10-Q

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

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: 001-38441

ChampionX Corporation

(Exact name of registrant as specified in its charter)

Delaware		82-3066826
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2445 Technology Forest Blvd,	Building 4, 12th Floor
The Woodlands,	Texas	77381
(Address of principal executive offices)		(Zip Code)

(281) 403-5772

(Registrant’s telephone number, including area code)

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	CHX	The Nasdaq Stock Market LLC

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 ☑

The registrant had 201,339,489 shares of common stock, $0.01 par value, outstanding as of April 23, 2021.

CHAMPIONX CORPORATION

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Income (Loss)	1
	Condensed Consolidated Statements of Comprehensive Income (Loss)	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Executive Overview and Business Outlook	20
	Consolidated Results of Operations	22
	Segment Results of Operations	23
	Capital Resources and Liquidity	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
SIGNATURES		29

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, contained in this report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements usually relate to future events and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results. Forward-looking statements are often identified by the words “believe,” “anticipate,” “expect,” “may,” “intend,” “foresee,” “guidance,” “estimate,” “potential,” “outlook,” “plan,” “should,” “would,” “could,” “target,” “forecast” and similar expressions, including the negative thereof. The absence of these words, however, does not mean that the statements are not forward-looking statements. Forward-looking statements are based on our current expectations, beliefs and assumptions concerning future developments and business conditions and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.

All of our forward-looking statements involve risks, uncertainties (some of which are significant or beyond our control) and assumptions that could cause actual results to materially differ from our historical experience and our present expectations or projections. Known material factors that could cause actual results to materially differ from those contemplated in the forward-looking statements are those set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update, revise or correct any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required under the federal securities laws.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHAMPIONX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
Product revenue	$	585,357	$	224,445
Service revenue	80,626		24,925
Lease and other revenue	18,905		12,064
Total revenue	684,888		261,434
Cost of goods and services	522,556		179,095
Gross profit	162,332		82,339
Selling, general and administrative expense	143,478		78,143
Goodwill impairment	—		616,271
Long-lived asset impairment	—		40,980
Interest expense, net	13,971		9,039
Other (income) expense, net	(1,936)		(1,633)
Income (loss) before income taxes	6,819		(660,461)
Provision for (benefit from) income taxes	2,782		(27,006)
Net income (loss)	4,037		(633,455)
Less: Net income (loss) attributable to noncontrolling interest	(1,735)		273
Net income (loss) attributable to ChampionX	$	5,772	$	(633,728)
Earnings (losses) per share attributable to ChampionX: *
Basic	$	0.03	$	(8.18)
Diluted	$	0.03	$	(8.18)
Weighted-average shares outstanding: *
Basic	200,580		77,477
Diluted	207,271		77,477

_______________________

* See Note 12 — Earnings Per Share

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

1

CHAMPIONX CORPORATION 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended March 31,
(in thousands)	2021		2020
Net income (loss)	$	4,037	$	(633,455)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (1)	3,213		(11,052)
Cash flow hedges (2)	413		—
Defined pension and other post-retirement benefits adjustments, net (3)	167		99
Other comprehensive income (loss)	3,793		(10,953)
Comprehensive income (loss)	7,830		(644,408)
Comprehensive income (loss) attributable to noncontrolling interest	(1,735)		273
Comprehensive income (loss) attributable to ChampionX	$	9,565	$	(644,681)

_______________________

(1) Net of income tax (expense) benefit of $0 for the three months ended March 31, 2021 and 2020.

(2) Net of income tax (expense) benefit of $(72) for the three months ended March 31, 2021.

(3) Net of income tax (expense) benefit of $47 and $33 for the three months ended March 31, 2021 and 2020, respectively.

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

2

CHAMPIONX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)	March 31, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	259,821	$	201,421
Receivables, net	528,142		559,545
Inventories, net	435,272		430,112
Prepaid expenses and other current assets	78,019		74,767
Total current assets	1,301,254		1,265,845
Property, plant and equipment, net of accumulated depreciation of $504,702 in 2021 and $494,490 in 2020	833,256		854,536
Operating lease right-of-use assets	125,328		122,481
Goodwill	686,455		680,594
Intangible assets, net	457,275		479,009
Other non-current assets	72,221		73,311
Total assets	$	3,475,789	$	3,475,776
Liabilities and Equity
Current portion of long-term debt	$	26,850	$	26,850
Accounts payable	333,765		299,666
Accrued compensation and employee benefits	61,380		70,303
Current portion of operating lease liabilities	36,375		33,234
Accrued distributor fees	22,044		37,465
Accrued expenses and other current liabilities	152,021		155,042
Total current liabilities	632,435		622,560
Long-term debt	899,469		905,764
Deferred income taxes	139,715		156,283
Operating lease liabilities	82,863		83,553
Other long-term liabilities	92,201		95,041
Total liabilities	1,846,683		1,863,201
Stockholders’ equity:
Common stock (2.5 billion shares authorized, $0.01 par value) 201.0 million shares and 200.4 million shares issued and outstanding in 2021 and 2020, respectively	2,010		2,004
Capital in excess of par value of common stock	2,302,406		2,293,179
Accumulated deficit	(632,685)		(638,457)
Accumulated other comprehensive loss	(26,962)		(30,755)
ChampionX stockholders’ equity	1,644,769		1,625,971
Noncontrolling interest	(15,663)		(13,396)
Total equity	1,629,106		1,612,575
Total liabilities and equity	$	3,475,789	$	3,475,776

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

3

CHAMPIONX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common stock
(in thousands)	Shares	Par Value		Capital in Excess of Par Value		Accum. Deficit		Accum. Other Comp. Loss		Non-controlling Interest		Total
December 31, 2020	200,380	$	2,004	$	2,293,179	$	(638,457)	$	(30,755)	$	(13,396)	$	1,612,575
Net income (loss)	—	—		—		5,772		—		(1,735)		4,037
Other comprehensive income	—	—		—		—		3,793		—		3,793
Stock-based compensation	64	—		6,442		—		—		—		6,442
Stock options exercised	577	6		3,341		—		—		—		3,347
Taxes withheld on issuance of stock-based awards	—	—		(556)		—		—		—		(556)
Cumulative translation adjustments	—	—		—		—		—		268		268
Distributions to noncontrolling interest	—	—		—		—		—		(800)		(800)
March 31, 2021	201,021	$	2,010	$	2,302,406	$	(632,685)	$	(26,962)	$	(15,663)	$	1,629,106

	Common Stock
(in thousands)	Shares	Par Value		Capital in Excess of Par Value		Retained Earnings (Accum. Deficit)		Accum. Other Comp. Loss		Non-controlling Interest		Total
December 31, 2019	77,460	$	775	$	969,174	$	107,048	$	(44,037)	$	3,254	$	1,036,214
Cumulative effect of accounting changes	—	—		—		(1,573)		—		—		(1,573)
Net income (loss)	—	—		—		(633,728)		—		273		(633,455)
Other comprehensive loss	—	—		—		—		(10,953)		—		(10,953)
Stock-based compensation	44	—		2,429		—		—		—		2,429
Taxes withheld on issuance of stock-based awards	—	—		(368)		—		—		—		(368)
March 31, 2020	77,504	$	775	$	971,235	$	(528,253)	$	(54,990)	$	3,527	$	392,294

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

4

CHAMPIONX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
(in thousands)	2021		2020
Cash provided by (used for) operating activities:
Net income (loss)	$	4,037	$	(633,455)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	39,150		16,970
Amortization	21,851		12,862
Stock-based compensation	6,442		2,429
Loss (gain) on disposal of fixed assets	1,954		(386)
Loss on goodwill and long-lived asset impairment	—		657,251
Provision (recovery) of bad debt	(1,413)		2,427
Provision for inventory obsolescence and write-downs	4,856		—
Amortization of deferred loan costs and accretion of discount	948		708
Deferred income taxes	(2,450)		(28,417)
Employee benefit plan expense	718		383
Other	103		349
Changes in operating assets and liabilities (net of effects of foreign exchange):
Receivables	30,019		(6,740)
Inventories	(6,511)		6,587
Prepaid expenses and other current assets	(1,247)		4,129
Accounts payable	36,227		3,068
Accrued compensation and employee benefits	(8,467)		(9,799)
Accrued expenses and other liabilities	(34,399)		12,153
Leased assets	(1,138)		(7,972)
Other	(466)		(3,325)
Net cash provided by operating activities	90,214		29,222
Cash provided by (used for) investing activities:
Capital expenditures	(25,579)		(7,467)
Proceeds from sale of fixed assets	912		721
Net cash used for investing activities	(24,667)		(6,746)
Cash provided by (used for) financing activities:
Payment of debt issue costs	—		(1,284)
Repayment of long-term debt	(6,712)		—
Distributions to noncontrolling interest	(800)		—
Payment of finance lease obligations	(1,215)		(1,492)
Proceeds from exercise of stock options	3,347		—
Payments related to taxes withheld on stock-based compensation	(556)		(368)
Net cash used for financing activities	(5,936)		(3,144)
Effect of exchange rate changes on cash and cash equivalents	(1,211)		(986)
Net increase (decrease) in cash and cash equivalents	58,400		18,346
Cash and cash equivalents at beginning of period	201,421		35,290
Cash and cash equivalents at end of period	$	259,821	$	53,636

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

5

CHAMPIONX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

ChampionX Corporation is a global leader in chemistry solutions and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely and efficiently around the world. Our products provide efficient functioning throughout the lifecycle of a well with a focus on the production phase of wells.

Unless the context requires otherwise, references in this report to “we,” “us,” “our,” “the Company,” or “ChampionX” mean ChampionX Corporation, together with our subsidiaries where the context requires.

On June 3, 2020, the Company and Ecolab Inc. (“Ecolab”) completed a Reverse Morris Trust transaction in which we acquired the Chemical Technologies business (“the Merger”). In association with the completion of the Merger, the Company changed its name from Apergy Corporation (“Apergy”) to ChampionX Corporation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of ChampionX have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions that we may undertake in the future, actual results may differ from our estimates. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments unless otherwise specified) necessary for a fair statement of our financial condition and results of operations as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these financial statements may not be representative of the results that may be expected for the year ending December 31, 2021.

6

NOTE 2—MERGER TRANSACTION

On June 3, 2020 we completed the acquisition of the Chemical Technologies business. To complete the acquisition, we issued 122.2 million shares of common stock, at a share price of $10.34 per share, in exchange for 100% equity ownership of Chemical Technologies.

Preliminary Purchase Price Allocation

The acquisition-date fair value of the consideration transferred consisted of the following:

(in thousands)
Equity consideration	$	1,263,931
Replacement awards attributable to pre-combination services(1)	43,964
Unfavorable supply agreement(2)	46,000
Favorable supply agreement(2)	(59,000)
Fair value of consideration transferred	$	1,294,895

_______________________

(1) Represents the fair value of the replacement equity awards to the extent services were provided by employees of Chemical Technologies prior to closing.

(2) As part of the Merger, the Company entered into a Cross Supply and Product Transfer Agreement with Ecolab in which over a period of approximately three years from the merger date, certain products will be manufactured by one party for the other. The cross selling prices in which each party will transfer their products, and include a take-or-pay element, have been set forth within this agreement and are not reflective of market terms. As a result, we recognized an intangible asset recorded at fair value for the favorable terms and a liability recorded at fair value for the unfavorable terms. The intangible asset will be amortized on a straight-line basis over a three-year period into cost of goods and services and the liability will be amortized as a component of product revenue.

As of March 31, 2021, we have substantially completed the allocation of the consideration. The primary areas in which the preliminary purchase price allocation is not yet finalized relate to filing of income tax returns that provide taxes payable and receivable from tax authorities as well as under the Tax Matters Agreement with Ecolab, deferred income taxes and residual goodwill. We will complete the purchase price allocation and valuation during the second quarter of 2021.

The following table provides the preliminary allocation of the purchase price as of the acquisition date.

(in thousands)
Cash and cash equivalents	$	57,588
Receivables	394,432
Inventories	340,000
Prepaid expenses and other current assets	63,576
Property, plant, and equipment	687,085
Identifiable intangible assets(1)	290,000
Other non-current assets	156,427
Total identifiable assets acquired	1,989,108
Accounts payable	184,028
Other current liabilities(1)	172,997
Long-term debt (2)	537,000
Deferred tax liabilities	103,956
Other liabilities(1)	98,970
Total liabilities assumed	1,096,951
Net identifiable assets acquired	892,157
Add: Negative fair value of non-controlling interests	16,052
Goodwill	386,686
Total net assets acquired	$	1,294,895

_______________________

(1) The fair value of the consideration transferred related to the favorable and unfavorable terms of the cross supply agreement has been excluded.

(2) In connection with the Merger, we assumed a term loan from Chemical Technologies, of which approximately $26.9 million has been classified as short-term representing the mandatory amortization payments due within the next twelve months. See Note 7—Debt for further information.

7

Pro forma financial information

The following unaudited pro forma results of operations have been prepared as though the Merger was completed on January 1, 2019. Pro forma amounts are based on the preliminary purchase price allocation of the acquisition and are not necessarily indicative of results that may be reported in the future. Non-recurring pro forma adjustments including acquisition-related costs directly attributable to the Merger are included within the reported pro forma revenue and net income (loss).

	Three Months Ended March 31,
(in thousands, except per share data)	2020
Revenues	$	820,695
Net income (loss) attributable to ChampionX	(734,425)

Included in the net income (loss) attributable to ChampionX on a pro forma basis were goodwill and long-lived asset impairment charges of $805.0 million during the three months ended March 31, 2020.

NOTE 3—NEW ACCOUNTING STANDARDS

All new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.

8

NOTE 4 — SEGMENT INFORMATION

Our reporting segments are:

•Production Chemical Technologies—provides oil and natural gas production and midstream markets with solutions to manage and control corrosion, oil and water separation, flow assurance, sour gas treatment and a host of water-related issues.

•Production & Automation Technologies—designs, manufactures, markets and services a full range of artificial lift equipment, end-to-end digital automation solutions, as well as other production equipment. Production & Automation Technologies’ products are sold under a collection of brands including Harbison-Fischer, Norris, Alberta Oil Tool, Oil Lift Technology, PCS Ferguson, Pro-Rod, Upco, Unbridled ESP, Norriseal-Wellmark, Quartzdyne, Spirit, Theta, Timberline and Windrock.

•Drilling Technologies—designs, manufactures and markets polycrystalline diamond cutters and bearings for use in oil and gas drill bits under the US Synthetic brand.

•Reservoir Chemical Technologies—manufactures specialty products that support well stimulation, construction (including drilling and cementing) and remediation needs in the oil and natural gas industry.

Business activities that do not meet the criteria of an operating segment have been combined into Corporate and other. Corporate and other includes (i) corporate and overhead expenses, and (ii) revenue and costs for activities that are not operating segments.

Segment revenue and segment operating profit were as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Segment revenue:
Production Chemical Technologies	$	412,371	$	—
Production & Automation Technologies	166,845		205,479
Drilling Technologies	34,994		55,955
Reservoir Chemical Technologies	29,891		—
Corporate and other (1)	40,787		—
Total revenue	$	684,888	$	261,434
Segment operating profit (loss):
Production Chemical Technologies	$	30,357	$	—
Production & Automation Technologies	5,362		(648,591)
Drilling Technologies	6,386		11,359
Reservoir Chemical Technologies	(3,228)		—
Total segment operating profit (loss)	38,877		(637,232)
Corporate and other (1)	18,087		14,190
Interest expense, net	13,971		9,039
Income (loss) before income taxes	$	6,819	$	(660,461)

_______________________

(1)    Corporate and other includes costs not directly attributable or allocated to our reporting segments such as corporate executive management and other administrative functions, and the results attributable to our noncontrolling interest. Additionally, the sales and expenses related to the Cross Supply Agreement with Ecolab are included within Corporate and other. See Note 2—Merger Transaction for further information.

9

NOTE 5—REVENUE

Our revenue is generated primarily from product sales. Service revenue is generated from providing services to our customers. These services include installation, repair and maintenance, laboratory and logistics services, chemical management services, troubleshooting, reporting, water treatment services, technical advisory assistance and other field services. Lease revenue is derived from rental income of leased production equipment. These lease arrangements generally allow customers to rent equipment on a daily basis with no stated end date. Management accounts for these arrangements as a daily renewal option beginning on the lease commencement date, with the lease term determined as the period in which it is reasonably certain the option will be exercised. As our costs are shared across the various revenue categories, cost of goods sold is not tracked separately and is not discretely identifiable.

Revenue disaggregated by geography was as follows:

	Three Months Ended March 31, 2021
(in thousands)	Production Chemical Technologies		Production & Automation Technologies		Drilling Technologies		Reservoir Chemical Technologies		Corporate		Total
United States	$	149,864	$	126,374	$	25,407	$	15,609	$	25,556	$	342,810
Canada	61,292		12,528		3,827		729		158		78,534
Middle East & Africa	58,370		10,272		716		6,062		5,583		81,003
Europe	42,608		1,983		2,499		1,389		2,257		50,736
Australia	6,395		9,576		117		54		—		16,142
Latin America	71,616		4,642		—		3,019		1,431		80,708
Asia-Pacific	10,492		1,463		1,553		1,120		5,802		20,430
Other	11,734		7		875		1,909		—		14,525
Total revenue	$	412,371	$	166,845	$	34,994	$	29,891	$	40,787	$	684,888

	Three Months Ended March 31, 2020
(in thousands)	Production Chemical Technologies		Production & Automation Technologies		Drilling Technologies		Reservoir Chemical Technologies		Corporate		Total
United States	$	—	$	154,430	$	40,940	$	—	$	—	$	195,370
Canada	—		13,124		4,828		—		—		17,952
Middle East & Africa	—		11,905		458		—		—		12,363
Europe	—		6,339		5,691		—		—		12,030
Australia	—		9,222		46		—		—		9,268
Latin America	—		7,560		22		—		—		7,582
Asia-Pacific	—		1,978		3,508		—		—		5,486
Other	—		921		462		—		—		1,383
Total revenue	$	—	$	205,479	$	55,955	$	—	$	—	$	261,434

Revenue is attributed to regions based on the location of our direct customer, which in some instances is an intermediary and not necessarily the end user.

Contract balances

Contract assets and contract liabilities from contracts with customers were as follows:

(in thousands)	March 31, 2021		December 31, 2020
Contract liabilities - current	$	16,993	$	16,668

10

NOTE 6—INTANGIBLE ASSETS

The components of our definite- and indefinite-lived intangible assets were as follows:

	March 31, 2021						December 31, 2020
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Definite-lived intangible assets:
Customer relationships	$	593,566	$	332,497	$	261,069	$	593,068	$	321,298	$	271,770
Trademarks	59,875		28,927		30,948		59,881		27,565		32,316
Patents	38,749		29,827		8,922		38,635		29,289		9,346
Unpatented technologies	133,697		24,290		109,407		133,700		19,958		113,742
Favorable supply agreements	59,000		16,118		42,882		59,000		11,308		47,692
Drawings and manuals	1,797		1,797		—		1,783		1,783		—
Other	5,398		4,951		447		5,374		4,831		543
	892,082		438,407		453,675		891,441		416,032		475,409
Indefinite-lived intangible assets:
Trademarks	3,600		—		3,600		3,600		—		3,600
Total	$	895,682	$	438,407	$	457,275	$	895,041	$	416,032	$	479,009

NOTE 7—DEBT

Long-term debt consisted of the following:

(in thousands)	March 31, 2021		December 31, 2020
2018 Credit Facility	$	—	$	—
2018 Term Loan Facility	140,000		140,000
2020 Term Loan Facility	516,863		523,575
6.375% Senior Notes due 2026	277,041		277,041
Total	933,904		940,616
Net unamortized discounts and issuance costs	(7,585)		(8,002)
Total long-term debt	$	926,319	$	932,614
Current portion of long-term debt (1)	(26,850)		(26,850)
Long-term debt, less current portion	$	899,469	$	905,764

_______________________

(1) Represents the mandatory amortization payments due within twelve months related to the 2020 Term Loan Facility.

The 2020 Term Loan Facility is subject to mandatory amortization payments of $6.7 million paid quarterly, which began on September 30, 2020, and contains customary representations and warranties, covenants, and events of default for loan facilities of this type. We were in compliance with all covenants as of March 31, 2021. The weighted average interest rate on borrowings during the period was 2.64% and 6.00% for the 2018 Term Loan Facility and 2020 Term Loan Facility, respectively.

NOTE 8—COMMITMENTS AND CONTINGENCIES

The Company is subject to various claims and contingencies related to, among other things, workers’ compensation, general liability (including product liability), automobile claims, health care claims, environmental matters, and lawsuits. We record liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. In accordance with applicable GAAP, the Company discloses a contingent liability

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even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred.

Guarantees and Indemnifications

We have provided indemnities in connection with sales of certain businesses and assets, including representations and warranties, covenants and related indemnities for environmental health and safety, tax, and employment matters. We do not have any material liabilities recorded for these indemnifications and are not aware of any claims or other information that would give rise to material payments under such indemnities.

In connection with the Company’s separation from Dover Corporation (“Dover”) in 2018, we entered into agreements with Dover that govern the treatment between Dover and us for certain indemnification matters and litigation responsibility. Generally, the separation and distribution agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and to place financial responsibility for the obligations and liabilities of Dover’s business with Dover. The separation and distribution agreement also establishes procedures for handling claims subject to indemnification and related matters. In addition, pursuant to the tax matters agreement, we have agreed to indemnify Dover and its affiliates against any and all tax-related liabilities incurred by them relating to the separation and/or certain related transactions to the extent caused by an acquisition of ChampionX stock or assets or by any other action or failure to act undertaken by ChampionX or its affiliates.

In connection with the Merger, we entered into agreements with Ecolab that govern the treatment between Ecolab and us for certain indemnification matters and litigation responsibility. Generally, the separation and distribution agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and to place financial responsibility for the obligations and liabilities of Ecolab’s business with Ecolab. The separation and distribution agreement also establishes procedures for handling claims subject to indemnification and related matters. In addition, pursuant to the Tax Matters Agreement, we have agreed to indemnify Ecolab and its affiliates for (i) all taxes for which ChampionX is responsible as defined within the Tax Matters Agreement, (ii) all taxes resulting from a breach by ChampionX of any of its representations (but only to the extent relating to a breach occurring after the consummation of the Merger) or any of its covenants under the Tax Matters Agreement, (iii) all taxes resulting from an acquisition after the Merger of any of the stock or assets of ChampionX, other than as a result of the Merger or a repayment of the ChampionX Credit Facilities and (iv) reasonable costs and expenses (including reasonable attorneys’ fees and expenses) related to the foregoing.

As of March 31, 2021 and December 31, 2020, we had $88.0 million and $88.8 million, respectively, of outstanding letters of credit, surety bonds and guarantees which expire at various dates through 2027. These financial instruments are primarily maintained as security for insurance, warranty and other performance obligations. Generally, we would only be liable for the amount of these letters of credit and surety bonds in the event of default in the performance of our obligations, the probability of which we believe is remote.

Litigation and Environmental Matters

We are involved in various pending or potential lawsuits, claims and environmental actions that have arisen in the ordinary course of our business. These proceedings primarily involve claims by private parties alleging injury arising out of use of our products, patent infringement, employment matters, and commercial disputes, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and either operating or owned facilities. We review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and accrued to date, and the availability and extent of insurance coverage. We accrue a liability for legal matters that are probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. We are unable to predict the ultimate outcome of these actions because of the inherent uncertainty of litigation and unfavorable rulings or developments could occur, and there can be no certainty that the Company may not ultimately incur changes in excess of recorded liabilities. However, we believe the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

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Environmental Matters

The Company is currently participating in environmental assessments and remediation at approximately 11 locations, the majority of which are in the U.S., and environmental liabilities have been accrued reflecting our best estimate of future costs. Potential insurance reimbursements are not anticipated in the Company’s accruals for environmental liabilities. As of March 31, 2021 environmental liability accruals related to these locations were $7.7 million.

Prior to the separation from Dover in 2018, groundwater contamination was discovered at the Norris Sucker Rods plant site located in Tulsa, Oklahoma ("Norris"). Initial remedial efforts were undertaken at the time of discovery of the contamination and Norris has since coordinated monitoring and remediation with the Oklahoma Department of Environmental Quality ("ODEQ"). As part of the ongoing long-term remediation process, Norris contracted an engineering and consulting firm to develop a range of possible additional remedial alternatives in order to accelerate the remediation process and associated cost estimates for the work. In October 2019, we received the firm’s preliminary remedial alternatives for consideration. We have submitted our long-term remediation plan and it was approved by ODEQ. We are now in discussion with ODEQ to finalize a consent order. Because we have not yet finalized the consent order for further remediation at the site and discussions with ODEQ remain ongoing, we cannot fully anticipate the timing, outcome or possible impact of such further remedial activities, financial or otherwise. As a result of the recommendations in the report, we accrued liabilities for these remediation efforts of approximately $2.0 million as of December 31, 2020. Liabilities could increase in the future at such time as we ultimately reach agreement with ODEQ on our remediation plan and such liabilities become probable and can be reasonably estimated, however, there have been no changes to our estimated liability as of March 31, 2021.

Matters Related to Deepwater Horizon Incident Response

On April 22, 2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico after an explosion and fire, resulting in a massive oil spill. Certain entities that are now subsidiaries of ChampionX as a result of the Merger (collectively the “COREXIT Defendants”) supplied COREXIT™ 9500, an oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule, which was used in the response to the spill. In connection with the provision of COREXIT™, the COREXIT Defendants were named in several lawsuits. Cases arising out of the Deepwater Horizon accident were administratively transferred and consolidated for pre-trial purposes under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, Case No. 10-md-02179 in the United States District Court in the Eastern District of Louisiana (E.D. La.) (“MDL 2179”). Claims related to the response to the oil spill were consolidated in a master complaint captioned the “B3 Master Complaint.” In 2011, Transocean Deepwater Drilling, Inc. and its affiliates (the “Transocean Entities”) named the COREXIT Defendants and other unaffiliated companies as first party defendants (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al, MDL No. 2179, Civil Action 10-2771). In April and May 2011, the Transocean Entities, Cameron International Corporation, Halliburton Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P. and Weatherford International, Inc. (collectively, the “Cross Claimants”) filed cross claims in MDL 2179 against the COREXIT Defendants and other unaffiliated cross defendants. In April and June 2011, in support of its defense of the claims against it, the COREXIT Defendants filed counterclaims against the Cross Claimants. On May 18, 2012, the COREXIT Defendants filed a motion for summary judgment as to the claims in the B3 Master Complaint. On November 28, 2012, the Court granted the COREXIT Defendants’ motion and dismissed with prejudice the claims in the B3 Master Complaint asserted against the COREXIT Defendants. There currently remain three “B3” cases that had asserted claims against Nalco and that remain pending against other defendants. Because the Court’s decision was not a “final judgment” for purposes of appeal with respect to those claims, under Federal Rule of Appellate Procedure 4(a), plaintiffs will have 30 days after entry of final judgment in each case to appeal the Court’s summary judgment decision.

The Company believes the claims asserted against the COREXIT Defendants are without merit and intends to defend these lawsuits vigorously. The Company also believes that it has rights to contribution and/or indemnification (including legal expenses) from third parties. However, we cannot predict the outcome of these lawsuits, the involvement it might have in these matters in the future, or the potential for future litigation.

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NOTE 9—RESTRUCTURING AND OTHER RELATED CHARGES

During 2021, we approved a restructuring plan (the 2021 Plan) related to the consolidation of product lines and associated facility closures and workforce reductions. As a result, we recognized charges of $4.3 million during the three months ended March 31, 2021 consisting of employee severance and related benefits. During the three months ended March 31, 2020, we recorded restructuring and other charges of $2.8 million.

The following table presents the restructuring and other related charges by segment as classified in our condensed consolidated statements of income (loss).

	Three Months Ended March 31,
(in thousands)	2021		2020
Segment restructuring charges:
Production Chemical Technologies	$	688	$	—
Production & Automation Technologies	3,524		671
Drilling Technologies	—		2,095
Reservoir Chemical Technologies	44		—
Total	$	4,256	$	2,766
Statements of Income (Loss) classification:
Cost of goods and services	$	3,484	$	2,039
Selling, general and administrative expense	772		727
Total	$	4,256	$	2,766

Our liability balance for restructuring and other related charges at March 31, 2021, reflects employee severance and related benefits initiated during the period as well as liabilities assumed in the Merger. Additional programs may be initiated during 2021 with related restructuring charges.

The following table details our restructuring accrual activities during the three months ended March 31, 2021:

(in thousands)	Restructuring Accrual Balance
December 31, 2020	$	2,951
Restructuring charges and asset write downs	2,448
Payments	(2,409)
Other, including foreign currency translation	(6)
March 31, 2021	$	2,984

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NOTE 10—EQUITY AND CASH INCENTIVE PROGRAMS

Stock-based compensation expense is reported within selling, general and administrative expense in the condensed consolidated statements of income (loss). Stock-based compensation expense relating to all stock-based incentive plans was as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Stock-based compensation expense	$	6,442	$	2,429
Tax benefit	(1,353)		(599)
Stock-based compensation expense, net of tax	$	5,089	$	1,830

A summary of activity relating to our share-based awards for the three months ended March 31, 2021, was as follows:

(in shares)	Stock-Settled Appreciation Rights	Performance Share Awards	Restricted Stock Units	Non-Qualified Stock Options
Outstanding at January 1, 2021	415,331	278,763	2,669,779	7,175,040
Granted	—	333,037	838,399	—
Forfeited	(2,134)	—	(61,057)	(29,981)
Exercised / vested	—	—	(94,680)	(577,276)
Outstanding at March 31, 2021	413,197	611,800	3,352,441	6,567,783

NOTE 11 — ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss—Accumulated other comprehensive loss consisted of the following:

(in thousands)	Foreign Currency Translation		Defined Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Accumulated Other Comprehensive Loss
December 31, 2019	$	(35,210)	$	(8,827)	$	—	$	(44,037)
Other comprehensive income (loss) before reclassifications, net of tax	(11,052)		—		—		(11,052)
Reclassification adjustment for net losses included in net income, net of tax	—		99		—		99
Other comprehensive income, net of tax	(11,052)		99		—		(10,953)
March 31, 2020	$	(46,262)	$	(8,728)	$	—	$	(54,990)

(in thousands)	Foreign Currency Translation		Defined Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Accumulated Other Comprehensive Loss
December 31, 2020	$	(14,965)	$	(13,470)	$	(2,320)	$	(30,755)
Other comprehensive loss before reclassifications, net of tax	3,213		—		413		3,626
Reclassification adjustment for net losses included in net income, net of tax	—		167		—		167
Other comprehensive income (loss), net of tax	3,213		167		413		3,793
March 31, 2021	$	(11,752)	$	(13,303)	$	(1,907)	$	(26,962)

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Reclassifications from accumulated other comprehensive loss—Reclassification adjustments from accumulated other comprehensive loss to net income (loss) related to defined pension and other post-retirement benefits consisted of the following:

	Three Months Ended March 31,				Affected line items on the condensed consolidated statements of income (loss)
(in thousands)	2021		2020
Pensions and other post-retirement benefits:
Amortization of actuarial loss and other	$	214	$	132	Other (income) expense, net
Total before tax	214		132		Income (loss) before income taxes
Tax benefit	(47)		(33)		Provision for (benefit from) income taxes
Net of tax	$	167	$	99	Net income (loss)

NOTE 12 — EARNINGS PER SHARE

A reconciliation of the number of shares used for the basic and diluted earnings (loss) per share calculation was as follows:

	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
Net income (loss) attributable to ChampionX	$	5,772	$	(633,728)
Weighted-average number of shares outstanding	200,580		77,477
Dilutive effect of stock-based compensation	6,691		—
Total shares and dilutive securities	207,271		77,477
Basic earnings (loss) per share attributable to ChampionX	$	0.03	$	(8.18)
Diluted earnings (loss) per share attributable to ChampionX	$	0.03	$	(8.18)

For all periods presented, the computation of diluted earnings (losses) per share excludes awards with an anti-dilutive impact. For the three months ended March 31, 2021, the diluted shares include the dilutive impact of equity awards except for approximately 0.4 million shares that were excluded because their inclusion would be anti-dilutive. For the three months ended March 31, 2020, we excluded all outstanding equity awards from the calculation of weighted-average shares outstanding, because their inclusion would be anti-dilutive as we were in a loss position.

NOTE 13—FAIR VALUE MEASUREMENTS

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when available. The hierarchy is broken down into three levels:

Level 1- Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2- Inputs include observable inputs other than quoted prices in active markets.

Level 3- Inputs are unobservable inputs for which there is little or no market data available.

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The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis are as follows:

	March 31, 2021		December 31, 2020
(in thousands)	Carrying Amount
Assets
Foreign currency forward contracts	$	1,863	$	4,576
Liabilities
Foreign currency forward contracts	$	4,839	$	6,561

The carrying value of foreign currency forward contracts is at fair value, which is determined based on foreign currency exchange rates as of the balance sheet date and is classified within Level 2. For purposes of fair value disclosure above, derivative values are presented gross. See Note 14—Derivatives And Hedging Transactions for further discussion of gross versus net presentation of the Company’s derivatives.

The carrying amounts of cash and cash equivalents, trade receivables, accounts payable, as well as amounts included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair value due to their short-term nature.

The fair value of our senior notes is based on Level 1 quoted market prices. The fair value of our term loan facilities are based on Level 2 quoted market prices for the same or similar debt instruments. The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were:

	March 31, 2021				December 31, 2020
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2018 Term Loan Facility	$	140,000	$	138,950	$	140,000	$	137,200
2020 Term Loan Facility	$	516,863	$	525,908	$	523,575	$	530,120
6.375% Senior Notes due 2026	$	277,041	$	291,239	$	277,041	$	277,054

NOTE 14—DERIVATIVES AND HEDGING TRANSACTIONS

The Company uses foreign currency forward contracts to manage risks associated with foreign currency exchange rates. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. Derivative contracts are recorded as assets and liabilities on the balance sheet at fair value. We evaluate hedge effectiveness at contract inception and thereafter on a quarterly basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Changes in fair value attributable to changes in spot exchange rates for derivative contracts that have been designated as cash flow hedges are recognized in accumulated other comprehensive income (loss) (“AOCI”) and reclassified into earnings in the same period the hedged transaction affects earnings and are presented in the same income statement line as the earnings effect of the hedged item. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships.

The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts. We monitor our exposure to credit risk by using major global banks and financial institutions as counterparties and monitoring their financial condition and credit profile. The Company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the Company’s derivative balance is not considered necessary.

Derivative Positions Summary

Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to settle with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented in

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the following table, no cash collateral had been received or pledged related to the underlying derivatives. We have elected to present our derivative balances on a gross basis on the condensed consolidated balance sheet.

The following table summarizes the gross fair value of the Company’s outstanding derivatives and the lines in which they are presented on the condensed consolidated balance sheet.

	Derivative Assets				Derivative Liabilities
(in thousands)	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Prepaid expenses and other current assets	$	1,863	$	4,576	$	—	$	—
Accrued expenses and other current liabilities	—		—		4,839		$	6,561
	$	1,863	$	4,576	$	4,839	$	6,561

The following table summarizes the notional values of the Company’s outstanding derivatives:

(in thousands)	March 31, 2021		December 31, 2020
Notional value of foreign currency forward contracts	$	534,216	$	483,377

Cash Flow Hedges

The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, primarily related to inventory purchases. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts attributable to changes in spot exchange rates are recorded in AOCI until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the condensed consolidated statements of income (loss) as the underlying exposure being hedged. The forward points are marked-to-market monthly and recognized in the same line item in the condensed consolidated statement of income (loss) as the underlying exposure being hedged.

Derivatives Not Designated as Hedging Instruments

The Company also uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities, primarily receivables and payables, which are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

Effect of Derivative Instruments on Income

The loss of all derivative instruments recognized is summarized below:

	Three Months Ended March 31,
(in thousands)	2021		2020
Loss reclassified from AOCI to income on cash flow hedges:
Cost of goods and services	$	754	$	—
Loss on derivatives not designated as hedging instruments:
Other (income) expense, net	667		—
Total loss of derivative instruments	$	1,421	$	—

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NOTE 15—INVENTORIES

Inventories consisted of the following:

(in thousands)	March 31, 2021		December 31, 2020
Raw materials	$	132,447	$	137,038
Work in progress	11,956		9,509
Finished goods	349,994		323,144
	494,397		469,691
Inventory reserve	(29,813)		(24,769)
LIFO adjustments (1)	(29,312)		(14,810)
Inventories, net	$	435,272	$	430,112

_______________________

(1) Represents the amount by which LIFO inventories exceeded their carrying value.

NOTE 16—CASH FLOW INFORMATION

Lease program

Our ESP leased asset program is reported in our Production & Automation Technologies segment. At the time of purchase, assets are recorded to inventory and are transferred to property, plant, and equipment when a customer contracts for an asset under our lease program. During the three months ended March 31, 2021 and March 31, 2020, we transferred $8.5 million and $7.2 million, respectively, of inventory into property, plant, and equipment as a result of assets entering our leased asset program.

Expenditures for assets that are placed into our leased asset program expected to be recovered through sale are reported in leased assets in the operating section of our condensed consolidated statements of cash flows. All other capitalizable expenditures for assets that are placed into our leased asset program are classified as capital expenditures in the investing section of our condensed consolidated statements of cash flows.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis is our analysis of our financial performance, financial condition and significant trends that may affect our future performance. It should be read in conjunction with the condensed consolidated financial statements, and notes thereto, included elsewhere in this report. It contains forward-looking statements including, without limitation, statements relating to ChampionX’s plans, strategies, objectives, expectations and intentions that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the words “believe,” “anticipate,” “expect,” “may,” “intend,” “foresee,” “guidance,” “estimate,” “potential,” “outlook,” “plan,” “should,” “would,” “could,” “target,” “forecast” and similar expressions, including the negative thereof. We undertake no obligation to publicly update, revise or correct any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the disclosures under the heading “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS.”

In November 2020, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, to modernize and simplify Management’s Discussion and Analysis and certain financial disclosure requirements. The final rule became effective on February 10, 2021 and must be applied in a registrant’s first fiscal year ending on or after August 9, 2021, however, under applicable SEC rules, early adoption is permitted following the effective date. We have elected to early adopt these amendments, including the sequential discussion of results within this section. Given the cyclical nature of our industry over the past decade combined with the short-cycle nature of our North American business, we believe this sequential discussion provides a more relevant analysis of our business results.

EXECUTIVE OVERVIEW AND BUSINESS OUTLOOK

We are a global leader in chemistry solutions and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely and efficiently around the world. Our products provide efficient and safe operations throughout the lifecycle of a well with a focus on the production phase of wells. Our business is organized into four reportable segments: Production Chemical Technologies, Production & Automation Technologies, Drilling Technologies, and Reservoir Chemical Technologies.

On June 3, 2020, the Company and Ecolab Inc. completed a Reverse Morris Trust transaction in which we acquired the Chemical Technologies business. In association with the completion of the Merger, the Company has changed its name from Apergy Corporation to ChampionX Corporation and its ticker symbol to “CHX”. See Note 2—Merger to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

Business Environment

We focus on economic- and industry-specific drivers and key risk factors affecting our business segments as we formulate our strategic plans and make decisions related to allocating capital and human resources. Our business segments provide a broad range of technologies and products for the oil and gas drilling and production industry and, as a result, are substantially dependent upon activity levels in the oil and gas industry. Demand for our products, technologies and services is impacted by overall global demand for oil and gas, ongoing depletion rates of existing wells which produce oil and gas, and our customers’ willingness to invest in the development and ongoing production of oil and gas resources. Our customers determine their operating and capital budgets based on current and future crude oil and natural gas prices, U.S. and worldwide rig count and U.S. well completions, among other factors. Crude oil and natural gas prices are impacted by supply and demand, which are influenced by geopolitical, macroeconomic, and local events, and have historically been subject to substantial volatility and cyclicality. Rig count, footage drilled, and exploration and production (E&P) investment by oil and gas operators have often been used as leading indicators for the level of drilling and development activity in the oil and gas sector.

Market Conditions and Outlook

During 2020, certain unprecedented events such as the novel coronavirus (“COVID-19”) pandemic and the resulting oversupply of crude oil caused the rapid decline of oil prices. In response to the significant reduction in oil prices, customer spending for exploration and production (E&P) activity deteriorated at a rapid pace due to reduced drilling activities, lower budgeted capital spending and options to reduce operating expenditures via cost cutting initiatives. Crude oil prices have recently improved and

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now are at average pricing levels experienced in 2019. Average rig counts, although continuing to increase, are still well below pre-pandemic levels. Although we are seeing positive trends in oil demand and prices, we anticipate some near-term raw material cost pressures as global economic activity levels continue to normalize versus the pandemic-induced levels of 2020.

In the first quarter of 2021, we experienced a severe winter storm, which disrupted our operations due to raw materials supply chain disruptions as facility closures. Although we anticipate further moderate short-term raw materials cost inflation as a result of the severe winter storm, we expect the remainder of 2021 to show positive momentum in our shorter-cycle North American businesses as well as a seasonal uptick in our international operations.

CRITICAL ACCOUNTING ESTIMATES

Refer to our “Critical Accounting Estimates” included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of our critical accounting estimates.

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CONSOLIDATED RESULTS OF OPERATIONS

	Three Months Ended
	March 31,		December 31,		March 31,		Variance
(dollars in thousands)	2021		2020		2020		Sequential		YoY
Revenue	$	684,888	$	706,122	$	261,434	$	(21,234)	$	423,454
Cost of goods and services	522,556		539,979		179,095		(17,423)		343,461
Gross profit	162,332		166,143		82,339		(3,811)		79,993
Selling, general and administrative expense	143,478		132,811		78,143		10,667		65,335
Goodwill impairment	—		—		616,271		—		(616,271)
Long-lived asset impairment	—		—		40,980		—		(40,980)
Interest expense, net	13,971		15,495		9,039		(1,524)		4,932
Other (income) expense, net	(1,936)		(1,170)		(1,633)		(766)		(303)
Income (loss) before income taxes	6,819		19,007		(660,461)		(12,188)		667,280
Provision for (benefit from) income taxes	2,782		11,526		(27,006)		(8,744)		29,788
Net income (loss)	4,037		7,481		(633,455)		(3,444)		637,492
Net income (loss) attributable to noncontrolling interest	(1,735)		124		273		(1,859)		(2,008)
Net income (loss) attributable to ChampionX	$	5,772	$	7,357	$	(633,728)	$	(1,585)	$	639,500

Comparison of the three months ended March 31, 2021 and December 31, 2020

Revenue. Revenue decreased $21.2 million, or 3%, sequentially primarily as a result of decreased revenue for our Chemical Technologies business. During the first quarter of 2021, our Chemical Technologies business experienced a decline in revenue primarily within North America due to the severe winter storm. The severe storm resulted in the shutdown of numerous petrochemical facilities, including certain ChampionX facilities and plants and the associated disruption of the Gulf Coast petrochemical supply chain. This decrease was partially offset by increases in our Production & Automation Technologies and Drilling Technologies segments as a result of an increase in U.S. land-based rig count and associated increase in customer spending on drilling activities, which positively impacted sales volumes.

Gross profit. Gross profit was relatively flat sequentially on a decline in revenue primarily due to the correlation between a decrease in cost of materials within our Chemical Technologies business associated with the lower volumes noted above.

Selling, general and administrative expense. Selling, general and administrative expense increased $10.7 million, or 8%, sequentially primarily due to transaction and integration related costs as well as the restoration of salaries from the temporary employee salary and benefit reduction instituted during 2020 to address the COVID-19 pandemic impact on commodity prices.

Provision for (benefit from) income taxes. Our provision for (benefit from) income taxes reflected effective tax rates of 40.8% and 60.6%, in the first quarter of 2021 and the fourth quarter of 2020, respectively. The effective tax rate for the first quarter of 2021 was impacted by the effects of valuation allowances in loss-making jurisdictions and withholding taxes.

Comparison of the three months ended March 31, 2021 and 2020

Revenue. Revenue increased $423.5 million in the first quarter of 2021 compared to prior year as a result of $483.5 million of incremental revenues from the acquired Chemicals Technologies business. Offsetting these incremental revenues was a $38.6 million decrease in revenue in our Production & Automation Technologies segment driven by a decline in customer spending for drilling, completions and other activities in North America and internationally, which affected our artificial lift, digital products, and other production equipment offerings. Additionally, there was a $21.0 million decrease in revenue in our Drilling Technologies segment primarily due to a decline in U.S. land-based rig count and drilling activity.

Gross profit. Gross profit increased $80.0 million, or 97%, in the first quarter of 2021 compared to the prior year mainly due to $103.6 million of gross profit generated by the acquired Chemicals Technologies business, offset by lower sales volume at

22

both Production & Automation Technologies and Drilling Technologies segments, and an increase in depreciation expense of $20.1 million primarily due to depreciation expense incurred on assets acquired related to the Merger.

Selling, general and administrative expense. Selling, general and administrative expense increased $65.3 million, or 84%, in the first quarter of 2021 compared to the prior year primarily due to $81.3 million of selling, general and administrative expense generated by the acquired Chemicals Technologies business. The increase in selling, general and administrative expense was partially offset by cost savings resulting from restructuring actions taken during 2020.

Interest expense, net. Interest expense, net increased $4.9 million in the first quarter of 2021 compared to the prior year primarily due to incremental interest expense related to the term loan assumed as part of the Merger.

Provision for (benefit from) income taxes. Our provision for (benefit from) income taxes reflected effective tax rates of 40.8% and 4.1%, in the first quarter of 2021 and 2020, respectively. The effective tax rate for the first quarter of 2021 was impacted by the effects of valuation allowances in loss-making jurisdictions and withholding taxes. Additionally the effective tax rate for the first quarter of 2020 was impacted by the tax effects of impairment of non-taxable goodwill of $560.1 million.

SEGMENT RESULTS OF OPERATIONS

	Three Months Ended
	March 31,		December 31,		March 31,		Variance
(dollars in thousands)	2021		2020		2020		Sequential		YoY
Segment revenue:
Production Chemical Technologies	$	412,371	$	446,652	$	—	$	(34,281)	$	412,371
Production & Automation Technologies	166,845		158,777		205,479		8,068		(38,634)
Drilling Technologies	34,994		23,568		55,955		11,426		(20,961)
Reservoir Chemical Technologies	29,891		30,937		—		(1,046)		29,891
Corporate	40,787		46,188		—		(5,401)		40,787
Total revenue	$	684,888	$	706,122	$	261,434	$	(21,234)	$	423,454
Segment operating profit (loss):
Production Chemical Technologies	$	30,357	$	49,200	$	—	$	(18,843)	$	30,357
Production & Automation Technologies	5,362		(4,724)		(648,591)		10,086		653,953
Drilling Technologies	6,386		153		11,359		6,233		(4,973)
Reservoir Chemical Technologies	(3,228)		432		—		(3,660)		(3,228)
Total segment operating profit (loss)	38,877		45,061		(637,232)		(6,184)		676,109
Corporate expense and other	18,087		10,559		14,190		7,528		3,897
Interest expense, net	13,971		15,495		9,039		(1,524)		4,932
Income (loss) before income taxes	$	6,819	$	19,007	$	(660,461)	$	(12,188)	$	667,280

Production Chemical Technologies

Revenue. Production Chemical Technologies revenue decreased $34.3 million, or 8% sequentially, mainly due to the seasonal decline within our international operations as well as a decline in volumes in North America due to the impacts of the severe winter storm in the first quarter of 2021. This was partially offset by increased global pricing to mitigate the increase in costs for raw materials and inflationary factors.

Operating profit. Production Chemical Technologies operating profit decreased $18.8 million in the first quarter of 2021 compared to the prior quarter primarily due to lower revenue noted above along with incremental costs to repair and start-up certain ChampionX facilities subsequent to the winter storm.

23

Production & Automation Technologies

Revenue. Production & Automation Technologies revenue increased $8.1 million, or 5%, as compared to the prior quarter, primarily due to an increase in customer spending as a result of improving market conditions during the first quarter of 2021. The increase in customer spending led to higher volumes across our product offerings in North America.

Revenue decreased $38.6 million, or 19%, as compared to the prior year, primarily due to the impacts of the COVID-19 pandemic and related oil price declines and the associated impacts on customer spending. During the second half of 2020 industry spending and activity have improved, but have not fully recovered as of the first quarter of 2021. The decline in customer spending led to lower volumes and associated lower revenue in our artificial lift, digital products and other production equipment offerings in North America and international markets.

Operating profit. Production & Automation Technologies operating profit increased $10.1 million in the first quarter of 2021 compared to the prior quarter primarily due to higher sales volume as noted above.

Operating profit increased $654.0 million in the first quarter of 2021 compared to the prior year primarily due to goodwill and long-lived asset impairment charges of $657.3 million recognized during the three months ended March 31, 2020. Absent the impairment charges, operating profit was relatively unchanged amid a decline in revenue primarily due to significant cost reduction initiatives instituted to address COVID-19 related oil price impacts.

Drilling Technologies

Revenue. Drilling Technologies revenue increased $11.4 million, or 48%, in the first quarter of 2021 compared to the prior quarter primarily due to an increase in U.S. land-based rig count and associated increase in customer spending on drilling activities, which positively impacted sales volumes of our diamond cutters and diamond bearings products.

Revenue decreased $21.0 million, or 37%, in the first quarter of 2021 compared to the prior year primarily due to a steep decline in U.S. land-based rig count throughout 2020 as a result of the pandemic. This resulted in a decline in customer spending on drilling activities, which negatively impacted sales volumes of our diamond cutters and diamond bearings products. Although we are experiencing an increase in rig counts sequentially, they have not reached pre-pandemic levels.

Operating profit. Drilling Technologies operating profit increased $6.2 million in the first quarter of 2021 compared to the prior quarter primarily due to increased volumes.

Operating profit decreased $5.0 million in the first quarter of 2021 compared to the prior year period due to lower revenue which was offset by cost savings from restructuring actions as well as other cost reduction efforts taken during 2020.

Reservoir Chemical Technologies

Revenue. Reservoir Chemical Technologies revenue decreased $1.0 million, or 3% sequentially mainly due to a decline in revenue within North America due to the severe winter storm in the first quarter of 2021.

Operating profit. Reservoir Chemical Technologies operating loss was $3.2 million in the first quarter of 2021 compared to operating profit of $0.4 million in the fourth quarter of 2020, a decrease of $3.7 million due to lower revenue.

CAPITAL RESOURCES AND LIQUIDITY

Overview

Our primary source of cash is from operating activities. We have historically generated, and expect to continue to generate, positive cash flow from operations. Cash generated from operations is generally allocated to working capital requirements, investments to support profitable revenue growth and maintain our facilities and systems, acquisitions that create value through add-on capabilities that broaden our existing businesses and deliver our growth strategy, as well as debt repayments to reduce our leverage. On April 27, 2021, we provided notice to the holders of our 6.375% Senior Notes due 2026 (the “Notes”) that we are redeeming $55.0 million in principal amount of the Notes on May 7, 2021 at 104.781%, according to the terms of the Notes.

24

At March 31, 2021, we had cash and cash equivalents of $259.8 million compared to $201.4 million at December 31, 2020, primary for working capital and operational purposes. At March 31, 2021, we had total liquidity of $610.5 million, comprised of $259.8 million of cash and $350.7 million of available capacity on our revolver.

At March 31, 2021, we had a long-term debt balance of $899.5 million, net of the current portion of long-term debt of $26.9 million, primarily consisting of our term loan due 2027 with a principal amount of $516.9 million, our senior notes due in 2026 with a principal amount of $277.0 million, and our term loan due in 2025 with a principal amount of $140.0 million. We also have access to a revolving credit facility which expires in May of 2023, which had an unused capacity of $350.7 million at March 31, 2021.

Outlook

We expect to generate cash to support liquidity and business requirements through operations and, if necessary, through our revolving credit facility. Volatility in credit, equity and commodity markets can create uncertainty for our businesses. However, the Company believes, based on our current financial condition and current expectations of future market conditions, that we will meet our short- and long-term needs with a combination of cash on hand, cash generated from operations, our revolving credit facility and access to capital markets.

In 2021, we expect to fund our capital expenditures and reduce outstanding debt through earnings and working capital improvements. We project capital expenditures of 3.0% to 3.5% of revenue inclusive of capital investments for our electric submersible pump leased assets.

Information related to guarantees is incorporated herein by reference from Note 8—Commitments And Contingencies to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Cash Flows

	Three Months Ended March 31,
(in thousands)	2021		2020
Cash provided by operating activities	$	90,214	$	29,222
Cash used in investing activities	(24,667)		(6,746)
Cash used in financing activities	(5,936)		(3,144)
Effect of exchange rate changes on cash and cash equivalents	(1,211)		(986)
Net increase (decrease) in cash and cash equivalents	$	58,400	$	18,346

Operating Activities

Cash provided by operating activities during the three months ended March 31, 2021 increased $61.0 million compared to 2020. The increase in cash provided by operating activities was primarily driven by increases from changes in our operating assets and liabilities in 2021 as compared to 2020, primarily due to an increase in cash received from the collection of trade receivables, a reduction in our cash outflows for inventory procurement and on leased assets. Cash provided by changes in working capital items was $14.0 million during the three months ended March 31, 2021 compared to cash used of $1.9 million during 2020.

Expenditures for assets that are placed into our lease asset program expected to be recovered through sale are reported in leased assets in the operating section of our condensed consolidated statements of cash flows.  All other capitalizable expenditures for assets that are placed into our lease asset program are classified as capital expenditures in the investing section of our condensed consolidated statements of cash flows.

Investing Activities

Cash used in investing activities was $24.7 million for the three months ended March 31, 2021, and was primarily comprised of capital expenditures of $25.6 million, partially offset by $0.9 million of cash proceeds from the sale of fixed assets.

Cash used in investing activities was $6.7 million for the three months ended March 31, 2020, and was primarily comprised of capital expenditures of $7.5 million, partially offset by $0.7 million of cash proceeds from the sale of fixed assets.

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Financing Activities

Cash used in financing activities of $5.9 million for the three months ended March 31, 2021, was primarily the result of repayments totaling $6.7 million on our Term Loan Facilities, $1.2 million of payments of finance lease obligations, and a distribution of $0.8 million to one of our non-controlling interests. This was partially offset by $3.3 million in cash proceeds from the exercise of stock options.

Cash used in financing activities of $3.1 million for the three months ended March 31, 2020, was primarily the result of $1.3 million in debt issue costs related to the amendment of the credit agreement and payments totaling $1.5 million for finance lease obligations.

Revolving Credit Facility

A summary of our revolving credit facility at March 31, 2021, was as follows:

(in millions) Description	Amount		Debt Outstanding		Letters of Credit		Unused Capacity		Maturity
Five-year revolving credit facility	$	400.0	$	—	$	49.3	$	350.7	May 2023

Additionally, we have a letter of credit outside of the revolving credit facility of approximately $2.2 million. As of March 31, 2021, we were in compliance with all restrictive covenants under our revolving credit facility.

Pursuant to Section 15(d) of the Securities Exchange Act of 1934, the obligation to file periodic financial information of the wholly owned subsidiaries of the Company that guarantee the Senior Notes was automatically suspended on January 1, 2021 when the Senior Notes were held by fewer than 300 persons.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 3—New Accounting Standards to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We may be exposed to certain market risks arising from the use of financial instruments in the ordinary course of business. For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2020. Our exposure to market risk has not materially changed since December 31, 2020.

ITEM 4. CONTROLS AND PROCEDURES

With the participation of management, our principal executive officer and principal financial officer carried out an evaluation, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2021.

There were no changes in internal control over financial reporting identified in the evaluation for the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in various pending or potential legal actions in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions because of the inherent uncertainty of litigation. However, management believes the most probable, ultimate resolution of these matters will not have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows. See Note 8—Commitments And Contingencies to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes or updates to our risk factors that were previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)None.

(b)None.

(c)None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Iran Threat Reduction and Syria Human Rights Act of 2012

Under the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the Securities Exchange Act of 1934, the Company is required to disclose in its periodic reports if it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with entities or individuals designated pursuant to certain Executive Orders. Disclosure is required even where the activities are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and even if the activities are not covered or prohibited by U.S. law.

As authorized by the U.S. Treasury’s Office of Foreign Assets Control (OFAC), a non-U.S. subsidiary of the Company which is part of Chemical Technologies completed sales of products used for process and water treatment applications in upstream oil and gas production related to the operation of and production from the Rhum gas field off the Scottish coast (Rhum) totaling $138,000 during the period from January 1, 2021 to March 31, 2021. The net profit before taxes associated with these sales for each period were nominal. Rhum is jointly owned by Serica Energy plc and Iranian Oil Company (U.K.) Limited. Our non-U.S. subsidiary intends to continue the Rhum-related activities, consistent with a specific license obtained from OFAC by its customers, and such activities may require additional disclosure pursuant to the above mentioned statute.

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ITEM 6. EXHIBITS

Exhibit No.	Exhibit Description
10.1+	Offer Letter, dated January 15, 2021 by and between the Company and Kenneth M. Fisher (incorporated by reference to Exhibit 10.1 to ChampionX’s Current Report on Form 8-K filed January 21, 2021)
10.2+	Release and Separation Agreement, dated January 19, 2021 by and between the Company and Jay A. Nutt (incorporated by reference to Exhibit 10.2 to ChampionX’s Current Report on Form 8-K filed January 21, 2021)
10.3+	Transition Letter, dated January 15, 2021 by and between the Company and Jay A. Nutt (incorporated by reference to Exhibit 10.3 to ChampionX’s Current Report on Form 8-K filed January 21, 2021)
22.1	List of Issuer and Subsidiary Guarantor of Guaranteed Securities (incorporated by reference to Exhibit 22.1 to ChampionX’s Form 10-Q for the quarterly period ended June 30, 2020 filed August 7, 2020)
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1**	Certification of Chief Executive Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
32.2**	Certification of Chief Financial Officer Under Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith
** Furnished herewith
† Denotes management contract or compensatory plan or arrangement

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CHAMPIONX CORPORATION
(Registrant)
/s/ ANTOINE MARCOS
Antoine Marcos
Vice President, Corporate Controller and Chief Accounting Officer
(Principal Accounting Officer and a Duly Authorized Officer)
Date:	April 29, 2021

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Sivasankaran Somasundaram, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of ChampionX Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 29, 2021	/s/ SIVASANKARAN SOMASUNDARAM
		Sivasankaran Somasundaram
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Kenneth M. Fisher, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of ChampionX Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 29, 2021	/s/ KENNETH M. FISHER
		Kenneth M. Fisher
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

UNDER SECTION 906 OF THE SARBANES-OXLEY

ACT OF 2002, 18 U.S.C. SECTION 1350

I, Sivasankaran Somasundaram, President and Chief Executive Officer of ChampionX Corporation (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(a) The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 29, 2021	/s/ SIVASANKARAN SOMASUNDARAM
		Sivasankaran Somasundaram
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

UNDER SECTION 906 OF THE SARBANES-OXLEY

ACT OF 2002, 18 U.S.C. SECTION 1350

I, Kenneth M. Fisher, Executive Vice President and Chief Financial Officer of ChampionX Corporation (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(a) The Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 29, 2021	/s/ KENNETH M. FISHER
		Kenneth M. Fisher
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2021	Apr. 23, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	001-38441
Entity Registrant Name	ChampionX Corp
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-3066826
Entity Address, Address Line One	2445 Technology Forest Blvd,
Entity Address, Address Line Two	Building 4, 12th Floor
Entity Address, City or Town	The Woodlands,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77381
City Area Code	(281)
Local Phone Number	403-5772
Security 12b Title	Common stock, $0.01 par value
Trading Symbol	CHX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		201,339,489
Entity Central Index Key	0001723089
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Lease and other revenue	$ 18,905	$ 12,064
Total revenue	684,888	261,434
Cost of goods and services	522,556	179,095
Gross profit	162,332	82,339
Selling, general and administrative expense	143,478	78,143
Goodwill impairment	0	616,271
Long-lived asset impairment	0	40,980
Interest expense, net	13,971	9,039
Other (income) expense, net	(1,936)	(1,633)
Income (loss) before income taxes	6,819	(660,461)
Provision for (benefit from) income taxes	2,782	(27,006)
Net income (loss)	4,037	(633,455)
Less: Net income (loss) attributable to noncontrolling interest	(1,735)	273
Net income (loss) attributable to ChampionX	$ 5,772	$ (633,728)
Earnings (losses) per share attributable to ChampionX:
Basic (in dollars per share)	$ 0.03	$ (8.18)
Diluted (in dollars per share)	$ 0.03	$ (8.18)
Weighted-average shares outstanding:
Weighted-average number of shares outstanding, basic (in shares)	200,580	77,477
Weighted-average number of shares outstanding, diluted (in shares)	207,271	77,477
Product revenue
Revenue	$ 585,357	$ 224,445
Service revenue
Revenue	$ 80,626	$ 24,925

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)		$ 4,037	$ (633,455)
Foreign currency translation adjustments	[1]	3,213	(11,052)
Cash flow hedges	[2]	413	0
Defined pension and other post-retirement benefits adjustments, net	[3]	167	99
Other comprehensive income (loss)		3,793	(10,953)
Comprehensive income (loss)		7,830	(644,408)
Comprehensive income (loss) attributable to noncontrolling interest		(1,735)	273
Comprehensive income (loss) attributable to ChampionX		$ 9,565	$ (644,681)

[1] Net of income tax (expense) benefit of $0 for the three months ended March 31, 2021 and 2020.

[2] Net of income tax (expense) benefit of $(72) for the three months ended March 31, 2021.

[3] Net of income tax (expense) benefit of $47 and $33 for the three months ended March 31, 2021 and 2020, respectively.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustments, tax (expense) benefit	$ 0	$ 0
Cash flow hedges, tax (expense) benefit	(72,000)
Pension and other post-retirement benefit plans, tax (expense) benefit	$ 47,000	$ 33,000

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Assets
Cash and cash equivalents	$ 259,821	$ 201,421
Receivables, net	528,142	559,545
Inventories, net	435,272	430,112
Prepaid expenses and other current assets	78,019	74,767
Total current assets	1,301,254	1,265,845
Property, plant and equipment, net of accumulated depreciation of $504,702 in 2021 and $494,490 in 2020	833,256	854,536
Operating lease right-of-use assets	125,328	122,481
Goodwill	686,455	680,594
Intangible assets, net	457,275	479,009
Other non-current assets	72,221	73,311
Total assets	3,475,789	3,475,776
Liabilities and Equity
Current portion of long-term debt	26,850	26,850
Accounts payable	333,765	299,666
Accrued compensation and employee benefits	61,380	70,303
Current portion of operating lease liabilities	36,375	33,234
Accrued distributor fees	22,044	37,465
Accrued expenses and other current liabilities	152,021	155,042
Total current liabilities	632,435	622,560
Long-term debt	899,469	905,764
Deferred income taxes	139,715	156,283
Operating lease liabilities	82,863	83,553
Other long-term liabilities	92,201	95,041
Total liabilities	1,846,683	1,863,201
Stockholders’ equity:
Common stock (2.5 billion shares authorized, $0.01 par value) 201.0 million shares and 200.4 million shares issued and outstanding in 2021 and 2020, respectively	2,010	2,004
Capital in excess of par value of common stock	2,302,406	2,293,179
Accumulated deficit	(632,685)	(638,457)
Accumulated other comprehensive loss	(26,962)	(30,755)
ChampionX stockholders’ equity	1,644,769	1,625,971
Noncontrolling interest	(15,663)	(13,396)
Total equity	1,629,106	1,612,575
Total liabilities and equity	$ 3,475,789	$ 3,475,776

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Accumulated depreciation on property, plant, and equipment	$ 504,702	$ 494,490
Common stock, shares authorized (in shares)	2,500,000,000	2,500,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued (in shares)	201,000,000.0	200,400,000
Common stock, shares outstanding (in shares)	201,000,000.0	200,400,000

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock, Par Value	Common Stock, Capital in Excess of Par Value	Retained Earnings (Accum. Deficit)	Accum. Other Comp. Loss	Non-controlling Interest	Cumulative effect of accounting changes	Cumulative effect of accounting changes Retained Earnings (Accum. Deficit)
Beginning balance (in shares) at Dec. 31, 2019		77,460
Beginning balance at Dec. 31, 2019	$ 1,036,214	$ 775	$ 969,174	$ 107,048	$ (44,037)	$ 3,254	$ (1,573)	$ (1,573)
Net income (loss)	(633,455)			(633,728)		273
Other comprehensive income (loss)	(10,953)				(10,953)
Stock-based compensation (in shares)		44
Stock-based compensation	2,429		2,429
Taxes withheld on issuance of stock-based awards	(368)		(368)
Ending balance (in shares) at Mar. 31, 2020		77,504
Ending balance at Mar. 31, 2020	$ 392,294	$ 775	971,235	(528,253)	(54,990)	3,527
Beginning balance (in shares) at Dec. 31, 2020	200,400	200,380
Beginning balance at Dec. 31, 2020	$ 1,612,575	$ 2,004	2,293,179	(638,457)	(30,755)	(13,396)
Net income (loss)	4,037			5,772		(1,735)
Other comprehensive income (loss)	3,793				3,793
Stock-based compensation (in shares)		64
Stock-based compensation	6,442		6,442
Stock options exercised (in shares)		577
Stock options exercised	3,347	$ 6	3,341
Taxes withheld on issuance of stock-based awards	(556)		(556)
Cumulative translation adjustments	268					268
Distributions to noncontrolling interest	$ (800)					(800)
Ending balance (in shares) at Mar. 31, 2021	201,000	201,021
Ending balance at Mar. 31, 2021	$ 1,629,106	$ 2,010	$ 2,302,406	$ (632,685)	$ (26,962)	$ (15,663)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash provided by (used for) operating activities:
Net income (loss)	$ 4,037	$ (633,455)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	39,150	16,970
Amortization	21,851	12,862
Stock-based compensation	6,442	2,429
Loss (gain) on disposal of fixed assets	1,954	(386)
Loss on goodwill and long-lived asset impairment	0	657,251
Provision (recovery) of bad debt	(1,413)	2,427
Provision for inventory obsolescence and write-downs	4,856	0
Amortization of deferred loan costs and accretion of discount	948	708
Deferred income taxes	(2,450)	(28,417)
Employee benefit plan expense	718	383
Other	103	349
Changes in operating assets and liabilities (net of effects of foreign exchange):
Receivables	30,019	(6,740)
Inventories	(6,511)	6,587
Prepaid expenses and other current assets	(1,247)	4,129
Accounts payable	36,227	3,068
Accrued compensation and employee benefits	(8,467)	(9,799)
Accrued expenses and other liabilities	(34,399)	12,153
Leased assets	(1,138)	(7,972)
Other	(466)	(3,325)
Net cash provided by operating activities	90,214	29,222
Cash provided by (used for) investing activities:
Capital expenditures	(25,579)	(7,467)
Proceeds from sale of fixed assets	912	721
Net cash used for investing activities	(24,667)	(6,746)
Cash provided by (used for) financing activities:
Payment of debt issue costs	0	(1,284)
Repayment of long-term debt	(6,712)	0
Distributions to noncontrolling interest	(800)	0
Payment of finance lease obligations	(1,215)	(1,492)
Proceeds from exercise of stock options	3,347	0
Payments related to taxes withheld on stock-based compensation	(556)	(368)
Net cash used for financing activities	(5,936)	(3,144)
Effect of exchange rate changes on cash and cash equivalents	(1,211)	(986)
Net increase (decrease) in cash and cash equivalents	58,400	18,346
Cash and cash equivalents at beginning of period	201,421	35,290
Cash and cash equivalents at end of period	$ 259,821	$ 53,636

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Basis of Presentation

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

ChampionX Corporation is a global leader in chemistry solutions and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely and efficiently around the world. Our products provide efficient functioning throughout the lifecycle of a well with a focus on the production phase of wells.

Unless the context requires otherwise, references in this report to “we,” “us,” “our,” “the Company,” or “ChampionX” mean ChampionX Corporation, together with our subsidiaries where the context requires.

On June 3, 2020, the Company and Ecolab Inc. (“Ecolab”) completed a Reverse Morris Trust transaction in which we acquired the Chemical Technologies business (“the Merger”). In association with the completion of the Merger, the Company changed its name from Apergy Corporation (“Apergy”) to ChampionX Corporation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of ChampionX have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions that we may undertake in the future, actual results may differ from our estimates. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments unless otherwise specified) necessary for a fair statement of our financial condition and results of operations as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these financial statements may not be representative of the results that may be expected for the year ending December 31, 2021.

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Merger Transaction

3 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Merger Transaction

MERGER TRANSACTION

On June 3, 2020 we completed the acquisition of the Chemical Technologies business. To complete the acquisition, we issued 122.2 million shares of common stock, at a share price of $10.34 per share, in exchange for 100% equity ownership of Chemical Technologies.

Preliminary Purchase Price Allocation

The acquisition-date fair value of the consideration transferred consisted of the following:

(in thousands)
Equity consideration	$	1,263,931
Replacement awards attributable to pre-combination services(1)	43,964
Unfavorable supply agreement(2)	46,000
Favorable supply agreement(2)	(59,000)
Fair value of consideration transferred	$	1,294,895

_______________________

(1) Represents the fair value of the replacement equity awards to the extent services were provided by employees of Chemical Technologies prior to closing.

(2) As part of the Merger, the Company entered into a Cross Supply and Product Transfer Agreement with Ecolab in which over a period of approximately three years from the merger date, certain products will be manufactured by one party for the other. The cross selling prices in which each party will transfer their products, and include a take-or-pay element, have been set forth within this agreement and are not reflective of market terms. As a result, we recognized an intangible asset recorded at fair value for the favorable terms and a liability recorded at fair value for the unfavorable terms. The intangible asset will be amortized on a straight-line basis over a three-year period into cost of goods and services and the liability will be amortized as a component of product revenue.

As of March 31, 2021, we have substantially completed the allocation of the consideration. The primary areas in which the preliminary purchase price allocation is not yet finalized relate to filing of income tax returns that provide taxes payable and receivable from tax authorities as well as under the Tax Matters Agreement with Ecolab, deferred income taxes and residual goodwill. We will complete the purchase price allocation and valuation during the second quarter of 2021.

The following table provides the preliminary allocation of the purchase price as of the acquisition date.

(in thousands)
Cash and cash equivalents	$	57,588
Receivables	394,432
Inventories	340,000
Prepaid expenses and other current assets	63,576
Property, plant, and equipment	687,085
Identifiable intangible assets(1)	290,000
Other non-current assets	156,427
Total identifiable assets acquired	1,989,108
Accounts payable	184,028
Other current liabilities(1)	172,997
Long-term debt (2)	537,000
Deferred tax liabilities	103,956
Other liabilities(1)	98,970
Total liabilities assumed	1,096,951
Net identifiable assets acquired	892,157
Add: Negative fair value of non-controlling interests	16,052
Goodwill	386,686
Total net assets acquired	$	1,294,895

_______________________

(1) The fair value of the consideration transferred related to the favorable and unfavorable terms of the cross supply agreement has been excluded.

(2) In connection with the Merger, we assumed a term loan from Chemical Technologies, of which approximately $26.9 million has been classified as short-term representing the mandatory amortization payments due within the next twelve months. See Note 7—Debt for further information.

Pro forma financial information

The following unaudited pro forma results of operations have been prepared as though the Merger was completed on January 1, 2019. Pro forma amounts are based on the preliminary purchase price allocation of the acquisition and are not necessarily indicative of results that may be reported in the future. Non-recurring pro forma adjustments including acquisition-related costs directly attributable to the Merger are included within the reported pro forma revenue and net income (loss).

	Three Months Ended March 31,
(in thousands, except per share data)	2020
Revenues	$	820,695
Net income (loss) attributable to ChampionX	(734,425)

Included in the net income (loss) attributable to ChampionX on a pro forma basis were goodwill and long-lived asset impairment charges of $805.0 million during the three months ended March 31, 2020.

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New Accounting Standards	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
New Accounting Standards	NEW ACCOUNTING STANDARDSAll new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.

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Segment Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Our reporting segments are:

•Production Chemical Technologies—provides oil and natural gas production and midstream markets with solutions to manage and control corrosion, oil and water separation, flow assurance, sour gas treatment and a host of water-related issues.

•Production & Automation Technologies—designs, manufactures, markets and services a full range of artificial lift equipment, end-to-end digital automation solutions, as well as other production equipment. Production & Automation Technologies’ products are sold under a collection of brands including Harbison-Fischer, Norris, Alberta Oil Tool, Oil Lift Technology, PCS Ferguson, Pro-Rod, Upco, Unbridled ESP, Norriseal-Wellmark, Quartzdyne, Spirit, Theta, Timberline and Windrock.

•Drilling Technologies—designs, manufactures and markets polycrystalline diamond cutters and bearings for use in oil and gas drill bits under the US Synthetic brand.

•Reservoir Chemical Technologies—manufactures specialty products that support well stimulation, construction (including drilling and cementing) and remediation needs in the oil and natural gas industry.

Business activities that do not meet the criteria of an operating segment have been combined into Corporate and other. Corporate and other includes (i) corporate and overhead expenses, and (ii) revenue and costs for activities that are not operating segments.

Segment revenue and segment operating profit were as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Segment revenue:
Production Chemical Technologies	$	412,371	$	—
Production & Automation Technologies	166,845		205,479
Drilling Technologies	34,994		55,955
Reservoir Chemical Technologies	29,891		—
Corporate and other (1)	40,787		—
Total revenue	$	684,888	$	261,434
Segment operating profit (loss):
Production Chemical Technologies	$	30,357	$	—
Production & Automation Technologies	5,362		(648,591)
Drilling Technologies	6,386		11,359
Reservoir Chemical Technologies	(3,228)		—
Total segment operating profit (loss)	38,877		(637,232)
Corporate and other (1)	18,087		14,190
Interest expense, net	13,971		9,039
Income (loss) before income taxes	$	6,819	$	(660,461)

_______________________

(1)    Corporate and other includes costs not directly attributable or allocated to our reporting segments such as corporate executive management and other administrative functions, and the results attributable to our noncontrolling interest. Additionally, the sales and expenses related to the Cross Supply Agreement with Ecolab are included within Corporate and other. See Note 2—Merger Transaction for further information.

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Revenue

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue

REVENUE

Our revenue is generated primarily from product sales. Service revenue is generated from providing services to our customers. These services include installation, repair and maintenance, laboratory and logistics services, chemical management services, troubleshooting, reporting, water treatment services, technical advisory assistance and other field services. Lease revenue is derived from rental income of leased production equipment. These lease arrangements generally allow customers to rent equipment on a daily basis with no stated end date. Management accounts for these arrangements as a daily renewal option beginning on the lease commencement date, with the lease term determined as the period in which it is reasonably certain the option will be exercised. As our costs are shared across the various revenue categories, cost of goods sold is not tracked separately and is not discretely identifiable.

Revenue disaggregated by geography was as follows:

	Three Months Ended March 31, 2021
(in thousands)	Production Chemical Technologies		Production & Automation Technologies		Drilling Technologies		Reservoir Chemical Technologies		Corporate		Total
United States	$	149,864	$	126,374	$	25,407	$	15,609	$	25,556	$	342,810
Canada	61,292		12,528		3,827		729		158		78,534
Middle East & Africa	58,370		10,272		716		6,062		5,583		81,003
Europe	42,608		1,983		2,499		1,389		2,257		50,736
Australia	6,395		9,576		117		54		—		16,142
Latin America	71,616		4,642		—		3,019		1,431		80,708
Asia-Pacific	10,492		1,463		1,553		1,120		5,802		20,430
Other	11,734		7		875		1,909		—		14,525
Total revenue	$	412,371	$	166,845	$	34,994	$	29,891	$	40,787	$	684,888

	Three Months Ended March 31, 2020
(in thousands)	Production Chemical Technologies		Production & Automation Technologies		Drilling Technologies		Reservoir Chemical Technologies		Corporate		Total
United States	$	—	$	154,430	$	40,940	$	—	$	—	$	195,370
Canada	—		13,124		4,828		—		—		17,952
Middle East & Africa	—		11,905		458		—		—		12,363
Europe	—		6,339		5,691		—		—		12,030
Australia	—		9,222		46		—		—		9,268
Latin America	—		7,560		22		—		—		7,582
Asia-Pacific	—		1,978		3,508		—		—		5,486
Other	—		921		462		—		—		1,383
Total revenue	$	—	$	205,479	$	55,955	$	—	$	—	$	261,434

Revenue is attributed to regions based on the location of our direct customer, which in some instances is an intermediary and not necessarily the end user.

Contract balances

Contract assets and contract liabilities from contracts with customers were as follows:

(in thousands)	March 31, 2021		December 31, 2020
Contract liabilities - current	$	16,993	$	16,668

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Intangible Assets

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

INTANGIBLE ASSETS

The components of our definite- and indefinite-lived intangible assets were as follows:

	March 31, 2021						December 31, 2020
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Definite-lived intangible assets:
Customer relationships	$	593,566	$	332,497	$	261,069	$	593,068	$	321,298	$	271,770
Trademarks	59,875		28,927		30,948		59,881		27,565		32,316
Patents	38,749		29,827		8,922		38,635		29,289		9,346
Unpatented technologies	133,697		24,290		109,407		133,700		19,958		113,742
Favorable supply agreements	59,000		16,118		42,882		59,000		11,308		47,692
Drawings and manuals	1,797		1,797		—		1,783		1,783		—
Other	5,398		4,951		447		5,374		4,831		543
	892,082		438,407		453,675		891,441		416,032		475,409
Indefinite-lived intangible assets:
Trademarks	3,600		—		3,600		3,600		—		3,600
Total	$	895,682	$	438,407	$	457,275	$	895,041	$	416,032	$	479,009

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Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt

DEBT

Long-term debt consisted of the following:

(in thousands)	March 31, 2021		December 31, 2020
2018 Credit Facility	$	—	$	—
2018 Term Loan Facility	140,000		140,000
2020 Term Loan Facility	516,863		523,575
6.375% Senior Notes due 2026	277,041		277,041
Total	933,904		940,616
Net unamortized discounts and issuance costs	(7,585)		(8,002)
Total long-term debt	$	926,319	$	932,614
Current portion of long-term debt (1)	(26,850)		(26,850)
Long-term debt, less current portion	$	899,469	$	905,764

_______________________

(1) Represents the mandatory amortization payments due within twelve months related to the 2020 Term Loan Facility.

The 2020 Term Loan Facility is subject to mandatory amortization payments of $6.7 million paid quarterly, which began on September 30, 2020, and contains customary representations and warranties, covenants, and events of default for loan facilities of this type. We were in compliance with all covenants as of March 31, 2021. The weighted average interest rate on borrowings during the period was 2.64% and 6.00% for the 2018 Term Loan Facility and 2020 Term Loan Facility, respectively.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES The Company is subject to various claims and contingencies related to, among other things, workers’ compensation, general liability (including product liability), automobile claims, health care claims, environmental matters, and lawsuits. We record liabilities where a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. In accordance with applicable GAAP, the Company discloses a contingent liability

even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred.

Guarantees and Indemnifications

We have provided indemnities in connection with sales of certain businesses and assets, including representations and warranties, covenants and related indemnities for environmental health and safety, tax, and employment matters. We do not have any material liabilities recorded for these indemnifications and are not aware of any claims or other information that would give rise to material payments under such indemnities.

In connection with the Company’s separation from Dover Corporation (“Dover”) in 2018, we entered into agreements with Dover that govern the treatment between Dover and us for certain indemnification matters and litigation responsibility. Generally, the separation and distribution agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and to place financial responsibility for the obligations and liabilities of Dover’s business with Dover. The separation and distribution agreement also establishes procedures for handling claims subject to indemnification and related matters. In addition, pursuant to the tax matters agreement, we have agreed to indemnify Dover and its affiliates against any and all tax-related liabilities incurred by them relating to the separation and/or certain related transactions to the extent caused by an acquisition of ChampionX stock or assets or by any other action or failure to act undertaken by ChampionX or its affiliates.

In connection with the Merger, we entered into agreements with Ecolab that govern the treatment between Ecolab and us for certain indemnification matters and litigation responsibility. Generally, the separation and distribution agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and to place financial responsibility for the obligations and liabilities of Ecolab’s business with Ecolab. The separation and distribution agreement also establishes procedures for handling claims subject to indemnification and related matters. In addition, pursuant to the Tax Matters Agreement, we have agreed to indemnify Ecolab and its affiliates for (i) all taxes for which ChampionX is responsible as defined within the Tax Matters Agreement, (ii) all taxes resulting from a breach by ChampionX of any of its representations (but only to the extent relating to a breach occurring after the consummation of the Merger) or any of its covenants under the Tax Matters Agreement, (iii) all taxes resulting from an acquisition after the Merger of any of the stock or assets of ChampionX, other than as a result of the Merger or a repayment of the ChampionX Credit Facilities and (iv) reasonable costs and expenses (including reasonable attorneys’ fees and expenses) related to the foregoing.

As of March 31, 2021 and December 31, 2020, we had $88.0 million and $88.8 million, respectively, of outstanding letters of credit, surety bonds and guarantees which expire at various dates through 2027. These financial instruments are primarily maintained as security for insurance, warranty and other performance obligations. Generally, we would only be liable for the amount of these letters of credit and surety bonds in the event of default in the performance of our obligations, the probability of which we believe is remote.

Litigation and Environmental Matters

We are involved in various pending or potential lawsuits, claims and environmental actions that have arisen in the ordinary course of our business. These proceedings primarily involve claims by private parties alleging injury arising out of use of our products, patent infringement, employment matters, and commercial disputes, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain chemical substances at various sites, such as Superfund sites and either operating or owned facilities. We review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and accrued to date, and the availability and extent of insurance coverage. We accrue a liability for legal matters that are probable and can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. We are unable to predict the ultimate outcome of these actions because of the inherent uncertainty of litigation and unfavorable rulings or developments could occur, and there can be no certainty that the Company may not ultimately incur changes in excess of recorded liabilities. However, we believe the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Environmental Matters

The Company is currently participating in environmental assessments and remediation at approximately 11 locations, the majority of which are in the U.S., and environmental liabilities have been accrued reflecting our best estimate of future costs. Potential insurance reimbursements are not anticipated in the Company’s accruals for environmental liabilities. As of March 31, 2021 environmental liability accruals related to these locations were $7.7 million.

Prior to the separation from Dover in 2018, groundwater contamination was discovered at the Norris Sucker Rods plant site located in Tulsa, Oklahoma ("Norris"). Initial remedial efforts were undertaken at the time of discovery of the contamination and Norris has since coordinated monitoring and remediation with the Oklahoma Department of Environmental Quality ("ODEQ"). As part of the ongoing long-term remediation process, Norris contracted an engineering and consulting firm to develop a range of possible additional remedial alternatives in order to accelerate the remediation process and associated cost estimates for the work. In October 2019, we received the firm’s preliminary remedial alternatives for consideration. We have submitted our long-term remediation plan and it was approved by ODEQ. We are now in discussion with ODEQ to finalize a consent order. Because we have not yet finalized the consent order for further remediation at the site and discussions with ODEQ remain ongoing, we cannot fully anticipate the timing, outcome or possible impact of such further remedial activities, financial or otherwise. As a result of the recommendations in the report, we accrued liabilities for these remediation efforts of approximately $2.0 million as of December 31, 2020. Liabilities could increase in the future at such time as we ultimately reach agreement with ODEQ on our remediation plan and such liabilities become probable and can be reasonably estimated, however, there have been no changes to our estimated liability as of March 31, 2021.

Matters Related to Deepwater Horizon Incident Response

On April 22, 2010, the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc, sank in the Gulf of Mexico after an explosion and fire, resulting in a massive oil spill. Certain entities that are now subsidiaries of ChampionX as a result of the Merger (collectively the “COREXIT Defendants”) supplied COREXIT™ 9500, an oil dispersant product listed on the U.S. EPA National Contingency Plan Product Schedule, which was used in the response to the spill. In connection with the provision of COREXIT™, the COREXIT Defendants were named in several lawsuits. Cases arising out of the Deepwater Horizon accident were administratively transferred and consolidated for pre-trial purposes under In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, Case No. 10-md-02179 in the United States District Court in the Eastern District of Louisiana (E.D. La.) (“MDL 2179”). Claims related to the response to the oil spill were consolidated in a master complaint captioned the “B3 Master Complaint.” In 2011, Transocean Deepwater Drilling, Inc. and its affiliates (the “Transocean Entities”) named the COREXIT Defendants and other unaffiliated companies as first party defendants (In re the Complaint and Petition of Triton Asset Leasing GmbH, et al, MDL No. 2179, Civil Action 10-2771). In April and May 2011, the Transocean Entities, Cameron International Corporation, Halliburton Energy Services, Inc., M-I L.L.C., Weatherford U.S., L.P. and Weatherford International, Inc. (collectively, the “Cross Claimants”) filed cross claims in MDL 2179 against the COREXIT Defendants and other unaffiliated cross defendants. In April and June 2011, in support of its defense of the claims against it, the COREXIT Defendants filed counterclaims against the Cross Claimants. On May 18, 2012, the COREXIT Defendants filed a motion for summary judgment as to the claims in the B3 Master Complaint. On November 28, 2012, the Court granted the COREXIT Defendants’ motion and dismissed with prejudice the claims in the B3 Master Complaint asserted against the COREXIT Defendants. There currently remain three “B3” cases that had asserted claims against Nalco and that remain pending against other defendants. Because the Court’s decision was not a “final judgment” for purposes of appeal with respect to those claims, under Federal Rule of Appellate Procedure 4(a), plaintiffs will have 30 days after entry of final judgment in each case to appeal the Court’s summary judgment decision.

The Company believes the claims asserted against the COREXIT Defendants are without merit and intends to defend these lawsuits vigorously. The Company also believes that it has rights to contribution and/or indemnification (including legal expenses) from third parties. However, we cannot predict the outcome of these lawsuits, the involvement it might have in these matters in the future, or the potential for future litigation.

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Restructuring and Other Related Charges

3 Months Ended

Mar. 31, 2021

Restructuring and Related Activities [Abstract]

Restructuring and Other Related Charges

RESTRUCTURING AND OTHER RELATED CHARGES

During 2021, we approved a restructuring plan (the 2021 Plan) related to the consolidation of product lines and associated facility closures and workforce reductions. As a result, we recognized charges of $4.3 million during the three months ended March 31, 2021 consisting of employee severance and related benefits. During the three months ended March 31, 2020, we recorded restructuring and other charges of $2.8 million.

The following table presents the restructuring and other related charges by segment as classified in our condensed consolidated statements of income (loss).

	Three Months Ended March 31,
(in thousands)	2021		2020
Segment restructuring charges:
Production Chemical Technologies	$	688	$	—
Production & Automation Technologies	3,524		671
Drilling Technologies	—		2,095
Reservoir Chemical Technologies	44		—
Total	$	4,256	$	2,766
Statements of Income (Loss) classification:
Cost of goods and services	$	3,484	$	2,039
Selling, general and administrative expense	772		727
Total	$	4,256	$	2,766

Our liability balance for restructuring and other related charges at March 31, 2021, reflects employee severance and related benefits initiated during the period as well as liabilities assumed in the Merger. Additional programs may be initiated during 2021 with related restructuring charges.

The following table details our restructuring accrual activities during the three months ended March 31, 2021:

(in thousands)	Restructuring Accrual Balance
December 31, 2020	$	2,951
Restructuring charges and asset write downs	2,448
Payments	(2,409)
Other, including foreign currency translation	(6)
March 31, 2021	$	2,984

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Equity and Cash Incentive Programs

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement, Noncash Expense [Abstract]

Equity and Cash Incentive Programs

EQUITY AND CASH INCENTIVE PROGRAMS

Stock-based compensation expense is reported within selling, general and administrative expense in the condensed consolidated statements of income (loss). Stock-based compensation expense relating to all stock-based incentive plans was as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Stock-based compensation expense	$	6,442	$	2,429
Tax benefit	(1,353)		(599)
Stock-based compensation expense, net of tax	$	5,089	$	1,830

A summary of activity relating to our share-based awards for the three months ended March 31, 2021, was as follows:

(in shares)	Stock-Settled Appreciation Rights	Performance Share Awards	Restricted Stock Units	Non-Qualified Stock Options
Outstanding at January 1, 2021	415,331	278,763	2,669,779	7,175,040
Granted	—	333,037	838,399	—
Forfeited	(2,134)	—	(61,057)	(29,981)
Exercised / vested	—	—	(94,680)	(577,276)
Outstanding at March 31, 2021	413,197	611,800	3,352,441	6,567,783

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

Accumulated Other Comprehensive Loss

ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss—Accumulated other comprehensive loss consisted of the following:

(in thousands)	Foreign Currency Translation		Defined Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Accumulated Other Comprehensive Loss
December 31, 2019	$	(35,210)	$	(8,827)	$	—	$	(44,037)
Other comprehensive income (loss) before reclassifications, net of tax	(11,052)		—		—		(11,052)
Reclassification adjustment for net losses included in net income, net of tax	—		99		—		99
Other comprehensive income, net of tax	(11,052)		99		—		(10,953)
March 31, 2020	$	(46,262)	$	(8,728)	$	—	$	(54,990)

(in thousands)	Foreign Currency Translation		Defined Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Accumulated Other Comprehensive Loss
December 31, 2020	$	(14,965)	$	(13,470)	$	(2,320)	$	(30,755)
Other comprehensive loss before reclassifications, net of tax	3,213		—		413		3,626
Reclassification adjustment for net losses included in net income, net of tax	—		167		—		167
Other comprehensive income (loss), net of tax	3,213		167		413		3,793
March 31, 2021	$	(11,752)	$	(13,303)	$	(1,907)	$	(26,962)

Reclassifications from accumulated other comprehensive loss—Reclassification adjustments from accumulated other comprehensive loss to net income (loss) related to defined pension and other post-retirement benefits consisted of the following:

	Three Months Ended March 31,				Affected line items on the condensed consolidated statements of income (loss)
(in thousands)	2021		2020
Pensions and other post-retirement benefits:
Amortization of actuarial loss and other	$	214	$	132	Other (income) expense, net
Total before tax	214		132		Income (loss) before income taxes
Tax benefit	(47)		(33)		Provision for (benefit from) income taxes
Net of tax	$	167	$	99	Net income (loss)

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Earnings per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

A reconciliation of the number of shares used for the basic and diluted earnings (loss) per share calculation was as follows:

	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
Net income (loss) attributable to ChampionX	$	5,772	$	(633,728)
Weighted-average number of shares outstanding	200,580		77,477
Dilutive effect of stock-based compensation	6,691		—
Total shares and dilutive securities	207,271		77,477
Basic earnings (loss) per share attributable to ChampionX	$	0.03	$	(8.18)
Diluted earnings (loss) per share attributable to ChampionX	$	0.03	$	(8.18)

For all periods presented, the computation of diluted earnings (losses) per share excludes awards with an anti-dilutive impact. For the three months ended March 31, 2021, the diluted shares include the dilutive impact of equity awards except for approximately 0.4 million shares that were excluded because their inclusion would be anti-dilutive. For the three months ended March 31, 2020, we excluded all outstanding equity awards from the calculation of weighted-average shares outstanding, because their inclusion would be anti-dilutive as we were in a loss position.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when available. The hierarchy is broken down into three levels:

Level 1- Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2- Inputs include observable inputs other than quoted prices in active markets.

Level 3- Inputs are unobservable inputs for which there is little or no market data available.

The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis are as follows:

	March 31, 2021		December 31, 2020
(in thousands)	Carrying Amount
Assets
Foreign currency forward contracts	$	1,863	$	4,576
Liabilities
Foreign currency forward contracts	$	4,839	$	6,561

The carrying value of foreign currency forward contracts is at fair value, which is determined based on foreign currency exchange rates as of the balance sheet date and is classified within Level 2. For purposes of fair value disclosure above, derivative values are presented gross. See Note 14—Derivatives And Hedging Transactions for further discussion of gross versus net presentation of the Company’s derivatives.

The carrying amounts of cash and cash equivalents, trade receivables, accounts payable, as well as amounts included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair value due to their short-term nature.

The fair value of our senior notes is based on Level 1 quoted market prices. The fair value of our term loan facilities are based on Level 2 quoted market prices for the same or similar debt instruments. The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were:

	March 31, 2021				December 31, 2020
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2018 Term Loan Facility	$	140,000	$	138,950	$	140,000	$	137,200
2020 Term Loan Facility	$	516,863	$	525,908	$	523,575	$	530,120
6.375% Senior Notes due 2026	$	277,041	$	291,239	$	277,041	$	277,054

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Derivatives and Hedging Transactions

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Transactions

DERIVATIVES AND HEDGING TRANSACTIONS

The Company uses foreign currency forward contracts to manage risks associated with foreign currency exchange rates. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. Derivative contracts are recorded as assets and liabilities on the balance sheet at fair value. We evaluate hedge effectiveness at contract inception and thereafter on a quarterly basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Changes in fair value attributable to changes in spot exchange rates for derivative contracts that have been designated as cash flow hedges are recognized in accumulated other comprehensive income (loss) (“AOCI”) and reclassified into earnings in the same period the hedged transaction affects earnings and are presented in the same income statement line as the earnings effect of the hedged item. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships.

The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts. We monitor our exposure to credit risk by using major global banks and financial institutions as counterparties and monitoring their financial condition and credit profile. The Company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the Company’s derivative balance is not considered necessary.

Derivative Positions Summary

Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to settle with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented in

the following table, no cash collateral had been received or pledged related to the underlying derivatives. We have elected to present our derivative balances on a gross basis on the condensed consolidated balance sheet.

The following table summarizes the gross fair value of the Company’s outstanding derivatives and the lines in which they are presented on the condensed consolidated balance sheet.

	Derivative Assets				Derivative Liabilities
(in thousands)	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Prepaid expenses and other current assets	$	1,863	$	4,576	$	—	$	—
Accrued expenses and other current liabilities	—		—		4,839		$	6,561
	$	1,863	$	4,576	$	4,839	$	6,561

The following table summarizes the notional values of the Company’s outstanding derivatives:

(in thousands)	March 31, 2021		December 31, 2020
Notional value of foreign currency forward contracts	$	534,216	$	483,377

Cash Flow Hedges

The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, primarily related to inventory purchases. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts attributable to changes in spot exchange rates are recorded in AOCI until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the condensed consolidated statements of income (loss) as the underlying exposure being hedged. The forward points are marked-to-market monthly and recognized in the same line item in the condensed consolidated statement of income (loss) as the underlying exposure being hedged.

Derivatives Not Designated as Hedging Instruments

The Company also uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities, primarily receivables and payables, which are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

Effect of Derivative Instruments on Income

The loss of all derivative instruments recognized is summarized below:

	Three Months Ended March 31,
(in thousands)	2021		2020
Loss reclassified from AOCI to income on cash flow hedges:
Cost of goods and services	$	754	$	—
Loss on derivatives not designated as hedging instruments:
Other (income) expense, net	667		—
Total loss of derivative instruments	$	1,421	$	—

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Inventories

3 Months Ended

Mar. 31, 2021

Inventory, Net [Abstract]

Inventories

INVENTORIES

Inventories consisted of the following:

(in thousands)	March 31, 2021		December 31, 2020
Raw materials	$	132,447	$	137,038
Work in progress	11,956		9,509
Finished goods	349,994		323,144
	494,397		469,691
Inventory reserve	(29,813)		(24,769)
LIFO adjustments (1)	(29,312)		(14,810)
Inventories, net	$	435,272	$	430,112

_______________________

(1) Represents the amount by which LIFO inventories exceeded their carrying value.

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Cash Flow Information

3 Months Ended

Mar. 31, 2021

Supplemental Cash Flow Elements [Abstract]

Cash Flow Information

CASH FLOW INFORMATION

Lease program

Our ESP leased asset program is reported in our Production & Automation Technologies segment. At the time of purchase, assets are recorded to inventory and are transferred to property, plant, and equipment when a customer contracts for an asset under our lease program. During the three months ended March 31, 2021 and March 31, 2020, we transferred $8.5 million and $7.2 million, respectively, of inventory into property, plant, and equipment as a result of assets entering our leased asset program.

Expenditures for assets that are placed into our leased asset program expected to be recovered through sale are reported in leased assets in the operating section of our condensed consolidated statements of cash flows. All other capitalizable expenditures for assets that are placed into our leased asset program are classified as capital expenditures in the investing section of our condensed consolidated statements of cash flows.

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of ChampionX have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions that we may undertake in the future, actual results may differ from our estimates. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments unless otherwise specified) necessary for a fair statement of our financial condition and results of operations as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these financial statements may not be representative of the results that may be expected for the year ending December 31, 2021.

New Accounting Standards

NEW ACCOUNTING STANDARDSAll new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.

Fair Value Measurements

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when available. The hierarchy is broken down into three levels:

Level 1- Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2- Inputs include observable inputs other than quoted prices in active markets.

Level 3- Inputs are unobservable inputs for which there is little or no market data available.

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Merger Transaction (Tables)

3 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Schedule of Consideration Transferred

The acquisition-date fair value of the consideration transferred consisted of the following:

(in thousands)
Equity consideration	$	1,263,931
Replacement awards attributable to pre-combination services(1)	43,964
Unfavorable supply agreement(2)	46,000
Favorable supply agreement(2)	(59,000)
Fair value of consideration transferred	$	1,294,895

_______________________

(1) Represents the fair value of the replacement equity awards to the extent services were provided by employees of Chemical Technologies prior to closing.

(2) As part of the Merger, the Company entered into a Cross Supply and Product Transfer Agreement with Ecolab in which over a period of approximately three years from the merger date, certain products will be manufactured by one party for the other. The cross selling prices in which each party will transfer their products, and include a take-or-pay element, have been set forth within this agreement and are not reflective of market terms. As a result, we recognized an intangible asset recorded at fair value for the favorable terms and a liability recorded at fair value for the unfavorable terms. The intangible asset will be amortized on a straight-line basis over a three-year period into cost of goods and services and the liability will be amortized as a component of product revenue.

Schedule of Preliminary Allocation of Purchase Price

The following table provides the preliminary allocation of the purchase price as of the acquisition date.

(in thousands)
Cash and cash equivalents	$	57,588
Receivables	394,432
Inventories	340,000
Prepaid expenses and other current assets	63,576
Property, plant, and equipment	687,085
Identifiable intangible assets(1)	290,000
Other non-current assets	156,427
Total identifiable assets acquired	1,989,108
Accounts payable	184,028
Other current liabilities(1)	172,997
Long-term debt (2)	537,000
Deferred tax liabilities	103,956
Other liabilities(1)	98,970
Total liabilities assumed	1,096,951
Net identifiable assets acquired	892,157
Add: Negative fair value of non-controlling interests	16,052
Goodwill	386,686
Total net assets acquired	$	1,294,895

_______________________

(1) The fair value of the consideration transferred related to the favorable and unfavorable terms of the cross supply agreement has been excluded.

(2) In connection with the Merger, we assumed a term loan from Chemical Technologies, of which approximately $26.9 million has been classified as short-term representing the mandatory amortization payments due within the next twelve months. See Note 7—Debt for further information.

Schedule of Pro Forma Information

The following unaudited pro forma results of operations have been prepared as though the Merger was completed on January 1, 2019. Pro forma amounts are based on the preliminary purchase price allocation of the acquisition and are not necessarily indicative of results that may be reported in the future. Non-recurring pro forma adjustments including acquisition-related costs directly attributable to the Merger are included within the reported pro forma revenue and net income (loss).

	Three Months Ended March 31,
(in thousands, except per share data)	2020
Revenues	$	820,695
Net income (loss) attributable to ChampionX	(734,425)

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Schedule of Segment Revenue and Operating Profit

Segment revenue and segment operating profit were as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Segment revenue:
Production Chemical Technologies	$	412,371	$	—
Production & Automation Technologies	166,845		205,479
Drilling Technologies	34,994		55,955
Reservoir Chemical Technologies	29,891		—
Corporate and other (1)	40,787		—
Total revenue	$	684,888	$	261,434
Segment operating profit (loss):
Production Chemical Technologies	$	30,357	$	—
Production & Automation Technologies	5,362		(648,591)
Drilling Technologies	6,386		11,359
Reservoir Chemical Technologies	(3,228)		—
Total segment operating profit (loss)	38,877		(637,232)
Corporate and other (1)	18,087		14,190
Interest expense, net	13,971		9,039
Income (loss) before income taxes	$	6,819	$	(660,461)

_______________________

(1)    Corporate and other includes costs not directly attributable or allocated to our reporting segments such as corporate executive management and other administrative functions, and the results attributable to our noncontrolling interest. Additionally, the sales and expenses related to the Cross Supply Agreement with Ecolab are included within Corporate and other. See Note 2—Merger Transaction for further information.

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Revenue (Tables)

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

Revenue disaggregated by geography was as follows:

	Three Months Ended March 31, 2021
(in thousands)	Production Chemical Technologies		Production & Automation Technologies		Drilling Technologies		Reservoir Chemical Technologies		Corporate		Total
United States	$	149,864	$	126,374	$	25,407	$	15,609	$	25,556	$	342,810
Canada	61,292		12,528		3,827		729		158		78,534
Middle East & Africa	58,370		10,272		716		6,062		5,583		81,003
Europe	42,608		1,983		2,499		1,389		2,257		50,736
Australia	6,395		9,576		117		54		—		16,142
Latin America	71,616		4,642		—		3,019		1,431		80,708
Asia-Pacific	10,492		1,463		1,553		1,120		5,802		20,430
Other	11,734		7		875		1,909		—		14,525
Total revenue	$	412,371	$	166,845	$	34,994	$	29,891	$	40,787	$	684,888

	Three Months Ended March 31, 2020
(in thousands)	Production Chemical Technologies		Production & Automation Technologies		Drilling Technologies		Reservoir Chemical Technologies		Corporate		Total
United States	$	—	$	154,430	$	40,940	$	—	$	—	$	195,370
Canada	—		13,124		4,828		—		—		17,952
Middle East & Africa	—		11,905		458		—		—		12,363
Europe	—		6,339		5,691		—		—		12,030
Australia	—		9,222		46		—		—		9,268
Latin America	—		7,560		22		—		—		7,582
Asia-Pacific	—		1,978		3,508		—		—		5,486
Other	—		921		462		—		—		1,383
Total revenue	$	—	$	205,479	$	55,955	$	—	$	—	$	261,434

Schedule of Contract Balances

Contract assets and contract liabilities from contracts with customers were as follows:

(in thousands)	March 31, 2021		December 31, 2020
Contract liabilities - current	$	16,993	$	16,668

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The components of our definite- and indefinite-lived intangible assets were as follows:

	March 31, 2021						December 31, 2020
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Definite-lived intangible assets:
Customer relationships	$	593,566	$	332,497	$	261,069	$	593,068	$	321,298	$	271,770
Trademarks	59,875		28,927		30,948		59,881		27,565		32,316
Patents	38,749		29,827		8,922		38,635		29,289		9,346
Unpatented technologies	133,697		24,290		109,407		133,700		19,958		113,742
Favorable supply agreements	59,000		16,118		42,882		59,000		11,308		47,692
Drawings and manuals	1,797		1,797		—		1,783		1,783		—
Other	5,398		4,951		447		5,374		4,831		543
	892,082		438,407		453,675		891,441		416,032		475,409
Indefinite-lived intangible assets:
Trademarks	3,600		—		3,600		3,600		—		3,600
Total	$	895,682	$	438,407	$	457,275	$	895,041	$	416,032	$	479,009

Schedule of Indefinite-Lived Intangible Assets

The components of our definite- and indefinite-lived intangible assets were as follows:

	March 31, 2021						December 31, 2020
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Definite-lived intangible assets:
Customer relationships	$	593,566	$	332,497	$	261,069	$	593,068	$	321,298	$	271,770
Trademarks	59,875		28,927		30,948		59,881		27,565		32,316
Patents	38,749		29,827		8,922		38,635		29,289		9,346
Unpatented technologies	133,697		24,290		109,407		133,700		19,958		113,742
Favorable supply agreements	59,000		16,118		42,882		59,000		11,308		47,692
Drawings and manuals	1,797		1,797		—		1,783		1,783		—
Other	5,398		4,951		447		5,374		4,831		543
	892,082		438,407		453,675		891,441		416,032		475,409
Indefinite-lived intangible assets:
Trademarks	3,600		—		3,600		3,600		—		3,600
Total	$	895,682	$	438,407	$	457,275	$	895,041	$	416,032	$	479,009

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Debt (Tables)

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Schedule of Debt

Long-term debt consisted of the following:

(in thousands)	March 31, 2021		December 31, 2020
2018 Credit Facility	$	—	$	—
2018 Term Loan Facility	140,000		140,000
2020 Term Loan Facility	516,863		523,575
6.375% Senior Notes due 2026	277,041		277,041
Total	933,904		940,616
Net unamortized discounts and issuance costs	(7,585)		(8,002)
Total long-term debt	$	926,319	$	932,614
Current portion of long-term debt (1)	(26,850)		(26,850)
Long-term debt, less current portion	$	899,469	$	905,764

_______________________

(1) Represents the mandatory amortization payments due within twelve months related to the 2020 Term Loan Facility.

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Restructuring and Other Related Charges (Tables)

3 Months Ended

Mar. 31, 2021

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

restructuring and other related charges by segment as classified in our condensed consolidated statements of income (loss).

	Three Months Ended March 31,
(in thousands)	2021		2020
Segment restructuring charges:
Production Chemical Technologies	$	688	$	—
Production & Automation Technologies	3,524		671
Drilling Technologies	—		2,095
Reservoir Chemical Technologies	44		—
Total	$	4,256	$	2,766
Statements of Income (Loss) classification:
Cost of goods and services	$	3,484	$	2,039
Selling, general and administrative expense	772		727
Total	$	4,256	$	2,766

The following table details our restructuring accrual activities during the three months ended March 31, 2021:

(in thousands)	Restructuring Accrual Balance
December 31, 2020	$	2,951
Restructuring charges and asset write downs	2,448
Payments	(2,409)
Other, including foreign currency translation	(6)
March 31, 2021	$	2,984

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Equity and Cash Incentive Programs (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement, Noncash Expense [Abstract]

Schedule of Stock-Based Compensation Expense

Stock-based compensation expense relating to all stock-based incentive plans was as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Stock-based compensation expense	$	6,442	$	2,429
Tax benefit	(1,353)		(599)
Stock-based compensation expense, net of tax	$	5,089	$	1,830

Summary of Activity Related to Share-Based Awards

A summary of activity relating to our share-based awards for the three months ended March 31, 2021, was as follows:

(in shares)	Stock-Settled Appreciation Rights	Performance Share Awards	Restricted Stock Units	Non-Qualified Stock Options
Outstanding at January 1, 2021	415,331	278,763	2,669,779	7,175,040
Granted	—	333,037	838,399	—
Forfeited	(2,134)	—	(61,057)	(29,981)
Exercised / vested	—	—	(94,680)	(577,276)
Outstanding at March 31, 2021	413,197	611,800	3,352,441	6,567,783

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consisted of the following:

(in thousands)	Foreign Currency Translation		Defined Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Accumulated Other Comprehensive Loss
December 31, 2019	$	(35,210)	$	(8,827)	$	—	$	(44,037)
Other comprehensive income (loss) before reclassifications, net of tax	(11,052)		—		—		(11,052)
Reclassification adjustment for net losses included in net income, net of tax	—		99		—		99
Other comprehensive income, net of tax	(11,052)		99		—		(10,953)
March 31, 2020	$	(46,262)	$	(8,728)	$	—	$	(54,990)

(in thousands)	Foreign Currency Translation		Defined Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Accumulated Other Comprehensive Loss
December 31, 2020	$	(14,965)	$	(13,470)	$	(2,320)	$	(30,755)
Other comprehensive loss before reclassifications, net of tax	3,213		—		413		3,626
Reclassification adjustment for net losses included in net income, net of tax	—		167		—		167
Other comprehensive income (loss), net of tax	3,213		167		413		3,793
March 31, 2021	$	(11,752)	$	(13,303)	$	(1,907)	$	(26,962)

Schedule of Reclassifications from Accumulated Other Comprehensive Loss

Reclassification adjustments from accumulated other comprehensive loss to net income (loss) related to defined pension and other post-retirement benefits consisted of the following:

	Three Months Ended March 31,				Affected line items on the condensed consolidated statements of income (loss)
(in thousands)	2021		2020
Pensions and other post-retirement benefits:
Amortization of actuarial loss and other	$	214	$	132	Other (income) expense, net
Total before tax	214		132		Income (loss) before income taxes
Tax benefit	(47)		(33)		Provision for (benefit from) income taxes
Net of tax	$	167	$	99	Net income (loss)

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Earnings per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of Earnings per Share

A reconciliation of the number of shares used for the basic and diluted earnings (loss) per share calculation was as follows:

	Three Months Ended March 31,
(in thousands, except per share data)	2021		2020
Net income (loss) attributable to ChampionX	$	5,772	$	(633,728)
Weighted-average number of shares outstanding	200,580		77,477
Dilutive effect of stock-based compensation	6,691		—
Total shares and dilutive securities	207,271		77,477
Basic earnings (loss) per share attributable to ChampionX	$	0.03	$	(8.18)
Diluted earnings (loss) per share attributable to ChampionX	$	0.03	$	(8.18)

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured on Recurring Basis

The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis are as follows:

	March 31, 2021		December 31, 2020
(in thousands)	Carrying Amount
Assets
Foreign currency forward contracts	$	1,863	$	4,576
Liabilities
Foreign currency forward contracts	$	4,839	$	6,561

Schedule of Fair Value of Long-Term Debt

The carrying amount and the estimated fair value of long-term debt, including current maturities, held by the Company were:

	March 31, 2021				December 31, 2020
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2018 Term Loan Facility	$	140,000	$	138,950	$	140,000	$	137,200
2020 Term Loan Facility	$	516,863	$	525,908	$	523,575	$	530,120
6.375% Senior Notes due 2026	$	277,041	$	291,239	$	277,041	$	277,054

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Derivatives and Hedging Transactions (Tables)

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Values of Outstanding Derivatives

The following table summarizes the gross fair value of the Company’s outstanding derivatives and the lines in which they are presented on the condensed consolidated balance sheet.

	Derivative Assets				Derivative Liabilities
(in thousands)	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Prepaid expenses and other current assets	$	1,863	$	4,576	$	—	$	—
Accrued expenses and other current liabilities	—		—		4,839		$	6,561
	$	1,863	$	4,576	$	4,839	$	6,561

The following table summarizes the notional values of the Company’s outstanding derivatives:

(in thousands)	March 31, 2021		December 31, 2020
Notional value of foreign currency forward contracts	$	534,216	$	483,377

Schedule of Gain (Loss) on Derivative Instruments

The loss of all derivative instruments recognized is summarized below:

	Three Months Ended March 31,
(in thousands)	2021		2020
Loss reclassified from AOCI to income on cash flow hedges:
Cost of goods and services	$	754	$	—
Loss on derivatives not designated as hedging instruments:
Other (income) expense, net	667		—
Total loss of derivative instruments	$	1,421	$	—

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Inventories (Tables)

3 Months Ended

Mar. 31, 2021

Inventory, Net [Abstract]

Components of Inventory

Inventories consisted of the following:

(in thousands)	March 31, 2021		December 31, 2020
Raw materials	$	132,447	$	137,038
Work in progress	11,956		9,509
Finished goods	349,994		323,144
	494,397		469,691
Inventory reserve	(29,813)		(24,769)
LIFO adjustments (1)	(29,312)		(14,810)
Inventories, net	$	435,272	$	430,112

_______________________

(1) Represents the amount by which LIFO inventories exceeded their carrying value.

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Merger Transaction - Narrative (Details) - Legacy ChampionX shares in Millions	Jun. 03, 2020 $ / shares shares
Business Acquisition [Line Items]
Number of shares issued (in shares) | shares	122.2
Share price (in dollars per share) | $ / shares	$ 10.34
Percentage of equity interest acquired	100.00%

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Merger Transaction - Schedule of Preliminary Purchase Price Allocation (Details) - Legacy ChampionX $ in Thousands	Jun. 03, 2020 USD ($)
Business Acquisition [Line Items]
Equity consideration	$ 1,263,931
Replacement awards attributable to pre-combination services	43,964
Unfavorable supply agreement	46,000
Favorable supply agreement	(59,000)
Fair value of consideration transferred	$ 1,294,895
Cross Supply and Product Transfer Agreement
Business Acquisition [Line Items]
Useful life of intangible assets recognized	3 years

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Merger Transaction - Schedule of Preliminary Allocation of Purchase Price (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Jun. 03, 2020
Business Acquisition [Line Items]
Goodwill	$ 686,455	$ 680,594
Legacy ChampionX
Business Acquisition [Line Items]
Cash and cash equivalents			$ 57,588
Receivables			394,432
Inventories			340,000
Prepaid expenses and other current assets			63,576
Property, plant, and equipment			687,085
Identifiable intangible assets			290,000
Other non-current assets			156,427
Total identifiable assets acquired			1,989,108
Accounts payable			184,028
Other current liabilities			172,997
Long-term debt			537,000
Deferred tax liabilities			103,956
Other liabilities			98,970
Total liabilities assumed			1,096,951
Net identifiable assets acquired			892,157
Add: Negative fair value of non-controlling interests			16,052
Goodwill			386,686
Total net assets acquired			1,294,895
Short-term debt			$ 26,900

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Merger Transaction - Schedule of Pro Forma Information (Details) - Legacy ChampionX $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Business Acquisition [Line Items]
Revenues	$ 820,695
Net income (loss) attributable to ChampionX	(734,425)
Goodwill and long-lived asset impairment charges	$ 805,000

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Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Segment revenue:
Revenue	$ 684,888	$ 261,434
Segment operating profit (loss):
Interest expense, net	13,971	9,039
Income (loss) before income taxes	6,819	(660,461)
Operating Segments
Segment operating profit (loss):
Income (loss) before income taxes	38,877	(637,232)
Operating Segments | Production Chemical Technologies
Segment revenue:
Revenue	412,371	0
Segment operating profit (loss):
Income (loss) before income taxes	30,357	0
Operating Segments | Production & Automation Technologies
Segment revenue:
Revenue	166,845	205,479
Segment operating profit (loss):
Income (loss) before income taxes	5,362	(648,591)
Operating Segments | Drilling Technologies
Segment revenue:
Revenue	34,994	55,955
Segment operating profit (loss):
Income (loss) before income taxes	6,386	11,359
Operating Segments | Reservoir Chemical Technologies
Segment revenue:
Revenue	29,891	0
Segment operating profit (loss):
Income (loss) before income taxes	(3,228)	0
Corporate Expense and Other
Segment revenue:
Revenue	40,787	0
Segment operating profit (loss):
Income (loss) before income taxes	$ 18,087	$ 14,190

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Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Total revenue	$ 684,888	$ 261,434
United States
Disaggregation of Revenue [Line Items]
Total revenue	342,810	195,370
Canada
Disaggregation of Revenue [Line Items]
Total revenue	78,534	17,952
Middle East & Africa
Disaggregation of Revenue [Line Items]
Total revenue	81,003	12,363
Europe
Disaggregation of Revenue [Line Items]
Total revenue	50,736	12,030
Australia
Disaggregation of Revenue [Line Items]
Total revenue	16,142	9,268
Latin America
Disaggregation of Revenue [Line Items]
Total revenue	80,708	7,582
Asia-Pacific
Disaggregation of Revenue [Line Items]
Total revenue	20,430	5,486
Other
Disaggregation of Revenue [Line Items]
Total revenue	14,525	1,383
Corporate
Disaggregation of Revenue [Line Items]
Total revenue	40,787	0
Corporate | United States
Disaggregation of Revenue [Line Items]
Total revenue	25,556	0
Corporate | Canada
Disaggregation of Revenue [Line Items]
Total revenue	158	0
Corporate | Middle East & Africa
Disaggregation of Revenue [Line Items]
Total revenue	5,583	0
Corporate | Europe
Disaggregation of Revenue [Line Items]
Total revenue	2,257	0
Corporate | Australia
Disaggregation of Revenue [Line Items]
Total revenue	0	0
Corporate | Latin America
Disaggregation of Revenue [Line Items]
Total revenue	1,431	0
Corporate | Asia-Pacific
Disaggregation of Revenue [Line Items]
Total revenue	5,802	0
Corporate | Other
Disaggregation of Revenue [Line Items]
Total revenue	0	0
Production Chemical Technologies | Operating Segments
Disaggregation of Revenue [Line Items]
Total revenue	412,371	0
Production Chemical Technologies | Operating Segments | United States
Disaggregation of Revenue [Line Items]
Total revenue	149,864	0
Production Chemical Technologies | Operating Segments | Canada
Disaggregation of Revenue [Line Items]
Total revenue	61,292	0
Production Chemical Technologies | Operating Segments | Middle East & Africa
Disaggregation of Revenue [Line Items]
Total revenue	58,370	0
Production Chemical Technologies | Operating Segments | Europe
Disaggregation of Revenue [Line Items]
Total revenue	42,608	0
Production Chemical Technologies | Operating Segments | Australia
Disaggregation of Revenue [Line Items]
Total revenue	6,395	0
Production Chemical Technologies | Operating Segments | Latin America
Disaggregation of Revenue [Line Items]
Total revenue	71,616	0
Production Chemical Technologies | Operating Segments | Asia-Pacific
Disaggregation of Revenue [Line Items]
Total revenue	10,492	0
Production Chemical Technologies | Operating Segments | Other
Disaggregation of Revenue [Line Items]
Total revenue	11,734	0
Production & Automation Technologies | Operating Segments
Disaggregation of Revenue [Line Items]
Total revenue	166,845	205,479
Production & Automation Technologies | Operating Segments | United States
Disaggregation of Revenue [Line Items]
Total revenue	126,374	154,430
Production & Automation Technologies | Operating Segments | Canada
Disaggregation of Revenue [Line Items]
Total revenue	12,528	13,124
Production & Automation Technologies | Operating Segments | Middle East & Africa
Disaggregation of Revenue [Line Items]
Total revenue	10,272	11,905
Production & Automation Technologies | Operating Segments | Europe
Disaggregation of Revenue [Line Items]
Total revenue	1,983	6,339
Production & Automation Technologies | Operating Segments | Australia
Disaggregation of Revenue [Line Items]
Total revenue	9,576	9,222
Production & Automation Technologies | Operating Segments | Latin America
Disaggregation of Revenue [Line Items]
Total revenue	4,642	7,560
Production & Automation Technologies | Operating Segments | Asia-Pacific
Disaggregation of Revenue [Line Items]
Total revenue	1,463	1,978
Production & Automation Technologies | Operating Segments | Other
Disaggregation of Revenue [Line Items]
Total revenue	7	921
Drilling Technologies | Operating Segments
Disaggregation of Revenue [Line Items]
Total revenue	34,994	55,955
Drilling Technologies | Operating Segments | United States
Disaggregation of Revenue [Line Items]
Total revenue	25,407	40,940
Drilling Technologies | Operating Segments | Canada
Disaggregation of Revenue [Line Items]
Total revenue	3,827	4,828
Drilling Technologies | Operating Segments | Middle East & Africa
Disaggregation of Revenue [Line Items]
Total revenue	716	458
Drilling Technologies | Operating Segments | Europe
Disaggregation of Revenue [Line Items]
Total revenue	2,499	5,691
Drilling Technologies | Operating Segments | Australia
Disaggregation of Revenue [Line Items]
Total revenue	117	46
Drilling Technologies | Operating Segments | Latin America
Disaggregation of Revenue [Line Items]
Total revenue	0	22
Drilling Technologies | Operating Segments | Asia-Pacific
Disaggregation of Revenue [Line Items]
Total revenue	1,553	3,508
Drilling Technologies | Operating Segments | Other
Disaggregation of Revenue [Line Items]
Total revenue	875	462
Reservoir Chemical Technologies | Operating Segments
Disaggregation of Revenue [Line Items]
Total revenue	29,891	0
Reservoir Chemical Technologies | Operating Segments | United States
Disaggregation of Revenue [Line Items]
Total revenue	15,609	0
Reservoir Chemical Technologies | Operating Segments | Canada
Disaggregation of Revenue [Line Items]
Total revenue	729	0
Reservoir Chemical Technologies | Operating Segments | Middle East & Africa
Disaggregation of Revenue [Line Items]
Total revenue	6,062	0
Reservoir Chemical Technologies | Operating Segments | Europe
Disaggregation of Revenue [Line Items]
Total revenue	1,389	0
Reservoir Chemical Technologies | Operating Segments | Australia
Disaggregation of Revenue [Line Items]
Total revenue	54	0
Reservoir Chemical Technologies | Operating Segments | Latin America
Disaggregation of Revenue [Line Items]
Total revenue	3,019	0
Reservoir Chemical Technologies | Operating Segments | Asia-Pacific
Disaggregation of Revenue [Line Items]
Total revenue	1,120	0
Reservoir Chemical Technologies | Operating Segments | Other
Disaggregation of Revenue [Line Items]
Total revenue	$ 1,909	$ 0

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Revenue - Contract Balances (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Revenue from Contract with Customer [Abstract]
Contract liabilities - current	$ 16,993	$ 16,668

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Intangible Assets - Schedule of Definite and Indefinite Lived Intangibles (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 892,082	$ 891,441
Accumulated amortization	438,407	416,032
Net carrying amount	453,675	475,409
Intangible assets, gross (excluding goodwill)	895,682	895,041
Intangible assets, net	457,275	479,009
Trademarks
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived Intangible Assets (excluding goodwill)	3,600	3,600
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	593,566	593,068
Accumulated amortization	332,497	321,298
Net carrying amount	261,069	271,770
Trademarks
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	59,875	59,881
Accumulated amortization	28,927	27,565
Net carrying amount	30,948	32,316
Patents
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	38,749	38,635
Accumulated amortization	29,827	29,289
Net carrying amount	8,922	9,346
Unpatented technologies
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	133,697	133,700
Accumulated amortization	24,290	19,958
Net carrying amount	109,407	113,742
Cross Supply and Product Transfer Agreement
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	59,000	59,000
Accumulated amortization	16,118	11,308
Net carrying amount	42,882	47,692
Drawings and manuals
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	1,797	1,783
Accumulated amortization	1,797	1,783
Net carrying amount	0	0
Other
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	5,398	5,374
Accumulated amortization	4,951	4,831
Net carrying amount	$ 447	$ 543

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Debt - Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Total	$ 933,904	$ 940,616
Net unamortized discounts and issuance costs	(7,585)	(8,002)
Total long-term debt	926,319	932,614
Current portion of long-term debt	(26,850)	(26,850)
Long-term debt, less current portion	899,469	905,764
Line of Credit
Debt Instrument [Line Items]
Total	0	0
Term Loan Facility | 2018 Term Loan Facility
Debt Instrument [Line Items]
Total	140,000	140,000
Term Loan Facility | 2020 Term Loan Facility
Debt Instrument [Line Items]
Total	$ 516,863	$ 523,575
Senior Notes | 6.375% Senior Notes Due May 2026
Debt Instrument [Line Items]
Debt interest rate	6.375%	6.375%
Total	$ 277,041	$ 277,041

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Debt - Narrative (Details) - USD ($) $ in Millions	Jun. 03, 2020	Mar. 31, 2021
2020 Term Loan Facility
Debt Instrument [Line Items]
Mandatory quarterly amortization payments	$ 6.7
Weighted average interest rate		6.00%
2018 Term Loan Facility
Debt Instrument [Line Items]
Weighted average interest rate		2.64%

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Commitments and Contingencies (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) case location	Dec. 31, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Letters of credit outstanding and surety bonds, amount	$ 88.0	$ 88.8
Number of locations | location	11
Accrued liability - environmental	$ 7.7	$ 2.0
Number of pending cases | case	3

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Restructuring and Other Related Charges - Schedule of Restructuring and Other Related Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 4,256	$ 2,766
Cost of goods and services
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3,484	2,039
Selling, general and administrative expense
Restructuring Cost and Reserve [Line Items]
Restructuring charges	772	727
Production Chemical Technologies
Restructuring Cost and Reserve [Line Items]
Restructuring charges	688	0
Production & Automation Technologies
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3,524	671
Drilling Technologies
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	2,095
Reservoir Chemical Technologies
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 44	$ 0

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Restructuring and Other Related Charges - Restructuring Reserve Rollforward (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Restructuring and Related Activities [Abstract]
Beginning balance	$ 2,951
Restructuring charges and asset write downs	2,448
Payments	(2,409)
Other, including foreign currency translation	(6)
Ending balance	$ 2,984

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Equity and Cash Incentive Programs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Stock-based compensation expense [Abstract]
Stock-based compensation expense	$ 6,442	$ 2,429
Tax benefit	(1,353)	(599)
Stock-based compensation expense, net of tax	$ 5,089	$ 1,830
Stock-Settled Appreciation Rights
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding, beginning balance (in shares)	415,331
Granted (in shares)	0
Forfeited (in shares)	(2,134)
Exercised/vested (in shares)	0
Outstanding, ending balance (in shares)	413,197
Performance Share Awards
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding, beginning balance (in shares)	278,763
Granted (in shares)	333,037
Forfeited (in shares)	0
Exercised/vested (in shares)	0
Outstanding, ending balance (in shares)	611,800
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding, beginning balance (in shares)	2,669,779
Granted (in shares)	838,399
Forfeited (in shares)	(61,057)
Exercised/vested (in shares)	(94,680)
Outstanding, ending balance (in shares)	3,352,441
Non-Qualified Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Outstanding, beginning balance (in shares)	7,175,040
Granted (in shares)	0
Forfeited (in shares)	(29,981)
Exercised/vested (in shares)	(577,276)
Outstanding, ending balance (in shares)	6,567,783

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Accumulated Other Comprehensive Loss - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 1,625,971
Other comprehensive income (loss)	3,793	$ (10,953)
Ending balance	1,644,769
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(30,755)	(44,037)
Other comprehensive income (loss) before reclassifications, net of tax	3,626	(11,052)
Reclassification adjustment for net losses included in net income, net of tax	167	99
Other comprehensive income (loss)	3,793	(10,953)
Ending balance	(26,962)	(54,990)
Foreign Currency Translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(14,965)	(35,210)
Other comprehensive income (loss) before reclassifications, net of tax	3,213	(11,052)
Reclassification adjustment for net losses included in net income, net of tax	0	0
Other comprehensive income (loss)	3,213	(11,052)
Ending balance	(11,752)	(46,262)
Defined Pension and Other Post-Retirement Benefits
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(13,470)	(8,827)
Other comprehensive income (loss) before reclassifications, net of tax	0	0
Reclassification adjustment for net losses included in net income, net of tax	167	99
Other comprehensive income (loss)	167	99
Ending balance	(13,303)	(8,728)
Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(2,320)	0
Other comprehensive income (loss) before reclassifications, net of tax	413	0
Reclassification adjustment for net losses included in net income, net of tax	0	0
Other comprehensive income (loss)	413	0
Ending balance	$ (1,907)	$ 0

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Accumulated Other Comprehensive Loss - Reclassifications from Accumulated Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (income) expense, net	$ (1,936)	$ (1,633)
Income (loss) before income taxes	(6,819)	660,461
Provision for (benefit from) income taxes	2,782	(27,006)
Net income (loss)	(4,037)	633,455
Amortization of actuarial loss and net transition obligation | Reclassification out of Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (income) expense, net	214	132
Accumulated defined benefit plans adjustment including portion attributable to noncontrolling interest | Reclassification out of Accumulated Other Comprehensive Loss
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income (loss) before income taxes	214	132
Provision for (benefit from) income taxes	(47)	(33)
Net income (loss)	$ 167	$ 99

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Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Net income (loss) attributable to ChampionX	$ 5,772	$ (633,728)
Weighted-average number of shares outstanding (in shares)	200,580	77,477
Dilutive effect of stock-based compensation (in shares)	6,691	0
Total shares and dilutive securities (in shares)	207,271	77,477
Basic earnings (loss) per share attributable to ChampionX (in dollars per share)	$ 0.03	$ (8.18)
Diluted earnings (loss) per share attributable to ChampionX (in dollars per share)	$ 0.03	$ (8.18)
Potentially diluted securities excluded as anti-dilutive (in shares)	400

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 1,863	$ 4,576
Derivative liabilities	4,839	6,561
Carrying Amount	933,904	940,616
Term Loan Facility | 2018 Term Loan Facility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Amount	140,000	140,000
Term Loan Facility | 2018 Term Loan Facility | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	138,950	137,200
Term Loan Facility | 2020 Term Loan Facility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Amount	516,863	523,575
Term Loan Facility | 2020 Term Loan Facility | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 525,908	$ 530,120
Senior Notes | 6.375% Senior Notes Due May 2026
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt interest rate	6.375%	6.375%
Carrying Amount	$ 277,041	$ 277,041
Senior Notes | 6.375% Senior Notes Due May 2026 | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	291,239	277,054
Foreign currency forward contracts | Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	1,863	4,576
Derivative liabilities	$ 4,839	$ 6,561

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Derivatives and Hedging Transactions - Schedule of Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Derivative Asset [Abstract]
Derivative assets	$ 1,863	$ 4,576
Derivative Liability [Abstract]
Derivative liabilities	4,839	6,561
Prepaid expenses and other current assets
Derivative Asset [Abstract]
Derivative assets	1,863	4,576
Accrued expenses and other current liabilities
Derivative Liability [Abstract]
Derivative liabilities	$ 4,839	$ 6,561

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Derivatives and Hedging Transactions - Schedule of Derivative Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Foreign currency forward contracts
Derivative [Line Items]
Notional value of foreign currency forward contracts	$ 534,216	$ 483,377

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Derivatives and Hedging Transactions - Schedule of Gain (Loss) on Derivative Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total loss of derivative instruments	$ 1,421	$ 0
Cost of goods and services | Designated as Hedging Instrument
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total loss of derivative instruments	754	0
Other (income) expense, net | Not Designated as Hedging Instrument
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Total loss of derivative instruments	$ 667	$ 0

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Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Inventory, Net [Abstract]
Raw materials	$ 132,447	$ 137,038
Work in progress	11,956	9,509
Finished goods	349,994	323,144
Subtotal	494,397	469,691
Inventory reserve	(29,813)	(24,769)
LIFO adjustments	(29,312)	(14,810)
Inventories, net	$ 435,272	$ 430,112

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Cash Flow Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Supplemental Cash Flow Elements [Abstract]
Transfers from inventory	$ 8.5	$ 7.2