What changed in this filing

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Item 1. Business

2021-03-02 compared with 2020-02-25 · 103 added, 168 removed, 131 unchanged (67% of the section changed)

Forum Energy Technologies, Inc., a Delaware corporation (“Forum,” the “Company,” “we” or “us”), is a global oilfield products company, serving the drilling, downhole, subsea, completions, and production sectors of the oil and natural gas industry.

Forum Energy Technologies, Inc., a Delaware corporation (“Forum,” the “Company,” “we” or “us”), is a global products company, serving the drilling, downhole, subsea, completions, and production sectors of the energy industry.

Our common shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “FET.” Our principal executive offices are located at 10344 Sam Houston Park Drive, Houston, Texas 77064, our telephone number is (713) 351-7900, and our website is www.f-e-t.com.

Our Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and all amendments thereto, are available free of charge on our website as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

Our Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and all amendments thereto, are available free of charge in the “Investors” section of our website as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

These reports are also available on the SEC’s website at www.sec.gov.

Information contained on or accessible from our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report or any other filing that we make with the SEC.

We are a global oilfield products company, serving the drilling, downhole, subsea, completions and production sectors of the oil and natural gas industry.

We design, manufacture and distribute products and engage in aftermarket services, parts supply and related services that complement our product offering.

Reverse Stock Split

On November 9, 2020, we effected a reverse stock split where each 20 issued and outstanding shares of our common stock were converted into one share of our common stock (the "Reverse Stock Split").

Our shares began trading on a reverse stock split-adjusted basis on November 10, 2020.

All share and per share data included in this report have been retroactively adjusted to reflect the Reverse Stock Split.

We are a global products company, serving the drilling, downhole, subsea, completions and production sectors of the energy industry.

We design, manufacture and distribute products and engage in aftermarket parts supply and services that complement our product offering.

The Company's products include highly engineered capital equipment as well as products that are consumed in the drilling, well construction, production and transportation of oil and natural gas.

Our product offering includes a mix of frequently replaced consumable products and highly engineered capital products.

Our consumable products are used in drilling, well construction and completions activities, within the supporting infrastructure, and at processing centers and refineries.

Our engineered capital products are directed at:

drilling rig equipment for new rigs, upgrades and refurbishment projects;

subsea construction and development projects;

pressure pumping equipment;

the placement of production equipment on new producing wells;

and downstream capital projects.

These consumable products are used in drilling, well construction and completions activities, within the supporting infrastructure, and at processing centers and refineries.

Our engineered capital products are directed at drilling rig equipment for new rigs, upgrades and refurbishment projects, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, and downstream capital projects.

In 2020, over 80% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.

We seek to design, manufacture and supply high quality reliable products that create value for our diverse customer base, which includes, among others, oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, subsea construction and service companies, and pipeline and refinery operators.

In the first quarter of 2019, we changed our reporting segments to align with business activity drivers and the manner in which management reviews and evaluates operating performance.

Forum now operates in the following three reporting segments:

Drilling & Downhole, Completions and Production, and we believe that this reporting segment structure better aligns with the key phases of the well cycle and provides improved operating efficiencies.

Prior to this change, we operated in three business segments:

Drilling & Subsea, Completions, and Production & Infrastructure.

We moved the Downhole product line from Completions to Drilling & Subsea to form the new Drilling & Downhole segment.

Completions retained the Stimulation & Intervention and Coiled Tubing product lines.

Finally, we renamed Production & Infrastructure the Production segment.

Our historical results of operations have been recast to retrospectively reflect these changes in accordance with generally accepted accounting principles.

We incorporate by reference the segment and geographic information for the last three years set forth in Note 17 Business Segments , and the information with respect to acquisitions is set forth in Note 4 Acquisitions & Dispositions .

Our reporting segments align with business activity drivers and the manner in which management reviews and evaluates operating performance.

Forum operates in the following three reporting segments:

Drilling & Downhole, Completions and Production.

We believe that the reporting segment structure is aligned with the key phases of the well cycle and provides operating efficiencies.

We incorporate by reference the segment and geographic information for the last three years set forth in Note 18 Business Segments , and the information with respect to dispositions set forth in Note 4 Dispositions .

Drilling & Downhole segment

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downhole technologies, including cementing and casing tools, protection products for artificial lift equipment and cables.

and subsea technologies, including robotic vehicles and other capital equipment, specialty components and tooling, a broad suite of complementary subsea technical services, and products used in pipeline infrastructure.

The segment also supplies subsea technologies, including robotic vehicles and other capital equipment, specialty components and tooling, a broad suite of complementary subsea technical services.

There are several factors that drive demand for our Drilling & Downhole segment.

Our Drilling Technologies product line is influenced by global drilling activity;

the level of capital investment in drilling rigs;

rig upgrades and equipment replacement as drilling contractors modify their existing rigs to increase capability or improve efficiency and safety;

and the number of rigs in use and the severity of the conditions under which they operate.

Our Downhole Technologies product line is impacted by the level of well completion activity and complexity of well construction and completion.

Demand for our subsea products is impacted by global offshore activity, defense spending, subsea equipment and pipeline installation, repair and maintenance spending, and growth in offshore resource development.

the level of capital investment in drilling rigs and equipment replacement as drilling contractors modify or replace existing rigs to increase capability or improve efficiency and safety;

the number of rigs in use and the severity of operating conditions.

Our Downhole Technologies product line is impacted

by the level of well completion activity and complexity of well construction and completion.

Demand for our subsea products is affected by global offshore activity, defense spending, subsea equipment and pipeline installation, repair and maintenance expenditures, and growth in offshore resource development.

Drilling Technologies.

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drilling fluid end components;

a broad line of items consumed in the drilling process;

and digital monitoring products.

and a broad line of items consumed in the drilling process.

Drilling capital equipment.

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Our Forum B+V Oil Tools and Wrangler™ branded tools reduce direct human involvement in the handling of pipe during drilling operations, improving safety, speed and efficiency of operations.

Our tubular handling tools include elevators, clamps, slip handles, tong handles, powered slips, spiders and kelly spinners.

Our tubular handling tools include elevators, clamps, rotary slips, rotary tongs, powered slips, spiders and kelly spinners.

Our hydraulic catwalks mechanize the lifting and lowering of tubulars to and from the drill floor, eliminating or reducing the need for traditional drill pipe and casing “pick-up and lay-down” operations with associated personnel.

In addition, our make-up and break-out tools, called Floorhand TM and Wrangler Roughneck™, automate a potentially dangerous rig floor task and improve rig drilling speed and safety.

In addition, we design and manufacture a range of rig-based offline activity cranes and multi-purpose cranes.

In addition, our make-up and break-out tools, called Forum Roughneck™, automate a potentially dangerous rig floor task and improve rig drilling speed and safety.

In addition, we also manufacture torque machines which allow customers to make up and break out complex tubulars and casing offline.

We also design and manufacture a range of rig-based offline activity cranes and multi-purpose cranes.

In addition to powered tubular handling equipment, we design and manufacture drilling manifold systems and high pressure piping packages.

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We manufacture a range of consumable products used on drilling rigs, well servicing rigs, and hydraulic fracturing systems.

Our consumable products include valves, centrifugal pumps, mud pump fluid end components, mud pump modules, rig sensors, inserts, and dies.

We are also a supplier of oilfield bearings to original equipment manufacturers and repair businesses for use in drilling and well stimulation equipment.

Our consumable products include valves, centrifugal pumps, mud pump fluid end components, including P-Quip™ mud pump modules, Forumlok™, rig sensors, inserts, and dies.

We are also a supplier of oilfield bearings, including FracMax™, to original equipment manufacturers and repair businesses for use in drilling and well stimulation equipment.

Downhole Technologies.

We manufacture a broad line of downhole products that are consumed during the well construction, completion and production phases of a well’s lifecycle.

We manufacture a broad line of downhole products that are consumed during the construction, completion and production phases of a well’s lifecycle.

Downhole protection systems.

We offer a full range of downhole protection solutions and artificial lift accessories through our various brands such as Cannon Services™ and Multilift.

The Cannon Services clamp, Forum cast clamp and protection products are used to shield downhole control lines, cables and gauges during installation and to provide protection during production enhancement operations.

We design and manufacture a full range of downhole protection solutions for electrical submersible pump (“ESP”) cabling, encapsulated control lines, sub-surface safety valves and permanent downhole gauges.

We offer a full selection of downhole protection solutions and artificial lift accessories through our various brands such as Cannon Services™ and Multilift.

Our Cannon Services protectors are used to shield downhole control lines, cables and gauges during installation and to provide protection during production enhancement operations.

We design and manufacture a variety of downhole protection solutions for electrical submersible pump (“ESP”) cabling, encapsulated control lines, sub-surface safety valves and permanent downhole gauges.

We provide both standard and customized protection systems, and we utilize a range of materials in our products for various downhole environments.

SandGuard™ and Cyclone™ completion tools extend the useful life of an ESP by protecting it against sand and other solids after shutdown.

Forum GasGuard™ breaks down gas slugs, creating an uninterrupted flow of liquid through an ESP.

SandGuard™ and Cyclone™ branded completion tools extend the useful life of an ESP by protecting it against sand and other solids during shutdown and startup.

Forum’s GasGuard™ branded product also extends the useful life of an ESP by breaking down gas slugs, creating an uninterrupted flow of liquid.

Casing and cementing tools.

Through our Davis-Lynch™ branded downhole well construction operations, we design and manufacture products used in the construction of oil and natural gas wells.

We design and manufacture a full range of centralizers, float equipment, stage cementing tools, inflatable packers, flotation collars, cementing plugs, mudline suspension and surge reduction equipment.

We design and manufacture a full portfolio of centralizers, float equipment, stage cementing tools, inflatable packers, flotation collars, cementing plugs and surge reduction equipment.

Our products are used globally in the construction of onshore and offshore wells.

Other downhole products.

We manufacture a line of downhole composite plugs, which are primarily used for zonal isolation during multi-stage hydraulic fracturing in horizontal and vertical wells.

Our primary customers in this product line are oil and natural gas producers, and service companies providing completions, artificial lift and other intervention services to producers.

Subsea Technologies.

We design and manufacture capital equipment and specialty components used in the subsea sector and provide a broad suite of complementary subsea technical services.

We design and manufacture capital equipment and specialty components used in the subsea sector and provide a broad suite of complementary technical services.

We have a core focus on the design and manufacture of remotely operated vehicle (“ROV”) systems, other specialty subsea vehicles, and rescue submarines, as well as critical components of these vehicles.

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We are a leading designer and manufacturer of a wide range of ROVs that we supply to the offshore subsea construction, observation and related service markets.

The market for subsea ROVs can be segmented into three broad classes of vehicles based on size and category of operations:

(1) large work-class vehicles and trenchers for subsea construction and installation activities, (2) drilling-class vehicles deployed from and for use around an offshore rig and (3) observation-class vehicles for inspection and light manipulation.

The market for ROVs can be segmented

into three broad classes of vehicles based on size and category of operations:

(1) large work-class vehicles and trenchers for construction and installation activities, (2) drilling-class vehicles deployed from and for use around an offshore rig and (3) observation-class vehicles for inspection and light manipulation.

We are a leading provider of work-class and observation class vehicles.

We design and manufacture large work-class ROVs through our Perry ® brand.

These vehicles are principally used in deepwater construction applications with the largest vehicles providing up to 250 horsepower, exceeding 1,200 pounds of payload capacity and having the capability to work in depths up to 5,000 meters.

In addition to work-class ROVs, we design and manufacture large subsea trenchers that travel along the sea floor for digging, installation and burial operations.

The largest of these subsea trenchers provides up to 1,500 horsepower and is able to cut over three meters deep into the seafloor to lay pipelines, power cables or communications cables.

We design and manufacture large work-class ROVs through our highly respected Perry ® brand.

These vehicles are principally used in deepwater construction applications.

In addition to work-class ROVs, we design and manufacture large trenchers that travel along the sea floor for trenching, installation and burial operations.

The largest of these trenchers is able to cut over three meters deep into the seafloor to lay pipelines, power cables or communications cables for customers in the pipeline, renewables and telecom markets.

Our Forum Sub-Atlantic ® branded observation-class vehicles are electrically powered and are principally used for inspection, survey and light manipulation, and serve a wide range of industries.

Designed primarily for the defense market, our subsea rescue vehicles are designed for a range of tasks including submarine rescue operations, diver support, seabed survey, port security, under hull search and a variety of other tasks.

Our subsea vehicle customers are primarily large offshore construction companies, including non-oil and natural gas entities, such as a range of governmental organizations including navies, maritime science and geoscience research organizations, offshore wind power companies, and other industries operating in marine environments.

In addition to ROVs, we design and manufacture subsea rescue vehicles capable of a range of tasks, including submarine rescue operations, diver support, seabed survey, port security, under hull search and a variety of other tasks.

Our subsea vehicle customers are primarily large offshore construction companies, including non-oil and natural gas entities, such as a range of governmental organizations including naval, maritime science and geoscience research organizations, offshore wind power companies, and other industries operating in marine environments.

Subsea products and technical services.

In addition to subsea vehicles, we are a leading manufacturer of subsea products and components.

We design and manufacture a group of products that are used in and around the ROV.

For example, we manufacture Dynacon ® branded ROV launch and recovery systems, Syntech ® branded syntactic foam buoyancy components, Sub-Atlantic ® branded ROV thrusters, and a wide range of hydraulic power units and valve packs.

We are also a leading designer and manufacturer of subsea products and components utilized in conjunction with ROVs for the oil and natural gas, renewables, telecommunications and defense markets.

We manufacture Dynacon ® branded ROV launch and recovery systems, linear cable engines, Sub-Atlantic ® branded ROV thrusters, and a wide range of hydraulic power units and valve packs.

We design and manufacture these ROV components for incorporation into our own vehicles as well as for sale to other ROV manufacturers.

We also provide a broad suite of subsea tooling, both industry standard and custom designed.

In addition to vehicle-related subsea products, we provide a broad suite of subsea technical services.

Subsea rental.

On January 3, 2018, we contributed our Forum Subsea Rentals (“FSR”) business into Ashtead Technology, in exchange for a 40% interest in the combined business.

The transaction created a market leading independent provider of subsea survey and ROV equipment rental services.

Our interest in the combined business was presented in our consolidated financial statements as an equity method investment in the Drilling and Downhole segment.

On September 3, 2019, we sold our aggregate 40% interest in Ashtead to the majority owners of Ashtead.

Refer to Note 4 Acquisitions & Dispositions for additional information.

We also provide a broad suite of subsea tooling, both industry standard and custom designed, and technical services.

Completions segment

In our Completions segment, we design, manufacture and supply products and provide related services to the coiled tubing, stimulation and intervention markets.

Through this segment, we offer stimulation and intervention technologies, including hydraulic fracturing pumps, pump consumables, cooling systems, flow iron, wireline cable and pressure control equipment as well as related recertification and refurbishment services.

Through this segment, we offer stimulation and intervention technologies, including hydraulic fracturing pumps, cooling systems, flow iron, wireline cable and pressure control equipment as well as related recertification and refurbishment services.

We also offer coiled tubing products, including coiled tubing strings and coiled line pipe.

There are several factors driving demand for our Completions segment.

Our Stimulation & Intervention and Coiled Tubing product lines are impacted by the use of hydraulic fracturing to develop oil and natural gas reserves in shale or tight sand basins across North America and the level of workover and intervention activity.

Demand for our Stimulation & Intervention and Coiled Tubing product lines is impacted by the level of North America shale or tight sand basin hydraulic fracturing activity and the level of workover and intervention activity.

Stimulation and Intervention .

We provide a broad range of high pressure pumps and flow equipment used by well stimulation, or pressure pumping, companies during stimulation, intervention (principally plug and perforation activity) and flowback processes.

We design and manufacture power end and fluid end assemblies, industrial heat exchanger and cooling systems, manifolds and manifold trailers, and treating iron.

We sell power end assemblies, industrial heat exchanger and cooling systems, manifolds and manifold trailers, and treating iron.

Frequent refurbishment and recertification of flow equipment is critical to ensuring the reliable and safe operation of a pressure pumping company ’ s fleet.

We perform these services at various locations throughout North America and seek to position our stocking and service locations in proximity to our customers ’ operations.

We also manufacture pressure control products that are used for well intervention operations and sold to oilfield service companies and equipment rental companies both domestically and internationally including blowout preventers for coiled tubing and wireline units and our Hydraulic Latch Assembly which is used to facilitate efficient zipper fracturing operations.

In addition, we manufacture electro-mechanical wireline cables as well as innovative EnviroLite (greaseless) cables.

We perform these services and position inventory in strategic locations in North America.

We also manufacture pressure control products that are used for well intervention operations that are sold domestically and internationally to oilfield service companies and equipment rental companies.

Products we supply include blowout preventers for coiled tubing and wireline units and our Hydraulic Latch Assembly, which is used to facilitate efficient zipper fracturing operations.

We also manufacture electro-mechanical wireline cables as well as innovative EnviroLite branded (greaseless) cables.

We also conduct aftermarket refurbishment and recertification services for pressure control equipment.

Our primary customers in the Stimulation and Intervention product line are pressure pumping and flowback service companies, although we also generate sales to original equipment manufacturers of pressure pumping units.

Our primary customers in the Stimulation and Intervention product line are pressure pumping, wireline and flowback service companies.

In addition, we sell directly to pressure pumping unit original equipment manufacturers.

Coiled Tubing .

We manufacture Global Tubing® branded coiled tubing strings and coiled line pipe and provide related services.

Coiled tubing strings are consumable components of coiled tubing units that perform well completion and intervention activities.

Our coiled line pipe offering serves as an alternative to conventional line pipe in onshore and subsea applications.

Our primary customers in the Coiled Tubing product line are service companies that provide coiled tubing services globally.

We manufacture Global Tubing® branded coiled tubing strings, including DURACOIL (quench and temper), and coiled line pipe, and provide related services.

Coiled tubing strings are consumable components utilized to perform well completion and intervention activities.

Our coiled line pipe offering serves as an alternative to conventional line pipe and composite flexibles in onshore and offshore applications.

The product line’s primary customers are domestic and international service companies that provide coiled tubing services and oil and gas operators.

Production segment

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Through this segment, we supply production equipment, including well site production and process equipment, and a broad range of industrial and process valves.

The level of spending to bring new wells on production, including the related infrastructure, is the primary driver for our Production segment.

Our Production Equipment product line also has exposure to the amount of spending on midstream and downstream projects, as it offers products that go from the well site to inside the refinery fence.

Our Valve Solutions product line is impacted by the level of infrastructure additions, upgrades and maintenance activities across the oil and natural gas industry, including the upstream, midstream and downstream sectors.

In addition, our valves are used in the power, process, petrochemical and mining industries.

The segment’s primary market driver is the level of spending associated with bringing new wells on production.

Demand for our Production Equipment product line is also impacted by the amount of spending on midstream and downstream projects.

Demand for our Valve Solutions product line is driven by the level of infrastructure additions, upgrades and maintenance activity across the oil and natural gas industry, including the upstream, midstream and downstream sectors.

In addition, Valve Solutions is affected by activity levels in the power generation, process, petrochemical and mining industries.

Production Equipment .

Our Production Equipment product line provides engineered process systems and field services for capital equipment used at the wellsite and for production processing in the U.S.

Once a well has been drilled, completed and brought on stream, we provide the well operator or producer with the process equipment necessary to make the oil or natural gas ready for transmission.

Once a well has been drilled, completed and brought on stream, we provide the well operator or producer with process equipment necessary to make the oil or natural gas ready for transmission.

We engineer, fabricate and install separators, packaged production systems and American Society of Mechanical Engineers ( “ ASME ” ) and American Petroleum Institute ( “ API ” ) coded pressure vessels, skidded vessels with gas measurement, modular process plants, header and manifold skids, process and flow control equipment and separators to help clean and process oil or natural gas as it travels from the wellhead and along the transmission line to the refinery.

Our customers are principally oil and natural gas operators or producers .

We also design and provide process oil treatment equipment, including desalters and dehydrators, used in refineries and other process applications worldwide.

We have a team of technicians and field service engineers for repair and installation, and we supply a broad range of replacement parts for our equipment and other manufacturers.

Our customers are principally U.S.

oil and natural gas operators or producers .

We also design and provide process oil treatment equipment, including EDGE ® and NU-STATIC ® branded desalters and dehydrator technologies, used in refineries and other process applications worldwide.

We have a team of highly trained technicians and field service engineers for repair and installation, and we supply a broad range of replacement parts for our equipment and other manufacturers.

This equipment removes sand, water and suspended solids from hydrocarbons prior to their transmission or refining.

Valve Solutions .

We design, manufacture and provide a wide range of industrial valves that principally serve the upstream, midstream and downstream markets of the oil and natural gas industry.

To a lesser extent, our valves serve general industrial, power and process industry customers as well as the mining industry.

We provide a wide range of industrial valves that principally serve the upstream, midstream and downstream markets of the oil and natural gas industry.

To a lesser extent, our valves serve general industrial, power generation and process industry customers as well as the mining industry.

We provide ball, gate, globe, check and butterfly valves across a range of sizes and applications.

We market our valves to our customers and end users through our recognized brands:

PBV ® , DSI ® , Quadrant ® , Accuseal ® , and ABZ ® .

PBV ® , DSI ® and Accuseal ® .

Much of our production is sold through distribution supply companies, with our marketing efforts targeting end users for pull through of our valve products.

Our global sales force and representatives cover approximately 30 countries, with local sales and distribution in Canada.

Our Canadian operations provide significant exposure to the heavy oil projects.

Our manufacturing and supply chain systems enable us to design and produce high-quality engineered valves, as well as provide standardized products, while maintaining competitive pricing and minimizing capital requirements.

We also utilize our international manufacturing partners to produce components and completed products for a number of our other valve brands.

Depending on the product, our valves are manufactured to conform to the standards of one or more of the API, American National Standards Institute, American Bureau of Shipping, and International Organization for Standardization and/or

other relevant standards governing the design and manufacture of industrial valves.

Through our Valve Solutions product line, we participate in the API’s standard-setting process.

Our Canadian operations provide significant exposure to heavy oil projects.

Our supply chain systems enable us to design and sell high-quality engineered valves, as well as provide standardized products, while maintaining competitive pricing and minimizing capital requirements.

We utilize our international manufacturing partners to produce components and completed products for a number of our valve brands.

Business history

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On April 17, 2012, we completed our initial public offering.

As we provide a mix of consumable products, capital goods, and repair parts and services, a majority of our business does not require lengthy lead times.

The majority of the orders and commitments included in our backlog as of December 31, 2019 were scheduled to be delivered within six months.

As we provide a mix of consumable products, capital goods, and repair parts and services, the majority of our business does not require lengthy lead times.

The majority of orders and commitments included in our backlog as of December 31, 2020 were scheduled to be delivered within six months.

Our backlog was approximately $114 million at December 31, 2020 and approximately $173 million at December 31, 2019.

Substantially all of the projects currently in our backlog are subject to change and/or termination at the option of the customer.

In the case of a change or termination, the customer is generally required to pay us for work performed and other costs necessarily incurred as a result of the change or termination.

It is difficult to predict how much of our current backlog will be delayed or terminated, or subject to changes, as well as our ability to collect termination or change fees.

Substantially all of the projects currently in our backlog are subject to change and our customers may seek to terminate these orders.

However, customers are generally required to pay us for work performed, other costs and fees as a result of such changes or termination.

It is difficult to predict how much of our current backlog may be delayed or terminated, or subject to changes, as well as our ability to collect termination or change fees.

Our consumable and repair products are predominantly off-the-shelf items requiring short lead-times, generally less than six months, and our related refurbishment or other services are also not contracted with significant lead time.

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A small portion of the revenue we generate from select Canadian operations often benefits from higher first quarter activity levels, as operators take advantage of the winter freeze to gain access to remote drilling and production areas.

Revenue exposed to this type of seasonality, however, comprised less than 5% of our overall revenue in 2019 .

The markets in which we operate are highly competitive.

We compete with a number of companies, some of which have greater financial and other resources than we do.

The principal competitive factors in our markets are product quality and performance, price, breadth of product offering, availability of products and services, distribution capabilities, responsiveness to customer needs, reputation for service and intellectual property rights.

We compete with a number of companies of varying size.

There are several large national and multinational companies that have longer operating histories, greater financial, technical and other resources and greater name recognition.

In addition, we have several smaller competitors who compete with us on a regional or local basis.

These competitor are often times very quick to respond to new or emerging technologies and services, and changes in customer requirements.

The principal competitive factors in our markets are product quality and performance, price, breadth of product offering, availability of products and services, performance, distribution capabilities, technical expertise, responsiveness to customer needs, reputation for service and intellectual property rights.

We believe our products and services in each segment are at least comparable in price, quality, performance and dependability with our competitors’ offerings.

We seek to differentiate ourselves from our competitors by providing a rapid response to the needs of our customers, a high level of customer service, and innovative product development initiatives.

Some of our competitors expend greater amounts of money on formal research and engineering efforts than we do.

We believe, however, that our product development efforts are enhanced by the investment of management time we make to improve our customer service and to work with our customers on their specific product needs and challenges.

Although we have no single competitor across all of our product lines, the companies we compete with across the greatest number of our product lines include Cameron International Corporation (a subsidiary of Schlumberger), Gardner Denver Holdings, Inc., National Oilwell Varco, Inc., TechnipFMC plc, Tenaris S.A., Weatherford International, Ltd., and Weir SPM, a subsidiary of The Weir Group.

We seek to differentiate ourselves from our competitors by providing a rapid response to the needs of our customers, expert knowledge, a high level of customer service, and innovative product development initiatives.

Some of our competitors expend greater amounts of money than us on formal research and engineering efforts.

We believe, however, that our product development efforts are enhanced by the investment of management time that we make to improve our customer service and to work with our customers on their specific product needs and challenges.

Although we have no single competitor across all of our product lines, the companies we compete with across the greatest number of our product lines include National Oilwell Varco, Inc., Cameron International Corporation (a subsidiary of Schlumberger), Ingersoll Rand, TechnipFMC plc, Tenaris S.A., and Caterpillar, Inc.

Patents, trademarks and other intellectual property

We currently hold multiple U.S.

and international patents and trademarks and have a number of pending patent and trademark applications.

Although in the aggregate our patents, trademarks and licenses are important to us, we do not regard any single patent, trademark or license as material to our business as a whole.

and international patents and trademarks, have a number of pending patent and trademark applications and have developed a significant amount of trade secrets or other know how in the areas where we compete.

Although our patents, trademarks, licenses, trade secrets and know how are material to us in the aggregate, we do not regard any single piece of intellectual property to be material to our business as a whole.

Raw materials

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Certain of our component parts, products or raw materials, such as bearings, are only available from a limited number of suppliers.

Please see “Risk factors—Risks related to our business—We are subject to the risk of supplier concentration.”

We may not be able to continue to purchase raw materials on a timely basis or at acceptable prices.

Please see “Risk factors—Risks related to our business—We rely on relationships with key suppliers to operate and maintain our business.”

Timely receipt of raw materials is critical to our business.

However, we may not be able to continue purchasing raw materials on a timely basis or at acceptable prices.

We generally try to purchase raw materials from multiple suppliers so that we are not dependent on any one supplier, but this is not always possible.

Working capital

We fund our business operations through a combination of available cash and cash equivalents, short-term investments, and cash flow generated from operations.

In addition, our senior secured revolving credit facility (the “Credit Facility”) is available for working capital needs.

For a summary of our Credit Facility, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

An important consideration for many of our customers in selecting a vendor is timely availability of the product.

Customers may pay a premium for earlier or immediate availability because of the cost of delays in critical operations.

We stock our consumable products in regional warehouses around the world so that these products are available for our customers when needed.

We stock our consumable products in regional warehouses or on consignment around the world so that these products are available for our customers when needed.

This availability is especially critical for certain consumable products, causing us to carry substantial inventories for these products.

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For critical items sourced from significant vendors, we have settled accounts more quickly, sometimes in exchange for early payment discounts.

Environmental, transportation, health and safety regulation

Governmental regulation

Our operations are subject to numerous stringent and complex laws and regulations governing the discharge of materials into the environment, health and safety aspects of our operations, or otherwise relating to human health and environmental protection.

In addition to environmental and worker safety regulations, we are subject to regulation by numerous other governmental regulatory agencies, including the U.S.

Department of Labor and other state, local and international bodies regulating worker rights and labor conditions.

In addition, we are subject to certain requirements to contribute to retirement funds or other benefit plans and laws in some jurisdictions in which we operate restrict our ability to dismiss employees.

We also operate vehicles that are subject to federal and state transportation regulations.

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In addition, it is not uncommon for neighboring landowners and other third-parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment.

Water discharges

The Federal Water Pollution Control Act (the “Clean Water Act”) and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into waters of the U.S.

The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency.

A responsible party includes the owner or operator of a facility from which a discharge occurs.

The Clean Water Act and analogous state laws provide for administrative, civil and criminal penalties for unauthorized discharges and, together with the Oil Pollution Act of 1990, impose rigorous requirements for spill prevention and response planning, as well as substantial potential liability for the costs of removal, remediation, and damages in connection with any unauthorized discharges.

Air emissions

The Federal Clean Air Act (the “Clean Air Act”) and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and the imposition of other emission control requirements.

In addition, the EPA has developed, and continues to develop, stringent regulations governing emissions of toxic air pollutants at specified sources.

Non-compliance with air permits or other requirements of the Clean Air Act and associated state laws and regulations can result in the imposition of administrative, civil and criminal penalties, as well as the issuance of orders or injunctions limiting or prohibiting non-compliant operations.

Climate change

In December 2009, the EPA determined that emissions of carbon dioxide, methane and other “greenhouse gases” (“GHGs”) present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes.

Based on these findings, the EPA has begun adopting and implementing regulations to restrict emissions of greenhouse gases under existing provisions of the Clean Air Act.

In addition, the U.S.

Congress has from time to time considered adopting legislation to reduce emissions of greenhouse gases and almost one-half of the states have already taken legal measures to reduce emissions of greenhouse gases primarily through the planned development of greenhouse gas emission inventories and/or regional greenhouse gas cap and trade programs.

Most of these cap and trade programs work by requiring major sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and gas processing plants, to acquire and surrender emission allowances.

The number of allowances available for purchase is reduced each year in an effort to achieve the overall greenhouse gas emission reduction goal.

In April 2016, the U.S.

signed the Paris Agreement, which requires member countries to review and “represent a progression” in their nationally determined contributions, which set GHG emission reduction goals, every five years.

In June 2017, President Trump announced that the U.S.

withdraw from the Paris Agreement unless it is renegotiated.

The State Department informed the United Nations of the U.S.

withdrawal in August 2017.

However, the earliest effective date of this withdrawal pursuant to the terms of the Paris Agreement is November 2020.

The adoption of legislation or regulatory programs to reduce emissions of greenhouse gases could require us to incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances or comply with new regulatory or reporting requirements.

Any such legislation or regulatory programs could also increase the cost of consuming, and thereby reduce demand for, the oil and natural gas produced by our customers.

Consequently, legislation and regulatory programs to reduce emissions of greenhouse gases could have an adverse effect on our business, financial condition and results of operations.

Finally, it should be noted that some scientists have concluded that increasing concentrations of greenhouse gases in the earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.

If any such effects were to occur, they could have an adverse effect on our business, financial condition, results of operations and cash flow.

For more information, please read “Risk Factors-Climate change legislation or regulations restricting emissions of greenhouse gases could increase our operating costs or reduce demand for our products .”

Hydraulic fracturing

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Department of Energy, are analyzing, or have been requested to review, a variety of environmental issues associated with shale development, including hydraulic fracturing.

Moreover, various political groups are requesting a ban on hydraulic fracturing on federal lands.

In addition, some states have adopted, and other states are considering adopting, regulations that could impose more stringent disclosure and/or well construction requirements on hydraulic fracturing operations.

Local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular, in some cases banning hydraulic fracturing entirely.

We cannot predict whether any such legislation will ever be enacted and if so, what its provisions would be.

If additional levels of regulation and permits were required through the adoption of new laws and regulations at the federal or state level, that could lead to delays, increased operating costs and process prohibitions for our customers that could reduce demand for our products and services, which would have a material adverse impact on our revenues, results of operations and cash flows.

For more information, please read “Risk Factors-Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products.”

Employee health and safety

We are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act (“OSHA”) and comparable state statutes, establishing requirements to protect the health and safety of workers.

In addition, the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in our operations and that this information be provided to employees, state and local government authorities and the public.

Substantial fines and penalties can be imposed and orders or injunctions limiting or prohibiting certain operations may be issued in connection with any failure to comply with laws and regulations relating to worker health and safety.

Moreover, various political groups and officials are requesting or have discussed implementing a ban on hydraulic fracturing, or oil & gas extraction generally, on federal lands.

For more information, please read “Risk Factors-Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products.”

Offshore regulation

Events in recent years have heightened environmental and regulatory concerns about the offshore oil and natural gas industry.

From time to time, governing bodies may propose and have enacted legislation or regulations that may materially limit or prohibit offshore drilling in certain areas.

If laws are enacted or other governmental actions are taken that delay, restrict or prohibit offshore operations in our customers’ expected areas of operation, our business could be materially adversely affected.

New or newly interpreted regulations and other regulatory initiatives by U.S.

governmental agencies have created significant uncertainty regarding the outlook for offshore activity in the U.S.

Gulf of Mexico and possible implications for regions outside of the U.S.

Gulf of Mexico.

Third party challenges to industry operations in the U.S.

Gulf of Mexico may also serve to further delay or restrict activities.

If the new regulations, operating procedures and possibility of increased legal liability are viewed by our current or future customers as a significant impairment to expected profitability on projects, then they could discontinue or curtail their offshore operations thereby reducing demand for our offshore products and services.

We also operate in non-U.S.

jurisdictions, which may impose similar regulations, prohibitions or liabilities.

Operating risk and insurance

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Of our total employees, approximately 1,000 were in the U.S., 150 were in the United Kingdom, 100 were in Germany, 100 were in Canada and 50 were in all other locations.

We are not a party to any collective bargaining agreements, other than in our Hamburg, Germany and Monterrey, Mexico facilities.

We are not a party to any collective bargaining agreements, other than in our Hamburg, Germany facility.

We consider our relations with our employees to be satisfactory.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business