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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
____________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____

Commission file number: 001-16337

OIL STATES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware76-0476605
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
Three Allen Center, 333 Clay Street
Suite 462077002
Houston, Texas(Zip Code)
(Address of principal executive offices)
(713) 652-0582
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareOISNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
As of October 21, 2022, the number of shares of common stock outstanding was 63,902,143.


OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 Page
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Financial Statements
Unaudited Consolidated Statements of Operations
Unaudited Consolidated Statements of Comprehensive Loss
Consolidated Balance Sheets
Unaudited Consolidated Statements of Stockholders' Equity
Unaudited Consolidated Statements of Cash Flows
Notes to Unaudited Condensed Consolidated Financial Statements20
Cautionary Statement Regarding Forward-Looking Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II – OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Signature Page
2

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION
ITEM 1. Financial Statements
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues:
Products$99,743 $70,409 $284,537 $209,892 
Services89,651 70,119 250,735 201,949 
189,394 140,528 535,272 411,841 
Costs and expenses:
Product costs81,576 60,310 225,765 173,699 
Service costs69,723 56,897 194,294 163,450 
Cost of revenues (exclusive of depreciation and amortization expense presented below)151,299 117,207 420,059 337,149 
Selling, general and administrative expense23,374 20,078 70,964 63,395 
Depreciation and amortization expense16,413 19,657 51,469 62,086 
Impairments of fixed and lease assets   3,444 
Other operating income, net(6,750)(275)(6,852)(714)
184,336 156,667 535,640 465,360 
Operating income (loss)5,058 (16,139)(368)(53,519)
Interest expense, net(2,637)(2,569)(7,947)(7,593)
Other income, net491 2,137 1,892 7,917 
Income (loss) before income taxes2,912 (16,571)(6,423)(53,195)
Income tax (provision) benefit(769)3,529 (6,002)9,072 
Net income (loss)$2,143 $(13,042)$(12,425)$(44,123)
Net income (loss) per share:
Basic$0.03 $(0.22)$(0.20)$(0.73)
Diluted0.03 (0.22)(0.20)(0.73)
Weighted average number of common shares outstanding:
Basic62,674 60,377 61,292 60,264 
Diluted62,676 60,377 61,292 60,264 
The accompanying notes are an integral part of these financial statements.
3

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income (loss)$2,143 $(13,042)$(12,425)$(44,123)
Other comprehensive loss:
Currency translation adjustments(11,939)(5,838)(23,758)(4,207)
Comprehensive loss$(9,796)$(18,880)$(36,183)$(48,330)
The accompanying notes are an integral part of these financial statements.
4

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
September 30,
2022
December 31, 2021
(Unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$33,103 $52,852 
Accounts receivable, net209,278 186,080 
Inventories, net181,628 168,573 
Prepaid expenses and other current assets18,164 19,222 
Total current assets442,173 426,727 
Property, plant, and equipment, net305,067 338,583 
Operating lease assets, net24,072 25,388 
Goodwill, net78,579 76,412 
Other intangible assets, net174,182 185,749 
Other noncurrent assets26,297 32,889 
Total assets$1,050,370 $1,085,748 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt$20,026 $18,262 
Accounts payable60,684 63,343 
Accrued liabilities51,691 43,401 
Current operating lease liabilities6,276 6,481 
Income taxes payable4,795 2,564 
Deferred revenue50,732 43,236 
Total current liabilities194,204 177,287 
Long-term debt134,972 160,488 
Long-term operating lease liabilities21,584 23,452 
Deferred income taxes5,923 3,637 
Other noncurrent liabilities19,547 25,058 
Total liabilities376,230 389,922 
Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 76,586,244 shares and 73,900,160 shares issued, respectively
766 739 
Additional paid-in capital1,120,607 1,105,135 
Retained earnings269,142 281,567 
Accumulated other comprehensive loss(89,789)(66,031)
Treasury stock, at cost, 12,684,101 and 12,521,834 shares, respectively
(626,586)(625,584)
Total stockholders' equity674,140 695,826 
Total liabilities and stockholders' equity$1,050,370 $1,085,748 
The accompanying notes are an integral part of these financial statements.
5

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)

Three Months Ended September 30, 2022Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Stockholders'
Equity
Balance, June 30, 2022$747 $1,108,631 $266,999 $(77,850)$(626,586)$671,941 
Net income— — 2,143 — — 2,143 
Currency translation adjustments (excluding intercompany advances)— — — (10,363)— (10,363)
Currency translation adjustments on intercompany advances— — — (1,576)— (1,576)
Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc.19 10,313 — — — 10,332 
Stock-based compensation expense— 1,663 — — — 1,663 
Surrender of stock to settle taxes on stock awards— — — — —  
Balance, September 30, 2022$766 $1,120,607 $269,142 $(89,789)$(626,586)$674,140 

Nine Months Ended September 30, 2022Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Stockholders'
Equity
Balance, December 31, 2021$739 $1,105,135 $281,567 $(66,031)$(625,584)$695,826 
Net loss— — (12,425)— — (12,425)
Currency translation adjustments (excluding intercompany advances)— — — (23,571)— (23,571)
Currency translation adjustments on intercompany advances— — — (187)— (187)
Issuance of common stock in connection with settlement of disputes with seller of GEODynamics, Inc.19 10,313 — — — 10,332 
Stock-based compensation expense8 5,159 — — — 5,167 
Surrender of stock to settle taxes on stock awards— — — — (1,002)(1,002)
Balance, September 30, 2022$766 $1,120,607 $269,142 $(89,789)$(626,586)$674,140 
The accompanying notes are an integral part of these financial statements.
6

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)

Three Months Ended September 30, 2021Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Stockholders' Equity
Balance, June 30, 2021$739 $1,101,959 $314,479 $(69,754)$(625,489)$721,934 
Net loss— — (13,042)— — (13,042)
Currency translation adjustments (excluding intercompany advances)— — — (3,273)— (3,273)
Currency translation adjustments on intercompany advances— — — (2,565)— (2,565)
Stock-based compensation expense— 1,548 — — — 1,548 
Surrender of stock to settle taxes on stock awards— — — — (95)(95)
Adoption of ASU 2020-06— — — — —  
Balance, September 30, 2021$739 $1,103,507 $301,437 $(75,592)$(625,584)$704,507 

Nine Months Ended September 30, 2021Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Stockholders' Equity
Balance, December 31, 2020$733 $1,122,945 $329,327 $(71,385)$(623,989)$757,631 
Net loss— — (44,123)— — (44,123)
Currency translation adjustments (excluding intercompany advances)— — — (1,649)— (1,649)
Currency translation adjustments on intercompany advances— — — (2,558)— (2,558)
Stock-based compensation expense6 6,245 — — — 6,251 
Surrender of stock to settle taxes on stock awards— — — — (1,595)(1,595)
Adoption of ASU 2020-06— (25,683)16,233 — — (9,450)
Balance, September 30, 2021$739 $1,103,507 $301,437 $(75,592)$(625,584)$704,507 
The accompanying notes are an integral part of these financial statements.
7

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended September 30,
20222021
Cash flows from operating activities:
Net loss$(12,425)$(44,123)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense51,469 62,086 
Settlement of disputes with seller of GEODynamics, Inc.620  
Impairments of inventories 2,113 
Impairments of fixed and lease assets 3,444 
Stock-based compensation expense5,167 6,251 
Amortization of debt discount and deferred financing costs1,416 1,839 
Deferred income tax provision (benefit)1,295 (10,340)
Gains on extinguishment of 1.50% convertible senior notes
(157)(4,022)
Gains on disposals of assets(1,538)(3,558)
Other, net616 325 
Changes in operating assets and liabilities, net of effect from acquired business:
Accounts receivable(27,745)1,112 
Inventories(18,680)(10,767)
Accounts payable and accrued liabilities8,873 13,708 
Deferred revenue7,496 (872)
Other operating assets and liabilities, net2,586 3,376 
Net cash flows provided by operating activities18,993 20,572 
Cash flows from investing activities:
Capital expenditures(13,263)(10,977)
Proceeds from disposition of property and equipment2,211 6,160 
Acquisition of business, net of cash acquired(8,125) 
Other, net(168)(511)
Net cash flows used in investing activities(19,345)(5,328)
Cash flows from financing activities:
Revolving credit facility borrowings9,830 12,782 
Revolving credit facility repayments(9,830)(31,782)
Payment of promissory note to seller of GEODynamics, Inc.(10,000) 
Issuance of 4.75% convertible senior notes
 135,000 
Purchases of 1.50% convertible senior notes
(6,272)(125,952)
Other debt and finance lease repayments, net(541)(55)
Payment of financing costs(81)(7,785)
Shares added to treasury stock as a result of net share settlements
due to vesting of stock awards
(1,002)(1,595)
Net cash flows used in financing activities(17,896)(19,387)
Effect of exchange rate changes on cash and cash equivalents(1,501)(307)
Net change in cash and cash equivalents(19,749)(4,450)
Cash and cash equivalents, beginning of period52,852 72,011 
Cash and cash equivalents, end of period$33,103 $67,561 
Cash paid (received) for:
Interest$4,605 $2,785 
Income taxes, net (67)1,272 
The accompanying notes are an integral part of these financial statements.
8

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Organization and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Oil States International, Inc. and its subsidiaries (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. Certain information in footnote disclosures normally included with financial statements prepared in accordance with generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair statement of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year.
As further discussed in Note 12, "Commitments and Contingencies," the impact of the Coronavirus Disease 2019 ("COVID-19") pandemic and the related economic, business and market disruptions continue to evolve and their future effects remain uncertain. The actual impact of these developments on the Company will depend on numerous factors, many of which are beyond management's control and knowledge. It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company. During 2020 and 2021, the Company recorded asset impairments, severance and restructuring charges in response to these developments as further discussed in Note 3, "Asset Impairments and Other Charges and Benefits." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.
The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include, but are not limited to, goodwill and long-lived asset impairments, revenue and income recognized over time, valuation allowances recorded on deferred tax assets, reserves on inventory, allowances for doubtful accounts, settlement of litigation and potential future adjustments related to contractual indemnification and other agreements. Actual results could materially differ from those estimates.
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, which are adopted by the Company as of the specified effective date. Management believes that recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.
The financial statements included in this report should be read in conjunction with the Company's audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2021.
2.    Acquisition
On April 14, 2022, the Company acquired E-Flow Control Holdings Limited ("E-Flow"), a U.K.-based global provider of fully integrated handling, control, monitoring and instrumentation solutions. The purchase price of $8.1 million (net of cash acquired) was funded with cash-on-hand and is subject to customary post-closing adjustments. Under the terms of the purchase agreement, the Company may be entitled to indemnification for certain matters occurring prior to the acquisition.
The E-Flow transaction was accounted for using the acquisition method of accounting, based on the Company's preliminary estimates of the fair value of assets acquired (primarily long-lived intangible assets and goodwill) and liabilities assumed in the acquisition. E-Flow's results of operations have been included in the Company's consolidated financial statements and have been reported within the Offshore/Manufactured Products segment subsequent to the closing of the acquisition.
9

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3.    Asset Impairments and Other Charges and Benefits
In March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50% in response to actual and forecasted reductions in global demand for crude oil due to the COVID-19 pandemic, coupled with announcements by Saudi Arabia and Russia of plans to increase crude oil production. As demand for most of the Company's products and services depends substantially on the level of capital expenditures by the oil and natural gas industry, these conditions caused rapid reductions to most of the Company's customers' drilling, completion and production activities and their related spending on the Company's products and services, particularly those supporting activities in the U.S. shale play regions, until the supply/demand imbalances eased. Following these March 2020 events, the Company immediately implemented significant cost reduction initiatives, which continued into 2021.
In this regard, during the first nine months of 2021, the Company continued its restructuring efforts, closed additional facilities in the United States and continued to assess the carrying value of its assets based on management actions and the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):
Offshore/ Manufactured ProductsWell Site ServicesDownhole TechnologiesCorporatePre-tax TotalTaxAfter-tax Total
First quarter 2021
Impairments of fixed assets (Note 4)
$ $650 $ $ $650 $137 $513 
Severance and restructuring costs282 1,306 275 1,555 3,418 717 2,701 
Second quarter 2021
Impairments of operating lease assets (Note 4)
$ $2,794 $ $ $2,794 $587 $2,207 
Severance and restructuring costs 2,351 203  2,554 536 2,018 
Third quarter 2021
Impairment of inventories (Note 4)
$ $ $2,113 $ $2,113 $444 $1,669 
Severance and restructuring costs256 352 129  737 154 583 
Additionally, during the three and nine months ended September 30, 2021, the Company recognized $1.2 million and $8.8 million, respectively, in aggregate reductions to payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") employee retention credit program.
In August 2022, the Offshore/Manufactured Products segment settled outstanding litigation against certain service providers in exchange for cash totaling $6.9 million. In connection with this settlement, the Company recognized a gain of $6.1 million (net of legal and other related costs) in the third quarter of 2022, which is included in other operating income, net.
Should, among other events and circumstances, the ongoing war between Russia and Ukraine escalate or spread, global economic and industry conditions deteriorate, the COVID-19 pandemic-induced business, supply chain and market disruptions worsen, the outlook for future operating results and cash flow for any of the Company's segments decline, income tax rates increase or regulations change, climate and environmental regulations or rules change, costs of equity or debt capital increase, valuation for comparable public companies or comparable acquisition valuations decrease, or management implements strategic decisions based on industry conditions, the Company may need to recognize additional impairment losses and/or incur other costs in future periods.
10

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.    Details of Selected Balance Sheet Accounts
Additional information regarding selected balance sheet accounts as of September 30, 2022 and December 31, 2021 is presented below (in thousands):
September 30,
2022
December 31,
2021
Accounts receivable, net:
Trade$145,949 $116,434 
Unbilled revenue23,412 24,389 
Contract assets36,752 39,755 
Other7,564 9,973 
Total accounts receivable213,677 190,551 
Allowance for doubtful accounts(4,399)(4,471)
$209,278 $186,080 
Allowance for doubtful accounts as a percentage of total accounts receivable2 %2 %
September 30,
2022
December 31,
2021
Deferred revenue (contract liabilities)$50,732 $43,236 
As of September 30, 2022, accounts receivable, net in the United States and the United Kingdom represented 75% and 12%, respectively, of the total. No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of September 30, 2022.
For the nine months ended September 30, 2022, the $3.0 million net decrease in contract assets was attributable to $30.4 million transferred to accounts receivable, which was partially offset by $27.6 million in revenue recognized during the period. Deferred revenue (contract liabilities) increased by $7.5 million in the first nine months of 2022, reflecting $22.7 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $14.8 million of revenue that was deferred at the beginning of the period.
The following provides a summary of activity in the allowance for doubtful accounts for the nine months ended September 30, 2022 and 2021 (in thousands):
Nine Months Ended September 30,
20222021
Allowance for doubtful accounts – January 1$4,471 $8,304 
Provisions1,237 20 
Write-offs(1,581)(2,200)
Other272 136 
Allowance for doubtful accounts – September 30$4,399 $6,260 
11

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
September 30,
2022
December 31,
2021
Inventories, net:
Finished goods and purchased products$87,542 $87,934 
Work in process29,652 24,722 
Raw materials102,120 96,357 
Total inventories219,314 209,013 
Allowance for excess or obsolete inventory(37,686)(40,440)
$181,628 $168,573 
The Company recorded an impairment charge of $2.1 million in the third quarter of 2021 to reduce the carrying value of inventories within the Downhole Technologies segment to their estimated net realizable value based primarily on management's decision to exit a product offering.
September 30,
2022
December 31,
2021
Property, plant and equipment, net:
Property, plant and equipment$1,121,891 $1,151,533 
Accumulated depreciation(816,824)(812,950)
$305,067 $338,583 
For the three months ended September 30, 2022 and 2021, depreciation expense was $11.3 million and $14.7 million, respectively. Depreciation expense was $35.9 million and $46.7 million, respectively, for the nine months ended September 30, 2022 and 2021.
During the first and second quarters of 2021, the Well Site Services segment recognized non-cash fixed and operating lease asset impairment charges of $0.7 million and $2.8 million, respectively, associated with the closure of additional facilities coupled with other management actions. During the second quarter of 2021, the segment also recorded an additional $1.9 million charge associated with the exit of a leased facility.
September 30, 2022December 31, 2021
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying AmountGross
Carrying
Amount
Accumulated
Amortization
Net Carrying Amount
Other intangible assets:
Customer relationships$149,673 $53,925 $95,748 $168,284 $66,734 $101,550 
Patents/Technology/Know-how79,769 37,747 42,022 78,821 33,151 45,670 
Tradenames and other53,956 17,544 36,412 53,708 15,179 38,529 
$283,398 $109,216 $174,182 $300,813 $115,064 $185,749 
For the three months ended September 30, 2022 and 2021, amortization expense was $5.1 million and $4.9 million, respectively. Amortization expense was $15.5 million and $15.4 million for the nine months ended September 30, 2022 and 2021, respectively.
September 30,
2022
December 31,
2021
Other noncurrent assets:
Deferred compensation plan$18,198 $23,348 
Deferred financing costs2,093 2,674 
Deferred income taxes1,255 1,878 
Other4,751 4,989 
$26,297 $32,889 
12

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
September 30,
2022
December 31,
2021
Accrued liabilities:
Accrued compensation$26,909 $20,904 
Accrued taxes, other than income taxes9,268 5,130 
Insurance liabilities4,953 6,361 
Accrued interest3,527 3,629 
Accrued commissions2,176 2,194 
Other4,858 5,183 
$51,691 $43,401 
5.    Long-term Debt
As of September 30, 2022 and December 31, 2021, long-term debt consisted of the following (in thousands):
September 30,
2022
December 31,
2021
Revolving credit facility(1)
$ $ 
2026 Notes(2)
131,944 131,291 
2023 Notes(3)
19,473 25,802 
Promissory note 17,534 
Other debt and finance lease obligations3,581 4,123 
Total debt154,998 178,750 
Less: Current portion(20,026)(18,262)
Total long-term debt$134,972 $160,488 
____________________
(1)Unamortized deferred financing costs of $2.1 million and $2.7 million as of September 30, 2022 and December 31, 2021, respectively, are presented in other noncurrent assets.
(2)The outstanding principal amount of the 2026 Notes was $135.0 million as of September 30, 2022 and December 31, 2021.
(3)The outstanding principal amount of the 2023 Notes was $19.5 million and $26.0 million as of September 30, 2022 and December 31, 2021, respectively.
Revolving Credit Facility
On February 10, 2021, the Company entered into a senior secured credit facility with certain lenders, which provides for a $125.0 million asset-based revolving credit facility (the "ABL Facility") under which credit availability is subject to a borrowing base calculation. On March 16, 2021, the Company entered into an amendment to the ABL Facility that permitted the Company to incur the indebtedness represented by the 2026 Notes discussed below.
The ABL Facility is governed by a credit agreement, as amended, with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto (the "ABL Agreement"). The ABL Agreement matures on February 10, 2025 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $17.5 million.
The ABL Agreement provides funding based on a borrowing base calculation that includes eligible U.S. customer accounts receivable and inventory and provides for a $50.0 million sub-limit for the issuance of letters of credit. Borrowings under the ABL Agreement are secured by a pledge of substantially all of the Company's domestic assets (other than real property) and the stock of certain foreign subsidiaries.
Borrowings under the ABL Agreement bear interest at a rate equal to the London Interbank Offered Rate ("LIBOR") plus a margin of 2.75% to 3.25% and subject to a LIBOR floor rate of 0.50%, or at a base rate plus a margin of 1.75% to 2.25%, in each case based on average borrowing availability. Quarterly, the Company must also pay a commitment fee of 0.375% to 0.50% per annum, based on unused commitments under the ABL Agreement.
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The ABL Agreement places restrictions on the Company's ability to incur additional indebtedness, grant liens on assets, pay dividends or make distributions on equity interests, dispose of assets, make investments, repay other indebtedness (including the 2023 Notes and the 2026 Notes discussed below), engage in mergers, and other matters, in each case, subject to certain exceptions. The ABL Agreement contains customary default provisions, which, if triggered, could result in acceleration of repayment of all amounts then outstanding. The ABL Agreement also requires the Company to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 (i) in the event that availability under the ABL Agreement is less than the greater of (a) 15% of the borrowing base and (b) $14.1 million; (ii) to complete certain specified transactions; or (iii) if an event of default has occurred and is continuing.
As of September 30, 2022, the Company had $17.6 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, 2022 was $79.9 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit. As of September 30, 2022, the Company was in compliance with its debt covenants under the ABL Agreement.
2026 Notes
On March 19, 2021, the Company issued $135.0 million aggregate principal amount of its 4.75% convertible senior notes due 2026 (the "2026 Notes") pursuant to an indenture, dated as of March 19, 2021 (the "2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. Computershare Trust Company, National Association, assumed the role of trustee as of March 1, 2022. Net proceeds from the 2026 Notes offering, after deducting issuance costs, totaled $130.6 million. The Company used $120.0 million of the cash proceeds to purchase $125.0 million principal amount of the outstanding 2023 Notes at a discount, with the balance added to cash on-hand.
The 2026 Notes bear interest at a rate of 4.75% per year and will mature on April 1, 2026, unless earlier repurchased, redeemed or converted. Interest is payable semi-annually in arrears on April 1 and October 1 of each year. Additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture. The initial conversion rate is 95.3516 shares of the Company's common stock per $1,000 principal amount of the 2026 Notes (equivalent to an initial conversion price of $10.49 per share of common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2026 Indenture. The Company's intent is to repay the principal amount of the 2026 Notes in cash and settle the conversion feature in shares of the Company's common stock. As of September 30, 2022, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.
2023 Notes
On January 30, 2018, the Company issued $200.0 million aggregate principal amount of its 1.50% convertible senior notes due 2023 (the "2023 Notes") pursuant to an indenture, dated as of January 30, 2018 (the "2023 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. Computershare Trust Company, National Association, assumed the role of trustee as of March 1, 2022. As of September 30, 2022, $19.5 million principal amount of the 2023 Notes remained outstanding. The 2023 Notes bear interest at a rate of 1.50% per year and will mature on February 15, 2023, unless earlier repurchased, redeemed or converted. The initial conversion rate is 22.2748 shares of the Company's common stock per $1,000 principal amount of the 2023 Notes (equivalent to an initial conversion price of $44.89 per share of common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2023 Indenture. The Company's intent is to repay the principal amount of the 2023 Notes in cash. As of September 30, 2022, none of the conditions allowing holders of the 2023 Notes to convert, or requiring us to repurchase the 2023 Notes, had been met.
The following table provides a summary of the Company's purchases of outstanding 2023 Notes during the nine months ended September 30, 2022 and 2021, with non-cash gains reported within other income, net (in thousands):
Principal AmountCarrying Value of LiabilityCash PaidNon-cash Gains Recognized
Nine Months Ended September 30,
2022$6,454 $6,429 $6,272 $157 
2021131,400 129,974 125,952 4,022 
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Promissory Note
In connection with the 2018 acquisition of GEODynamics, Inc. ("GEODynamics" and the "GEODynamics Acquisition"), the Company issued a $25.0 million promissory note (the "GEO Note") that bore interest at 2.50% per annum (subject to adjustment) and was scheduled to mature on July 12, 2019. Payments due under the GEO Note were subject to set-off, in full or in part, against certain indemnification claims related to matters occurring prior to the GEODynamics Acquisition. The Company asserted indemnification claims against the seller of GEODynamics (the "GEO Seller"), and the GEO Seller filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries alleging that payments due under the GEO Note were required to be repaid in accordance with the terms of such note. The Company incurred settlement costs and expenses of $7.5 million related to such indemnification claims, and as of June 28, 2022 had reduced the carrying amount of such note in the consolidated balance sheet to $17.5 million, which was its then-current best estimate of what was owed after set-off for such indemnification matters. As further discussed in Note 12, "Commitments and Contingencies," on June 28, 2022, the Company settled its disputes with the GEO Seller, including the full and final settlement of all amounts due under the GEO Note. Pursuant to the settlement agreement, on July 1, 2022, the Company paid the GEO Seller $10.0 million in cash, issued approximately 1.9 million shares of its common stock (having a market value of $10.3 million) and extinguished the $17.5 million carrying value of the GEO Note along with accrued interest of $2.2 million.
6.    Fair Value Measurements
The Company's financial instruments consist of cash and cash equivalents, investments, receivables, payables and debt instruments. The Company believes that the carrying values of these instruments, other than the 2023 Notes and 2026 Notes, on the accompanying consolidated balance sheets approximate their fair values. The estimated fair value of the 2023 Notes as of September 30, 2022 was $19.1 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $19.5 million. The estimated fair value of the 2026 Notes as of September 30, 2022 was $110.4 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $135.0 million.
7.    Stockholders' Equity
Common and Preferred Stock
The following table provides details with respect to the changes to the number of shares of common stock, $0.01 par value, outstanding during the first nine months of 2022 (in thousands):
Shares of common stock outstanding – December 31, 202161,378 
Issuance of common stock to seller of GEODynamics, Inc. (Note 12)
1,910 
Restricted stock awards, net of forfeitures776 
Shares withheld for taxes on vesting of stock awards(162)
Shares of common stock outstanding – September 30, 202263,902 
As of September 30, 2022 and December 31, 2021, the Company had 25,000,000 shares of preferred stock, $0.01 par value, authorized, with no shares issued or outstanding.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, reported as a component of stockholders' equity, primarily relates to fluctuations in currency exchange rates against the U.S. dollar as used to translate certain of the international operations of the Company's operating segments. Accumulated other comprehensive loss increased from $66.0 million at December 31, 2021 to $89.8 million at September 30, 2022. For the nine months ended September 30, 2022 and 2021, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil.
During the nine months ended September 30, 2022, the exchange rate for the British pound weakened by 18% compared to the U.S. dollar while the Brazilian real strengthened by 3% compared to the U.S. dollar, contributing to other comprehensive loss of $23.8 million. During the nine months ended September 30, 2021, the exchange rate for the British pound and the Brazilian real weakened by 1% and 5%, respectively, compared to the U.S. dollar, contributing to other comprehensive loss of $4.2 million.
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(Continued)
8.