What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-05 · 66 added, 52 removed, 377 unchanged (24% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands, except per share information) 2022 2021 2022 2021

9 unchanged sentences

Interest expense 8,143 7,128 23,609 24,065

Foreign exchange and other losses (gains), net ( 12,838 ) ( 939 ) ( 18,824 ) 2,531

Foreign exchange and other gains, net ( 18,288 ) ( 3,962 ) ( 37,112 ) ( 1,431 )

Loss on extinguishment of debt — 196 — 5,290

13 unchanged sentences

( 22,690 ) ( 5,822 ) ( 46,199 ) ( 2,604 )

Gain (loss) on pension liability 57 ( 21 ) 87 56

Gain on pension liability 66 45 153 101

Comprehensive loss $ ( 6,147 ) $ ( 17,364 ) $ ( 29,504 ) $ ( 65,559 )

3 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands, except share information) June 30, 2022 December 31, 2021

(in thousands, except share information) September 30, 2022 December 31, 2021

Current assets

40 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2022 2021

1 unchanged sentence

Net income (loss) $ 16,542 $ ( 63,056 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation expense 9,678 13,159

12 unchanged sentences

Billings in excess of costs and estimated profits earned ( 8,812 ) 3,747

Net cash provided by (used in) operating activities $ ( 50,559 ) $ 2,356

Net cash used in operating activities $ ( 32,132 ) $ ( 8,100 )

Cash flows from investing activities

4 unchanged sentences

Cash flows from financing activities

Borrowings on revolving Credit Facility 274,472 —

Repayments on revolving Credit Facility ( 240,899 ) ( 13,126 )

Borrowings on Credit Facility 423,945 —

Repayments on Credit Facility ( 413,205 ) ( 13,126 )

Cash paid to repurchase 2025 Notes — ( 58,596 )

1 unchanged sentence

Repurchases of stock ( 826 ) ( 349 )

Deferred financing costs — ( 1,464 )

Net cash provided by (used in) financing activities $ 9,168 $ ( 74,558 )

10 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(in thousands) Common stock Additional paid-in capital Treasury stock Retained

16 unchanged sentences

Balance at June 30, 2022 62 1,252,647 ( 135,562 ) ( 684,242 ) ( 124,451 ) 308,454

Stock-based compensation expense — 765 — — — 765

Restricted stock issuance, net of forfeitures — ( 467 ) — — — ( 467 )

Treasury stock — — — — — —

Currency translation adjustment — — — — ( 22,690 ) ( 22,690 )

Change in pension liability — — — — 66 66

Net income — — — 16,477 — 16,477

Balance at September 30, 2022 $ 62 $ 1,252,945 $ ( 135,562 ) $ ( 667,765 ) $ ( 147,075 ) $ 302,605

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

(in thousands) Common stock Additional paid-in capital Treasury stock Retained

15 unchanged sentences

Balance at June 30, 2021 $ 60 $ 1,246,389 $ ( 134,499 ) $ ( 653,125 ) $ ( 97,115 ) $ 361,710

Stock-based compensation expense — 1,881 — — — 1,881

Restricted stock issuance, net of forfeitures 1 ( 209 ) — — — ( 208 )

Currency translation adjustment — — — — ( 5,822 ) ( 5,822 )

Change in pension liability — — — — 45 45

Net loss — — — ( 11,587 ) — ( 11,587 )

Balance at September 30, 2021 $ 61 $ 1,248,061 $ ( 134,500 ) $ ( 664,712 ) $ ( 102,892 ) $ 346,018

The accompanying notes are an integral part of these condensed consolidated financial statements.

11 unchanged sentences

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other interim period.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other interim period.

These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting.

4 unchanged sentences

During 2021, distribution of vaccines resulted in reopening of certain economies and increasing demand for oil and natural gas.

However, ongoing COVID-19 outbreaks and related work restrictions continue to contribute to disruptions in global supply chains which have contributed to inflationary pressures for certain goods and services.

We anticipate that our liquidity, financial condition and future results of operations will continue to be impacted by ongoing developments from the COVID-19 pandemic.

However, ongoing COVID-19 outbreaks and related work restrictions continue to contribute to disruptions in global supply chains, which have contributed to materials delays and inflationary pressures for certain goods and services.

We anticipate that our liquidity, financial condition and future results of operations will continue to be impacted by measures taken in response to COVID-19 outbreaks.

Recent Accounting Pronouncements

21 unchanged sentences

Such contract liabilities typically result from billings in excess of costs incurred on construction contracts and advance payments received on product sales.

The following table reflects the changes in our contract assets and contract liabilities balances for the six months ended June 30, 2022 (in thousands):

June 30, 2022 December 31, 2021 Increase / (Decrease)

The following table reflects the changes in our contract assets and contract liabilities balances for the nine months ended September 30, 2022 (in thousands):

September 30, 2022 December 31, 2021 Increase / (Decrease)

Accrued revenue $ 934 $ 2,245

4 unchanged sentences

Contract liabilities $ 10,824 $ 16,981 $ ( 6,157 ) ( 36 ) %

During the six months ended June 30, 2022, our contract assets increased by $ 5.6 million and our contract liabilities decreased by $ 7.8 million primarily due to the timing of milestone billings for projects in our subsea product line.

During the six months ended June 30, 2022, we recognized $ 12.0 million of revenue that was included in the contract liability balance at the beginning of the period.

As all of our contracts are less than one year in duration, we have elected to apply the practical expedient which allows an entity to exclude disclosures about its remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

During the nine months ended September 30, 2022, our contract assets increased by $ 7.0 million and our contract liabilities decreased by $ 6.2 million primarily due to the timing of milestone billings for projects in our Subsea product line.

During the nine months ended September 30, 2022, we recognized $ 12.9 million of revenue that was included in the contract liability balance at the beginning of the period.

As the majority of our contracts are less than one year in duration, we have elected to apply the practical expedient which allows an entity to exclude disclosures about its remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

2021 Acquisition of Hawker Equipment Solutions

On December 20, 2021, we acquired certain assets of Hawker Equipment Solutions, LLC (“Hawker”) for total cash consideration of $ 5.1 million, of which, $ 3.4 million was paid in the fourth quarter of 2021 with the balance expected to be paid over the subsequent five years , including $ 0.5 million paid in the first half of 2022.

Hawker is a manufacturer of hydraulic pickup and laydown units.

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Continued)

Our significant components of inventory at June 30, 2022 and December 31, 2021 were as follows (in thousands):

June 30, 2022 December 31, 2021

Our significant components of inventory at September 30, 2022 and December 31, 2021 were as follows (in thousands):

September 30, 2022 December 31, 2021

Raw materials and parts $ 97,409 $ 97,053

5 unchanged sentences

Intangible Assets

Intangible assets consisted of the following as of June 30, 2022 and December 31, 2021, respectively (in thousands):

June 30, 2022

Intangible assets consisted of the following as of September 30, 2022 and December 31, 2021, respectively (in thousands):

September 30, 2022

Gross Carrying Amount Accumulated Amortization Net Intangibles Amortization Period (In Years)

16 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Continued)

Notes payable and lines of credit as of June 30, 2022 and December 31, 2021 consisted of the following (in thousands):

June 30, 2022 December 31, 2021

Notes payable and lines of credit as of September 30, 2022 and December 31, 2021 consisted of the following (in thousands):

September 30, 2022 December 31, 2021

2025 Notes $ 256,970 $ 256,970

13 unchanged sentences

The 2025 Notes are secured by a first lien on substantially all of the Company’s assets, except for Credit Facility priority collateral, which secures the 2025 Notes on a second lien basis.

As of June 30, 2022, approximately $ 123 million principal amount of the 2025 Notes is mandatorily convertible into shares of our common stock at a conversion rate of 37.0370 shares per $1,000 principal amount of 2025 Notes converted, equivalent to a conversion price of $ 27.00 per share, subject, however, to the condition that the average of the daily trading prices for the common stock over the preceding 20 -trading day period is at least $ 30.00 per share.

As of September 30, 2022, approximately $ 123 million principal amount of the 2025 Notes is mandatorily convertible into shares of our common stock at a conversion rate of 37.0370 shares per $1,000 principal amount of 2025 Notes converted, equivalent to a conversion price of $ 27.00 per share, subject, however, to the condition that the per share daily volume weighted average price for the common stock over the preceding 20 -trading day period is at least $ 30.00 per share.

Holders of the 2025 Notes also have optional conversion rights in the event that the Company elects to redeem the 2025 Notes in cash and at the final maturity of the new notes.

Any interest that the Company elects to pay in additional notes is also subject to the mandatory and optional conversion rights.

During the six months ended June 30, 2021, we repurchased an aggregate $ 58.0 million of principal amount of our 2025 Notes for $ 56.7 million.

During the nine months ended September 30, 2021, we repurchased an aggregate $ 59.9 million of principal amount of our 2025 Notes for $ 58.6 million.

The net carrying value of the extinguished debt, including unamortized debt discount and debt issuance costs, was $ 53.3 million, resulting in a $ 5.3 million loss on extinguishment of debt.

12 unchanged sentences

Our borrowing capacity under the Credit Facility could be reduced or eliminated, depending on future fluctuations in our receivables and inventory.

As of June 30, 2022, our total borrowing base was $ 162.4 million, of which $ 33.6 million was drawn and $ 14.5 million was used for security of outstanding letters of credit, resulting in remaining availability of $ 114.3 million.

As of September 30, 2022, our total borrowing base was $ 160.0 million, of which $ 10.7 million was drawn and $ 22.1 million was used for security of outstanding letters of credit, resulting in remaining availability of $ 127.2 million.

Borrowings under the U.S.

3 unchanged sentences

The Canadian line base rate is determined by reference to the greater of (i) the one-month CDOR rate plus 1.00 % and (ii) the prime rate for Canadian dollar commercial loans made in Canada as reported by Thomson Reuters, subject to a floor of 0.00 %.

The weighted average interest rate under the Credit Facility was approximately 4.43 % for the six months ended June 30, 2022.

The weighted average interest rate under the Credit Facility was approximately 5.02 % for the nine months ended September 30, 2022.

The Credit Facility also provides for a commitment fee in the amount of (a) 0.375 % on the unused portion of commitments if average usage of the Credit Facility is greater than 50 % and (b) 0.500 % on the unused portion of commitments if average usage of the Credit Facility is less than or equal to 50 %.

7 unchanged sentences

We execute letters of credit in the normal course of business to secure the delivery of product from specific vendors and also to guarantee our fulfillment of performance obligations relating to certain large contracts.

We had $ 14.8 million and $ 19.1 million in total outstanding letters of credit as of June 30, 2022 and December 31, 2021, respectively.

We had $ 22.1 million and $ 19.1 million in total outstanding letters of credit as of September 30, 2022 and December 31, 2021, respectively.

For interim periods, our income tax expense or benefit is computed based on our estimated annual effective tax rate and any discrete items that impact the interim periods.

For the three and six months ended June 30, 2022, we recorded a tax expense of $ 1.7 million and $ 3.6 million, respectively.

For the three and six months ended June 30, 2021, we recorded a tax expense of $ 1.2 million and $ 2.9 million, respectively.

For the three and nine months ended September 30, 2022, we recorded a tax expense of $ 1.4 million and $ 4.9 million, respectively.

For the three and nine months ended September 30, 2021, we recorded a tax expense of $ 0.8 million and $ 3.8 million, respectively.

The estimated annual effective tax rates for all periods were impacted by losses in jurisdictions where the recording of a tax benefit is not available.

8 unchanged sentences

evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning and recent operating results.

As of June 30, 2022, we do not anticipate being able to fully utilize all of the losses prior to their expiration in the following jurisdictions:

As of September 30, 2022, we do not anticipate being able to fully utilize all of the losses prior to their expiration in the following jurisdictions:

the U.S., the U.K., Germany, Singapore, China and Saudi Arabia.

As a result, we have certain valuation allowances against our deferred tax assets as of June 30, 2022.

As a result, we have certain valuation allowances against our deferred tax assets as of September 30, 2022.

Fair Value Measurements

The Company had $ 33.6 million of borrowings outstanding under the Credit Facility as of June 30, 2022.

The Company had $ 10.7 million of borrowings outstanding under the Credit Facility as of September 30, 2022.

The Credit Facility incurs interest at a variable interest rate, and therefore, the carrying amount approximates fair value.

1 unchanged sentence

The fair value of our 2025 Notes is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those or similar instruments.

At June 30, 2022, the fair value and the carrying value of our 2025 Notes approximated $ 249.8 million and $ 234.9 million, respectively.

At September 30, 2022, the fair value and the carrying value of our 2025 Notes approximated $ 248.2 million and $ 236.4 million, respectively.

At December 31, 2021, the fair value and the carrying value of our 2025 Notes approximated $ 225.0 million and $ 232.0 million, respectively.

There were no other significant outstanding financial instruments as of June 30, 2022 and December 31, 2021 that required measuring the amounts at fair value on a recurring basis.

We did not change our valuation techniques associated with recurring fair value measurements from prior periods, and there were no transfers between levels of the fair value hierarchy during the six months ended June 30, 2022.

There were no other significant outstanding financial instruments as of September 30, 2022 and December 31, 2021 that required measuring the amounts at fair value on a recurring basis.

Business Segments

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

16 unchanged sentences

A summary of consolidated assets by reportable segment is as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Drilling & Downhole $ 317,807 $ 313,493

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

9 unchanged sentences

Management reviewed such pending judicial and legal proceedings, the reasonably anticipated costs and expenses in connection with such proceedings, and the availability and limits of insurance coverage, and has established reserves that are believed to be appropriate in light of those outcomes that are believed to be probable and can be estimated.

The reserves accrued at June 30, 2022 and December 31, 2021, respectively, are immaterial.

The reserves accrued at September 30, 2022 and December 31, 2021, respectively, are immaterial.

In the opinion of management, the Company’s ultimate liability, if any, with respect to these actions is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

3 unchanged sentences

For further disclosure regarding certain litigation matters, refer to Note 13 of the notes to the consolidated financial statements included in Item 8 of the Company’s 2021 Annual Report on Form 10-K filed with the SEC on March 4, 2022.

There have been no material changes related to these matters during the six months ended June 30, 2022.

There have been no material changes related to these matters during the nine months ended September 30, 2022.

Earnings (Loss) Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

9 unchanged sentences

Diluted $ 1.82 $ ( 2.05 ) $ 2.37 $ ( 11.19 )

The diluted earnings per share calculation excludes approximately 59 thousand shares for the three months ended June 30, 2022, and 116 thousand shares for the six months ended June 30, 2022, because they were anti-dilutive.

For the three months and six months ended June 30, 2021, we excluded all potentially dilutive restricted shares, stock options and the assumed conversion of the 2025 Notes in calculating diluted earnings per share as the effect was anti-dilutive due to net losses incurred for these periods.

The diluted earnings per share calculation excludes approximately 54 thousand shares for the three months ended September 30, 2022, and 95 thousand shares for the nine months ended September 30, 2022, because they were anti-dilutive.

For the three months and nine months ended September 30, 2021, we excluded all potentially dilutive restricted shares, stock options and the assumed conversion of the 2025 Notes in calculating diluted earnings per share as the effect was anti-dilutive due to net losses incurred for these periods.

Stockholders' Equity

Stock-based compensation

During the six months ended June 30, 2022, the Company granted 101,111 restricted stock units to employees that vest ratably over three years .

During the six months ended June 30, 2022, the Company granted 101,111 restricted stock units to employees that vest ratably over three years contingent upon achieving a minimum stock price of $ 23.68 for 20 trading days during each performance period.

During the nine months ended September 30, 2022, the Company granted 101,111 restricted stock units to employees that vest ratably over three years .

In addition, during the nine months ended September 30, 2022, the Company granted 101,111 restricted stock units to employees that vest ratably over three years contingent upon achieving a minimum stock price of $ 23.68 for 20 trading days during each performance period.

These awards may be settled in cash or shares at the company's option.

These awards were originally classified as cash-settled liability settled awards.

On May 10, 2022, shareholders approved additional shares to be added to the employee equity incentive plan.

As a result, the fair value of the awards was remeasured as of May 10, 2022 and the classification of these awards was updated from cash-settled to share-settled resulting in equity classification.

On May 10, 2022, shareholders approved an additional 325,000 shares to be added to the employee equity incentive plan and the fair value of the awards was remeasured as of May 10, 2022.

In connection with their remeasurement, the Company determined that the awards would be settled in shares instead of cash and they were classified as equity.

Related Party Transactions

2 unchanged sentences

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-Q

Item 1. Financial Statements