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 March 31, 2021

☐ 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 001-38382

FTS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		30-0780081
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

777 Main Street, Suite 2900, Fort Worth, Texas (Address of principal executive offices)		76102 (Zip Code)

(817) 862-2000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	FTSI	NYSE American
Series A Preferred Purchase Rights		NYSE American

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.


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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of April 30, 2021, the registrant had 13,677,664 shares of Class A common stock, par value $0.01 per share, and 312,306 shares of Class B common stock, par value $0.01 per share, outstanding.

Table of Contents

FTS INTERNATIONAL, INC.

TABLE OF CONTENTS


		Page
	Cautionary Statement Regarding Forward-Looking Statements	3

PART I -	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Statements of Operations	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Stockholders’ Equity	7
	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	21

PART II -	OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
	Signatures	23

Table of Contents

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical or current fact included in this annual report are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance and business. Forward-looking statements may be identified by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “assume,” “believe,” “can have,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “would” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures and growth rates, our plans and objectives for future operations, growth or initiatives or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect and, therefore, investors should not unduly rely on such statements. These statements, and related risks and uncertainties, include, but are not limited to: the effects of our bankruptcy proceedings on our business, liquidity, results of operations and prospects and the interests of various constituents; a further decline or future decline in domestic spending by the onshore oil and natural gas industry; continued volatility or future volatility in oil and natural gas prices; deterioration in general economic conditions or a continued weakening or future weakening of the broader energy industry; federal, state and local regulation of hydraulic fracturing and other oilfield service activities, as well as exploration and production activities; our ability to obtain permits, approvals and authorizations from governmental and third parties; the effects of or changes to U.S. and foreign government regulation; the price and availability of alternative fuels and energy sources; the discovery rates of new oil and natural gas reserves; and other factors described in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2020 and our subsequent reports on Forms 10-Q and 8-K.

We make many of our forward-looking statements based on our operating budgets and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.

We caution that the risks and uncertainties identified by us may not be all of the factors that are important to investors. Furthermore, the forward-looking statements included in this quarterly report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

Table of Contents

PART 1 – FINANCIAL INFORMATION

Item 1.Financial Statements

FTS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Successor		Predecessor
	Three Months Ended		Three Months Ended
	March 31,		March 31,
(Dollars in millions, except per share amounts)	2021		2020
Revenue
Revenue	$	95.9	$	150.8
Revenue from related parties		—		0.7
Total revenue		95.9		151.5

Operating expenses
Costs of revenue (excluding depreciation of $13.4 and $20.5 respectively, included in depreciation and amortization below)		78.5		114.6
Selling, general and administrative		10.5		17.7
Depreciation and amortization		13.9		21.4
Impairments and other charges		0.3		4.3
Gain on disposal of assets, net		—		(0.1)
Total operating expenses		103.2		157.9

Operating loss		(7.3)		(6.4)

Interest expense, net		(0.1)		(7.3)
Gain on extinguishment of debt, net		—		2.0
Reorganization items		(0.5)		—

Loss before income taxes		(7.9)		(11.7)
Income tax benefit		—		—

Net loss	$	(7.9)	$	(11.7)

Basic and diluted loss per share	$	(0.56)	$	(2.18)
Shares used in computing basic and diluted earnings per share (in thousands)		13,990		5,367

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

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FTS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31,		December 31,
(In millions, except share amounts)	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	86.4	$	94.0
Accounts receivable, net		56.5		26.9
Inventories		31.8		29.0
Prepaid expenses and other current assets		4.5		19.5
Total current assets		179.2		169.4

Property, plant, and equipment, net		125.4		132.3
Operating lease right-of-use assets		3.8		4.5
Intangible assets, net		7.2		7.4
Other assets		1.4		1.4
Total assets	$	317.0	$	315.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	39.1	$	26.9
Accrued expenses		10.9		12.5
Current portion of operating lease liabilities		2.6		3.0
Other current liabilities		0.3		0.3
Total current liabilities		52.9		42.7

Operating lease liabilities		2.3		3.3
Other liabilities		2.2		2.4
Total liabilities		57.4		48.4

Commitments and contingencies (Note 9)

Stockholders’ equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized		—		—
Successor Common stock Class A, $0.01 par value, 49,000,000, authorized 13,677,664 issued and outstanding at March 31, 2021 and December 31, 2020 Successor Common stock Class B, $0.01 par value, 1,000,000, authorized 312,306 issued and outstanding at March 31, 2021 and December 31, 2020		0.1		0.1
Additional paid-in capital		280.8		279.9
Accumulated deficit		(21.3)		(13.4)
Total stockholders’ equity		259.6		266.6
Total liabilities and stockholders’ equity	$	317.0	$	315.0

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

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FTS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Successor		Predecessor
	Three Months Ended		Three Months Ended
	March 31,		March 31,
(In millions)	2021		2020
Cash flows from operating activities
Net loss	$	(7.9)	$	(11.7)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		13.9		21.4
Stock-based compensation		0.9		3.1
Amortization of debt discounts and issuance costs		—		0.4
Gain on disposal of assets, net		—		(0.1)
Gain on extinguishment of debt, net		—		(2.0)
Non-cash provision for supply commitment charges		—		3.2
Cash paid to settle supply commitment charges		—		(11.2)
Inventory write-down		—		0.6
Other non-cash items		0.1		0.9
Changes in operating assets and liabilities:
Accounts receivable		(29.7)		(2.4)
Accounts receivable from related parties		—		(0.7)
Inventories		(2.7)		1.3
Prepaid expenses and other assets		1.5		(8.1)
Accounts payable		10.7		16.2
Accrued expenses and other liabilities		(1.8)		2.3
Net cash (used in) provided by operating activities		(15.0)		13.2

Cash flows from investing activities
Capital expenditures		(5.3)		(16.4)
Proceeds from disposal of assets		—		0.1
Net cash used in investing activities		(5.3)		(16.3)

Cash flows from financing activities
Repayments of long-term debt		—		(20.6)
Taxes paid related to net share settlement of equity awards		—		(0.1)
Net cash used in financing activities		—		(20.7)

Net decrease in cash, cash equivalents, and restricted cash		(20.3)		(23.8)
Cash, cash equivalents, and restricted cash at beginning of period		106.7		223.0
Cash and cash equivalents at end of period	$	86.4	$	199.2

Supplemental cash flow information:
Interest paid	$	—	$	1.4
Noncash investing and financing activities:
Capital expenditures included in accounts payable	$	2.0	$	2.0
Operating lease liabilities incurred from obtaining right-of-use assets	$	0.8	$	0.3
Derecognition of lease liabilities and right-of-use assets due to lease termination	$	1.1	$	0.3

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

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FTS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

Additional

Total

Common Stock

Paid-in

Accumulated

Stockholders’

(Dollars in millions and shares in thousands)

Shares

Amount

Capital

Deficit

Equity

Balance at January 1, 2021 Successor

13,990

0.1

SEC Form 10-Q filed by FTS International, Inc.