HOUSTON, Nov. 4, 2024
/PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company")
(NYSE: FTK) today announced operational and financial results for
the quarter ended September 30, 2024,
highlighted by significant improvement in profitability metrics as
compared to the third quarter of 2023. Due to the strong results
achieved through the first nine months of the year, the Company
increased its 2024 profit guidance.
Financial Summary (in thousands, except 'per share'
amounts)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Total
Revenues
|
$
49,742
|
|
$
47,268
|
|
$
136,267
|
|
$
145,870
|
|
Gross Profit
|
$
9,119
|
|
$
9,047
|
|
$
27,108
|
|
$
14,833
|
|
Adjusted Gross Profit
(1)
|
$
10,695
|
|
$
10,264
|
|
$
31,421
|
|
$
18,005
|
|
Net Income
|
$
2,532
|
|
$
1,287
|
|
$
6,068
|
|
$
22,609
|
|
Diluted Income (Loss)
Per Share
|
$
0.08
|
|
$
0.04
|
|
$
0.20
|
|
$
(0.18)
|
|
Adjusted EBITDA
(1)
|
$
4,840
|
|
$
3,392
|
|
$
13,303
|
|
$
(2,464)
|
Third Quarter 2024 Highlights
- Generated total revenue of $49.7
million, a 5% increase from the third quarter of 2023,
highlighted by a 58% year-over-year increase in Data Analytics
revenues.
- Reduced SG&A by 12% from the third quarter of 2023 and by
9% sequentially from the second quarter of 2024.
- Reported net income of $2.5
million and adjusted EBITDA(1) of $4.8 million, representing a year-over-year
increase of 97% and 43%, respectively.
- Reduced borrowings outstanding under the Asset Based Loan by
81% (or $6.1 million) compared to
year-end 2023.
2024 Guidance: Stronger Profit Expectations
Based upon the Company's strong year-to-date operational
performance and the outlook for the fourth quarter, the Company is
increasing its 2024 guidance. Flotek now expects adjusted
EBITDA(2) to be in the range of $16.5 million to $18.5
million, up from the previous range of $14 million to $18
million. This represents a 9% increase to the midpoint of
the range and a 35% increase when compared to the midpoint of the
Company's original 2024 guidance of $10
million to $16 million. In
addition, the Company now expects its adjusted gross profit
margin(2) for 2024 to be in the range of 20% to
22%, up from the original guidance of 18% to
22%.
Management Commentary
Chief Executive Officer Dr. Ryan
Ezell commented, "We are pleased to report another quarter
of outstanding safety, service quality and financial results. We
continue to gain momentum and market share with the execution of
our strategy, despite a challenging upstream market. Revenue from
our Data Analytics segment grew 30% in the third quarter, a
continuation of the strong growth of 22% in the second quarter. Our
new upstream Data Analytics' applications, including flare
monitoring, were a catalyst for revenue growth this quarter.
Following the EPA's approval of our JP3 analyzer in mid-July, we
recognized our first revenues from flare monitoring in August and
September, which comprised 25% of total quarterly segment revenues.
We expect to see further growth in flare monitoring revenues during
the fourth quarter. Revenue from our chemistry segment increased 7%
in the third quarter, a continuation of the growth in the prior
quarter. Our persistent revenue growth in our chemistry segment,
despite a declining frac fleet market, is clear evidence that we
are gaining market share through our differentiated chemistry
technology solutions.
In terms of profitability, adjusted EBITDA during the third
quarter improved for the eighth consecutive quarter and, as a
result, we are increasing our adjusted EBITDA guidance for the
second time this year. Over the first nine months of 2024, we
reported adjusted EBITDA of $13.3
million, as compared to ($2.5)
million during the nine months ended September 30, 2023. This $15.8 million improvement reflects the continued
positive trajectory of the Company and the hard work and
dedication of the Flotek employees."
Third Quarter 2024 Financial Results
- Revenue: Flotek reported total revenues of $49.7 million for the third quarter of 2024,
which was an increase of $2.5
million, or 5% compared to the third quarter of 2023. Third
quarter revenue increased 8% sequentially driven by a 7% sequential
increase in Chemistry revenues and a 30% sequential increase in
Data Analytics' revenue. Data Analytics segment revenue totaled
$2.7 million during the third quarter
of 2024, of which 25% was attributed to Flotek's new proprietary
flare measurement application.
- Gross Profit: The Company generated gross profit of
$9.1 million with a margin of 18%
during the third quarter 2024, as compared to gross profit of
$9.0 million with a margin of 19% for
the third quarter 2023. Gross profit margin during the third
quarter of 2024 was lower than the 2023 period as a result of a
shift in chemistry product mix as well as lower revenue during the
2024 period related to the minimum chemistry purchase requirements
contained in the Company's long-term supply agreement. Partially
offsetting these items was an increase in gross profit from the
Company's Data Analytics segment, which contributed $1.2 million to third quarter 2024 gross profit,
a 46% increase from the year ago quarter.
- Adjusted Gross Profit (Non-GAAP)(1):
Flotek generated adjusted gross profit of $10.7 million during the third quarter 2024
compared to adjusted gross profit of $10.3
million for the third quarter 2023. Adjusted gross profit
excludes non-cash items, primarily amortization of contract
assets.
- Selling, General and Administrative ("SG&A")
Expense: SG&A expense totaled $5.7
million for the third quarter 2024 compared to $6.5 million for the third quarter 2023. The
improvement was the result of lower personnel costs and
professional fee expenses during the 2024 period.
- Net Income and EPS: Flotek reported net income of
$2.5 million, or $0.08 per diluted share, for the third quarter
2024. This compares to a net income of $1.3
million, or $0.04 per diluted
share, for the third quarter 2023.
- Adjusted EBITDA (Non-GAAP)(1):
Adjusted EBITDA was $4.8 million in
the third quarter 2024 as compared to $3.4
million in the third quarter 2023. Third quarter 2024
adjusted EBITDA marked the eighth consecutive quarter of
improvement.
|
(1)
|
A non-GAAP financial
measure. See the "Unaudited Reconciliation of Non-GAAP Items and
Non-Cash Items Impacting Earnings" section in this release for more
information, including reconciliations to the most comparable
GAAP measures.
|
|
(2)
|
A non-GAAP financial
measure. See the "Unaudited Reconciliation of Non-GAAP Items and
Non-Cash Items Impacting Earnings" section in this release for more
information, including reconciliations to the most comparable
GAAP measures. We are unable to reconcile this forward-looking
non-GAAP financial measure to the most directly comparable GAAP
financial measure without unreasonable efforts, as we are unable to
predict with a reasonable degree of certainty the impact of certain
items that would be expected to impact the GAAP financial measure,
including, among other items, the future amortization of our
contract assets, certain stock-based compensation costs and the
impact of the revaluation of certain liabilities, which is based
upon our future stock price. These items do not impact the non-GAAP
financial measure.
|
Conference Call Details
Flotek will host a conference call on November 5, 2024, at 9:00
a.m. CT (10:00 a.m. ET) to
discuss its third quarter 2024 results. Participants may access the
call through Flotek's website at www.flotekind.com under "News"
within the Investor Relations section, by telephone toll free at
1-800-836-8184 (international toll: 1-646-357-8785), or by using
the following link to access the audience view of the webcast at
https://app.webinar.net/7baorgbxmJ5 approximately five minutes
prior to the start of the call. Following the conclusion of the
conference call, a recording of the call will be available on the
Company's website.
An updated corporate presentation that will be referenced on the
call will be posted to the Investor Relations section of Flotek's
website at www.flotekind.com prior to the start of the earnings
conference call.
About Flotek Industries, Inc.
Flotek Industries, Inc. is a leading chemistry and data
technology company focused on servicing the Energy industry. The
Company's top tier technologies leverage near real-time data to
deliver innovative solutions to maximize customer returns. Flotek
has an intellectual property portfolio of over 170 patents, 20+
years of field and laboratory data, and a global presence in more
than 59 countries.
Flotek has established collaborative partnerships focused on
sustainable and optimized chemistry and data solutions, aiming to
reduce the environmental impact of energy on land, air, water and
people.
Flotek is based in Houston,
Texas and its common shares are traded on the New York Stock
Exchange under the ticker symbol "FTK." For additional information,
please visit www.flotekind.com.
Forward-Looking Statements
Certain statements set forth in this press release constitute
forward-looking statements (within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) regarding Flotek Industries, Inc.'s business,
financial condition, results of operations and prospects. Words
such as will, continue, expects, anticipates, intends, plans,
believes, seeks, estimates and similar expressions or variations of
such words are intended to identify forward-looking statements, but
are not the exclusive means of identifying forward-looking
statements in this press release. Although forward-looking
statements in this press release reflect the good faith judgment of
management, such statements can only be based on facts and factors
currently known to management. Consequently, forward-looking
statements are inherently subject to risks and uncertainties, and
actual results and outcomes may differ materially from the results
and outcomes discussed in the forward-looking statements. Further
information about the risks and uncertainties that may impact the
Company are set forth in the Company's most recent filing with the
Securities and Exchange Commission on Form 10-K (including, without
limitation, in the "Risk Factors" section thereof), and in the
Company's other SEC filings and publicly available documents.
Readers are urged not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. The Company undertakes no obligation to revise or
update any forward-looking statements in order to reflect any event
or circumstance that may arise after the date of this press
release.
|
FLOTEK INDUSTRIES,
INC.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands,
except share data)
|
|
|
September 30,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
4,997
|
|
$
5,851
|
|
Restricted
cash
|
101
|
|
102
|
|
Accounts receivable,
net of allowance for credit losses of $388 and $745 at
September 30, 2024 and December 31, 2023,
respectively
|
12,220
|
|
13,687
|
|
Accounts receivable,
related party, net of allowance for credit losses of $0 at
each of September 30, 2024 and December 31, 2023,
respectively
|
47,064
|
|
34,569
|
|
Inventories,
net
|
12,744
|
|
12,838
|
|
Other current
assets
|
2,687
|
|
3,564
|
|
Current contract
asset
|
6,480
|
|
5,836
|
|
Total current
assets
|
86,293
|
|
76,447
|
|
Long-term contract
asset
|
63,835
|
|
68,820
|
|
Property and equipment,
net
|
4,958
|
|
5,129
|
|
Operating lease
right-of-use assets
|
3,759
|
|
5,030
|
|
Deferred tax assets,
net
|
66
|
|
300
|
|
Other long-term
assets
|
1,738
|
|
1,787
|
|
TOTAL
ASSETS
|
$
160,649
|
|
$
157,513
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
37,395
|
|
$
31,705
|
|
Accrued
liabilities
|
4,115
|
|
5,890
|
|
Income taxes
payable
|
54
|
|
45
|
|
Current portion of
operating lease liabilities
|
1,642
|
|
2,449
|
|
Current portion of
finance lease liabilities
|
—
|
|
22
|
|
Asset-based
loan
|
1,426
|
|
7,492
|
|
Current portion of
long-term debt
|
104
|
|
179
|
|
Total current
liabilities
|
44,736
|
|
47,782
|
|
Deferred revenue,
long-term
|
35
|
|
35
|
|
Long-term operating
lease liabilities
|
6,871
|
|
7,676
|
|
Long-term
debt
|
—
|
|
60
|
|
TOTAL
LIABILITIES
|
51,642
|
|
55,553
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock,
$0.0001 par value, 100,000 shares authorized; no shares issued and
outstanding
|
—
|
|
—
|
|
Common stock, $0.0001
par value, 240,000,000 shares authorized; 30,891,597 shares issued
and
29,789,476 shares outstanding at September 30, 2024; 30,772,837
shares issued and 29,664,130
shares outstanding at December 31, 2023
|
3
|
|
3
|
|
Additional paid-in
capital
|
464,143
|
|
463,140
|
|
Accumulated other
comprehensive income
|
133
|
|
127
|
|
Accumulated
deficit
|
(320,738)
|
|
(326,806)
|
|
Treasury stock, at
cost; 1,102,121 and 1,108,707 shares at September 30, 2024
and December 31, 2023, respectively
|
(34,534)
|
|
(34,504)
|
|
Total stockholders'
equity
|
109,007
|
|
101,960
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
160,649
|
|
$
157,513
|
|
FLOTEK INDUSTRIES,
INC.
Unaudited Condensed
Consolidated Statements of Operations
(in thousands,
except per share data)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Revenue from external
customers
|
$
16,565
|
|
$
17,806
|
|
$
47,935
|
|
$
47,278
|
|
Revenue from related
party
|
33,177
|
|
29,462
|
|
88,332
|
|
98,592
|
|
Total
revenues
|
49,742
|
|
47,268
|
|
136,267
|
|
145,870
|
|
Cost of goods
sold
|
40,623
|
|
38,221
|
|
109,159
|
|
131,037
|
|
Gross
profit
|
9,119
|
|
9,047
|
|
27,108
|
|
14,833
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative
|
5,714
|
|
6,526
|
|
18,056
|
|
21,303
|
|
Depreciation
|
220
|
|
181
|
|
662
|
|
530
|
|
Research and
development
|
462
|
|
757
|
|
1,349
|
|
2,231
|
|
Severance
costs
|
—
|
|
2
|
|
23
|
|
(28)
|
|
Gain on sale of
property and equipment
|
—
|
|
(38)
|
|
(34)
|
|
(38)
|
|
Gain in fair value of
Contract Consideration Convertible Notes Payable
|
—
|
|
—
|
|
—
|
|
(29,969)
|
|
Total operating costs
and expenses
|
6,396
|
|
7,428
|
|
20,056
|
|
(5,971)
|
|
Income from
operations
|
2,723
|
|
1,619
|
|
7,052
|
|
20,804
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Paycheck protection
plan loan forgiveness
|
—
|
|
—
|
|
—
|
|
4,522
|
|
Interest
expense
|
(256)
|
|
(160)
|
|
(842)
|
|
(2,537)
|
|
Other income,
net
|
102
|
|
(91)
|
|
151
|
|
(82)
|
|
Total other income
(expense)
|
(154)
|
|
(251)
|
|
(691)
|
|
1,903
|
|
Income before income
taxes
|
2,569
|
|
1,368
|
|
6,361
|
|
22,707
|
|
Income tax
expense
|
(37)
|
|
(81)
|
|
(293)
|
|
(98)
|
|
Net
income
|
$
2,532
|
|
$
1,287
|
|
$
6,068
|
|
$
22,609
|
|
|
|
|
|
|
|
|
|
Income (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.09
|
|
$
0.04
|
|
$
0.21
|
|
$
0.97
|
|
Diluted
|
$
0.08
|
|
$
0.04
|
|
$
0.20
|
|
$
(0.18)
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares:
|
|
|
|
|
|
|
|
|
Weighted average
common shares used in
computing basic income (loss) per common share
|
29,613
|
|
29,358
|
|
29,498
|
|
23,291
|
|
Weighted average
common shares used in
computing diluted income (loss) per common share
|
30,897
|
|
30,688
|
|
30,655
|
|
28,034
|
|
FLOTEK INDUSTRIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
6,068
|
|
$
22,609
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
Change in fair value
of contingent consideration
|
(46)
|
|
(384)
|
|
Change in fair value
of Contract Consideration Convertible Notes Payable
|
—
|
|
(29,969)
|
|
Amortization of
convertible note issuance costs
|
—
|
|
83
|
|
Payment-in-kind
interest expense
|
—
|
|
2,284
|
|
Amortization of
contract asset
|
4,341
|
|
3,665
|
|
Depreciation
|
662
|
|
530
|
|
Amortization of
asset-based loan origination costs
|
243
|
|
36
|
|
Provision for credit
losses, net of recoveries
|
121
|
|
97
|
|
Provision for excess
and obsolete inventory
|
626
|
|
626
|
|
Gain on sale of
property and equipment
|
(34)
|
|
(38)
|
|
Non-cash lease
expense
|
1,661
|
|
2,316
|
|
Stock compensation
expense
|
915
|
|
(565)
|
|
Deferred income tax
expense
|
233
|
|
50
|
|
Paycheck protection
plan loan forgiveness
|
—
|
|
(4,522)
|
|
Changes in current
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
1,346
|
|
3,472
|
|
Accounts receivable,
related party
|
(12,495)
|
|
(2,082)
|
|
Inventories
|
(532)
|
|
(776)
|
|
Other
assets
|
849
|
|
(863)
|
|
Accounts
payable
|
5,690
|
|
60
|
|
Accrued
liabilities
|
(1,730)
|
|
(3,179)
|
|
Operating lease
liabilities
|
(2,002)
|
|
(2,636)
|
|
Income taxes
payable
|
9
|
|
(54)
|
|
Interest
payable
|
—
|
|
(8)
|
|
Net cash provided by
(used in) operating activities
|
5,925
|
|
(9,248)
|
|
FLOTEK INDUSTRIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
(continued)
|
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(491)
|
|
(593)
|
|
Proceeds from sale of
assets
|
34
|
|
68
|
|
Net cash used in
investing activities
|
(457)
|
|
(525)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Payment for forfeited
stock options
|
—
|
|
(617)
|
|
Payments on long term
debt
|
(135)
|
|
(104)
|
|
Proceeds from
asset-based loan
|
122,600
|
|
27,750
|
|
Payments on
asset-based loan
|
(128,666)
|
|
(24,380)
|
|
Payment of asset-based
loan origination costs
|
(164)
|
|
(502)
|
|
Payments to tax
authorities for shares withheld from employees
|
(30)
|
|
(246)
|
|
Proceeds from issuance
of stock
|
88
|
|
48
|
|
Payments for finance
leases
|
(22)
|
|
(24)
|
|
Net cash (used in)
provided by financing activities
|
(6,329)
|
|
1,925
|
|
Effect of changes in
exchange rates on cash and cash equivalents
|
6
|
|
13
|
|
Net change in cash
and cash equivalents and restricted cash
|
(855)
|
|
(7,835)
|
|
Cash and cash
equivalents at the beginning of period
|
5,851
|
|
12,290
|
|
Restricted cash at the
beginning of period
|
102
|
|
100
|
|
Cash and cash
equivalents and restricted cash at beginning of
period
|
5,953
|
|
12,390
|
|
Cash and cash
equivalents at end of period
|
4,997
|
|
4,453
|
|
Restricted cash at the
end of period
|
101
|
|
102
|
|
Cash and cash
equivalents and restricted cash at end of period
|
$
5,098
|
|
$
4,555
|
|
FLOTEK INDUSTRIES,
INC.
Unaudited
Reconciliation of Non-GAAP Items and Non-Cash Items Impacting
Earnings
(in
thousands)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
9,119
|
|
$
9,047
|
|
$
27,108
|
|
$
14,833
|
|
Stock compensation
expense
|
3
|
|
2
|
|
9
|
|
(135)
|
|
Severance and
retirement
|
—
|
|
—
|
|
9
|
|
26
|
|
Contingent liability
revaluation
|
(19)
|
|
(61)
|
|
(46)
|
|
(384)
|
|
Amortization of
contract asset
|
1,592
|
|
1,276
|
|
4,341
|
|
3,665
|
|
Adjusted Gross
profit (Non-GAAP) (1)
|
$
10,695
|
|
$
10,264
|
|
$
31,421
|
|
$
18,005
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
2,532
|
|
$
1,287
|
|
$
6,068
|
|
$
22,609
|
|
Interest
expense
|
256
|
|
160
|
|
842
|
|
2,537
|
|
Income tax
expense
|
37
|
|
81
|
|
293
|
|
98
|
|
Depreciation and
amortization
|
220
|
|
181
|
|
662
|
|
530
|
|
EBITDA (Non-GAAP)
(1)
|
$
3,045
|
|
$
1,709
|
|
$
7,865
|
|
$
25,774
|
|
Stock compensation
expense
|
272
|
|
268
|
|
915
|
|
(574)
|
|
Severance
|
—
|
|
2
|
|
32
|
|
(28)
|
|
Contingent liability
revaluation
|
(19)
|
|
(61)
|
|
(46)
|
|
(384)
|
|
Gain on disposal of
assets
|
—
|
|
(38)
|
|
(34)
|
|
(38)
|
|
PPP loan
forgiveness
|
—
|
|
—
|
|
—
|
|
(4,522)
|
|
Contract Consideration
Convertible Notes Payable revaluation adjustment
|
—
|
|
—
|
|
—
|
|
(29,969)
|
|
Amortization of
contract asset
|
1,592
|
|
1,276
|
|
4,341
|
|
3,665
|
|
Non-Recurring
professional fees
|
(50)
|
|
236
|
|
230
|
|
3,612
|
|
Adjusted EBITDA
(Non-GAAP) (1)
|
$
4,840
|
|
$
3,392
|
|
$
13,303
|
|
$
(2,464)
|
|
|
|
(1)
|
Management believes
that adjusted gross profit, EBITDA and adjusted EBITDA for the
three and nine months ended September 30, 2024 and 2023, are useful
to investors to assess and understand operating performance,
especially when comparing those results with previous and
subsequent periods. Management views the income and expenses
noted above to be outside of the Company's normal operating
results. Management analyzes operating results without the
impact of the above items as an indicator of performance, to
identify underlying trends in the business and cash flow from
continuing operations, and to establish financial and operational
goals, excluding certain non-cash or non-recurring
items.
|
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SOURCE Flotek Industries, Inc.