Quarterly report pursuant to Section 13 or 15(d)

Reportable Segment Information

v3.22.2.2
Reportable Segment Information
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Reportable Segment Information Reportable Segment Information
The Company currently has two operating segments for which discrete financial information is readily available: hydraulic fracturing (inclusive of acidizing) and cementing. These operating segments represent how the Chief Operating Decision Maker evaluates performance and allocates resources.
On September 1, 2022, the Company disposed of its coiled tubing assets (included in the "all other" category) to a subsidiary of STEP as part of a strategic repositioning. The divestiture of our coiled tubing assets did not qualify for presentation and disclosure as discontinued operations, and accordingly, we have recorded the resulting loss of approximately $13.8 million as part of our loss on disposal of assets in our consolidated statement of operations. We received approximately $2.8 million in cash and 2,616,460 common shares of STEP valued at $11.9 million as consideration for the coiled tubing assets, for total consideration of $14.6 million. The divestiture of our coiled tubing assets resulted in a reduction in the number of our current operating segments to two. The change in the number of our operating segments did not impact our reportable segment information reported for the three and nine months ended September 30, 2022 and 2021.
In accordance with the FASB Accounting Standards Codification ("ASC") 280—Segment Reporting, the Company has one reportable segment (pressure pumping) comprised of the hydraulic fracturing and cementing operating segments. Our coiled tubing results of operations prior to the divestiture and corporate administrative expense (inclusive of our total income tax expense (benefit), other (income) and expense and interest expense) are included in the "all other" category in the table below. Total corporate administrative expense for the three and nine months ended September 30, 2022 was $20.4 million and $45.4 million, respectively. Total corporate administrative expense for the three and nine months ended September 30, 2021 was $13.5 million and $25.1 million, respectively.
Our hydraulic fracturing operating segment revenue approximated 91.7% and 92.7% of our pressure pumping revenue during the three and nine months ended September 30, 2022, respectively. During the three and nine months ended September 30, 2021, our hydraulic fracturing operating segment revenue approximated 93.4% and 93.5% of our pressure pumping revenue, respectively.
Inter-segment revenues are not material and are not shown separately in the table below.
The Company manages and assesses the performance of the reportable segment by its adjusted EBITDA (earnings before other income (expense), interest expense, income taxes, depreciation and amortization, stock-based compensation expense, severance and related expense, impairment expense, (gain)/loss on disposal of assets and other unusual or nonrecurring expenses or (income)).
A reconciliation from segment level financial information to the consolidated statement of operations is provided in the table below (in thousands):
Three Months Ended September 30, 2022
Pressure Pumping All Other Total
Service revenue $ 330,780  $ 2,234  $ 333,014 
Adjusted EBITDA $ 102,550  $ (12,550) $ 90,000 
Depreciation and amortization $ 29,736  $ 681  $ 30,417 
Capital expenditures $ 112,865  $ 2,258  $ 115,123 
Total assets at September 30, 2022 $ 1,091,796  $ 51,810  $ 1,143,606 
Three Months Ended September 30, 2021
Pressure Pumping All Other Total
Service revenue $ 245,641  $ 4,458  $ 250,099 
Adjusted EBITDA $ 53,975  $ (11,877) $ 42,098 
Depreciation and amortization $ 32,536  $ 995  $ 33,531 
Capital expenditures $ 52,904  $ 300  $ 53,204 
Total assets December 31, 2021 $ 1,023,037  $ 38,199  $ 1,061,236 
Nine Months Ended September 30, 2022
Pressure Pumping All Other Total
Service revenue $ 917,336  $ 13,440  $ 930,776 
Adjusted EBITDA $ 265,835  $ (33,355) $ 232,480 
Depreciation and amortization $ 91,194  $ 2,540  $ 93,734 
Capital expenditures $ 267,638  $ 8,294  $ 275,932 
Total assets at September 30, 2022 $ 1,091,796  $ 51,810  $ 1,143,606 
Nine Months Ended September 30, 2021
Pressure Pumping All Other Total
Service revenue $ 617,293  $ 11,151  $ 628,444 
Adjusted EBITDA $ 132,673  $ (34,866) $ 97,807 
Depreciation and amortization $ 97,307  $ 2,946  $ 100,253 
Capital expenditures $ 113,670  $ 2,634  $ 116,304 
Total assets December 31, 2021 $ 1,023,037  $ 38,199  $ 1,061,236 
Reconciliation of net income (loss) to adjusted EBITDA (in thousands):
Three Months Ended September 30, 2022
Pressure Pumping All Other Total
Net income (loss) $ 46,805  $ (36,773) $ 10,032 
Depreciation and amortization 29,736  681  30,417 
Interest expense —  237  237 
Income tax expense —  2,768  2,768 
Loss (gain) on disposal of assets 22,850  13,786  36,636 
Stock-based compensation —  3,306  3,306 
Other (income) expense (3)
(2,668) 3,284  616 
Other general and administrative expense (1)
4,775  145  4,920 
Severance expense 1,052  16  1,068 
Adjusted EBITDA $ 102,550  $ (12,550) $ 90,000 
Three Months Ended September 30, 2021
Pressure Pumping All Other Total
Net income (loss) $ 9,058  $ (14,125) $ (5,067)
Depreciation and amortization 32,536  995  33,531 
Interest expense —  143  143 
Income tax benefit —  (1,279) (1,279)
Loss on disposal of assets 12,381  43  12,424 
Stock-based compensation —  3,009  3,009 
Other expense —  309  309 
Other general and administrative expense, (net) (1)
—  (972) (972)
Adjusted EBITDA $ 53,975  $ (11,877) $ 42,098 
Nine Months Ended September 30, 2022
Pressure Pumping All Other Total
Net income (loss) $ 51,782  $ (62,794) $ (11,012)
Depreciation and amortization 91,194  2,540  93,734 
Impairment expense 57,454  —  57,454 
Interest expense —  1,040  1,040 
Income tax benefit —  (1,164) (1,164)
Loss (gain) on disposal of assets 61,952  13,288  75,240 
Stock-based compensation —  18,128  18,128 
Other income (2) (3)
(2,668) (7,081) (9,749)
Other general and administrative expense (1)
5,060  2,651  7,711 
Severance expense 1,061  37  1,098 
Adjusted EBITDA $ 265,835  $ (33,355) $ 232,480 
Nine Months Ended September 30, 2021
Pressure Pumping All Other Total
Net income (loss) $ (5,426) $ (28,527) $ (33,953)
Depreciation and amortization 97,307  2,946  100,253 
Interest expense —  477  477 
Income tax benefit —  (11,639) (11,639)
Loss (gain) on disposal of assets 40,792  (292) 40,500 
Stock-based compensation —  8,405  8,405 
Other income —  (1,178) (1,178)
Other general and administrative expense, (net) (1)
—  (5,670) (5,670)
Severance expense —  612  612 
Adjusted EBITDA $ 132,673  $ (34,866) $ 97,807 

(1)Other general and administrative expense, (net of reimbursement from insurance carriers) primarily relates to nonrecurring professional fees paid to external consultants in connection with our audit committee review, SEC investigation, shareholder litigation, legal settlement to a vendor and other legal matters, net of insurance recoveries. During the three and nine months ended September 30, 2022, we received reimbursement of approximately $3.4 million and $6.9 million, respectively, from our insurance carriers in connection with the SEC investigation and shareholder litigation. During the three and nine months ended September 30, 2021, we received reimbursement of approximately $1.4 million and $8.1 million, respectively.
(2)Includes $10.7 million of net tax refund (net of advisory fees) received in March 2022 from the Texas Comptroller of Public Accounts in connection with limited sales, excise and use tax beginning July 1, 2015 through December 31, 2018.
(3)Includes $2.7 million non cash income from fixed asset inventory received as part of a settlement of warranty claims with an equipment manufacturer and a $3.3 million unrealized loss on short-term investment.