Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Disaggregation of Revenue

The Company differentiates revenue based on whether the source of revenue is attributable to product sales or service revenue.

Total revenue disaggregated by revenue source is as follows (in thousands):

	Years ended December 31,
	2023		2022
Revenue:
Products (1)	$	182,695	$	132,521
Services	5,363		3,571
	$	188,058	$	136,092

(1) Product revenues include sales to related parties as described in Note 17, “Related Party Transactions.”

Disaggregation of Cost of Sales

The Company differentiates cost of sales based on whether the cost is attributable to tangible goods sold, cost of services sold or other costs which cannot be directly attributable to either tangible goods or services.

Total cost of sales disaggregated is as follows (in thousands):

	Years ended December 31,
	2023		2022
Cost of sales:
Tangible goods sold	$	144,720	$	126,914
Services	528		285
Other	18,547		15,593
	$	163,795	$	142,792

Other cost of sales represent costs directly associated with the generation of revenue but which cannot be attributed directly to tangible goods sold or services. Examples of other costs of sales are certain personnel costs and equipment rental and insurance costs.

Cost of sales disaggregated between external and related party sales is as follows (in thousands):

	Years ended December 31,
	2023		2022
Cost of sales:
Cost of sales for external customers	$	64,498	$	56,844
Cost of sales for related parties	99,297		85,948
	$	163,795	$	142,792

Contract Assets

Contract assets are as follows (in thousands):

	December 31,
	2023		2022
Contract assets	$	79,688	$	83,060
Less accumulated amortization	(5,032)		(3,371)
Contract assets, net	74,656		79,689
Less current contract assets	(5,836)		(7,113)
Contract assets, long term	$	68,820	$	72,576

In connection with entering into the ProFrac Agreement in 2022 as discussed in Note 9, “Debt and Convertible Notes Payable” and Note 17, “Related Party Transactions”, the Company recognized contract assets of $10.0 million and $69.5 million, respectively, and associated fees of $3.6 million. As of December 31, 2023, $68.8 million of the contract assets are classified as long term based upon our estimate of the forecasted revenues from the ProFrac Agreement which will not be realized within the next twelve months of the ProFrac Agreement.

During the years ended December 31, 2023 and 2022 the Company recognized $5.0 million and $3.4 million, respectively, of contract assets amortization which is recorded as a reduction of the transaction price included in the related party revenue in the consolidated statement of operations. The below table reflects our estimated amortization per year (in thousands) based on the Company’s current forecasted revenues from the ProFrac Agreement.

Years ending December 31,	Amortization
2024	$	5,836
2025	8,642
2026	9,628
2027	9,628
2028	9,628
Thereafter through May 2032	31,294
Total contract assets	$	74,656