valuable information about the composition of energy customers’ hydrocarbon fluids. The customers of the DA segment span across the entire oil and gas market, from production upstream to midstream facilities to refineries and distribution networks. To date, the DA segment has focused solely on North American markets. The DA segment provides real-time hydrocarbon composition data that helps its customers generate additional profit by enhancing blending, optimizing transmix, increasing efficiencies of towers, enabling automation of fluid handling, and reducing losses due to give-away (i.e., that portion of a product of higher value than what is specified) using real-time process information. The Company evaluates performance based upon a variety of criteria. The primary financial measure is segment operating income. Various functions, including certain sales and marketing activities and general and administrative activities, are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, and income taxes are not allocated to the reportable segment. Summarized financial information of the reportable segments is as follows (in thousands):
(1) The Company formed the Data Analytics segment in the second quarter of 2020 upon acquiring JP3. Assets of the Company by reportable segments are as follows (in thousands):
Geographic Information Revenue by country is based on the location where services are provided and products are used. No individual countries other than the U.S. and the United Arab Emirates (“UAE”) accounted for more than 10% of revenue. Revenue by geographic location is as follows (in thousands):
Long-lived assets held in countries other than the U.S. are not considered material to the consolidated financial statements. Major Customers Revenue from major customers, as a percentage of consolidated revenue, is as follows (in thousands):
* This customer did not account for more than 10% of revenue during this period. *(1) Not applicable, as the Company did not form the Data Analytics segment until May 2020 upon acquiring JP3.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn April 5, 2021, ADM and FCC filed a lawsuit against Flotek Chemistry and the Company in the Delaware Court of Chancery. See Note 13, “Commitments and Contingencies” for a discussion of the lawsuit and the lawsuit against ADM and FCC filed previously by the Company and Flotek Chemistry. |
Organization and Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of PresentationThe accompanying unaudited financial statements reflect all adjustments, in the opinion of management, necessary for fair statement of the financial condition and results of operations for the periods presented. All such adjustments are normal and recurring in nature. The financial statements, including selected notes, have been prepared in accordance with applicable rules and regulations of the SEC regarding interim financial reporting and do not include all information and disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for comprehensive financial statement reporting. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates.
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Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications did not impact previously reported net loss and stockholders’ equity.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”). We evaluate the applicability and impact of all authoritative guidance issued by the FASB. Guidance not listed below was assessed and determined to be either not applicable, clarifications of items listed below, immaterial or already adopted by the Company. New Accounting Standards Issued But Not Adopted as of March 31, 2021 The FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard removes specific exceptions to the general principles in Topic 740. The pronouncement is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted for public companies for periods in which financial statements have not yet been issued. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures. The FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects estimates of expected credit losses over their contractual life that are recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. The pronouncement is effective for smaller reporting companies for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of this standard, including subsequent amendments, on the consolidated financial statements and related disclosures.
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Fair Value Measurements | Fair Value Measurements Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement. •Level 1 — Quoted prices in active markets for identical assets or liabilities; •Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and •Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs.
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Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive.Potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2021 and 2020, since including them would have an anti-dilutive effect on loss per share due to the net loss incurred during the periods. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision-maker in deciding how to allocate resources and assess performance. The operations of the Company are categorized into the following reportable segments: CT and DA. Chemistry Technologies. The CT segment includes green specialty chemistries, logistics and technology services, which enable its customers to pursue improved efficiencies in the drilling and completion of their wells. The Company designs, develops, manufactures, packages, distributes, delivers and markets reservoir-centric fluid systems, including specialty and conventional chemistries, for use in oil and gas well drilling, cementing, completion, remediation and stimulation activities designed to maximize recovery in both new and mature fields. Customers of the CT segment include major integrated oil and gas companies, oilfield services companies, independent oil and gas companies, national and state-owned oil companies, and international supply chain management companies. In 2020, the Company leveraged historical expertise, existing infrastructure, personnel, supply chain, research and resident consumer market experience to address the emerging demand for sanitizers, surface cleaners and disinfectants for industrial, commercial and consumer use. Rather than operating under relaxed pandemic-related guidelines, the Company sought to produce Food and Drug Administration and Environmental Protection Agency compliant products by completing all necessary upgrades to its already ISO 9001:2015 certified facility in Marlow, Oklahoma. Today the Company has a portfolio of specialty chemical products to address the long-term challenges created by the current COVID-19 pandemic and in preparation for future outbreaks. Data Analytics. The DA segment, created in the second quarter of 2020 in conjunction with the acquisition of JP3 on May 18, 2020, includes the design, development, production, sale and support of equipment and services that create and provide valuable information about the composition of energy customers’ hydrocarbon fluids. The customers of the DA segment span across the entire oil and gas market, from production upstream to midstream facilities to refineries and distribution networks. To date, the DA segment has focused solely on North American markets. The DA segment provides real-time hydrocarbon composition data that helps its customers generate additional profit by enhancing blending, optimizing transmix, increasing efficiencies of towers, enabling automation of fluid handling, and reducing losses due to give-away (i.e., that portion of a product of higher value than what is specified) using real-time process information. The Company evaluates performance based upon a variety of criteria. The primary financial measure is segment operating income. Various functions, including certain sales and marketing activities and general and administrative activities, are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, and income taxes are not allocated to the reportable segment.
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Business Combination (Tables) |
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of business acquisitions, by acquisition | The following table summarizes the fair value of JP3’s assets acquired as of the closing date of May 18, 2020 (in thousands):
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Revenue from Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregation of revenue | Revenue disaggregated by revenue source is as follows (in thousands):
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of inventory | Inventories are as follows (in thousands):
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Property and Equipment (Tables) |
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Components of property and equipment | Property and equipment are as follows (in thousands):
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Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of lease expense and supplemental cash flow information | The components of lease expense and supplemental cash flow information are as follows (in thousands):
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Schedule of maturities of lease liabilities | Maturities of lease liabilities are as follows (in thousands):
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Schedule of maturities of lease liabilities | Maturities of lease liabilities are as follows (in thousands):
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Schedule of supplemental balance sheet information | Supplemental balance sheet information related to leases is as follows (in thousands):
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Impairment of Fixed and Long-lived Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of impairment charges | The Company recorded impairment charges of fixed and intangible assets as follows (in thousands):
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Accrued Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Current Accrued Liabilities | Current accrued liabilities are as follows (in thousands):
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | Long-term debt, including current portion, is as follows (in thousands):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value measurements, recurring | The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy (in thousands):
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Schedule of fair value, liabilities measured on recurring basis, unobservable input reconciliation | The following table presents the changes in contingent consideration balances classified as Level 3 balances for the three months ended March 31, 2021 and 2020 (in thousands):
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Income Taxes (Tables) |
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Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows:
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Supplemental Cash Flow Information (Tables) |
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Components of supplemental cash flow information | Supplemental cash flow information is as follows (in thousands):
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Business Segment, Geographic and Major Customer Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial information regarding reportable segments | Summarized financial information of the reportable segments is as follows (in thousands):
(1) The Company formed the Data Analytics segment in the second quarter of 2020 upon acquiring JP3. Assets of the Company by reportable segments are as follows (in thousands):
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Revenue by geographic location | Revenue by geographic location is as follows (in thousands):
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Revenue by major customers | Revenue from major customers, as a percentage of consolidated revenue, is as follows (in thousands):
* This customer did not account for more than 10% of revenue during this period. *(1) Not applicable, as the Company did not form the Data Analytics segment until May 2020 upon acquiring JP3.
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Organization and Significant Accounting Policies (Details) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2021
USD ($)
segment
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Dec. 31, 2020
USD ($)
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Unusual or Infrequent Item, or Both | ||
Number of operation segments (segments) | segment | 2 | |
Assets held for sale | $ 546 | $ 0 |
Property and equipment, net | 8,258 | $ 9,087 |
Adjustment | ||
Unusual or Infrequent Item, or Both | ||
Assets held for sale | 500 | |
Property and equipment, net | $ (500) |
Business Combination - Narrative (Details) - JP3 Measurement, LLC $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended |
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Jun. 30, 2020
USD ($)
provision
$ / shares
shares
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Business Acquisition | |
Ownership (in percentage) | 100.00% |
Aggregate value of consideration paid | $ 36.6 |
Payments to acquire business | $ 25.0 |
Shares issued to acquire business (in shares) | shares | 11.5 |
Fair value of shares used as consideration | $ 8.5 |
Excess working capital assumed | 1.9 |
Contingent consideration | $ 1.2 |
Number of earn-out provisions (provisions) | provision | 2 |
Additional earn-out based on appreciation of Flotek’s share price | $ 5.0 |
First earn out provision threshold (usd per share) | $ / shares | $ 2 |
Second earn out provision threshold (usd per share) | $ / shares | $ 3 |
Business Combination - Net Assets Acquired (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
May 18, 2020 |
---|---|---|---|
Assets acquired: | |||
Goodwill | $ 8,092 | $ 8,092 | |
JP3 Measurement, LLC | |||
Assets acquired: | |||
Inventory | $ 7,100 | ||
Cash | 604 | ||
Net working capital, net of cash and inventories | (1,063) | ||
Fixed assets | 426 | ||
Long-term debt assumed and other assets (liabilities) | (893) | ||
Goodwill | 17,522 | ||
Net assets acquired | 36,596 | ||
JP3 Measurement, LLC | Tradenames and trademarks | |||
Assets acquired: | |||
Intangible assets other than goodwill | 1,100 | ||
JP3 Measurement, LLC | Technology and know-how | |||
Assets acquired: | |||
Intangible assets other than goodwill | 5,000 | ||
JP3 Measurement, LLC | Customer lists | |||
Assets acquired: | |||
Intangible assets other than goodwill | $ 6,800 |
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Revenue from Contract with Customer [Abstract] | ||
Product sales as a percentage of total revenue (in percentage) | 90.00% | 90.00% |
Disaggregation of Revenue | ||
Revenue | $ 11,770 | $ 19,416 |
Products | ||
Disaggregation of Revenue | ||
Revenue | 11,082 | 18,800 |
Services | ||
Disaggregation of Revenue | ||
Revenue | $ 688 | $ 616 |
Inventories - Components of inventory (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 7,074 | $ 7,190 |
Finished goods | 15,617 | 15,705 |
Inventories | 22,691 | 22,895 |
Less reserve for excess and obsolete inventory | (11,075) | (11,058) |
Inventories, net | $ 11,616 | $ 11,837 |
Inventories - Narratives (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Inventory | ||
Inventory write-down | $ 307,000 | $ 529,000 |
Chemistry Technologies | ||
Inventory | ||
Inventory write-down | 300,000 | |
Data Analytics | ||
Inventory | ||
Inventory write-down | $ 0 |
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Components of Property, Plant and Equipment | ||
Property and equipment | $ 20,131 | $ 20,541 |
Less accumulated depreciation | (11,873) | (11,454) |
Property and equipment, net | 8,258 | 9,087 |
Land | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 1,986 | 2,415 |
Land improvements | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 861 | 867 |
Buildings and leasehold improvements | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 6,365 | 6,364 |
Machinery and equipment | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 7,777 | 7,760 |
Furniture and fixtures | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 649 | 649 |
Transportation equipment | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 1,189 | 1,190 |
Computer equipment and software | ||
Components of Property, Plant and Equipment | ||
Property and equipment | $ 1,304 | $ 1,296 |
Property and Equipment - Narratives (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 300,000 | $ 1,700,000 |
Loss on write-down of assets held for sale | $ 0 | $ 30,178,000 |
Leases - Narratives (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
Lessee, Lease, Description | |||
Operating lease, right-of-use asset | $ 8,696,000 | $ 8,984,000 | |
Operating lease liability | 2,217,000 | $ 2,320,000 | |
Impairment of right-of-use assets | $ 0 | $ 7,434,000 | |
Adjustment | |||
Lessee, Lease, Description | |||
Operating lease, right-of-use asset | 6,200,000 | ||
Operating lease liability | $ 6,200,000 |
Leases - Components of Lease Expense and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Leases [Abstract] | ||
Operating lease expense | $ 238 | $ 570 |
Finance lease expense: | ||
Amortization of right-of-use assets | 4 | 5 |
Interest on lease liabilities | 3 | 4 |
Total finance lease expense | 7 | 9 |
Short-term lease expense | 69 | 32 |
Total lease expense | 314 | 611 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | 372 | 584 |
Operating cash flows from finance leases | (3) | 3 |
Financing cash flows from finance leases | $ (14) | $ (51) |
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Operating Leases | ||
2021 (excluding the three months ended March 31, 2021) | $ 936 | |
2022 | 1,289 | |
2023 | 1,317 | |
2024 | 1,347 | |
2025 | 1,347 | |
Thereafter | 6,865 | |
Total lease payments | 13,101 | |
Less: Interest | (4,405) | |
Present value of lease liabilities | 8,696 | $ 8,984 |
Finance Leases | ||
2021 (excluding the three months ended March 31, 2021) | 52 | |
2022 | 46 | |
2023 | 39 | |
2024 | 23 | |
2025 | 0 | |
Thereafter | 0 | |
Total lease payments | 160 | |
Less: Interest | (19) | |
Present value of lease liabilities | $ 141 | $ 156 |
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Operating Leases | ||
Operating lease right-of-use assets | $ 2,217 | $ 2,320 |
Current portion of operating lease liabilities | 597 | 636 |
Long-term operating lease liabilities | 8,099 | 8,348 |
Total operating lease liabilities | 8,696 | 8,984 |
Finance Leases | ||
Property and equipment | 147 | 147 |
Accumulated depreciation | (29) | (26) |
Property and equipment, net | 118 | 121 |
Current portion of finance lease liabilities | 61 | 60 |
Long-term finance lease liabilities | 80 | 96 |
Total finance lease liabilities | $ 141 | $ 156 |
Weighted Average Remaining Lease Term | ||
Operating leases (in years) | 9 years 7 months 6 days | 9 years 10 months 24 days |
Finance leases (in years) | 3 years 3 months 18 days | 3 years 1 month 6 days |
Weighted Average Discount Rate | ||
Operating leases (in percentage) | 6.70% | 8.90% |
Finance leases (in percentage) | 8.50% | 9.00% |
Impairment of Fixed and Long-lived Assets - Schedule of Impairment Charges (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Long Lived Assets Held-for-sale | ||
Loss on write-down of assets held for sale | $ 0 | $ 30,178,000 |
Operating lease right-of-use assets | 0 | 7,434,000 |
Total other intangibles | 0 | 19,842,000 |
Total impairment of fixed, long-lived and intangible assets | 0 | 57,454,000 |
Patents and technology | ||
Long Lived Assets Held-for-sale | ||
Total other intangibles | 0 | 9,902,000 |
Customer relationships | ||
Long Lived Assets Held-for-sale | ||
Total other intangibles | 0 | 9,165,000 |
Intangible assets in progress | ||
Long Lived Assets Held-for-sale | ||
Total other intangibles | 0 | 596,000 |
Trademarks and brand names | ||
Long Lived Assets Held-for-sale | ||
Total other intangibles | $ 0 | $ 179,000 |
Impairment of Fixed and Long-lived Assets - Narratives (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Unusual or infrequent item, or both, loss, gross | $ 57.5 |
Amortization of finite-lived intangible assets | $ 0.5 |
Accrued Liabilities - Schedule of Current Accrued Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Accrued liabilities, current | ||
Loss on purchase commitments (Note 13) | $ 9,383 | $ 9,402 |
Severance costs | 2,918 | 3,558 |
Payroll and benefits | 1,053 | 1,789 |
Contingent liability for earn-out provision | 1,081 | 1,416 |
Taxes other than income taxes | 883 | 544 |
Due to third parties | 531 | 434 |
Legal costs | 980 | 333 |
Deferred revenue, current | 134 | 146 |
Other | 968 | 653 |
Total current accrued liabilities | $ 17,931 | $ 18,275 |
Debt - Narratives (Details) - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
May 18, 2020 |
Apr. 30, 2020 |
|
Unsecured Debt | Flotek PPP loan | ||
Debt Instrument | ||
Proceeds from debt | $ 4.8 | |
Debt instrument stated interest rate (percent) | 1.00% | |
Debt instrument term (years) | 2 years | |
Percentage of cost allocable to payroll costs (percent) | 60.00% | |
JP3 Measurement, LLC | ||
Debt Instrument | ||
Assumed PPP loan | $ 0.9 |
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt Instrument | ||
Less current maturities | $ (5,023) | $ (4,048) |
Long-term debt | 642 | 1,617 |
Unsecured Debt | ||
Debt Instrument | ||
Total | 5,665 | 5,665 |
Less current maturities | (5,023) | (4,048) |
Long-term debt | 642 | 1,617 |
Unsecured Debt | Flotek PPP loan | ||
Debt Instrument | ||
Total | 4,788 | 4,788 |
Unsecured Debt | JP3 PPP loan | ||
Debt Instrument | ||
Total | $ 877 | $ 877 |
Fair Value Measurements - Recurring (Details) - Recurring - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring | ||
Contingent consideration | $ 1,081 | $ 1,416 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring | ||
Contingent consideration | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring | ||
Contingent consideration | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring | ||
Contingent consideration | $ 1,081 | $ 1,416 |
Fair Value Measurements - Narratives (Details) - USD ($) |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
Jun. 30, 2020 |
May 31, 2020 |
|
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Impairment of fixed and long-lived assets | $ 0 | $ 30,178,000 | |||
JP3 Measurement, LLC | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Contingent consideration | $ 1,200,000 | ||||
JP3 Measurement, LLC | Level 3 | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Contingent consideration | $ 1,200,000 | ||||
Nonrecurring | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Impairment of fixed and long-lived assets | $ 57,500,000 | ||||
Recurring | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Contingent consideration | 1,081,000 | $ 1,416,000 | |||
Recurring | Level 3 | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Contingent consideration | $ 1,081,000 | $ 1,416,000 |
Fair Value Measurements - Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance - beginning of period | $ 1,416 | $ 0 |
Additions / issuances | 0 | 0 |
Change in fair value | (335) | 0 |
Transfer out of Level 3 | 0 | 0 |
Balance - end of period | $ 1,081 | $ 0 |
Income Taxes - Reconciliation of Effective Tax Rate (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory tax rate | 21.00% | 21.00% |
State income taxes, net of federal benefit | (0.10%) | (0.10%) |
Non-U.S. income taxed at different rates | 0.60% | 0.10% |
Increase (reduction) in tax benefit related to stock-based awards | 0.10% | (0.20%) |
Non-deductible expenses | 0.00% | (0.10%) |
Research and development credit | 0.00% | 0.10% |
Increase in valuation allowance | (21.70%) | (15.00%) |
Effect of tax rate differences of NOL carryback | 0.00% | 3.00% |
Effective income tax rate | (0.10%) | 8.80% |
Income Taxes - Narratives (Details) $ in Millions |
Mar. 31, 2020
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Taxes receivable | $ 6.1 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
Other Commitments [Line Items] | |||
Indemnification expense | $ 0.5 | $ 0.2 | |
Terpene Supply Agreement | |||
Other Commitments [Line Items] | |||
Accrued Liabilities | $ 9.4 | $ 9.4 |
Stockholders’ Equity - Narratives (Details) - $ / shares |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
May 05, 2020 |
May 04, 2020 |
|
Equity | ||||
Common stock, shares authorized (in shares) | 140,000,000 | 140,000,000 | 140,000,000 | 80,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares authorized (in shares) | 100,000 | 100,000 | 100,000 | |
Preferred stock, at par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Adjustment | ||||
Equity | ||||
Other | 600,000 |
Earnings (Loss) Per Share - Narratives (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Anti-dilutive securities excluded from calculation of earnings per share (in shares) | 0 | 400,000 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Anti-dilutive securities excluded from calculation of earnings per share (in shares) | 0 | 3,000,000.0 |
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Supplemental cash payment information: | ||
Interest paid | $ 6 | $ 4 |
Income taxes (received, net of payments) paid | $ (351) | $ (32) |
Related Party Transaction (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Related Party Transaction | ||||
Accrual for potential penalties and interest | $ 0.2 | |||
Chief Executive Officer | Affiliated Entity | ||||
Related Party Transaction | ||||
Due from related party | $ 1.4 | $ 1.4 | $ 1.8 |
Business Segment, Geographic and Major Customer Information - Reportable Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Summarized financial information regarding reportable segments | ||
Net revenue from external customers | $ 11,770 | $ 19,416 |
Loss from operations, including impairment | (8,243) | (70,085) |
Depreciation and amortization | 307 | 2,191 |
Additions to long-lived assets | 19 | 42 |
Operating Segments | Chemistry Technologies | ||
Summarized financial information regarding reportable segments | ||
Net revenue from external customers | 10,302 | 19,416 |
Loss from operations, including impairment | (3,589) | (70,269) |
Depreciation and amortization | 292 | 1,809 |
Additions to long-lived assets | 19 | 42 |
Operating Segments | Data Analytics | ||
Summarized financial information regarding reportable segments | ||
Net revenue from external customers | 1,468 | 0 |
Loss from operations, including impairment | (292) | 0 |
Depreciation and amortization | 15 | 0 |
Additions to long-lived assets | 0 | 0 |
Corporate and Other | ||
Summarized financial information regarding reportable segments | ||
Net revenue from external customers | 0 | 0 |
Loss from operations, including impairment | (4,362) | 184 |
Depreciation and amortization | 0 | 382 |
Additions to long-lived assets | $ 0 | $ 0 |
Business Segment, Geographic and Major Customer Information - Assets by Reportable Segments (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Segment Reporting Information | ||
Total assets | $ 78,717 | $ 86,210 |
Operating Segments | Chemistry Technologies | ||
Segment Reporting Information | ||
Total assets | 33,804 | 43,346 |
Operating Segments | Data Analytics | ||
Segment Reporting Information | ||
Total assets | 14,025 | 13,201 |
Corporate and Other | ||
Segment Reporting Information | ||
Total assets | $ 30,888 | $ 29,663 |
Business Segment, Geographic and Major Customer Information - Geographic Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Revenues from External Customers and Long-Lived Assets | ||
Revenue | $ 11,770 | $ 19,416 |
U.S. | ||
Revenues from External Customers and Long-Lived Assets | ||
Revenue | 9,661 | 15,775 |
UAE | ||
Revenues from External Customers and Long-Lived Assets | ||
Revenue | 1,103 | 1,461 |
Other countries | ||
Revenues from External Customers and Long-Lived Assets | ||
Revenue | $ 1,006 | $ 2,180 |
Business Segment, Geographic and Major Customer Information - Major Customers (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Segment Reporting Information | ||
Revenue | $ 11,770 | $ 19,416 |
Customer Concentration Risk | Sales | Customer A | Chemistry Technologies | ||
Segment Reporting Information | ||
Revenue | $ 3,029 | $ 7,754 |
Percentage of revenue by major customers (in percentage) | 25.70% | 39.90% |
Customer Concentration Risk | Sales | Customer B | Chemistry Technologies | ||
Segment Reporting Information | ||
Revenue | $ 2,849 | $ 3,480 |
Percentage of revenue by major customers (in percentage) | 24.20% | 17.90% |
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