Quarterly report pursuant to Section 13 or 15(d)

Segment information

v3.22.2.2
Segment information
 9 Months Ended
Sep. 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 and Monahans is part of our proppant production segment. Amounts in the other category reflect our business activities that are not separately reportable, which primarily 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 nine months ended September 30, 2022 and 2021, intersegment revenues for the manufacturing segment were 95% and 91% and 91% and 88%, respectively. For the three and nine months ended September 30, 2022 and 2021, intersegment revenues for the proppant production segment were 56% and 46% and 61% and 40%, 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, loss on extinguishment of debt and gain on investments.

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

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stimulation services

 

$

668,578

 

 

$

190,723

 

 

$

1,581,289

 

 

$

502,932

 

Manufacturing

 

 

48,742

 

 

 

19,861

 

 

 

115,602

 

 

 

50,741

 

Proppant production

 

 

24,642

 

 

 

6,399

 

 

 

54,581

 

 

 

19,769

 

Other

 

 

46,872

 

 

 

—

 

 

 

62,231

 

 

 

—

 

Total segments

 

 

788,834

 

 

 

216,983

 

 

 

1,813,703

 

 

 

573,442

 

Eliminations

 

 

(92,104

)

 

 

(21,052

)

 

 

(182,149

)

 

 

(53,106

)

Total

 

$

696,730

 

 

$

195,931

 

 

$

1,631,554

 

 

$

520,336

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stimulation services

 

$

249,557

 

 

$

31,599

 

 

$

519,214

 

 

$

75,027

 

Manufacturing

 

 

8,416

 

 

 

502

 

 

 

27,798

 

 

 

3,181

 

Proppant production

 

 

9,198

 

 

 

2,417

 

 

 

29,657

 

 

 

8,069

 

Other

 

 

(11,072

)

 

 

—

 

 

 

(18,526

)

 

 

—

 

Adjusted EBITDA for reportable segments

 

 

256,099

 

 

 

34,518

 

 

 

558,143

 

 

 

86,277

 

Interest expense, net

 

 

(16,261

)

 

 

(6,896

)

 

 

(38,984

)

 

 

(19,118

)

Depreciation, depletion and amortization

 

 

(68,758

)

 

 

(35,241

)

 

 

(177,038

)

 

 

(105,606

)

Income tax benefit (provision)

 

 

(8,157

)

 

 

(170

)

 

 

(13,021

)

 

 

138

 

Loss on disposal of assets, net

 

 

(667

)

 

 

(3,397

)

 

 

(2,656

)

 

 

(7,472

)

Loss on extinguishment of debt

 

 

(242

)

 

 

—

 

 

 

(17,337

)

 

 

—

 

Litigation accrual

 

 

—

 

 

 

—

 

 

 

(4,000

)

 

 

—

 

Stock compensation expense

 

 

(2,719

)

 

 

—

 

 

 

(4,174

)

 

 

—

 

Stock compensation expense related to deemed contributions

 

 

(10,207

)

 

 

—

 

 

 

(49,056

)

 

 

—

 

Bad debt expense, net of recoveries

 

 

—

 

 

 

(2,562

)

 

 

(5

)

 

 

(2,562

)

Loss on foreign currency transactions

 

 

80

 

 

 

(116

)

 

 

126

 

 

 

(116

)

Reorganization costs

 

 

—

 

 

 

(211

)

 

 

(55

)

 

 

(211

)

Acquisition related expenses

 

 

(5,806

)

 

 

—

 

 

 

(22,888

)

 

 

—

 

Unrealized gain on investments, net

 

 

—

 

 

 

—

 

 

 

8,526

 

 

 

—

 

Net income (loss)

 

$

143,362

 

 

$

(14,075

)

 

$

237,581

 

 

$

(48,670

)

 

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

 

(In thousands)

 

September 30,

2022

 

 

December 31,

2021

 

Total assets

 

 

 

 

 

 

 

 

Stimulation services

 

$

1,663,989

 

 

$

510,579

 

Manufacturing

 

 

140,396

 

 

 

77,968

 

Proppant production

 

 

298,138

 

 

 

100,294

 

Other

 

 

196,946

 

 

 

—

 

Total segment assets

 

 

2,299,469

 

 

 

688,841

 

Eliminations

 

 

(320,185

)

 

 

(24,271

)

Total

 

$

1,979,284

 

 

$

664,570