Quarterly report pursuant to Section 13 or 15(d)

Segment information

v3.22.2.2
Segment information
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment information

18. Segment information

Our business has three reportable segments: Stimulation services, Manufacturing and Proppant production. Each reportable segment represents a separate business unit that operated as a standalone company prior to the reorganization of the Company in December 2021. Following the reorganization, each reportable segment continues to have distinct management and prepares discrete financial information for the segment (consistent with when each operated as a standalone business). FTSI is part of our stimulation services segment. Amounts in the other category reflect our business activities that are not separately reportable, which only included Flotek for the periods presented. Our chief operating decision makers review the discrete segment financial information, including Adjusted EBITDA as the measure of profitability, to evaluate the performance of our segments and make resource allocation decisions.

We account for intersegment transactions as if the transactions were with third parties, that is, at estimated current market prices. For the three and six months ended June 30, 2022 and 2021, intersegment revenues for the manufacturing segment were 92% and 88% and

88% and 87%, respectively. For the three and six months ended June 30, 2022 and 2021, intersegment revenues for the proppant production segment were 64% and 44% and 66% and 38%, respectively.

The performance of our segments is evaluated primarily on Adjusted EBITDA. We define Adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax provision, (iii) depreciation, depletion and amortization, (iv) loss on disposal of assets, and (v) stock-based compensation, and (vi) other unusual or non-recurring charges, such as costs related to our initial public offering, non-recurring supply commitment charges, certain bad debt expense and gain on extinguishment of debt.

Segment information, and a reconciliation of Adjusted EBITDA, for the three and six months ended June 30, 2022 and 2021 is as follows:

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(In thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stimulation services

 

$

576,556

 

 

$

168,506

 

 

$

912,711

 

 

$

312,209

 

Manufacturing

 

 

34,854

 

 

 

16,223

 

 

 

66,860

 

 

 

30,880

 

Proppant production

 

 

17,531

 

 

 

7,781

 

 

 

29,939

 

 

 

13,370

 

Other

 

 

15,359

 

 

 

—

 

 

 

15,359

 

 

 

—

 

Total segments

 

 

644,300

 

 

 

192,510

 

 

 

1,024,869

 

 

 

356,459

 

Eliminations

 

 

(54,456

)

 

 

(17,691

)

 

 

(90,045

)

 

 

(32,054

)

Total

 

$

589,844

 

 

$

174,819

 

 

$

934,824

 

 

$

324,405

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stimulation services

 

$

196,088

 

 

$

30,475

 

 

$

269,657

 

 

$

43,428

 

Manufacturing

 

 

9,360

 

 

 

349

 

 

 

19,382

 

 

 

2,679

 

Proppant production

 

 

12,574

 

 

 

3,246

 

 

 

20,459

 

 

 

5,652

 

Other

 

 

(7,454

)

 

 

—

 

 

 

(7,454

)

 

 

—

 

Adjusted EBITDA for reportable segments

 

 

210,568

 

 

 

34,070

 

 

 

302,044

 

 

 

51,759

 

Interest expense, net

 

 

(13,451

)

 

 

(6,187

)

 

 

(22,723

)

 

 

(12,222

)

Depreciation, depletion and amortization

 

 

(64,064

)

 

 

(34,904

)

 

 

(108,280

)

 

 

(70,365

)

Income tax benefit (provision)

 

 

(4,112

)

 

 

283

 

 

 

(4,864

)

 

 

308

 

Loss on disposal of assets, net

 

 

(2,143

)

 

 

(1,868

)

 

 

(1,989

)

 

 

(4,075

)

Loss on extinguishment of debt

 

 

(8,822

)

 

 

—

 

 

 

(17,095

)

 

 

—

 

Litigation accrual

 

 

(4,000

)

 

 

—

 

 

 

(4,000

)

 

 

—

 

Stock compensation expense

 

 

(1,455

)

 

 

—

 

 

 

(1,455

)

 

 

—

 

Stock compensation expense related to deemed contributions

 

 

(38,849

)

 

 

—

 

 

 

(38,849

)

 

 

—

 

Bad debt expense, net of recoveries

 

 

—

 

 

 

—

 

 

 

(5

)

 

 

—

 

Loss on foreign currency transactions

 

 

58

 

 

 

—

 

 

 

46

 

 

 

—

 

Reorganization costs

 

 

—

 

 

 

—

 

 

 

(55

)

 

 

—

 

Acquisition related expenses

 

 

(4,063

)

 

 

—

 

 

 

(17,082

)

 

 

—

 

Unrealized gain on investments, net

 

 

426

 

 

 

—

 

 

 

8,526

 

 

 

—

 

Net income (loss)

 

$

70,093

 

 

$

(8,606

)

 

$

94,219

 

 

$

(34,595

)

 

Segment information as of June 30, 2022 and December 31, 2021 is as follows:

 

(In thousands)

 

June 30,

2022

 

 

December 31,

2021

 

Total assets

 

 

 

 

 

 

 

 

Stimulation services

 

$

1,401,665

 

 

$

510,579

 

Manufacturing

 

 

113,147

 

 

 

77,968

 

Proppant production

 

 

133,235

 

 

 

100,294

 

Other

 

 

193,297

 

 

 

—

 

Total segment assets

 

 

1,841,344

 

 

 

688,841

 

Eliminations

 

 

(177,719

)

 

 

(24,271

)

Total

 

$

1,663,625

 

 

$

664,570