What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-07-29 · 212 added, 166 removed, 264 unchanged (59% of the section changed)

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The following discussion and analysis should be read together with our condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and notes to those statements included in our 2023 Annual Report on Form 10-K in order to understand factors, such as charges and credits, financing transactions and changes in tax regulations, which may impact comparability from period to period.

We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our Offshore Manufactured Products, Well Site Services and Downhole Technologies segments.

We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our Offshore Manufactured Products, Completion and Production Services (previously referred to as Well Site Services) and Downhole Technologies segments.

In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies.

Historical financial data, supplemental disaggregated revenue and backlog information as of and for the three and six months ended June 30, 2023 (presented herein) was conformed with the 2024 segment presentation.

Historical financial data, supplemental disaggregated revenue and backlog information as of and for the three and nine months ended September 30, 2023 (presented herein) was conformed with the 2024 segment presentation.

Additionally, following the sale of its remaining U.S.

land-based drilling rigs and the exit of the flowback and well testing service offering in the third quarter of 2024, our Well Site Services segment name was changed to the Completion and Production Services segment.

Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and gas industry, particularly our customers’ willingness to invest capital in the exploration for and development of crude oil and natural gas reserves.

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On February 16, 2024, we amended the ABL Facility (as defined below) to extend its maturity date from February 10, 2025 to February 16, 2028.

In the first quarter of 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies.

Certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment in the first quarter of 2024 to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies.

Historical segment financial data, backlog and other information were conformed with the 2024 segment presentation.

In 2023, we implemented initiatives to reduce future costs, which are continuing into 2024.

These management actions included the consolidation, relocation and exit of certain manufacturing and service locations as well as the realignment of operations discussed above.

Additionally, following the sale of its remaining U.S.

land-based drilling rigs and the exit of the flowback and well testing service offering in the third quarter of 2024, the Company’s Well Site Services segment name was changed to the Completion and Production Services segment.

In 2023, we began implementing initiatives, which are continuing into 2024, to reduce future costs.

Management actions to-date in 2024 included:

the consolidation, relocation and exit of certain underperforming locations;

the exit of certain service offerings;

reductions in our U.S.

work force as well as the realignment of operations discussed above.

We have also incurred legal and other related costs to enforce certain patents related to our proprietary technologies.

As a result of these actions, our reported pre-tax results for the six months ended June 30, 2024 included a $10.0 million non-cash goodwill impairment charge as well as $6.9 million of facility consolidation, patent defense and other charges.

During the second quarter of 2024, our Offshore Manufactured Products segment sold a manufacturing and service facility that was classified as held-for-sale for net proceeds of $10.3 million.

Additionally, we purchased $11.5 million principal amount of our 2026 Notes (as defined below) for $10.8 million and purchased $2.4 million of our common stock.

On July 19, 2024, Brent crude oil, WTI crude oil and natural gas spot prices closed at $85.19 per barrel, $81.43 per barrel and $1.88 per MMBtu, respectively.

As a result of these actions, our reported pre-tax results for the nine months ended September 30, 2024 included $23.4 million in non-cash goodwill, intangible and operating lease asset impairment charges as well as $11.8 million of facility consolidation and exit, patent defense and other charges.

During the nine months ended September 30, 2024, our Offshore Manufactured Products segment sold a manufacturing and service facility that was classified as held for sale for net proceeds of $10.3 million, we purchased $11.5 million principal amount of our 2026 Notes (as defined below) for $10.8 million, and we purchased $5.5 million of our common stock.

On October 24, 2024, our Board of Directors terminated our existing common stock repurchase program and replaced it with a new $50.0 million common stock repurchase authorization which expires in October 2026.

On October 25, 2024, Brent crude oil, WTI crude oil and natural gas spot prices closed at $75.62 per barrel, $72.02 per barrel and $1.93 per MMBtu, respectively – below the third quarter 2024 averages.

Additionally, the U.S.

drilling rig count reported on July 19, 2024 was 586 rigs – 3% below the second quarter 2024 average.

drilling rig count reported on October 25, 2024 was 585 rigs – comparable to the third quarter 2024 average.

Current and expected future pricing for WTI crude oil and natural gas and inflationary cost increases, along with expectations regarding the regulatory environment in the regions in which we operate, are factors that will continue to influence our customers’ willingness to invest capital in their businesses.

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the perceived risk of a global economic recession;

domestic or international crude oil and natural gas production;

the levels of domestic or international crude oil and natural gas production;

changes in governmental rules and regulations;

the willingness of operators to invest capital in the exploration for and development of resources;

the willingness of operators to invest capital in the

exploration for and development of resources;

use of alternative fuels;

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This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our customers’ longer-term commodity demand forecasts and outlook for crude oil and natural gas prices.

Approximately 90% of Offshore Manufactured Products segment sales in the first six months of 2024 were driven by our customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as “project-driven products and services”).

Approximately 89% of Offshore Manufactured Products segment sales in the first nine months of 2024 were driven by our customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as “project-driven products and services”).

Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans.

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Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to change based on short-term fluctuations in the price of crude oil and natural gas.

Backlog reported by our Offshore Manufactured Products segment decreased to $300 million as of June 30, 2024 from $327 million as of December 31, 2023.

Bookings totaled $101 million in the second quarter of 2024, yielding a quarterly book-to-bill ratio of 1.0x (0.9x year-to-date).

Backlog reported by our Offshore Manufactured Products segment increased to $313 million as of September 30, 2024 from $300 million as of June 30, 2024.

Bookings totaled $112 million in the third quarter of 2024, yielding a quarterly book-to-bill ratio of 1.1x (1.0x year-to-date).

The following table sets forth backlog as of the dates indicated (in millions).

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2022 255 232 248 300

Our Well Site Services segment provides completion services and, to a much lesser extent, land drilling services, in the United States (including the Gulf of Mexico) and internationally.

drilling and completion activity and, in turn, our Well Site Services results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of its operations.

Our Completion and Production Services segment provides completion and production services in the United States (including the Gulf of Mexico) and internationally.

Prior to the sale of its drilling rigs in August of 2024, the segment also provided land drilling services in the United States.

drilling and completion activity and, in turn, our Completion and Production Services results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of its operations.

We primarily supply equipment and service personnel utilized in the completion of, and initial production from, new and recompleted wells in our U.S.

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Demand drivers for the Downhole Technologies segment include continued trends toward longer lateral lengths, increased frac stages and more perforation clusters to target increased unconventional well productivity.

Demand for our completion-related products and services within each of our segments is highly correlated to changes in the total number of wells drilled in the United States, total footage drilled, the number of drilled wells that are completed and changes in the drilling rig count.

Demand for our completion-related products and services within our Completion and Production Services and Downhole Technologies segments is highly correlated to changes in the total number of wells drilled in the United States, total footage drilled, the number of drilled wells that are completed and changes in the drilling rig count.

The following table sets forth a summary of the U.S.

drilling rig count, as measured by Baker Hughes Company, as of and for the periods indicated.

As of July 19, 2024

As of October 25, 2024

Average for the

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

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

2024 2023 2024 2023

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shale plays utilizing horizontal drilling and completion techniques.

As of June 30, 2024, oil-directed drilling accounted for 82% of the total U.S.

As of September 30, 2024, oil-directed drilling accounted for 82% of the total U.S.

rig count – with the balance largely natural gas related.

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geopolitical conflicts and tensions;

management’s implementation of strategic decisions;

and changes in tax laws in the United States and international markets.

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In the first quarter of 2024, certain short-cycle manufacturing operations historically reported within the Offshore Manufactured Products segment (legacy frac plug and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and the current segment management structure, as well as provide for additional operational synergies.

Historical financial data and supplemental disaggregated revenue information as of and for the three and six months ended June 30, 2023 (presented herein) were conformed with the 2024 segment presentation.

Historical financial data and supplemental disaggregated revenue information as of and for the three and nine months ended September 30, 2023 (presented herein) were conformed with the 2024 segment presentation.

Additionally, following the sale of its remaining U.S.

Unaudited Consolidated Results of Operations

The following summarizes our consolidated results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands, except per share amounts):

The following summarizes our consolidated results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Variance 2024 2023 Variance

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— — — 10,000 — 10,000

Impairments of intangible assets

10,787 — 10,787 10,787 — 10,787

Impairments of operating lease assets

2,579 — 2,579 2,579 — 2,579

Other operating (income) expense, net

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Income (loss) before income taxes (12,134) 4,448 (16,582) (24,848) 9,628 (34,476)

Income tax benefit (provision) 665 (862) 1,527 641 (2,464) 3,105

Income tax provision (2,215) (236) (1,979) (1,574) (2,700) 1,126

Net income (loss) $ (14,349) $ 4,212 $ (18,561) $ (26,422) $ 6,928 $ (33,350)

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We manage and measure our business performance in three distinct operating segments:

Offshore Manufactured Products, Well Site Services and Downhole Technologies.

Supplemental financial information by operating segment for the three and six months ended June 30, 2024 and 2023 is summarized below (in thousands):

Offshore Manufactured Products, Completion and Production Services and Downhole Technologies.

Supplemental financial information by operating segment for the three and nine months ended September 30, 2024 and 2023 is summarized below (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Variance 2024 2023 Variance

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102,234 96,070 6,164 290,647 255,222 35,425

Well Site Services 46,421 64,536 (18,115) 93,713 131,594 (37,881)

Completion and Production Services

40,099 59,831 (19,732) 133,812 191,425 (57,613)

Downhole Technologies 32,015 38,388 (6,373) 103,534 127,370 (23,836)

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$ 19,310 $ 15,586 $ 3,724 $ 44,270 $ 32,122 $ 12,148

Well Site Services (2)

Completion and Production Services (2)

(18,267) 3,285 (21,552) (19,221) 14,983 (34,204)

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_______________

(1) During the three and six months ended June 30, 2024, we recognized facility consolidation charges of $1.5 million and $3.0 million, respectively, associated with the Offshore Manufactured Products segment’s consolidation and relocation of a manufacturing and service location.

(2) During the three and six months ended June 30, 2024, the Well Site Services segment recognized charges of $2.9 million and $3.9 million, respectively, associated primarily with the consolidation and exit of certain underperforming service locations and the defense of certain patents.

(3) During the six months ended June 30, 2024, the Downhole Technologies segment recognized a $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the segment realignment discussed above.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

We reported net income for the three months ended June 30, 2024 of $1.3 million, or $0.02 per share.

The reported second quarter net income included facility consolidation and other charges of $4.4 million ($3.5 million after-tax, or $0.06 per share), partially offset by non-cash gains of $0.5 million ($0.4 million after-tax, or $0.01 per share) associated with debt extinguishment.

These results compare to net income for the three months ended June 30, 2023 of $0.6 million, or $0.01 per share.

Our second quarter 2024 results of operations reflect the impact of the growth in offshore and international project activity and associated backlog conversion, partially offset by a decline in natural gas focused investments by our U.S.

customers, competitive market conditions and management’s decision to exit certain underperforming locations.

Management continues to implement measures in areas experiencing lower activity levels to reduce future costs.

Consolidated total revenues in the second quarter of 2024 increased $2.9 million, or 2%, from the second quarter of 2023.

Consolidated product revenues in the second quarter of 2024 increased $15.9 million, or 17%, from the second quarter of 2023, driven primarily by the conversion of production facility and connector products from backlog into revenue.

Consolidated service revenues in the second quarter of 2024 decreased $13.1 million, or 14%, from the second quarter of 2023.

This decrease was concentrated in the United States – driven by lower land-based customer investments (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming locations during the first six months of 2024, partially offset by higher offshore and international service activity.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended June 30, 2024 and 2023 (in thousands):

(1) During the three and nine months ended September 30, 2024, the Offshore Manufactured Products segment recognized facility consolidation and other charges of $0.4 million and $3.4 million, respectively, associated primarily with the consolidation and relocation of a manufacturing and service location.

During the three and nine months ended September 30, 2023, the segment recognized facility consolidation charges of $1.6 million associated primarily with the consolidation and relocation of certain manufacturing and service locations.

(2) During the three and nine months ended September 30, 2024, the Completion and Production Services segment recognized charges of $17.2 million and $21.1 million, respectively, associated primarily with the exit of its flowback and well testing service offering, the consolidation and exit of certain underperforming service locations, and the defense of certain patents.

(3) During the both three and nine months ended September 30, 2024, the Downhole Technologies segment recognized charges of $0.6 million associated primarily with the exit of an underperforming location.

Additionally during the nine months ended September 30, 2024, the segment recognized a $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the segment realignment discussed above.

For further discussion of charges and credits recognized during the three and nine months ended September 30, 2024 and 2023, see Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

We reported a net loss for the three months ended September 30, 2024 of $14.3 million, or $0.23 per share.

The reported third quarter net loss included charges of $18.2 million ($17.0 million after tax, or $0.27 per share) associated with the restructuring of certain of its U.S.

land-based operations, facility consolidations and closures, patent defense and personnel reductions.

These results compare to net income for the three months ended September 30, 2023 of $4.2 million, or $0.07 per share, which included facility consolidation and other charges of $1.6 million ($1.3 million after-tax, or $0.02 per share).

Our third quarter 2024 results of operations reflect the impact of operators continued investments in offshore and international project activity and associated backlog conversion, partially offset by a decline in land-based investments by our U.S.

customers, competitive market conditions and management’s decision to exit certain underperforming locations and service offerings in the United States.

Management expects to continue to implement measures to reduce costs in areas experiencing lower activity levels.

Consolidated total revenues in the third quarter of 2024 decreased $19.9 million, or 10%, from the third quarter of 2023.

Consolidated product revenues in the third quarter of 2024 decreased $1.8 million, or 2%, from the third quarter of 2023, driven primarily by lower U.S.

short-cycle completion product sales volumes.

Consolidated service revenues in the third quarter of 2024 decreased $18.1 million, or 20%, from the third quarter of 2023.

This decrease was concentrated in the United States – driven by lower land-based customer investments (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming locations during the first half of 2024, partially offset by higher offshore and international service activity.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended September 30, 2024 and 2023 (in thousands):

Offshore Manufactured Products

Well Site Services Downhole Technologies Total

Three Months Ended June 30 2024 2023 2024 2023 2024 2023 2024 2023

Completion and Production Services

Downhole Technologies Total

Three Months Ended September 30 2024 2023 2024 2023 2024 2023 2024 2023

Project-driven:

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By destination:

land $ 7,184 $ 10,003 $ 32,792 $ 51,596 $ 27,782 $ 32,113 $ 67,758 $ 93,712

Offshore and international $ 94,189 $ 87,857 $ 10,639 $ 10,729 $ 9,028 $ 6,164 $ 113,856 $ 104,750

land 8,045 8,213 29,460 49,102 22,987 32,224 60,492 89,539

$ 102,234 $ 96,070 $ 40,099 $ 59,831 $ 32,015 $ 38,388 $ 174,348 $ 194,289

Cost of Revenues (exclusive of Depreciation and Amortization Expense).

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) in the second quarter of 2024 were comparable to the level reported in the second quarter of 2023.

Consolidated product costs in the second quarter of 2024 increased $9.8 million, or 14%, from the second quarter of 2023 driven primarily by the increase in project-driven products sales volumes.

Consolidated service costs in the second quarter of 2024 decreased $9.8 million, or 14%, from the second quarter of 2023, with the impact of lower U.S.

land-based activity levels and implemented cost control measures partially offset by facility consolidation and exit costs incurred in 2024.

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) in the third quarter of 2024 decreased $13.8 million, or 9%, compared to the level reported in the third quarter of 2023.

Consolidated product costs in the third quarter of 2024 decreased $1.0 million, or 1%, from the third quarter of 2023 driven primarily by the decline in U.S.

land-based products sales volumes.

Consolidated service costs in the third quarter of 2024 decreased $12.8 million, or 18%, from the third quarter of 2023, with the impact of lower U.S.

land-based activity levels and implemented cost control measures partially offset by facility exit and severance costs incurred in third quarter of 2024.

Selling, General and Administrative Expense.

Selling, general and administrative expense was $26.4 million in the second quarter of 2024, which included $1.0 million of costs associated with enforcing certain of our patents.

Excluding these patent defense costs, selling, general and administrative costs increased $1.9 million, or 8%, from the second quarter of 2023, due primarily to higher compensation costs.

Selling, general and administrative expense was $22.8 million in the third quarter of 2024, which included $1.3 million of costs associated with enforcing certain of our patents.

Excluding these patent defense costs, selling, general and administrative costs decreased $2.8 million, or 12%, from the third quarter of 2023, due primarily to lower short- and long-term incentive expenses.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $0.8 million, or 5%, in the second quarter of 2024 compared to the prior-year quarter.

Depreciation and amortization expense decreased $1.8 million, or 12%, in the third quarter of 2024 compared to the prior-year quarter.

Note 10, “Segments and Related Information,” to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.

Impairments of Intangible Assets.

In the third quarter of 2024, as a result of our decision to exit an underperforming service offering, our Completion and Production Services segment recognized non-cash impairment charges of $10.8 million to reduce the carrying amount of its long-lived intangible assets to estimated fair value.

See Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Impairments of Operating Lease Assets.

In the third quarter of 2024, management made strategic decisions to exit five leased service locations within our Completion and Production Services segment and one within our Downhole Technologies segment.

As a result of these decisions, our Completion and Production Services and Downhole Technologies segments recognized non-cash impairment charges totaling $2.6 million to reduce the carrying amount of the related operating lease assets.

Operating Income.

Our consolidated operating income was $2.0 million in the second quarter of 2024, which included charges totaling $4.4 million associated with facility consolidations and exits, and patent defense.

This compares to second quarter 2023 consolidated operating income of $3.3 million.

Excluding the 2024 charges, operating income increased $3.2 million year-over-year.

Our consolidated operating loss was $11.0 million in the third quarter of 2024, which included $13.4 million in non-cash intangible and operating lease asset impairment charges and charges totaling $4.8 million associated with facility consolidations and exits, patent defense and other management actions.

This compares to third quarter 2023 consolidated operating income of $6.2 million, which included facility consolidation and other charges of $1.6 million.

Excluding these charges, operating results declined $0.7 million year-over-year, driven by the substantial decline in activity levels in the United States.

Interest Expense, Net.

Net interest expense totaled $2.1 million in the second quarter of 2024, which compares to $2.1 million in the same period of 2023.

Interest expense as a percentage of total debt outstanding was approximately 7% in the second quarter of 2024, compared to 7% in the second quarter of 2023.

Income tax benefit (provision) for the three months ended June 30, 2024 and 2023 was calculated using a discrete approach.

Net interest expense totaled $1.8 million in the third quarter of 2024, which compares to $1.9 million in the same period of 2023.

Interest expense as a percentage of total debt outstanding was approximately 7% in the third quarter of 2024, compared to 7% in the third quarter of 2023.

Income tax provision for the three months ended September 30, 2024 and 2023 was calculated using a discrete approach.

This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate.

For the three months ended June 30, 2024, our income tax benefit was $0.7 million on pre-tax income of $0.6 million, which included favorable changes in valuation allowances recorded against deferred tax assets and certain non-deductible expenses.

This compares to an income tax provision of $0.9 million on a pre-tax income of $1.4 million for the three months ended June 30, 2023, which included certain non-deductible expenses, discrete tax items and a favorable change in valuation allowances recorded against deferred tax assets.

For the three months ended September 30, 2024, our income tax provision was $2.2 million on a pre-tax loss of $12.1 million, which included unfavorable changes in valuation allowances recorded against deferred tax assets and certain non-deductible expenses.

This compares to an income tax provision of $0.2 million on a pre-tax income of $4.4 million for the three months ended September 30, 2023, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.

Other Comprehensive Income (Loss).

Reported comprehensive income (loss) is the sum of reported net income and other comprehensive income (loss).

Other comprehensive loss was $3.2 million in the second quarter of 2024 compared to comprehensive income of $3.3 million in the second quarter of 2023 due to fluctuations in currency exchange rates compared to the U.S.

Reported comprehensive loss is the sum of reported net income (loss) and other comprehensive income (loss).

Other comprehensive income was $9.6 million in the third quarter of 2024 compared to comprehensive loss of $5.7 million in the third quarter of 2023 due to fluctuations in currency exchange rates compared to the U.S.

dollar which are used to translate certain of the international operations of our operating segments.

For the three months ended June 30, 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the second quarter of 2024, the exchange rate for the Brazilian real weakened compared to the U.S.

dollar while the exchange rate for the British flat was flat compared to the U.S.

In the second quarter of 2023, the exchange rates for the British pound and the Brazilian real strengthened compared to the U.S.

For the three months ended September 30, 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the third quarter of 2024, the exchange rate for the British pound and the Brazilian real strengthened compared to the U.S.

In the third quarter of 2023, the exchange rates for the British pound and the Brazilian real weakened compared to the U.S.

Segment Operating Results

Offshore Manufactured Products

Our Offshore Manufactured Products segment revenues increased $22.9 million, or 29%, in the second quarter of 2024 compared to the second quarter of 2023 due primarily to increased demand for international and offshore project-driven products and services.

Operating Income.

Our Offshore Manufactured Products segment reported operating income of $14.4 million in the second quarter of 2024, which included $1.5 million in facility consolidation charges.

This compares to operating income in the second quarter of 2023 of $8.8 million.

Excluding the 2024 charges, operating income increased $7.1 million year-over-year.

Backlog in our Offshore Manufactured Products segment totaled $300 million as of June 30, 2024, with second quarter 2024 bookings of $101 million and a quarterly book-to-bill ratio of 1.0x.

Well Site Services

Our Well Site Services segment revenues decreased $18.1 million, or 28%, in the second quarter of 2024 compared to the prior-year period, driven primarily by lower U.S.

land-based customer activity levels (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming service locations during the first six months of 2024.

Our Offshore Manufactured Products segment revenues increased $6.2 million, or 6%, in the third quarter of 2024 compared to the third quarter of 2023 due to increased demand for military products and international and offshore project-driven products and services.

Operating Income.

Our Well Site Services segment reported an operating loss of $0.5 million in the second quarter of 2024, which included charges totaling $2.9 million associated with facility consolidations and exits, and the defense of patents.

This compares to operating income of $4.7 million in the second quarter of 2023.

Excluding the 2024 charges discussed above, the Well Site Services segment’s operating results declined $2.4 million from the prior-year period, with the impact of the decrease in U.S.

land-based revenues substantially offset by implemented cost control measures.

Our Offshore Manufactured Products segment reported operating income of $19.3 million in the third quarter of 2024, which included $0.4 million in facility consolidation and other charges.

This compares to operating income in the third quarter of 2023 of $15.6 million, which included $1.6 million in facility consolidation and other charges.

Excluding these charges, operating income increased $2.4 million year-over-year.

Backlog in our Offshore Manufactured Products segment totaled $313 million as of September 30, 2024, with third quarter 2024 bookings of $112 million and a quarterly book-to-bill ratio of 1.1x.

Completion and Production Services

Our Completion and Production Services segment revenues decreased $19.7 million, or 33%, in the third quarter of 2024 compared to the prior-year period, driven primarily by lower U.S.

land-based customer activity levels (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming service locations during the first half of 2024.

Operating Income (Loss).

Our Completion and Production Services segment reported an operating loss of $18.3 million in the third quarter of 2024, which included charges totaling $17.2 million associated with the exit of a service offering, facility consolidations and exits, the defense of patents and other management actions.

This compares to operating income of $3.3 million in the third quarter of 2023.

Excluding the 2024 charges discussed above, the Completion and Production Services segment’s operating income declined $4.3 million from the prior-year period, with the impact of the decrease in U.S.

land-based revenues partially offset by implemented cost control measures.

The segment’s U.S.

land-based service offerings and facilities exited during the third quarter of 2024 collectively generated revenues of $9.3 million and operating losses of $17.1 million in the current quarter, which included intangible and operating lease asset impairment, facility closure and other charges totaling $15.1 million as well as depreciation and amortization expense of $1.3 million.

Downhole Technologies

Our Downhole Technologies segment revenues decreased $1.9 million, or 5%, in the second quarter of 2024 from the prior-year period, driven primarily by lower U.S.

Our Downhole Technologies segment revenues decreased $6.4 million, or 17%, in the third quarter of 2024 from the prior-year period, driven primarily by lower U.S.

customer activity levels and competitive market conditions.

Operating Loss.

Our Downhole Technologies segment reported an operating loss of $1.1 million in the second quarter of 2024, which compares to an operating loss of $0.1 million in the prior-year period, which included a $1.0 million non-cash provision for excess and obsolete inventory.

Excluding the 2023 charge discussed above, the Downhole Technologies operating results declined $2.0 million from the prior-year period, due primarily to the reported decrease in revenues and lower manufacturing volumes.

Our Downhole Technologies segment reported an operating loss of $3.7 million in the third quarter of 2024, which included charges totaling $1.2 million associated with the exit of a facility, personnel reductions and a customer bankruptcy.

This compares to an operating loss of $1.9 million in the third quarter of 2023.

Excluding the 2024 charges discussed above, the Downhole Technologies segment’s operating loss increased $0.6 million year-over-year due primarily to the reported decrease in revenues and lower manufacturing volumes.

Operating Loss.

Corporate expenses increased $0.5 million, or 4%, in the second quarter of 2024 from the prior-year period.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

We reported a net loss for the six months ended June 30, 2024 of $12.1 million, or $0.19 per share.

The reported first six months net loss included:

a non-cash goodwill impairment charge of $10.0 million ($9.5 million after-tax, or $0.15 per share) and facility consolidation and other charges of $6.9 million ($5.5 million after-tax, or $0.09 per share), partially offset by non-cash gains of $0.5 million ($0.4 million after-tax, or $0.01 per share) associated with debt extinguishment.

These results compare to net income for the six months ended June 30, 2023 of $2.7 million, or $0.04 per share.

Our first half 2024 results of operations reflect the impact of growth in offshore and international project activity and associated backlog conversion, partially offset by a decline in natural gas focused investments by our U.S.

customers, competitive market conditions and management’s decisions to exit certain underperforming locations.

Management continues to implement measures in areas experiencing lower activity levels to reduce future costs.

Consolidated total revenues in the first six months of 2024 decreased $26.1 million, or 7%, from the first six months of 2023.

Consolidated product revenues in the first six months of 2024 increased $10.4 million, or 5%, from the first six months of 2023, with the impact of higher customer demand for project-driven production facility products partially offset by a decline in U.S.

Corporate expenses decreased $2.4 million, or 22%, in the third quarter of 2024 from the prior-year period due primarily to lower short- and long-term incentive expenses.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

We reported a net loss for the nine months ended September 30, 2024 of $26.4 million, or $0.42 per share.

The reported first nine months net loss included net charges and credits of $34.6 million ($31.6 million after tax, or $0.51 per share) associated with the restructuring of certain of its U.S.

land-based operations, facility consolidations and closures, patent defense, personnel reductions and debt extinguishment.

These results compare to net income for the nine months ended September 30, 2023 of $6.9 million, or $0.11 per share, which included facility consolidation and other charges of $1.6 million ($1.3 million after-tax, or $0.02 per share).

Our results of operations for the first nine months of 2024 reflect the impact of operators continued investment in offshore and international project activity and associated backlog conversion, partially offset by a decline in land-based investments by our U.S.

customers, competitive market conditions and management’s decision to exit certain underperforming locations and service offerings in the United States.

Management expects to continue to implement measures to reduce costs in areas experiencing lower activity levels.

Consolidated total revenues in the first nine months of 2024 decreased $46.0 million, or 8%, from the first nine months of 2023.

Consolidated product revenues in the first nine months of 2024 increased $8.6 million, or 3%, from the first nine months of 2023, with the impact of higher customer demand for project-driven production facility products and military products partially offset by a decline in U.S.

customer demand for completion and perforating products.

Consolidated service revenues in the first six months of 2024 decreased $36.5 million, or 20%, from the first six months of 2023.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the six months ended June 30, 2024 and 2023 (in thousands):

Consolidated service revenues in the first nine months of 2024 decreased $54.6 million, or 20%, from the first nine months of 2023.

This decrease was concentrated in the United States – driven by lower land-based customer investments (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming locations during the first half of 2024, partially offset by higher offshore and international service activity.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the nine months ended September 30, 2024 and 2023 (in thousands):

Offshore Manufactured Products

Well Site Services Downhole Technologies Total

Six Months Ended June 30 2024 2023 2024 2023 2024 2023 2024 2023

Completion and Production Services

Downhole Technologies Total

Nine Months Ended September 30 2024 2023 2024 2023 2024 2023 2024 2023

Project-driven:

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By destination:

land $ 14,239 $ 18,445 $ 68,649 $ 104,870 $ 51,952 $ 70,934 $ 134,840 $ 194,249

Offshore and international $ 268,363 $ 228,564 $ 35,703 $ 37,453 $ 28,595 $ 24,212 $ 332,661 $ 290,229

land 22,284 26,658 98,109 153,972 74,939 103,158 195,332 283,788

$ 290,647 $ 255,222 $ 133,812 $ 191,425 $ 103,534 $ 127,370 $ 527,993 $ 574,017

Cost of Revenues (exclusive of Depreciation and Amortization Expense).

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $18.8 million, or 6%, in the first six months of 2024 compared to the first six months of 2023.

Consolidated product costs in the first six months of 2024 increased $6.3 million, or 4%, compared to the first six months of 2023 due primarily to the reported product revenue increase.

Consolidated service costs in the first six months of 2024 decreased $25.1 million, or 18%, compared to the first six months of 2023, with the impact of lower U.S.

activity levels and implemented cost control measures partially offset by facility consolidation and exit costs incurred in 2024.

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $32.6 million, or 7%, in the first nine months of 2024 compared to the first nine months of 2023.

Consolidated product costs in the first nine months of 2024 increased $5.3 million, or 2%, compared to the first nine months of 2023 due primarily to the reported product revenue increase.

Consolidated service costs in the first nine months of 2024 decreased $37.9 million, or 18%, compared to the first nine months of 2023, with the impact of lower U.S.

activity levels and implemented cost control measures partially offset by facility exit and severance costs incurred in 2024.

Selling, General and Administrative Expense.

Selling, general and administrative expense was $48.9 million in the first six months of 2024, which included $1.3 million of costs associated with enforcing certain of our patents.

Excluding these patent defense costs, selling, general and administrative costs were consistent with the first six months of 2023.

Selling, general and administrative expense was $71.6 million in the first nine months of 2024, which included $2.7 million of costs associated with enforcing certain of our patents.

Excluding these patent defense costs, selling, general and administrative costs decreased $2.8 million, or 4%, from the level reported in the first nine months of 2023, due primarily to lower short- and long-term incentive expenses.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $1.9 million, or 6%, in the first six months of 2024 compared to the prior-year period.

Depreciation and amortization expense decreased $3.7 million, or 8%, in the first nine months of 2024 compared to the prior-year period.

Note 10, “Segments and Related Information,” to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.

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During the first quarter of 2024, our Downhole Technologies operations recognized a non-cash impairment charge of $10.0 million related to goodwill transferred to the business in connection with segment realignment discussed above.

See Note 2, “Goodwill Impairment and Other Charges,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Impairments of Intangible Assets.

In the first nine months of 2024, as a result of our decision to exit an underperforming service offering, our Completion and Production Services business recognized non-cash impairment charges of $10.8 million to reduce the carrying amount of its long-lived intangible assets to estimated fair value.

Impairments of Operating Lease Assets.

In the first nine months of 2024, management made strategic decisions to exit five leased service locations within our Completion and Production Services segment and one within our Downhole Technologies segment.

Operating Income (Loss).

Our consolidated operating loss was $9.1 million in the first six months of 2024, which included a $10.0 million non-cash goodwill impairment charge and charges totaling $6.9 million associated with facility consolidations and exits, and patent defense.

This compares to consolidated operating income of $9.1 million in the first six months of 2023.

Excluding the 2024 charges, operating income decreased $1.3 million year-over-year.

Our consolidated operating loss was $20.2 million in the first nine months of 2024, which included $23.4 million in non-cash goodwill, intangible and operating lease asset impairment charges and other charges totaling $11.8 million associated with facility consolidations and exits, patent defense and other management actions.

This compares to consolidated operating income of $15.3 million in the first nine months of 2023, which included facility consolidation and other charges of $1.6 million.

Excluding these charges, operating results declined $2.0 million year-over-year, driven by the substantial decline in activity levels in the United States.

Interest Expense, Net.

Net interest expense totaled $4.2 million in the first six months of 2024, which compares to $4.5 million in the first six months of 2023.

Interest expense as a percentage of total debt outstanding was approximately 7% in the first six months of 2024, compared to 7% in the first six months of 2023.

Income tax benefit (provision) for the first six months of 2024 and 2023 was calculated using a discrete approach.

Net interest expense totaled $6.0 million in the first nine months of 2024, which compares to $6.4 million in the first nine months of 2023.

Interest expense as a percentage of total debt outstanding was approximately 7% in the first nine months of 2024, compared to 7% in the first nine months of 2023.

Income tax provision for the first nine months of 2024 and 2023 was calculated using a discrete approach.

This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate.

For the first six months of 2024, our income tax benefit was $0.6 million on a pre-tax loss of $12.7 million, which included a $10.0 million goodwill impairment charge, other non-deductible expenses and favorable changes in valuation allowances recorded against deferred tax assets.

This compares to an income tax provision of $2.5 million on pre-tax income of $5.2 million for the first six months of 2023, which included certain non-deductible expenses, discrete tax items and a favorable change in valuation allowances recorded against deferred tax assets.

Other Comprehensive Income (Loss).

Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income (loss).

Other comprehensive loss was $6.2 million in the first six months of 2024 compared to comprehensive income of $7.4 million in the first six months of 2023 due to fluctuations in foreign currency exchange rates compared to the U.S.

For the first nine months of 2024, our income tax provision was $1.6 million on a pre-tax loss of $24.8 million, which included a $10.0 million goodwill impairment charge, other non-deductible expenses and unfavorable changes in valuation allowances recorded against deferred tax assets.

This compares to an income tax provision of $2.7 million on pre-tax income of $9.6 million for the first nine months of 2023, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.

Other Comprehensive Income.

Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income.

Other comprehensive income was $3.4 million in the first nine months of 2024 compared to comprehensive income of $1.7 million in the first nine months of 2023 due to fluctuations in foreign currency exchange rates compared to the U.S.

dollar for certain of the international operations of our operating segments.

For the first six months of 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the first six months of 2024, the exchange rates for the British pound and the Brazilian real weakened compared to the U.S.

This compares to the first six months of 2023, when the exchange rates for the British pound and the Brazilian real strengthened compared to the U.S.

For the first nine months of 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income were primarily attributable to the United Kingdom and Brazil.

During the first nine months of 2024, the exchange rates for the British pound strengthened compared to the U.S.

dollar while the Brazilian real weakened compared to the U.S.

This compares to the first nine months of 2023, when the exchange rates for the British pound and the Brazilian real strengthened compared to the U.S.

Segment Operating Results

Offshore Manufactured Products

Our Offshore Manufactured Products segment revenues increased $29.3 million, or 18%, in the first six months of 2024 compared to the first six months of 2023 due primarily to increased demand for international and offshore-project driven products and services.

Our Offshore Manufactured Products segment revenues increased $35.4 million, or 14%, in the first nine months of 2024 compared to the first nine months of 2023 due primarily to increased demand for international and offshore-project driven products and services.

Operating Income.

Our Offshore Manufactured Products segment reported operating income of $25.0 million in the first six months of 2024, which included $3.0 million in facility consolidation charges.

This compares to operating income of $16.5 million in the first six months of 2023.

Excluding the 2024 charges, operating income increased $11.4 million year-over-year.

Backlog in our Offshore Manufactured Products segment totaled $300 million as of June 30, 2024 compared to $327 million as of December 31, 2023.

Bookings during the first six months of 2024 totaled $167 million, yielding a year-to-date book-to-bill ratio of 0.9x.

Well Site Services

Our Well Site Services segment revenues decreased $37.9 million, or 29%, in the first six months of 2024 compared to the first six months of 2023, driven primarily by lower U.S.

customer activity levels (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming service locations during the first six months of 2024.

Our Offshore Manufactured Products segment reported operating income of $44.3 million in the first nine months of 2024, which included $3.4 million in facility consolidation and other charges.

This compares to operating income of $32.1 million in the first nine months of 2023, which included $1.6 million in facility consolidation and other charges.

Excluding these charges, operating income increased $13.9 million year-over-year.

Backlog in our Offshore Manufactured Products segment totaled $313 million as of September 30, 2024 compared to $327 million as of December 31, 2023.

Bookings during the first nine months of 2024 totaled $279 million, yielding a year-to-date book-to-bill ratio of 1.0x.

Completion and Production Services

Our Completion and Production Services segment revenues decreased $57.6 million, or 30%, in the first nine months of 2024 compared to the first nine months of 2023, driven primarily by lower U.S.

customer activity levels (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming service locations during the first half of 2024.

Operating Income (Loss).

Our Well Site Services segment reported an operating loss of $1.0 million in the first six months of 2024, which included charges totaling $3.9 million associated with facility consolidations and exits, and the defense of patents.

This compares to operating income of $11.7 million in the first six months of 2023.

Excluding the 2024 charges discussed above, the Well Site Services segment’s operating results declined $8.7 million from the prior-year period, with the impact of the decrease in U.S.

Our Completion and Production Services segment reported an operating loss of $19.2 million in the first nine months of 2024, which included charges totaling $21.1 million associated with the exit of a service offering, facility consolidations and exits, the defense of patents and other management actions.

This compares to operating income of $15.0 million in the first nine months of 2023.

Excluding the 2024 charges discussed above, the Completion and Production Services segment’s operating income declined $13.1 million from the prior-year period, with the impact of a decrease in U.S.

land-based revenues partially offset by implemented cost control measures.

The segment’s U.S.

land-based service offerings and facilities exited during the first nine months of 2024 collectively generated revenues of $35.8 million and operating losses of $24.0 million in 2024, which included intangible and operating lease asset impairment, facility closure and other charges totaling $17.4 million as well as depreciation and amortization expense of $4.2 million.

Downhole Technologies

Our Downhole Technologies segment revenues decreased $17.5 million, or 20%, in the first six months of 2024 from the first six months of 2023 due primarily to lower U.S.

Our Downhole Technologies segment revenues decreased $23.8 million, or 19%, in the first nine months of 2024 from the first nine months of 2023 due primarily to lower U.S.

customer demand for perforating and completion products during the first quarter of 2024.

Operating Loss.

Our Downhole Technologies segment reported an operating loss of $13.2 million in the first six months of 2024, which included the $10.0 million non-cash goodwill impairment charge related to the first quarter of 2024 segment realignment.

This compares to operating income of $1.8 million reported in the first six months of 2023, which included a $1.0 million non-cash provision for excess and obsolete inventory.

Excluding the charge discussed above, the Downhole Technologies operating results declined $6.0 million from the prior-year period, due primarily to the reported decrease in revenue and lower manufacturing volumes.

Our Downhole Technologies segment reported an operating loss of $16.9 million in the first nine months of 2024, which included the $10.0 million non-cash goodwill impairment charge related to the first quarter of 2024 segment realignment and $1.2 million in charges related to the exit of a facility, personnel reductions and a customer bankruptcy.

This compares to an operating loss of $0.1 million reported in the first nine months of 2023.

Excluding the 2024 charges discussed above, the Downhole Technologies segment’s operating loss increased $5.6 million from the prior-year period, due primarily to the reported decrease in revenue and lower manufacturing volumes.

Operating Loss.

Corporate expenses in the first six months of 2024 decreased $0.9 million, or 4%, from the first six months of 2023, due primarily to lower short- and long-term incentive expenses.

Corporate expenses in the first nine months of 2024 decreased $3.3 million, or 10%, from the first nine months of 2023, due primarily to lower short- and long-term incentive expenses.

Liquidity, Capital Resources and Other Matters

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Operating Activities

Cash flows used in operations totaled $1.1 million during the first six months of 2024, compared to $38.7 million generated by operations during the first six months of 2023.

During the first six months of 2024, $28.3 million was used to fund net working capital increases, primarily due to an activity-driven increase in inventories, the payment of accrued 2023 short- and long-term cash incentives in the first quarter of 2024 and a decrease in accounts payable.

During the first six months of 2023, $0.8 million was provided by net working capital decreases, with the favorable impact of a decrease in accounts receivable and an increase in deferred revenues, substantially offset by an activity-driven increase in inventories and the payment of accrued 2022 short-and long-term cash incentives in the first quarter of 2023.

Cash flows from operations totaled $27.7 million during the first nine months of 2024, compared to $52.4 million generated by operations during the first nine months of 2023.

During the first nine months of 2024, $13.2 million was used to fund net working capital increases, primarily due to an activity-driven increase in inventories, the payment of accrued 2023 short- and long-term cash incentives in the first quarter of 2024 and a decrease in accounts payable, partially offset by the favorable impact of a decrease in accounts receivable.

During the first nine months of 2023, $3.2 million was used to fund net working capital increases, with an activity-driven increase in inventories and the payment of accrued 2022 short-and long-term cash incentives in the first quarter of 2023 substantially offset by the favorable impact of a decrease in accounts receivable and an increase in deferred revenues.

Investing Activities

Net cash used in investing activities during the first six months of 2024 totaled $3.2 million, compared to $16.7 million used in investing activities during the first six months of 2023.

Capital expenditures totaled $15.9 million and $17.3 million during the first six months of 2024 and 2023, respectively.

These investments were offset by proceeds from the sale of property and equipment of $12.8 million and $0.7 million during the first six months of 2024 and 2023, respectively.

Net cash used in investing activities during the first nine months of 2024 totaled $8.3 million, compared to $19.1 million used in investing activities during the first nine months of 2023.

Capital expenditures totaled $23.3 million and $23.4 million during the first nine months of 2024 and 2023, respectively.

These investments were offset by proceeds from the sale of property and equipment of $15.4 million and $4.4 million during the first nine months of 2024 and 2023, respectively.

Within our Offshore Manufactured Products segment, we completed the consolidation of certain facilities in Houston, Texas during 2023 and have strategically relocated our Asian manufacturing and service operations from Singapore to Batam, Indonesia.

With these consolidations, a facility classified as held-for-sale assets within prepaid expenses and other current assets as of December 31, 2023 was sold during the second quarter of 2024 for net proceeds of $10.3 million.

With these consolidations, a facility classified as held for sale within prepaid expenses and other current assets as of December 31, 2023 was sold during the second quarter of 2024 for net proceeds of $10.3 million.

Including investments associated with the construction of a new facility in Batam, we expect to invest approximately $30 million in capital expenditures during 2024.

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Financing Activities

During the first six months of 2024, net cash of $17.2 million was used in financing activities, which included the purchase of $11.5 million principal amount of our outstanding 2026 Notes for $10.8 million in cash and the repurchase of $2.4 million of the Company’s common stock.

This compares to $22.6 million of cash used in financing activities during the first six months of 2023, which included the repayment of the $17.3 million principal amount outstanding under our 2023 Notes and the repurchase of $3.0 million of our common stock.

As of June 30, 2024, we had cash and cash equivalents totaling $25.2 million, which compared to $47.1 million as of December 31, 2023.

As of June 30, 2024, we had no borrowings outstanding under our ABL Facility, $123.5 million principal amount of our 2026 Notes (as defined below) outstanding and other debt of $2.9 million.

Our reported interest expense included amortization of deferred financing costs of $0.8 million during the first six months of 2024.

For the first six months of 2024, our contractual cash interest expense was $3.8 million, or approximately 6% of the average principal balance of debt outstanding.

During the first nine months of 2024, net cash of $20.2 million was used in financing activities, which included the purchase of $11.5 million principal amount of our outstanding 2026 Notes for $10.8 million in cash and the repurchase of $5.1 million of the Company’s common stock.

This compares to $22.7 million of cash used in financing activities during the first nine months of 2023, which included the repayment of the $17.3 million principal amount outstanding under our 2023 Notes and the repurchase of $3.0 million of our common stock.

As of September 30, 2024, we had cash and cash equivalents totaling $46.0 million, which compared to $47.1 million as of December 31, 2023.

As of September 30, 2024, we had no borrowings outstanding under our ABL Facility, $123.5 million principal amount of our 2026 Notes (as defined below) outstanding and other debt of $3.0 million.

Our reported interest expense included amortization of deferred financing costs of $1.2 million during the first nine months of 2024.

For the first nine months of 2024, our contractual cash interest expense was $5.5 million, or approximately 6% of the average principal balance of debt outstanding.

We believe that cash on-hand, cash flow from operations and borrowing capacity available under our ABL Facility will be sufficient to meet our liquidity needs in the coming twelve months.

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Capital availability will be affected by prevailing conditions in our industry, the global economy, the global banking and financial markets, stakeholder scrutiny of ESG matters and other factors, many of which are beyond our control.

In this regard, the effect of multiple U.S.

bank failures in 2023 resulted in significant disruptions to global banking and financial markets.

For companies like ours that support the energy industry, these disruptions negatively impacted the value of

our common stock and may reduce our ability to access capital in the bank and capital markets or result in such capital being available on less favorable terms, which could in the future negatively affect our liquidity.

For companies like ours that support the energy industry, disruptions affecting the availability of capital have in the

past and may in the future negatively impact the value of our common stock and may reduce our ability to access capital in the bank and capital markets or result in such capital being available on less favorable terms, which could negatively affect our liquidity.

On March 6, 2024, the SEC finalized rules relating to the disclosure of a range of climate-related information (the “Rules”).

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Subject to applicable securities laws, such purchases will be at such times and in such amounts as we deem appropriate.

During the six months ended June 30, 2024, $2.4 million in repurchases of common stock were made under the program.

The amount remaining under our share repurchase authorization as of June 30, 2024 was $15.8 million.

During the nine months ended September 30, 2024, $5.5 million in repurchases of common stock were made under the program.

The amount remaining under our share repurchase authorization as of September 30, 2024 was $12.6 million.

Revolving Credit Facility.

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See Note 4, “Long-term Debt,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the ABL Agreement.

As of June 30, 2024, we had $14.4 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of June 30, 2024 was $82.5 million, calculated based on the then-current borrowing base less outstanding letters of credit.

As of September 30, 2024, we had $15.1 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of September 30, 2024 was $76.4 million, calculated based on the then-current borrowing base less outstanding letters of credit.

We issued $135.0 million aggregate principal amount of 4.75% convertible senior notes due 2026 (the “2026 Notes”) pursuant to an indenture, dated as of March 19, 2021 (the “2026 Indenture”), between us and Computershare Trust Company, National Association, as successor trustee.

As of June 30, 2024, we have purchased a cumulative $11.5 million principal amount of the 2026 Notes for $10.8 million in cash, with $123.5 million principal amount outstanding.

As of September 30, 2024, we have purchased a cumulative $11.5 million principal amount of the 2026 Notes for $10.8 million in cash, with $123.5 million principal amount outstanding.

The outstanding 2026 Notes will mature on April 1, 2026, unless earlier repurchased, redeemed or converted.

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See Note 4, “Long-term Debt,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the 2026 Notes.

As of June 30, 2024, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

As of September 30, 2024, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

On February 15, 2023, our 2023 Notes matured and the outstanding $17.3 million in principal amount was repaid in full.

Our total debt represented 15% and 16% of our combined total debt and stockholders’ equity as of June 30, 2024 and December 31, 2023, respectively.

Our total debt represented 15% and 16% of our combined total debt and stockholders’ equity as of September 30, 2024 and December 31, 2023, respectively.

Contingencies and Other Obligations.

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Off-Balance Sheet Arrangements.

As of June 30, 2024, we had no off-balance sheet arrangements.

As of September 30, 2024, we had no off-balance sheet arrangements.

Critical Accounting Policies

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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 2. Management’s Discussion and Analysis