Results Of Operations By Business Segment And Geographic Area

3 Months Ended

Mar. 31, 2012

Results Of Operations By Business Segment And Geographic Area [Abstract]

Results Of Operations By Business Segment And Geographic Area

Note 13 — Results of Operations by Business Segment and Geographic Area

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by chief operating decision-makers to determine allocation of resources and assessment of performance. The Company's business is comprised of three reportable segments: Chemicals and Logistics ("Chemicals"), Drilling Products ("Drilling") and Artificial Lift.

• Chemicals is comprised of two business divisions: Specialty Chemicals and Logistics. Specialty Chemicals designs, develops, manufactures, packages and markets specialty chemicals used in oil and gas well cementing, stimulation, acidizing, drilling and production. Logistics manages automated material handling, loading facilities and blending capabilities for oilfield services companies.

• Drilling rents, inspects, manufactures and markets down-hole drilling equipment for energy, mining, water well and industrial drilling sectors.

• Artificial Lift assembles and markets artificial lift equipment, including the Petrovalve line of rod pump components, electric submersible pumps, gas separators, valves and services that support coal bed methane and oil production.

The Company evaluates performance based upon several criteria. The primary financial measure is segment income before taxes. 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, as well as estimated income tax provisions (benefits), are not allocated to reportable segments. Intersegment revenue of $2.7 million, and $ 2.5 million, for the three months ended March 31, 2012 and 2011, respectively has been eliminated from the amounts below.

Summarized financial information regarding reportable segments includes (in thousands):

As of and for the quarter ended March 31,	Chemicals		Drilling		Artificial Lift		Corporate			Total
2012
Net revenue from external customers	$	47,647	$	28,988	$	2,560	$	—		$	79,195
Gross margin		20,895		11,509		1,047		—			33,451
Income (loss) from operations		17,122		5,549		516		(6,439	)		16,748
Depreciation and amortization		404		2,158		44		42			2,648
Total assets		59,913		115,401		10,907		17,971			204,192
Capital expenditures		1,250		2,394		13		462			4,119
2011
Net revenue from external customers	$	26,927	$	22,641	$	3,337	$	—		$	52,905
Gross margin		11,301		8,945		899		—			21,145
Income (loss) from operations		8,525		4,697		426		(4,364	)		9,284
Depreciation and amortization		390		1,943		53		82			2,468
Total assets		50,745		104,295		7,297		25,283			187,620
Capital expenditures		51		819		10		361			1,241

Product Revenue

The Company differentiates revenue and cost of revenue dependent upon whether the source of revenue is related to Products, Rentals or Services. Product revenue is as follows: (in thousands):

	Three Months Ended March 31,
	2012		2011
Revenue:
Product	$	55,768	$	34,973
Rental		18,066		14,135
Service		5,361		3,797
	$	79,195	$	52,905
Cost of revenue:
Product		32,397		21,667
Rental		8,575		6,481
Service		3,082		2,165
Depreciation		1,690		1,447
	$	45,744	$	31,760

Geographic Information

Revenue by country is based upon the location of where services are provided and products are sold. No individual country other than the United States ("U.S.") accounted for more than 10% of revenue. Long-lived assets held in countries other than the U.S. are not considered material to the consolidated financial statements.

Revenue by geographic location is as follows (in thousands):

	Three Months Ended March 31,
	2012		2011
United States	$	67,971	$	45,075
Other Countries		11,224		7,830
Total	$	79,195	$	52,905

Concentrations and Credit Risk

The majority of the Company's revenue is derived from the oil and gas industry. Customers include major integrated oil and natural gas companies, independent oil and natural gas companies, pressure pumping service companies and state-owned national oil companies. Revenue from two customers accounted for 16%, and 11% of consolidated revenue for the quarter ended March 31, 2012 and 2011, respectively. Two of these customers accounted for 14% and 11% of consolidated revenue for the three months ended March 31, 2012 and 2011, respectively. Over 97% of this revenue for both periods related to sales by the Chemicals segment.

The Company is subject to significant concentrations of credit risk associated within trade accounts receivable as the Company does not generally require collateral in support of trade receivables. Further, the majority of the Company's cash is maintained at one major financial institution and balances often exceed insurable amounts.

Certain raw materials used by the Chemicals segment in the manufacture of the Company's proprietary complex nanofluids ("CnF") products are obtainable from limited sources. Certain mud-motor inventory parts in the Drilling segment and stock parts in the Artificial Lift segment are primarily sourced from China.