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Segment information

v3.22.2
Segment information
 3 Months Ended 12 Months Ended
Mar. 31, 2022
Dec. 31, 2021
Segment Reporting [Abstract]    
Segment information
14. 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. 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 months ended March 31, 2022 and 2021, intersegment revenues for the manufacturing segment were 84% and 86%, respectively. For the three months ended March 31, 2022 and 2021, intersegment revenues for the proppant production segment were 69% and 29%, 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) 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 months ended March 31, 2022 and 2021 is as follows:
 
                 
   
     
Three Months Ended
March 31,
  
(In thousands)
   
2022
    
2021
  
     
Revenues
                 
Stimulation services
    $ 336,155     $ 143,703  
Manufacturing
      32,006       14,657  
Proppant production
      12,408       5,589  
    
 
 
    
 
 
  
Total segments
      380,569       163,949  
Eliminations
      (35,589 )      (14,363 ) 
    
 
 
    
 
 
  
Total
    $ 344,980     $ 149,586  
    
 
 
    
 
 
  
   
     
Three Months Ended
March 31,
  
(In thousands)
   
2022
    
2021
  
Adjusted EBITDA
     
Stimulation services
    $ 73,569     $ 12,953  
Manufacturing
      10,022       2,330  
Proppant production
      7,885       2,406  
  
 
 
    
 
 
  
Adjusted EBITDA for reportable segments
      91,476       17,689  
Interest expense, net
      (9,272 )      (6,035 ) 
Depreciation, depletion and amortization
      (44,216 )      (35,461 ) 
Income tax benefit (provision)
      (752 )      25  
(Gain) loss on disposal of assets, net
      154       (2,207 ) 
Loss on extinguishment of debt
      (8,273 )      —  
Bad debt expense, net of recoveries
      (5 )      —  
Loss on foreign currency transactions
      (12 )      —  
Reorganizational costs
      (55 )      —  
Acquisition related expenses
      (13,019 )      —  
Investment income
      8,100       —  
  
 
 
    
 
 
  
Net income (loss)
    $ 24,126     $ (25,989 ) 
Segment information as of March 31, 2022 and December 31, 2021 is as follows:
 
     
     
March 31,
    
December 31,
  
(In thousands)
   
2022
    
2021
  
Total assets
     
Stimulation services
    $ 1,213,208     $ 510,579  
Manufacturing
      104,124       77,968  
Proppant production
      107,628       100,294  
  
 
 
    
 
 
  
Total segments
      1,424,960       688,841  
Eliminations
      (111,072 )      (24,271 ) 
  
 
 
    
 
 
  
Total
    $ 1,313,888     $ 664,570  
10. 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). The Wilks, who are our Chief Operating Decision Makers (“CODMs”), 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, 2021 and 2020, intersegment revenues for the manufacturing segment were 90% and 97%, respectively. For the years ended December 31, 2021 and 2020, intersegment revenues for the proppant production segment were 40% and 20%, 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 benefit (provision), (iii) depreciation, depletion and amortization, (iv) loss on disposal of assets, (v) loss on extinguishment of debt, (vi) bad debt expense, (vii) loss on foreign currency transactions and (viii) other unusual or
non-recurring
charges, such as costs related to our initial public offering, severance charges, and
non-recurring
supply commitment charges.
Segment information as of and for the years ended December 31, 2021 and 2020 is as follows:
 
   
    
Year ended December 31,
  
     
2021
    
2020
  
Revenues
     
Stimulation services
    $ 745,373     $ 538,282  
Manufacturing
      76,360       46,222  
Proppant production
      27,225       10,215  
  
 
 
  
Total segments
      848,958       594,719  
Eliminations
      (80,605 )      (47,040 ) 
  
 
 
  
Total
    $ 768,353     $ 547,679  
  
 
 
  
 
   
    
Year ended December 31,
  
     
2021
    
2020
  
Cost of revenues, excluding depreciation, depletion and amortization
     
Stimulation services
    $ 570,828     $ 433,122  
Manufacturing
      65,849       40,424  
Proppant production
      14,050       6,064  
  
 
 
  
Total segments
      650,727       479,610  
Eliminations
      (80,605 )      (47,040 ) 
  
 
 
  
Total
    $ 570,122     $ 432,570  
  
 
 
  
Adjusted EBITDA
     
Stimulation services
    $ 122,634     $ 68,787  
Manufacturing
      1,382       1,325  
Proppant production
      10,672       2,685  
  
 
 
  
Total segments
      134,688       72,797  
Eliminations
      —       —  
  
 
 
  
Total
    $ 134,688     $ 72,797  
  
 
 
  
Depreciation, depletion and amortization
     
Stimulation services
    $ 128,004     $ 138,122  
Manufacturing
      3,788       2,796  
Proppant production
      8,895       9,744  
  
 
 
  
Total
    $ 140,687     $ 150,662  
  
 
 
  
Capital expenditures
     
Stimulation services
    $ 82,545     $ 46,371  
Manufacturing
      3,500       1,661  
Proppant production
      1,355       5  
  
 
 
  
Total
    $ 87,400     $ 48,037  
 
  
Total assets
     
Stimulation services
    $ 545,047     $ 452,729  
Manufacturing
      77,968       64,769  
Proppant production
      100,294       73,918  
  
 
 
  
Total segment assets
      723,309       591,416  
Eliminations
      (58,739 )      (14,139 ) 
  
 
 
  
Total
    $ 664,570     $ 577,277  
The following table sets forth the reconciliation of Segment Adjusted EBITDA to net loss in our consolidated statements of operations:
 
     
     
2021
    
2020
  
Stimulation services—Adjusted EBITDA
    $ 122,634     $ 68,787  
Manufacturing—Adjusted EBITDA
      1,382       1,325  
Proppant production—Adjusted EBITDA
      10,672       2,685  
  
 
 
    
 
 
  
Total
    $ 134,688     $ 72,797  
  
 
 
    
 
 
  
Interest expense, net
      (25,788 )      (23,276 ) 
Income tax benefit (provision)
      186       (582 ) 
Depreciation, depletion and amortization
      (140,687 )      (150,662 ) 
Loss on disposal of assets, net
      (9,777 )      (8,447 ) 
Loss on extinguishment of debt
      (515 )      —  
Bad debt expense, net of recoveries
      1,164       (2,778 ) 
Loss on foreign currency transactions
      (249 )      —  
Reorganization costs
      (2,060 )      —  
Severance charges
      (500 )      —  
Supply commitment charges
      —       (5,600 ) 
  
 
 
    
 
 
  
Net loss
    $ (43,538 )    $ (118,548 )