ChampionX Corp - Annual Report: 2023 (Form 10-K)

Earnings per share attributable to ChampionX: Basic$ $ $ Diluted$ $ $ Weighted-average shares outstanding:Basic Diluted

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

CHAMPIONX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended December 31,
(in thousands)	2023	2022	2021
Net income	$	$	$
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	()	()	()
Cash flow hedges	()
Pension and other post-retirement benefit plans	()
Accumulated deficit	()	()
Accumulated other comprehensive loss	()	()
ChampionX stockholders’ equity
Noncontrolling interest	()	()
Total equity
Total liabilities and equity	$	$

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

CHAMPION X CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in thousands)	2023	2022	2021
Cash provided by (used for) operating activities:
Net income	$	$	$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Loss (gain) on disposal groups			()
Loss on goodwill and long-lived asset impairments
Stock-based compensation
Provision for inventory obsolescence and write-downs
Loss on debt extinguishment and modification
Deferred income tax expense (benefit)	()	()	()
Gain on disposal of fixed assets	()	()	()
Amortization of deferred loan costs and accretion of discount
Other
Changes in operating assets and liabilities:
Receivables		()	()
Inventories		()	()
Leased assets	()	()	()
Other assets		()
Accounts payable	()	()
Other liabilities	()		()
Net cash provided by operating activities

Cash provided by (used for) investing activities:
Capital expenditures	()	()	()
Proceeds from disposal of business
Proceeds from sale of fixed assets
Acquisitions, net of cash acquired		()	()
Purchase of investments			()
Net cash used for investing activities	()	()	()

Cash provided by (used for) financing activities:
Proceeds from long-term debt
Repayment of long-term debt	()	()	()
Payment of debt issuance costs	()	()
Dividends paid	()	()
Repurchases of common stock	()	()
Proceeds from exercise of stock options
Payments related to taxes withheld on stock-based compensation	()	()	()
Distribution to noncontrolling interest	()	()	()
Payment of finance lease obligations	()	()	()
Proceeds expected to be remitted under the Accounts Receivable Facility
Net cash used for financing activities	()	()	()

Effect of exchange rate changes on cash and cash equivalents	()	()	()

Net increase (decrease) in cash and cash equivalents		()
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period	$	$	$

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

CHAMPIONX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Common stock

Accum. Deficit

Accum.
Other
Comp.
Loss

Non-
controlling
Interest

Total

(in thousands)

Par
Value

Capital in
excess of
par value

December 31, 2020

()

Net income

—

Other comprehensive income

—

Stock-based compensation

—

Stock options exercised

—

Taxes withheld on issuance of stock-based awards

—

()

—

()

Distributions declared and paid to noncontrolling interest

—

()

Currency translation adjustments

—

()

December 31, 2021

()

Net income

—

Other comprehensive loss

—

()

—

()

Stock-based compensation

—

Stock options exercised

—

Taxes withheld on issuance of stock-based awards

—

()

—

()

Dividends declared to common stockholders ($ per share)

—

()

—

()

Repurchase and cancellation of common stock

()

—

()

Distributions declared and paid to noncontrolling interest

—

()

Currency translation adjustments

—

December 31, 2022

()

Net income

—

Other comprehensive loss

—

()

—

()

Stock-based compensation

—

Stock options exercised

—

Taxes withheld on issuance of stock-based awards

—

()

—

()

Dividends declared to common stockholders ($ per share)

—

()

—

()

Repurchase and cancellation of common stock

()

—

()

Distributions declared and paid to noncontrolling interest

—

()

—

()

Currency translation adjustments

—

Contract assets primarily relate to work completed for performance obligations that are satisfied over time and are recorded in prepaid expenses and other current assets on our consolidated balance sheets. Contract assets are transferred to receivables when the right to consideration becomes unconditional. Contract liabilities relate to billings or consideration received in advance of performance (obligation to transfer goods or services to a customer) under the contract. Contract liabilities are recognized as revenue when the performance obligation has been performed, which primarily occurs during the subsequent quarter. Current contract liabilities are recorded in accrued expenses and other current liabilities on our consolidated balance sheets.

NOTE 6—

$ Buildings and improvements Software Machinery, equipment and other Accumulated depreciation()()Property, plant and equipment, net$ $

Depreciation expense was $ million, $ million, and $ million for the years ended December 31, 2023, 2022, and 2021, respectively.

NOTE 7—

$ $ $ $

Acquisition (1)

Allocated to disposal group (2)

() ()Impairment ()()Foreign currency translation () () December 31, 2022 2022 Term Loan Facility

Components of total lease cost—

$ Interest on lease liabilities Operating lease cost Short-term and variable lease cost Sublease income Total lease cost$ $

Lease term and discount rate—

Finance leaseWeighted-average discount rate:Operating lease % %Finance lease % %

$ 2025 2026 2027 2028 Thereafter Total future minimum lease payments Interest included within lease payments()()Total lease liabilities$ $

Lessor Accounting

Lease revenue is primarily generated from our ESP leased asset program within our Production & Automation Technologies segment. An ESP rental unit has components consisting of surface, downhole and cable equipment. The average length of these arrangements generally range from months to months. Lease revenue for our leased asset programs was $ million and $ million for the years ended December 31, 2023 and 2022, respectively.

Leased assets—

months$ Downhole equipment months Surface equipment years Other lease equipment

- years

Accumulated depreciation()Leased assets, net$

Depreciation expense on our leased assets was $ million and $ million for the year ended December 31, 2023 and 2022, respectively.

NOTE 11—

million consisting primarily of contract termination costs, inventory obsolescence, and employee severance and related benefits. We approved various restructuring plans related to the consolidation of product lines and associated facility closures and workforce reductions during prior periods. During 2022, we completed the exit of one of our product lines within the Reservoir Chemical Technologies segment. As a result, we recognized net charges of $ million during 2022, consisting primarily of contract termination costs, employee severance and related benefits, disposals of equipment and warehouse closures, partially offset by gains realized on the sale of facilities. During 2021, we recorded restructuring and other charges of $ million.

$ $ Production & Automation Technologies Drilling Technologies Reservoir Chemical Technologies Corporate and other Total$ $ $ Statements of Income classification:Cost of goods and services$ $ $ Selling, general and administrative expense Total$ $ $

Our liability balance for restructuring and other related charges at December 31, 2023 reflects contract termination costs, employee severance and related benefits initiated during the period.

Restructuring charges Asset sales and write-offs()Payments()Other, including foreign currency translation()December 31, 2023$

NOTE 12—

million net actuarial loss, and gains in the amount of $ million and $ million during the years ended December 31, 2023, 2022, and 2021, respectively. The actuarial gains and losses are reflected in our consolidated statements of comprehensive income, net of tax. The net unfunded liability of the plans as of December 31, 2023 and 2022 was approximately $ million and $ million, respectively, and is included in other long-term liabilities within our consolidated balance sheets. The net periodic benefit expense was $ million, $ million, and $ million for the years ended December 31, 2023, 2022, and 2021, respectively.

NOTE 13—

million, and in 2021 to increase the shares of common stock reserved for issuance to million, in each case subject to customary adjustments arising from stock splits and other similar changes, along with other amendments.

The 2018 Plan authorizes the grant of stock options, stock-settled stock appreciation rights (“SARs”), restricted stock awards, restricted stock units, performance share awards, cash performance awards, directors’ shares and deferred stock units. The ChampionX Compensation Committee determines the exercise price for options and the base price of SARs, which may not be less than the fair value of ChampionX common stock on the date of grant. Generally, stock options or SARs vest after years of service and expire at the end of years. Performance share awards vest if ChampionX achieves certain pre-established performance targets based on specified performance criteria over a performance period of not less than years.

million allocated to post-combination services was recorded as stock-based compensation expense over each employees’ remaining service period of approximately from the Merger date.

Stock-based compensation expense is reported within selling, general and administrative expense in the consolidated statements of income.

$ $ Tax benefit()()()Stock-based compensation expense, net of tax$ $ $

SARs

We did not issue SARs during 2023, 2022 or 2021.

$ Forfeited / expired() Exercised() Outstanding at December 31, 2023 $ $ Exercisable at December 31, 2023 $ $

There is unrecognized compensation expense related to SARs, as all SARs are exercisable as of December 31, 2023.

$ $ Aggregate intrinsic value of SARs exercised

Performance Share Awards - ChampionX

Market Vesting Conditions

We granted , , and performance share awards subject to market vesting conditions during 2023, 2022, and 2021, respectively, under the 2018 Plan. These awards vest if ChampionX achieves certain pre-established performance targets based on specified performance criteria over a performance period of not less than years. The performance targets for these awards are classified as a market vesting condition, therefore the compensation cost was calculated using the grant date fair value, as estimated using a Monte Carlo simulation, and is not subject to change based on future events.

$ $

$ Granted Forfeited() Vested()

Performance adjustment (1)

Unvested at December 31, 2023 $

_______________________

(1)Represents the additional shares that were issued to participants upon vesting of the awards due to the performance factor being exceeded for the performance period.

Unrecognized compensation expense related to unvested performance share awards as of December 31, 2023, was $ million, which will be recognized over a weighted average period of years.

period.

Directors’ shares are granted at no cost to non-employee directors and deferred stock units are recorded for non-employee directors who elect to defer receipt of their directors’ shares to a later date.

$ Granted Forfeited() Vested() Unvested at December 31, 2023 $

_______________________

(1)Shares unvested on the dates indicated includes deferred stock units recorded for non-employee directors who elected to defer receipt of directors’ shares awarded to a later date; shares granted includes directors’ shares and deferred stock units awarded in the year; and shares vested includes directors’ shares awarded in the year and deferred stock units recorded in previous years that were issued in accordance with a non-employee director’s deferral election.

Unrecognized compensation expense relating to unvested restricted stock units, directors’ shares and deferred stock units as of December 31, 2023, was $ million, which will be recognized over a weighted average period of year.

Non-Qualified Stock Options

We did not grant non-qualified stock options in 2023, 2022 or 2021. All outstanding non-qualified stock options were issued to employees of the Chemical Technologies business upon the closing of the Merger as replacement awards for options originally granted to them by Ecolab.

$ Granted Forfeited / expired() Exercised() Outstanding at December 31, 2023 $ $ Exercisable at December 31, 2023 $ $

We had unrecognized compensation expense relating to unvested stock options as of December 31, 2023.

During the year ended December 31, 2023, the total intrinsic value of stock options exercised was approximately $ million and cash received from stock options exercised was approximately $ million. The cash tax benefit from stock options exercised during the year ended December 31, 2023 was approximately $ million.

NOTE 14—

per share of the Company’s common stock. Our January 2024 cash dividend of $ per share was declared on November 9, 2023, and was paid on January 26, 2024 to shareholders of record on January 5, 2024. As a result, we recorded a dividend payable of $ million on our consolidated balance sheet as of December 31, 2023.

On January 31, 2024, our Board approved an increase of our regular quarterly cash dividend to $ per share of the Company’s common stock and declared our next quarterly cash dividend payable on April 26, 2024 to shareholders of record on April 5, 2024. Subsequent dividend declarations, if any, including the amounts and timing of future dividends, are subject to approval by the Board and will depend on future business conditions, financial conditions, results of operations and other factors.

Repurchases

On March 7, 2022, the Company announced that our Board authorized the Company to repurchase up to $ million of its common stock, which was increased to $ million by the Board on October 24, 2022. On January 31, 2024, our Board authorized an increase in the aggregate value of shares that may be repurchased under the share repurchase program to $ billion.

This program has no time limit and does not obligate the Company to acquire any particular amount of shares of its common stock. During 2023, we repurchased and cancelled shares of common stock at a volume-weighted average price of $ per share for a total of $ million including commissions.

NOTE 15—

$ $ Weighted-average number of shares outstanding Dilutive effect of stock-based compensation Total shares and dilutive securities Basic earnings per share attributable to ChampionX$ $ $ Diluted earnings per share attributable to ChampionX$ $ $

million, million, and million shares, respectively, that were excluded because their inclusion would be anti-dilutive.

NOTE 16—

$ Interest rate swapsLevel 2 Total$ $ LiabilitiesForeign currency forward contractsLevel 2$ $ Interest rate swapsLevel 2 Total$ $

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 17—Derivatives and Hedging Transactions for further discussion of gross versus net presentation of the Company’s derivatives.

The fair value of our term loan facility is based on Level 2 quoted market prices for the same or similar debt instruments. The fair value of our revolving line of credit approximates carrying value due to the variable interest rates charged on the borrowings, which reprice frequently (Level 2).

$ $ $ 2022 Term Loan Facility$ $ $ $

Impairment of Goodwill and Long-lived Assets

We consider the inputs for our long-lived asset and goodwill impairment calculations to be Level 3 inputs in the fair value hierarchy. See Note 7—Goodwill and Intangible Assets for additional information.

Credit Risk

By their nature, financial instruments involve risk, including credit risk, for non-performance by counterparties. Financial instruments that potentially subject us to credit risk primarily consist of trade receivables. See Note 1—Basis of Presentation and Summary of Significant Accounting Policies for additional information on the mitigation of credit risk.

NOTE 17—

$ $— $— Other non-current assets — — Accrued expenses and other current liabilities— — Other long-term liabilities— — $ $ $ $

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


	December 31,
(in thousands)	2023	2022
Notional value of foreign currency forward contracts and interest rate swaps	$	$

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 consolidated statements of income as the underlying exposure being hedged. The forward points are marked-to-market monthly and recognized in the same line item in the consolidated statements of income as the underlying exposure being hedged.

)$()$ Interest expense() Loss on derivatives not designated as hedging instruments:Foreign currency transaction losses, net Total gain of derivative instruments$()$ $

NOTE 18—

$ $()Foreign Income before income taxes$ $ $

Provision for (benefit from) income taxes—

$ $ State and local Foreign Total current Deferred:U.S. federal()()()State and local()()()Foreign()() Total deferred ()()()Provision for income taxes$ $ $

% % %Net difference resulting from:State and local taxes, net of federal income tax benefit Foreign withholding tax Foreign derived intangible income()()()Foreign operations tax effect ()Research and experimentation tax credits()()()Foreign tax credit()()()Nondeductible expenses Branch income Tax return to accrual adjustments()()()State deferred taxes()() Goodwill impairment Foreign inclusions (including global intangible low-taxed income) Change in valuation allowance () Stock compensation()()()Nondeductible officer compensation Other ()Effective income tax rate % % %

$ Accrued expenses Inventories Net operating loss and other carryforwards Accounts receivable Lease liability Research and Development Long-term liabilities Other assets Deferred tax assets Valuation allowance()()Deferred tax assets, net of valuation allowance$ $ Deferred tax liabilities attributable to:Inventories$()$()Intangible assets, including goodwill()()Property, plant and equipment()()Foreign withholding taxes()()Lease asset()()Investment in subsidiary()()Long-term liabilities() Deferred tax liabilities()()Net deferred tax liabilities$()$()Classified as follows in the consolidated balance sheets:Assets held for sale$ $ Other non-current assets Liabilities held for sale ()Deferred income taxes()()Net deferred tax liabilities$()$()

Effective Tax Rate. Our effective tax rate was % for 2023 compared to % for 2022. The lower effective tax rate for 2022 was primarily due to the release of valuation allowance on the deferred tax asset of a foreign affiliate.

Net operating loss carryforwards. As of December 31, 2023, our deferred tax asset balance included non-U.S. net operating loss carryforwards of $ million. This entire balance is available to be carried forward; certain non-U.S. carryforwards will expire during the years 2027 through 2039.

Foreign tax credit carryforwards. As of December 31, 2023, our deferred tax asset balance included U.S. foreign tax credit carryforwards of $ million. This entire balance is available to be carried forward and will begin to expire during 2029.

Valuation allowance. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. With respect to foreign net operating losses, a significant piece of objective negative evidence evaluated was the cumulative loss incurred in various international jurisdictions over the three-year period ended December 31, 2023. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. In addition, we analyzed our foreign income classification and determined we would not generate sufficient general limitation income to utilize our general limitation foreign tax credits. Based on this evaluation, as of December 31, 2023, we recorded a valuation allowance of $ million relating to net foreign deferred tax assets (including net operating losses) and $ million relating to foreign tax credits to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased if objective negative evidence in the form of cumulative losses are no longer present and additional weight is given to subjective

million of deferred tax liabilities primarily associated with withholding taxes on undistributed earnings generated by foreign subsidiaries. The Company continues to assert permanent reinvestment of the remaining undistributed earnings for which deferred taxes have not been provided for as of December 31, 2023. If there are policy changes, the Company would record the applicable taxes in the period of change. No deferred taxes have been provided for withholding taxes and other taxes on the remaining earnings as of December 31, 2023 as computation of the potential deferred tax liability associated with these undistributed earnings and any other basis differences is not practicable.

NOTE 19—

million, $ million, and $ million, respectively, of distributions to the noncontrolling interest holders in ChampionX Middle East Services LLC. For the years ended December 31, 2023, 2022, and 2021 we declared and paid distributions of $ million, $ million, and $ million respectively, to the noncontrolling interest holders in Champion Arabia Co. Ltd. and $ million, $ million, and million respectively, to the noncontrolling interest holders in Petrochem Performance Products LLC.

million for the year ended December 31, 2023.

NOTE 20—

million in receivables may be sold and remain unpaid under the Accounts Receivable Facility at any time.

million and $ million of accounts receivable were sold in the year ended December 31, 2023 and December 31, 2022, respectively. The accounts receivable sold that remained outstanding as of December 31, 2023 and December 31, 2022 was $ million and $ million, respectively. During each period, cash receipts from the purchaser at the time of the sale were classified as operating activities in our consolidated statement of cash flows. The difference between the carrying amount of the accounts receivable sold and the sum of the cash received is recorded as a loss on sale of receivables in other income (expense), net in our consolidated statements of income. The loss on sale of accounts receivable was $ million for the year ended December 31, 2023 and $ million for the year ended December 31, 2022.

NOTE 21—

million outstanding under the program, which is included in accounts payable on our consolidated balance sheet.

Purchases Payments()Other, including foreign currency translation December 31, 2023$

NOTE 22—

$ $ Cash paid for interest$ $ $ Net increase (decrease) in accounts payable for capital expenditures$ $()$

$ Finance leases - interestOperating$ $ Finance leases - principalFinancing$ $ Supplemental non-cash information on lease liabilities arising from obtaining right-of-use assets:Operating leasesNon-cash$ $ Finance leasesNon-cash$ $

_______________________

(1) Cash required by operating leases is reported net of operating lease expense in the operating section of our consolidated statements of cash flows in accrued expenses and other liabilities.

Leased Asset 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

million, $ million, and $ million, respectively, of inventory into property, plant, and equipment as a result of assets entering our lease 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 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 consolidated statements of cash flows. During the years ended December 31, 2023, 2022, and 2021, we made cash payments of $ million, $ million, and $ million, respectively, for leased asset program equipment.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Processes

We maintain a set of disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2023.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.

The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Changes in Internal Control

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. 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 Exchange Act, 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 our Chemical Technologies business 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 $1,133,294 for the year ended December 31, 2023. The net profit before taxes associated with these sales was 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.

Insider Trading Arrangements and Policies

During the three months ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the or of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information about our executive officers is presented under the caption “Information about our Executive Officers” in Part I, Item 1 of this Annual Report on Form 10-K.

The remaining information required in response to this Item will be included in the definitive proxy statement for our 2024 Annual Meeting of Shareholders to be filed with the SEC and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required in response to this Item will be included in the definitive proxy statement for our 2024 Annual Meeting of Shareholders to be filed with the SEC and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table provides information as of December 31, 2023 with respect to shares of ChampionX common stock that may be issued under our 2018 Plan and under awards assumed when we acquired the Chemical Technologies business from Ecolab in 2020.


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by shareholders	2,673,830	(1)	31.9	(2)	22,184,277	(3)
Equity compensation plans not approved by shareholders	2,728,376	(4)	6.4	(5)	—
Total	5,402,206		n/a		22,184,277

_______________________

(1)Includes 235,125 SSAR awards outstanding, 901,661 PSAs outstanding, assuming performance at target, 1,381,643 RSUs outstanding, and 155,401 deferred stock units credited to non-employee directors pursuant to the 2018 Plan.

(2)The weighted-average exercise price reflects the weighted-average price for outstanding SSAR awards only; it does not include restricted stock awards outstanding or deferred stock units.

(3)Reflects the shares available for grant determined in accordance with the terms of our 2018 Plan, calculated based on (a) one share for each SSAR, (b) three shares for each PSA, RSU and deferred stock unit awarded prior to February 18, 2021, (c) one share for each PSA, RSU and deferred stock unit awarded on or after February 18, 2021, and (d) unvested PSAs issued at the maximum amount of 200%.

(4)Reflects shares subject to outstanding stock options assumed in the acquisition of the Chemical Technologies business from Ecolab in 2020.

(5)The weighted-average exercise price reflects the weighted-average price for outstanding stock option awards only; it does not include restricted stock awards outstanding.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1. Financial Statements:

Our consolidated financial statements are included under Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

2. Financial Statement Schedule and related Report of Independent Registered Public Accounting Firm:

See “Schedule II—Valuation and Qualifying Accounts” and the related Report of Independent Registered Public Accounting Firm included herein. All other financial statement schedules are omitted because of the absence of conditions under which they are required or because information required is shown in the consolidated financial statements and notes thereto in Part II, Item 8 of this Annual Report on Form 10-K.

3. Index of Exhibits:

Incorporated by Reference

Exhibit No

Exhibit Description

Form

Exhibit No.

Filing Date

2 .1

Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019, by and among Ecolab Inc., ChampionX Holding Inc., ChampionX Corporation, and Athena Merger Sub, Inc.

8-K

2.1

December 20, 2019

2.2

Separation and Distribution Agreement , dated as of December 18, 2019, by and among Ecolab Inc., ChampionX Holding Inc., and ChampionX Corporation.

8-K

2.2

December 20, 2019

3.1

Second Amended and Restated Certificate of Incorporation of the Company.

8-K

3.1

May 11, 2023

3.2

Amended and Restated By-Laws of the Company.

8-K

3.2

May 11, 2023

4.1 *

Description of ChampionX Corporation Common Stock

10.1

Restatement Agreement, dated June 7, 2022, by and among ChampionX Corporation, as Borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent

8-K

10.1

June 8, 2022

10.2

Amendment No. 1 to Amended and Restated Credit Agreement, dated September 29, 2023, by and among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent

8-K

10.1

October 3, 2023

10.3

Master Receivables Purchase Agreement, dated as of June 28, 2022, by and among ChampionX LLC and US Synthetic Corporation as Sellers, Apergy USA, Inc. as Servicer, ChampionX Corporation, and JPMorgan Chase Bank, N.A., as Purchaser

8-K

10.1

July 5, 2022

10.4

Performance Undertaking, dated June 28, 2022, made by ChampionX Corporation in favor of JPMorgan Chase Bank, N.A.

8-K

10.2

July 5, 2022

10.5*

First Amendment to Master Receivables Purchase Agreement, dated as of October 4, 2022 among ChampionX LLC and US Synthetic Corporation as Sellers, Apergy USA, Inc. as Servicer, ChampionX Corporation, and JPMorgan Chase Bank, N.A., as Purchaser

10.6*

Second Amendment to Master Receivables Purchase Agreement, dated as of October 24, 2023 among ChampionX LLC, US Synthetic Corporation and Apergy ESP Systems, LLC as Sellers, Apergy USA, Inc. as Servicer, ChampionX Corporation, and JPMorgan Chase Bank, N.A., as Purchaser

10.7*

Third Amendment to Master Receivables Purchase Agreement, dated as of December 14, 2023 among ChampionX LLC and US Synthetic Corporation as Sellers, Apergy USA, Inc. as Servicer, ChampionX Corporation, and JPMorgan Chase Bank, N.A., as Purchaser

10.8*

Master Receivables Purchase Agreement Facility Extension Request dated June 26, 2023

10.9*

Master Receivables Purchase Agreement Facility Extension Request dated July 20, 2023

10.10*

Master Receivables Purchase Agreement Facility Extension Request dated August 28, 2023

10.1 1 +

ChampionX Corporation Amended and Restated 2018 Equity and Cash Incentive Plan.

8-K

10.1

May 13, 2021

10.12 +

ChampionX Corporation Executive Officer Annual Incentive Plan.

8-K

10.6

May 11, 2018

10.13 +

Apergy USA LLC, Executive Deferred Compensation Plan.

8-K

10.7

May 11, 2018

10.14 +

ChampionX Corporation Executive Severance Plan.

8-K

10.8

May 11, 2018

10.15 +

ChampionX Corporation Senior Executive Change-in-Control Severance Plan.

8-K

10.9

May 11, 2018

10 .16 +

Form of award grant letter for restricted stock unit awards made under the ChampionX Corporation 2018 Equity and Cash Incentive Plan.

8-K

10.10

May 11, 2018

10.1 7 +

Form of award grant letter for performance share awards made under the ChampionX Corporation 2018 Equity and Cash Incentive Plan.

8-K

10.11

May 11, 2018

10.1 8 +

ChampionX Mirror Savings Plan

10-K

10.13

March 1, 2021

10.1 9 +

ChampionX Mirror Savings Plan First Amendment

10-K

10.13

February 10, 2022

10.2 0 +

ChampionX Mirror Savings Plan Second Amendment

10-K

10.13

February 02, 2023

10.2 1

Tax Matters Agreement, dated as of June 3, 2020, by and among Ecolab Inc., ChampionX Holding Inc. and ChampionX Corporation.

8-K

2.4

June 4, 2020

10.2 2

Intellectual Property Matters Agreement, dated as of June 3, 2020, by and among Ecolab Inc. and ChampionX Holding Inc.

8-K

2.6

June 4, 2020

10.2 3

Master Cross Supply and Product Transfer Agreement, dated as of June 3, 2020, by and among Ecolab Inc. and ChampionX LLC.

8-K

2.7

June 4, 2020

21.1 *

Subsidiaries of ChampionX Corporation.

23.1*

Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm.

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.

97 .1*

Amended and Restated Executive Co mpensation Clawback Policy

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

ITEM 16. FORM 10-K SUMMARY

None.

()()$ Year Ended December 31, 2022$ ()()()$ Year Ended December 31, 2021$ () $

_______________________

(1) Net of recoveries on previously reserved or written-off balances.

Deferred Tax Valuation Allowance

Balance at Beginning of Year

Additions

Reductions

Other(2)

Balance at End of Year

Year Ended December 31, 2023

Year Ended December 31, 2022

()

Year Ended December 31, 2021

()

_______________________

(2) Other represents impact of changes in foreign exchange rates

Inventory Reserves (including LIFO)

Balance at Beginning of Year

Additions

Reductions

Other

Balance at End of Year

Year Ended December 31, 2023

()

Year Ended December 31, 2022

()

Year Ended December 31, 2021

()

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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)

Date: February 6, 2024

By:

/s/ KENNETH M. FISHER

Kenneth M. Fisher

Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date

Signature

February 6, 2024

/s/ SIVASANKARAN SOMASUNDARAM

Sivasankaran Somasundaram
President and Chief Executive Officer
Director

(Principal Executive Officer)

February 6, 2024

/s/ KENNETH M. FISHER

Kenneth M. Fisher
Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

February 6, 2024

/s/ ANTOINE MARCOS

Antoine Marcos
Vice President, Corporate Controller and Chief Accounting Officer

(Principal Accounting Officer)

February 6, 2024

/s/ HEIDI S. ALDERMAN

Heidi S. Alderman
Director

February 6, 2024

/s/ MAMATHA CHAMARTHI

Mamatha Chamarthi
Director

February 6, 2024

/s/ CARLOS A. FIERRO

Carlos A. Fierro
Director

February 6, 2024

/s/ GARY P. LUQUETTE

Gary P. Luquette
Director

February 6, 2024

/s/ ELAINE PICKLE

Elaine Pickle
Director

February 6, 2024

/s/ STUART PORTER

Stuart Porter
Director

February 6, 2024

/s/ DANIEL W. RABUN

Daniel W. Rabun
Chairman of the Board of Directors

February 6, 2024

/s/ STEPHEN M. TODD

Stephen M. Todd
Director

ChampionX Corp - Annual Report: 2023 (Form 10-K)

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