Annual report pursuant to Section 13 and 15(d)

Business Segments

v3.23.1
Business Segments
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Business Segments

15. BUSINESS SEGMENTS

Our business has three reportable segments: stimulation services, proppant production and manufacturing. 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, USWS, and REV are part of our stimulation services segment and Monahans and Monarch are 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 years ended December 31, 2022, 2021 and 2020, intersegment revenues for the proppant production segment were 62%, 40% and 20%, respectively. For the years ended December 31, 2022, 2021 and 2020, intersegment revenues for the manufacturing segment were 92%, 90% and 97%, 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 expense or benefit, (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, provision for credit losses, loss on extinguishment of debt and gain on investments.

Segment information, and a reconciliation of Adjusted EBITDA are as follows:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

Stimulation Services

 

$

2,348.7

 

 

$

745.4

 

 

$

538.3

 

Proppant Production

 

 

90.0

 

 

 

27.2

 

 

 

10.2

 

Manufacturing

 

 

166.7

 

 

 

76.4

 

 

 

46.2

 

Other

 

 

111.8

 

 

 

-

 

 

 

-

 

Total segments

 

 

2,717.2

 

 

 

849.0

 

 

 

594.7

 

Eliminations

 

 

(291.6

)

 

 

(80.6

)

 

 

(47.0

)

Total revenues

 

$

2,425.6

 

 

$

768.4

 

 

$

547.7

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Stimulation Services

 

$

771.4

 

 

$

122.6

 

 

$

68.8

 

Proppant Production

 

 

49.8

 

 

 

10.7

 

 

 

2.7

 

Manufacturing

 

 

14.3

 

 

 

1.4

 

 

 

1.3

 

Other

 

 

(24.3

)

 

 

-

 

 

 

-

 

Adjusted EBITDA for reportable segments

 

 

811.2

 

 

 

134.7

 

 

 

72.8

 

Interest expense, net

 

 

(59.5

)

 

 

(25.8

)

 

 

(23.3

)

Depreciation, depletion and amortization

 

 

(267.3

)

 

 

(140.7

)

 

 

(150.7

)

Income tax benefit (expense)

 

 

(9.1

)

 

 

0.2

 

 

 

(0.5

)

Loss on disposal of assets, net

 

 

(2.1

)

 

 

(9.8

)

 

 

(8.4

)

Loss on extinguishment of debt

 

 

(17.6

)

 

 

(0.5

)

 

 

-

 

Accruals for legal contingencies

 

 

(11.3

)

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

(8.1

)

 

 

-

 

 

 

-

 

Stock-based compensation related to deemed contributions

 

 

(59.3

)

 

 

-

 

 

 

-

 

Provision for credit losses, net of recoveries

 

 

(1.9

)

 

 

1.2

 

 

 

(2.8

)

Loss on foreign currency transactions

 

 

-

 

 

 

(0.2

)

 

 

-

 

Reorganization costs

 

 

-

 

 

 

(2.1

)

 

 

-

 

Acquisition related expenses

 

 

(48.8

)

 

 

-

 

 

 

-

 

Severance charges

 

 

-

 

 

 

(0.5

)

 

 

-

 

Supply commitment charges

 

 

-

 

 

 

-

 

 

 

(5.6

)

Unrealized gain on investments, net

 

 

16.5

 

 

 

-

 

 

 

-

 

Net income (loss)

 

$

342.7

 

 

$

(43.5

)

 

$

(118.5

)

 

Revenues related to external customers by segment are as follows:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

Stimulation Services

 

$

2,341.5

 

 

$

744.2

 

 

$

537.9

 

Proppant Production

 

 

33.9

 

 

 

16.3

 

 

 

8.2

 

Manufacturing

 

 

13.1

 

 

 

7.9

 

 

 

1.6

 

Other

 

 

37.1

 

 

 

-

 

 

 

-

 

Total revenues

 

$

2,425.6

 

 

$

768.4

 

 

$

547.7

 

Total assets by segment are as follows:

 

 

December 31,

 

 

 

2022

 

 

2021

 

Total assets:

 

 

 

 

 

 

Stimulation Services

 

$

2,647.9

 

 

$

510.6

 

Proppant Production

 

 

477.1

 

 

 

100.3

 

Manufacturing

 

 

140.5

 

 

 

78.0

 

Other

 

 

193.7

 

 

 

-

 

Total segment assets

 

 

3,459.2

 

 

 

688.9

 

Eliminations

 

 

(525.6

)

 

 

(24.3

)

Total assets

 

$

2,933.6

 

 

$

664.6