Core Insights - Flotek Industries, Inc. (FTK) has shown a significant stock performance, with a 36% return to investors since an earlier report estimated a 38% upside potential [1] Company Analysis - The recent conference call regarding FTK's 3Q25 results provided updates on the company's performance and future outlook [1] - The analyst emphasizes a focus on identifying undervalued businesses and high-quality compounders within various sectors, including chemicals and energy transition [1] Investment Strategy - The investment approach combines bottom-up fundamental analysis with top-down macroeconomic context, focusing on financial statements, competitive landscapes, and management quality [1] - The goal is to share well-researched investment ideas that help investors navigate complex markets, reflecting a commitment to disciplined research and actionable strategies [1]

Financial Performance - Total revenues for Q3 2025 reached $56,031,000, a 12.9% increase from $49,742,000 in Q3 2024[21] - Net income for Q3 2025 was $20,355,000, compared to $2,532,000 in Q3 2024, representing a significant increase of 705.5%[23] - Gross profit for the nine months ended September 30, 2025, was $44,639,000, up from $27,108,000 in the same period of 2024, indicating a 64.7% increase[21] - Operating income for the nine months ended September 30, 2025, was $17,256,000, a 144.5% increase from $7,052,000 in the same period of 2024[21] - Net income for the nine months ended September 30, 2025, was $27,503 thousand, compared to $2,532 thousand for the same period in 2024, representing a significant increase[31] - For the three months ended September 30, 2025, net income was $20.4 million, compared to $2.5 million for the same period in 2024, representing a significant increase[110] - Basic earnings per share for the three months ended September 30, 2025, was $0.57, up from $0.09 in 2024, while diluted earnings per share increased to $0.53 from $0.08[110] Revenue Breakdown - Product revenue for the nine months ended September 30, 2025, was $154.7 million, up 17.2% from $132.1 million in 2024[61] - The Company recognized lease revenue of $9.3 million for the nine months ended September 30, 2025, compared to no rental income in the same period of 2024[61] - Revenue from related parties for the three months ended September 30, 2025, was $33,090 thousand, compared to $33,177 thousand in 2024, indicating a slight decrease of 0.26%[131] - Related party revenues for the nine months ended September 30, 2025, were $97.2 million, compared to $88.3 million for the same period in 2024, indicating a year-over-year growth of approximately 10.1%[118] Assets and Liabilities - Total assets increased to $212,687,000 as of September 30, 2025, from $170,796,000 at the end of 2024, reflecting a growth of 24.5%[20] - The company had total liabilities of $102,189,000 as of September 30, 2025, compared to $56,896,000 at the end of 2024, marking an increase of 79.5%[20] - The total stockholders' equity as of September 30, 2025, was $110,498 thousand, up from $109,007 thousand as of September 30, 2024[32] Cash Flow and Expenses - Cash and cash equivalents at the end of Q3 2025 were $4,603,000, compared to $4,997,000 at the end of Q3 2024[25] - The company recorded total lease expenses of $863,000 and $1.0 million for the three months ended September 30, 2025 and 2024, respectively[74] - The company incurred $1.7 million in capital expenditures for the nine months ended September 30, 2025, compared to $0.5 million in 2024[194] - Net cash provided by operating activities decreased to $957,000 for the nine months ended September 30, 2025, compared to $5.9 million for the same period in 2024[190] Research and Development - Research and development expenses for Q3 2025 were $549,000, slightly up from $462,000 in Q3 2024[21] - Research and development costs for the three months ended September 30, 2025, were $0.4 million in the Chemistry Technologies segment and $0.2 million in the Data Analytics segment, indicating continued focus on innovation[125] Market and Operational Insights - The company’s Chemistry Technologies segment aims to enhance profitability for hydrocarbon producers through optimized chemistry solutions[38] - The Data Analytics segment provides real-time insights to optimize operations and reduce emissions, utilizing advanced technologies[39] - The Company expects stable demand for its chemistry products in 2025, based on strong results in Q1 2025 and customer commitments[159] - The demand for natural gas is anticipated to increase over the next 12 to 24 months due to growth in natural gas exports and its use in electricity generation[160] Tax and Valuation - The Company had U.S. net operating loss carryforwards of $190.1 million as of September 30, 2025, with $40.6 million expiring from 2029 to 2037[98] - A full valuation allowance was no longer required for certain deferred tax assets as of September 30, 2025, resulting in a partial release totaling $29.7 million for the three months and $31.1 million for the nine months ended September 30, 2025[102] Compliance and Risk Management - The Company was in compliance with all applicable covenants under the ABL as of September 30, 2025[87] - The Company has identified risks that could materially affect its business and financial condition, as detailed in its risk factors[213]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 increased by 13% compared to Q3 2024, driven by a 232% increase in data analytics revenue and a 43% increase in external chemistry revenue [5][19] - Gross profit rose by 95% year-over-year, with gross profit margin reaching 32% in Q3 2025 [5][22] - Net income for the quarter was $20.4 million, significantly up from $2.5 million in the same quarter last year, with adjusted EBITDA increasing by 142% year-over-year [5][22] Business Line Data and Key Metrics Changes - Data analytics segment revenue represented 16% of total company revenue in Q3 2025, up from 5% in the year-ago quarter, with service revenues increasing by 625% [19][9] - The chemistry segment saw a 54% growth in external chemistry revenues, despite a 24% decline in active frac fleets [16][20] - PowerTech assets contributed $6.1 million in revenue during the quarter, leading to a 50% sequential increase in data analytics revenue [17][18] Market Data and Key Metrics Changes - International sales totaled $10 million for the first nine months of 2025, up 122% from the previous year [20] - The company anticipates a cautious optimism for 2026, despite potential commodity price volatility [16] Company Strategy and Development Direction - Flotek is transforming into a data-as-a-service business model, expanding its total addressable market and increasing market share in both business segments [4][5] - The company aims to leverage chemistry as a common value creation platform while focusing on high-margin data analytics revenue [25][26] - Flotek is committed to supporting the energy infrastructure sector, anticipating significant growth in high-margin data analytics revenue and cash flow [8][25] Management's Comments on Operating Environment and Future Outlook - Management noted that hydrocarbon demand fundamentals are expected to grow long-term, requiring substantial investment to maintain production levels [7][8] - The company is optimistic about its future, emphasizing the importance of innovation and tailored solutions to meet customer needs [8][25] - Management highlighted the successful integration of new technology and the positive impact on margins and profitability [24][25] Other Important Information - Flotek achieved zero lost-time incidents in field operations during the quarter, reflecting a strong commitment to safety [6] - The company increased its 2025 total revenue and adjusted EBITDA guidance ranges by 6% and 3%, respectively [6][23] Q&A Session Summary Question: What is the major factor determining the cadence of ramping up digital valuation units? - Management indicated that successful pilot programs have transitioned to commercial phases, which will drive multiple unit deployments starting in Q4 2025 [27][28] Question: Can you provide an update on customer conversations for third-party power services? - Management reported $2.1 million in revenue secured from additional customers, with ongoing testing and positive progress in customer adoption [32][33] Question: How does the GPA 2172 compliance impact the Expect Analyzer? - The compliance allows for the use of optical spectroscopy in custody transfer, significantly enhancing measurement accuracy and transparency for customers [40][41] Question: What is the outlook for the chemistry business, particularly in the Middle East? - Management expressed optimism about growth in the Middle East, anticipating positive impacts from recent contracts and ongoing discussions with major customers [43][44] Question: What are the expected efficiency gains from the Expect Analyzer? - The Expect Analyzer provides real-time analysis every five seconds, significantly improving measurement accuracy and reducing costs by up to 50% [45][46]

Third Quarter 2025 Earnings Presentation November 4, 2025 Forward-Looking Statements Certain statements set forth in this presentation 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 express ...

Core Insights - Flotek Industries reported quarterly earnings of $0.20 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, and showing an increase from $0.08 per share a year ago, resulting in an earnings surprise of +33.33% [1] - The company achieved revenues of $56.03 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 12.40% and increasing from $49.74 million year-over-year [2] - Flotek Industries has outperformed the S&P 500, with shares rising approximately 82.1% since the beginning of the year compared to the S&P 500's gain of 16.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.17 on revenues of $51.65 million, and for the current fiscal year, it is $0.66 on revenues of $215.2 million [7] - The estimate revisions trend for Flotek Industries was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Chemical - Specialty industry, to which Flotek Industries belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, suggesting that the industry outlook may impact stock performance [8]

Financial Performance - Total revenues for Q3 2025 increased by 13% to $56.0 million, compared to $49.7 million in Q3 2024, driven largely by the Data Analytics segment[1][3] - Gross profit for Q3 2025 was $17.8 million, reflecting a 95% increase from $9.1 million in Q3 2024, resulting in a gross profit margin of 32% compared to 18% in the prior year[1][7] - Net income surged to $20.4 million, or $0.53 per diluted share, up from $2.5 million, or $0.08 per diluted share, in Q3 2024, including a $12.6 million tax benefit[1][10] - Adjusted EBITDA rose by 142% to $11.7 million in Q3 2025, marking the twelfth consecutive quarter of growth[1][11] - The Data Analytics segment achieved a revenue increase of 232% to $8.9 million, with service revenues growing over 625% to $7.2 million[1][8] - The Chemistry Technologies segment reported external revenues of $20.2 million, a 43% increase compared to Q3 2024[1][5] - Total revenues for the three months ended September 30, 2025, increased to $56,031 thousand, up 12.9% from $49,742 thousand in the same period of 2024[20] - Net income for the three months ended September 30, 2025, was $20,355 thousand, a significant increase from $2,532 thousand in the same period of 2024[23] - EBITDA for the three months ended September 30, 2025, was $9,675 thousand, compared to $3,045 thousand for the same period in 2024, reflecting a growth of 217%[23] Guidance and Projections - The company revised its 2025 guidance for total revenues to a range of $220-$225 million, up from the previous guidance of $200-$220 million[2] Expenses and Costs - SG&A expenses totaled $7.4 million for Q3 2025, representing 13% of revenues, up from $5.7 million or 11% of revenues in Q3 2024[1][9] - Research and development expenses for the nine months ended September 30, 2025, were $1,359 thousand, slightly up from $1,349 thousand in 2024[20] - The company reported interest expense of $1,351 thousand for the three months ended September 30, 2025, compared to $256 thousand in the same period of 2024, showing a substantial rise[23] - Stock compensation expense for the three months ended September 30, 2025, was $569 thousand, up from $272 thousand in the same period of 2024[23] - The company incurred non-recurring professional fees of $167 thousand for the three months ended September 30, 2025, compared to a benefit of $(50) thousand in the same period of 2024[23] Assets and Liabilities - Total assets increased to $212,687 thousand as of September 30, 2025, up from $170,796 thousand at December 31, 2024[19] - Current liabilities totaled $56,478 thousand, an increase from $50,368 thousand at December 31, 2024[19] - The company had a total stockholders' equity of $110,498 thousand as of September 30, 2025, down from $113,900 thousand at December 31, 2024[19] Cash Flow - Cash and cash equivalents at the end of the period were $4,603 thousand, compared to $4,997 thousand at the end of September 30, 2024[22] - Cash flows from operating activities for the nine months ended September 30, 2025, were $957 thousand, a decrease from $5,925 thousand in 2024[22] Tax and Amortization - The income tax benefit for the three months ended September 30, 2025, was $(12,612) thousand, contrasting with an expense of $37 thousand in the same period of 2024[23] - Depreciation and amortization for the three months ended September 30, 2025, totaled $581 thousand, compared to $220 thousand in the same period of 2024, reflecting an increase of 164%[23] - The amortization of contract assets for the three months ended September 30, 2025, was $1,294 thousand, compared to $1,592 thousand in the same period of 2024[23] Adjusted Metrics - The company believes that Adjusted EBITDA provides a clearer view of its leverage profile and debt service capacity, enhancing comparability for investors and analysts[23]

Core Insights - Flotek Industries, Inc. reported strong financial results for Q3 2025, demonstrating successful execution of its transformational strategy and robust growth across its segments [1][4]. Financial Performance - Total revenues for Q3 2025 reached $56.0 million, a 13% increase from $49.7 million in Q3 2024. For the nine months ended September 30, 2025, revenues were $169.7 million, up 25% from $136.3 million in the same period last year [2][7]. - Gross profit for Q3 2025 was $17.8 million, reflecting a 95% increase from $9.1 million in Q3 2024. The gross profit margin improved to 32% from 18% year-over-year [2][8]. - Net income surged to $20.4 million, or $0.53 per diluted share, compared to $2.5 million, or $0.08 per diluted share, in Q3 2024. This included a $12.6 million tax benefit [2][10]. - Adjusted EBITDA increased by 142% to $11.7 million in Q3 2025, marking the twelfth consecutive quarter of growth [2][11]. Segment Performance - The Chemistry Technologies segment saw external revenues grow by 43% year-over-year, with total revenues for the segment increasing by 17% to $152.3 million for the nine months ended September 30, 2025 [5][18]. - The Data Analytics segment achieved a remarkable 232% revenue increase in Q3 2025, with service revenues growing 625% to $7.2 million, driven by the adoption of advanced analytics solutions [5][18]. Guidance and Outlook - Flotek has revised its 2025 guidance, increasing total revenue expectations to a range of $220-$225 million and Adjusted EBITDA to $35-$40 million, based on strong year-to-date performance [4][7]. Operational Highlights - The company reported a gross profit margin of 32% for Q3 2025, attributed to the high-margin Data Analytics revenue, which constituted 16% of total revenues, up from 5% in Q3 2024 [7][8]. - The acquisition of mobile gas conditioning assets contributed $6.1 million to Q3 2025 revenue, enhancing overall performance [7][12].

Core Insights - An active investing approach focuses on identifying breakout stocks within a defined price range, recommending to sell if the price falls below the lower band and to hold for gains if it exceeds the upper band [1] - Flotek Industries, NatWest Group, and Ermenegildo Zegna have been identified as today's breakout stocks, each showing strong expected earnings growth for the current year [8] Breakout Stock Identification - To identify breakout stocks, it is essential to calculate support and resistance levels, where support is the lower bound and resistance is the upper bound for stock movements [2] - Demand for a stock is lowest at its support level, while traders are more inclined to buy at the resistance level, indicating potential breakout candidates [3] Genuine Breakout Criteria - A genuine breakout occurs when the previous resistance level becomes the new support level, which can be confirmed through long-term price trend analysis [5] - The strength of support and resistance levels is determined by observing price trends over time, which is crucial for identifying breakout stocks [5] Screening Criteria - The screening criteria for breakout stocks include a percentage price change over four weeks between 10% and 20%, a current price close to 52-week highs, and a Zacks Rank of 2 or better [6][7] - Stocks must have a beta of 2 or less and a current price of $20 or less to be considered, narrowing the selection to a manageable number of candidates [7] Company Profiles - **Flotek Industries**: A technology-driven green chemistry and data company with an expected earnings growth rate of 94.1% for the current year and a Zacks Rank of 2 [9] - **NatWest Group**: Provides banking and financial services with an expected earnings growth rate of 30.1% for the current year, also holding a Zacks Rank of 2 [10] - **Ermenegildo Zegna**: Designs and markets luxury clothing with an expected earnings growth rate of 37.5% for the current year, maintaining a Zacks Rank of 2 [11]

Group 1: Company Overview - Flotek Industries (FTK) is part of the Oils-Energy group, which consists of 245 companies and currently ranks 13 within the Zacks Sector Rank [2] - Flotek Industries has a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] Group 2: Performance Metrics - Year-to-date, Flotek Industries has gained approximately 69.9%, significantly outperforming the Oils-Energy sector's average return of 5.9% [4] - The consensus estimate for FTK's full-year earnings has increased by 4.8% over the past 90 days, reflecting improved analyst sentiment [3] Group 3: Industry Context - Flotek Industries operates within the Oil and Gas - Field Services industry, which includes 23 companies and currently ranks 160 in the Zacks Industry Rank, with an average gain of 4.5% this year [5] - In comparison, OMV AG, another Oils-Energy stock, has returned 39.7% year-to-date and is part of the Oil and Gas - Integrated - International industry, which has a lower ranking and a year-to-date gain of 7.8% [4][6]

Core Viewpoint - Flotek Industries, Inc. is set to release its third quarter 2025 financial and operating results on November 4, 2025, with a conference call scheduled for November 5, 2025 [1][2]. Group 1: Financial Results Announcement - The company will issue its press release after market close on November 4, 2025 [2]. - The earnings conference call is scheduled for November 5, 2025, at 9:00 a.m. Central (10:00 a.m. Eastern) [2]. Group 2: Accessing the Conference Call - Participants can access the call via Flotek's website, by telephone, or through a provided webcast link [3]. - A recording of the conference call will be available on the company's website after the call concludes [3]. Group 3: Company Overview - Flotek Industries, Inc. specializes in chemistry and data technology for the energy industry, utilizing near real-time data to enhance customer returns [4]. - The company holds an intellectual property portfolio of over 130 patents and has a global presence in more than 59 countries [4]. - Flotek is committed to sustainable and optimized chemistry and data solutions to minimize environmental impact [5].