| Business Segments |
16. BUSINESS SEGMENTS
The Company's segments are determined as those operations whose results are reviewed regularly by the chief operating decision maker ("CODM"), who is our Executive Chairman, in deciding how to allocate resources and assess performance. Our CODM manages our business segments primarily by the type of product or services provided. We have three reportable segments which we operate within the United States of America: Stimulation Services, Proppant Production and Manufacturing. Amounts in the other category reflect our business activities that are not separately reportable, which primarily includes Flotek for the periods presented. Other business activities also include Livewire Power, LLC (“Livewire”), which we launched in the fourth quarter of 2024. Livewire enables onsite power generation services for oilfield and non-oilfield customers that require off-grid power solutions.
The CODM assesses the performance of the segments based on segment adjusted EBITDA, which is defined as our net income (loss) before (i) interest expense, net, (ii) income taxes, (iii) depreciation, depletion and amortization, (iv) (loss) gain on disposal of assets, net, (v) stock-based compensation, and (vi) other charges, such as certain credit losses, gain (loss) on extinguishment of debt, gain (loss) on investments, acquisition and integration expenses, litigation expenses and accruals for legal contingencies, acquisition earnout adjustments, severance charges, goodwill impairments, gains on insurance recoveries, transaction costs, third-party supply commitment charges, and impairments of long-lived assets.
We account for intersegment transactions as if the transactions were with third parties, that is, at estimated current market prices.
Summarized financial information for our reportable segments is as follows:
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Stimulation Services |
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Proppant Production |
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Manufacturing |
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Other |
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Eliminations |
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Total |
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Year Ended December 31, 2024: |
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Revenue |
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External customers — services |
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$ |
1,886.7 |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
1,886.7 |
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External customers — product sales (1) |
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— |
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181.5 |
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50.8 |
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71.9 |
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— |
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304.2 |
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Intercompany (2) |
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27.7 |
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65.0 |
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172.0 |
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123.6 |
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(388.3 |
) |
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— |
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Total Revenue |
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$ |
1,914.4 |
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$ |
246.5 |
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$ |
222.8 |
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$ |
195.5 |
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$ |
(388.3 |
) |
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$ |
2,190.9 |
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Cost of revenues, exclusive of depreciation, depletion, and amortization |
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1,394.8 |
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137.6 |
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190.5 |
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152.5 |
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(380.3 |
) |
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1,495.1 |
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Selling, general and administrative, excluding stock-based compensation |
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123.6 |
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23.3 |
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24.6 |
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25.8 |
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— |
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197.3 |
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Other expense (income) |
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(2.7 |
) |
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— |
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0.1 |
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— |
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— |
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(2.6 |
) |
Adjusted EBITDA (3) |
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$ |
398.7 |
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$ |
85.6 |
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$ |
7.6 |
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$ |
17.2 |
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$ |
(8.0 |
) |
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$ |
501.1 |
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Depreciation, depletion and amortization |
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348.5 |
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77.8 |
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13.8 |
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2.8 |
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(0.7 |
) |
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442.2 |
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Investment in property, plant & equipment |
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216.8 |
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23.5 |
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8.6 |
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10.8 |
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(4.7 |
) |
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255.0 |
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As of December 31, 2024: |
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Cash and cash equivalents |
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$ |
8.7 |
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$ |
— |
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$ |
1.7 |
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$ |
4.4 |
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$ |
— |
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$ |
14.8 |
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Total current assets |
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466.9 |
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71.4 |
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255.3 |
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95.3 |
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(314.8 |
) |
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574.1 |
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Property, plant, and equipment, net |
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839.3 |
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817.6 |
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82.5 |
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25.9 |
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(4.1 |
) |
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1,761.2 |
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Total assets (4) |
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2,911.3 |
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929.5 |
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443.2 |
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249.6 |
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(1,545.5 |
) |
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2,988.1 |
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Current portion of long-term debt |
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87.5 |
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65.5 |
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6.8 |
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4.8 |
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— |
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164.6 |
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Long-term debt |
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649.1 |
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278.0 |
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17.3 |
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— |
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— |
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944.4 |
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Total liabilities |
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1,891.4 |
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124.2 |
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360.7 |
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103.9 |
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(631.7 |
) |
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1,848.5 |
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Stimulation Services |
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Proppant Production |
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Manufacturing |
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Other |
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Eliminations |
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Total |
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Year Ended December 31, 2023: |
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Revenue |
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External customers — services |
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$ |
2,274.2 |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
2,274.2 |
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External customers — product sales (1) |
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— |
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270.2 |
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19.0 |
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66.6 |
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— |
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355.8 |
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Intercompany (2) |
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17.0 |
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113.1 |
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157.1 |
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126.4 |
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(413.6 |
) |
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— |
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Total Revenue |
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$ |
2,291.2 |
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$ |
383.3 |
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$ |
176.1 |
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$ |
193.0 |
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$ |
(413.6 |
) |
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$ |
2,630.0 |
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Cost of revenues, exclusive of depreciation, depletion, and amortization |
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1,668.9 |
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171.6 |
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147.0 |
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166.2 |
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(413.6 |
) |
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1,740.1 |
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Selling, general and administrative, excluding stock-based compensation |
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147.0 |
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13.8 |
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14.6 |
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28.4 |
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— |
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|
203.8 |
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Other expense (income) |
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(2.1 |
) |
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(0.2 |
) |
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— |
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0.0 |
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— |
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(2.3 |
) |
Adjusted EBITDA (3) |
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$ |
477.4 |
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$ |
198.1 |
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$ |
14.5 |
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$ |
(1.6 |
) |
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$ |
— |
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$ |
688.4 |
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Depreciation, depletion and amortization |
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|
363.0 |
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|
68.1 |
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|
4.2 |
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|
3.1 |
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— |
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$ |
438.4 |
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Investment in property, plant & equipment |
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221.8 |
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|
40.9 |
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|
3.3 |
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|
1.0 |
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— |
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$ |
267.0 |
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As of December 31, 2023: |
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Cash and cash equivalents |
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$ |
1.3 |
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$ |
17.7 |
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$ |
0.4 |
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$ |
5.9 |
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$ |
— |
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$ |
25.3 |
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Total current assets |
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445.8 |
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|
181.2 |
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164.7 |
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70.6 |
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(224.2 |
) |
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|
638.1 |
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Property, plant, and equipment, net |
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881.6 |
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|
859.8 |
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|
19.8 |
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|
17.8 |
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— |
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1,779.0 |
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Total assets (4) |
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2,483.9 |
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1,160.1 |
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|
243.9 |
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|
188.7 |
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(1,005.9 |
) |
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|
3,070.7 |
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Current portion of long-term debt |
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|
46.2 |
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|
71.6 |
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|
1.0 |
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|
7.6 |
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— |
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|
126.4 |
|
Long-term debt |
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|
611.2 |
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|
328.2 |
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|
2.6 |
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|
0.1 |
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|
— |
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|
942.1 |
|
Total liabilities |
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1,404.5 |
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|
225.7 |
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|
201.5 |
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|
55.5 |
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(145.1 |
) |
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1,742.1 |
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Year Ended December 31, 2022: |
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Revenue |
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|
|
|
|
|
|
|
|
|
|
|
|
|
External customers — services |
|
$ |
2,341.5 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
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|
$ |
2,341.5 |
|
External customers — product sales (1) |
|
|
— |
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|
33.9 |
|
|
|
13.1 |
|
|
|
37.1 |
|
|
|
— |
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|
84.1 |
|
Intercompany (2) |
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|
7.2 |
|
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|
56.1 |
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|
153.6 |
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|
74.7 |
|
|
|
(291.6 |
) |
|
|
— |
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Total Revenue |
|
$ |
2,348.7 |
|
|
$ |
90.0 |
|
|
$ |
166.7 |
|
|
$ |
111.8 |
|
|
$ |
(291.6 |
) |
|
$ |
2,425.6 |
|
Cost of revenues, exclusive of depreciation, depletion, and amortization |
|
|
1,451.3 |
|
|
|
40.7 |
|
|
|
137.9 |
|
|
|
118.5 |
|
|
|
(291.6 |
) |
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|
1,456.8 |
|
Selling, general and administrative, excluding stock-based compensation |
|
|
122.6 |
|
|
|
3.2 |
|
|
|
14.4 |
|
|
|
17.4 |
|
|
|
— |
|
|
|
157.6 |
|
Other expense (income) |
|
|
(0.7 |
) |
|
|
0.4 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
(0.0 |
) |
Adjusted EBITDA (3) |
|
$ |
775.5 |
|
|
$ |
45.7 |
|
|
$ |
14.3 |
|
|
$ |
(24.3 |
) |
|
$ |
— |
|
|
$ |
811.2 |
|
Depreciation, depletion and amortization |
|
$ |
246.4 |
|
|
$ |
14.2 |
|
|
$ |
4.7 |
|
|
$ |
2.0 |
|
|
$ |
— |
|
|
$ |
267.3 |
|
Investment in property, plant & equipment |
|
$ |
297.8 |
|
|
$ |
52.5 |
|
|
$ |
5.5 |
|
|
$ |
0.4 |
|
|
$ |
— |
|
|
$ |
356.2 |
|
(1)
Our Proppant Production segment recognized noncash revenue associated with acquired contract liabilities of $43.7, $57.5 million and $6.6 million in 2024, 2023 and 2022, respectively.
(2)
In our other business activities, Flotek recorded $32.5 million and $20.1 million of revenue in 2024 and 2023, respectively, related to contract shortfalls because the Stimulation Services segment did not purchase the minimum contractual commitment of chemistry products from Flotek.
(3)
Adjusted EBITDA for the stimulated services segment included an intercompany supply commitment charge of $32.5 million and $20.1 million in 2024 and 2023, respectively, because this segment did not purchase the minimum contractual commitment of chemistry products from Flotek.
(4)
Total assets for the Stimulation Services segment includes our investment in BPC prior to acquisition, which was $23.4 million and $53.6 as of December 31, 2023 and 2022, respectively. The gains and losses associated with this investment are not included in our segment profit measure of adjusted EBITDA.
The following table reconciles consolidated Adjusted EBITDA to net income (loss):
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Year Ended December 31, |
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2024 |
|
|
2023 |
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|
2022 |
|
Adjusted EBITDA of reportable segments |
|
$ |
501.1 |
|
|
$ |
688.4 |
|
|
$ |
811.2 |
|
Interest expense, net |
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|
(156.6 |
) |
|
|
(154.9 |
) |
|
|
(59.5 |
) |
Depreciation, depletion and amortization |
|
|
(442.2 |
) |
|
|
(438.4 |
) |
|
|
(267.3 |
) |
Income tax benefit (expense) |
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|
7.0 |
|
|
|
(1.2 |
) |
|
|
(9.1 |
) |
Gain (loss) on disposal of assets, net |
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|
(0.3 |
) |
|
|
1.7 |
|
|
|
(2.1 |
) |
Loss on extinguishment of debt |
|
|
(0.8 |
) |
|
|
(33.5 |
) |
|
|
(17.6 |
) |
Acquisition earnout adjustment |
|
|
— |
|
|
|
6.6 |
|
|
|
— |
|
Stock-based compensation (1) |
|
|
(7.3 |
) |
|
|
(10.1 |
) |
|
|
(8.1 |
) |
Stock-based compensation related to deemed contributions (1) |
|
|
— |
|
|
|
(19.7 |
) |
|
|
(59.3 |
) |
Provision for credit losses, net of recoveries |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(1.9 |
) |
Transaction costs |
|
|
(3.9 |
) |
|
|
— |
|
|
|
— |
|
Severance charges |
|
|
(2.5 |
) |
|
|
(1.1 |
) |
|
|
— |
|
Acquisition and integration costs |
|
|
(7.8 |
) |
|
|
(21.8 |
) |
|
|
(48.8 |
) |
Supply commitment charges |
|
|
(9.6 |
) |
|
|
— |
|
|
|
— |
|
Impairment of long-lived assets |
|
|
— |
|
|
|
(2.5 |
) |
|
|
— |
|
Impairment of goodwill |
|
|
(74.5 |
) |
|
|
— |
|
|
|
— |
|
Gain on insurance recoveries |
|
|
4.9 |
|
|
|
— |
|
|
|
— |
|
Litigation expenses and accruals for legal contingencies |
|
|
(15.7 |
) |
|
|
(34.1 |
) |
|
|
(11.3 |
) |
Unrealized gain (loss) on investments, net |
|
|
0.4 |
|
|
|
(38.5 |
) |
|
|
16.5 |
|
Net income (loss) |
|
$ |
(207.8 |
) |
|
$ |
(59.2 |
) |
|
$ |
342.7 |
|
(1)
Stock-based compensation and stock-based compensation related to deemed contributions are reported in “Selling, general and administrative” in the consolidated statements of operations and are not allocated to the segments.
|