DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

On November 1, 2022, we completed the Quest Integrity Transaction with Baker Hughes for an aggregate purchase price of approximately $279 million, reflecting certain estimated post-closing adjustments, in accordance with the Sale Agreement. We used the net proceeds from the sale of Quest Integrity to pay down $225.0 million of term debt and certain fees associated with that repayment and related accrued interest, with the remainder reserved for general corporate purposes, thereby reducing our future debt service obligations and leverage, and improving our liquidity. Quest Integrity previously represented a reportable segment. Following the completion of the Quest Integrity Transaction, we now operate in two segments, IHT and MS. Refer to Note 1 – Summary of Significant Accounting Policies and Practices for additional details regarding the Quest Integrity Transaction.

Our condensed consolidated balance sheets and condensed consolidated statements of operations report discontinued operations separate from continuing operations. Our condensed consolidated statements of comprehensive loss, statements of equity and statements of cash flows combine continuing and discontinued operations. A summary of financial information related to our discontinued operations is presented in the tables below.

The table below represents the reconciliation of the major line items consisting of pretax income from discontinued operations to the after-tax income from discontinued operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Major classes of line items constituting income (loss) from discontinued operations
Revenues	$	29,441	$	19,531	$	88,704	$	59,858
Operating expenses	(12,052)		(10,720)		(39,508)		(32,878)
Selling, general and administrative expenses	(8,832)		(7,109)		(26,422)		(19,531)
Restructuring and other related charges, net	—		—		—		(297)
Interest expense, net	(78)		(61)		(108)		(204)
Other expense	(2,675)		(856)		(4,934)		(1,964)
Income before income taxes from discontinued operations	5,804		785		17,732		4,984
Provision for income taxes	(2,057)		(1,521)		(1,464)		(1,004)
Net income (loss) from discontinued operations	$	3,747	$	(736)	$	16,268	$	3,980

The table below represents the reconciliation of the major classes of assets and liabilities of the discontinued operations to amounts presented separately in the condensed consolidated balance sheets (in thousands):

	September 30, 2022		December 31, 2021
	(unaudited)
Carrying amount of major classes of assets included as part of discontinued operations
Cash and cash equivalents	$	10,641	$	10,122
Accounts receivable, net	25,640		20,499
Prepaid expenses and other current assets	8,077		3,805
Property, plant and equipment, net	17,131		15,879
Goodwill and intangible assets, net	25,311		26,823
Other classes of assets that are not major	1,870		5,968
Total assets associated with discontinued operations	$	88,670	$	83,096
Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable	$	1,923	$	2,125
Other accrued liabilities	13,162		9,363
Operating lease obligations	1,812		2,368
Other classes of liabilities that are not major	2,478		2,540
Total liabilities associated with discontinued operations	$	19,375	$	16,396

The assets and liabilities in discontinued operations are measured at the lower of their carrying value and fair value less cost to sell. During the three months and nine months ended September 30, 2022, it was not necessary to write-down any assets or liabilities attributable to the disposal group in discontinued operations to fair value, less costs to sell. Quest Integrity had $0.02 million and $0.3 million of accrued capital expenditures as of September 30, 2022 and September 30, 2021, respectively, which are excluded from the condensed consolidated statements of cash flows until paid.

The following table presents the depreciation and amortization and capital expenditures of Quest Integrity (in thousands):

	Nine Months Ended September 30,
	2022		2021
Cash flows provided by operating activities of discontinued operations:
Depreciation and amortization	$	1,143	$	2,016
Cash flows provided by investing activities of discontinued operations:
Capital expenditures	$	3,703	$	2,365