| Business Segments |
NOTE 16. BUSINESS SEGMENTS
We manage our business segments primarily on 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.
We evaluate the performance of our segments based on Adjusted EBITDA. We define Adjusted EBITDA 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 reorganization costs and other costs related to our initial public offering, certain credit losses, gain (loss) on extinguishment of debt, unrealized gain (loss) on investments, acquisition and integration expenses, litigation expenses and accruals for legal contingencies, acquisition earnout adjustments, and severance charges.
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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Three months ended September 30, 2023: |
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Revenue |
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External customers |
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$ |
485.4 |
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$ |
69.5 |
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$ |
1.5 |
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$ |
17.8 |
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$ |
— |
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$ |
574.2 |
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Intercompany |
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4.1 |
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28.9 |
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42.3 |
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30.8 |
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(106.1 |
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— |
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Total Revenue |
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$ |
489.5 |
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$ |
98.4 |
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$ |
43.8 |
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$ |
48.6 |
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$ |
(106.1 |
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$ |
574.2 |
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Adjusted EBITDA |
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$ |
93.3 |
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$ |
51.6 |
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$ |
1.6 |
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$ |
2.8 |
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$ |
— |
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$ |
149.3 |
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Three months ended September 30, 2022: |
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Revenue |
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External customers |
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$ |
668.3 |
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$ |
10.9 |
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$ |
2.3 |
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$ |
15.2 |
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$ |
— |
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$ |
696.7 |
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Intercompany |
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0.3 |
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13.8 |
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46.4 |
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31.7 |
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(92.2 |
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— |
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Total Revenue |
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$ |
668.6 |
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$ |
24.7 |
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$ |
48.7 |
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$ |
46.9 |
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$ |
(92.2 |
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$ |
696.7 |
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Adjusted EBITDA |
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$ |
249.5 |
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$ |
9.2 |
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$ |
4.5 |
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$ |
(11.1 |
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$ |
— |
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$ |
252.1 |
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Nine months ended September 30, 2023: |
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Revenue |
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External customers |
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$ |
1,879.8 |
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$ |
200.7 |
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$ |
13.2 |
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$ |
47.2 |
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$ |
— |
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$ |
2,140.9 |
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Intercompany |
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8.1 |
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89.7 |
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128.8 |
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102.3 |
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(328.9 |
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— |
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Total Revenue |
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$ |
1,887.9 |
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$ |
290.4 |
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$ |
142.0 |
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$ |
149.5 |
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$ |
(328.9 |
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$ |
2,140.9 |
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Adjusted EBITDA |
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$ |
421.9 |
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$ |
150.7 |
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$ |
12.7 |
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$ |
(6.4 |
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$ |
— |
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$ |
578.9 |
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Nine months ended September 30, 2022: |
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Revenue |
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External customers |
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$ |
1,578.9 |
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$ |
21.0 |
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$ |
10.4 |
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$ |
21.2 |
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$ |
— |
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$ |
1,631.5 |
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Intercompany |
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2.4 |
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33.6 |
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105.2 |
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41.0 |
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(182.2 |
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— |
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Total Revenue |
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$ |
1,581.3 |
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$ |
54.6 |
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$ |
115.6 |
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$ |
62.2 |
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$ |
(182.2 |
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$ |
1,631.5 |
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Adjusted EBITDA |
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$ |
519.3 |
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$ |
29.6 |
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$ |
17.4 |
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$ |
(18.5 |
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$ |
— |
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$ |
547.8 |
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The following table reconciles total Adjusted EBITDA to net income:
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Adjusted EBITDA |
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$ |
149.3 |
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$ |
252.1 |
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$ |
578.9 |
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$ |
547.8 |
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Interest expense, net |
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(40.2 |
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(16.3 |
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(116.1 |
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(39.0 |
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Depreciation, depletion and amortization |
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(111.5 |
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(69.1 |
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(330.7 |
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(178.1 |
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Income tax benefit (expense) |
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6.7 |
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(7.9 |
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(9.6 |
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(12.4 |
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Gain (loss) on disposal of assets, net |
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1.3 |
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(0.6 |
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0.3 |
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(2.6 |
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(Loss) gain on extinguishment of debt |
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— |
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(0.2 |
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4.1 |
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(17.3 |
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Acquisition earnout adjustment |
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— |
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— |
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6.6 |
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— |
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Stock-based compensation |
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(2.3 |
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(2.7 |
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(7.6 |
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(4.2 |
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Stock-based compensation related to deemed contributions |
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(2.1 |
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(10.2 |
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(19.7 |
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(49.1 |
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Provision for credit losses, net of recoveries |
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— |
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— |
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(0.1 |
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— |
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Severance charges |
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(1.1 |
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— |
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(1.1 |
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— |
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Acquisition and integration costs |
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(2.6 |
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(5.8 |
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(20.1 |
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(22.9 |
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Litigation expenses and accruals for legal contingencies |
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(10.3 |
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— |
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(23.5 |
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(4.0 |
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Unrealized (loss) gain on investments, net |
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(5.1 |
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— |
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(24.1 |
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8.5 |
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Net (loss) income |
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$ |
(17.9 |
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$ |
139.3 |
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$ |
37.3 |
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$ |
226.7 |
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Segments assets are comprised of the following:
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September 30,
2023 |
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December 31,
2022 |
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Total assets: |
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Stimulation Services |
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$ |
2,909.3 |
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$ |
2,647.9 |
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Proppant Production |
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1,126.7 |
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477.1 |
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Manufacturing |
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224.3 |
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140.5 |
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Other |
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182.5 |
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193.7 |
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Total segment assets |
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4,442.8 |
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3,459.2 |
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Eliminations |
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(1,220.7 |
) |
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(525.6 |
) |
Total assets |
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$ |
3,222.1 |
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$ |
2,933.6 |
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