48,007 46,127 1,880 6,451 176 614 2,223 (26,095) (16,631) 4,522 (1,672) (9) 2,841 21,352 (9) 21,343 1.30 (0.12) 16,468 26,462 Unaudited Condensed Consolidated Balance Sheets (in thousands, except share data) Current liabilities: S 35,962 S 31,706 Accounts payable 3,385 Accrued liabilities 5,890 78 45 Income taxes payable Current portion of operating lease liabilities 2,063 2,449 Current portion of finance lease liabilities 13 22 7.402 Asset-based loan 3,111 Current portion of long-term debt 179 179 Total cu ...

| | | | Three months ended March 31, | | | | --- | --- | --- | --- | --- | --- | | | 2024 | | | 2023 | % Change | | Total Revenues | $ | 40,374 | $ | 48,007 | (16)% | | Gross Profit | $ | 8,821 | $ | 1,880 | 369% | | (1) Adjusted Gross Profit | $ | 10,075 | $ | 2,647 | 281% | | Net Income | $ | 1,562 | $ | 21,343 | (93)% | | Diluted Income (Loss) Per Share | $ | 0.05 | $ | (0.12) | n/a | | (1) Adjusted EBITDA | $ | 4,026 | $ | (3,851) | n/a | First Quarter 2024 Highlights Full Year 2024 Profitability Outloo ...

HOUSTON, May 7, 2024 /PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company") (NYSE: FTK) today announced operational and financial results for the quarter ended March 31, 2024, highlighted by significant improvement in profitability metrics as compared to the first quarter of 2023. Financial Summary (in thousands, except per share amounts) Three months ended March 31, 2024 2023 % Change Total Revenues $                    40,374 $                     48,007 (16) ...

HOUSTON, April 8, 2024 /PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company") (NYSE: FTK) today announced the Company's schedule for releasing its first quarter 2024 financial and operating results for the period ended March 31, 2024.   The Company plans to release its first quarter 2024 financial and operating results press release after market close on Tuesday, May 7, 2024, and host its earnings conference call on Wednesday, May 8, 2024, at 9:00 a.m. CST (10:00 a.m. EST).To participate in the ...

Part I [Business](index=3&type=section&id=Item%201%2E%20Business) Flotek Industries operates in Chemistry Technologies and Data Analytics, driven by the ProFrac agreement and strategic R&D - The company operates through two primary business segments: **Chemistry Technologies (CT)** and **Data Analytics (DA)**, supported by a central **Research & Innovation (R&I)** function[16](index=16&type=chunk)[17](index=17&type=chunk)[23](index=23&type=chunk) - In **2023**, the company appointed Dr. Ryan Ezell as CEO, secured an asset-based loan (ABL) of up to **$13.8 million**, and completed a **1-for-6 reverse stock split** to regain NYSE compliance[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **R&D Expense** | $2.5 million | $4.4 million | - As of **December 31, 2023**, the company holds **138 granted patents** (**114 in CT**, **24 in DA**) and **41 registered trademarks**[38](index=38&type=chunk) - The company had approximately **146 employees** as of **December 31, 2023**, and achieved a **0.00 TRIR in 2023**, indicating a strong safety performance[45](index=45&type=chunk)[48](index=48&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A%2E%20Risk%20Factors) The company faces significant business, industry, and securities risks, including ProFrac reliance and NOL limitations - The company has a **significant customer concentration risk**, with revenues from the **ProFrac Agreement** representing **65% of total revenues in 2023**, and termination of this agreement would have a **material adverse impact**[68](index=68&type=chunk)[71](index=71&type=chunk) - In **2023**, the company underwent an **"ownership change"** under **Section 382** of the Internal Revenue Code, which **limits** its ability to use pre-change net operating losses (NOLs) and other tax attributes to offset future taxable income[96](index=96&type=chunk)[97](index=97&type=chunk) - A **conflict of interest** may exist due to the relationship with **ProFrac Services, LLC** and its affiliates, which are the company's **largest customer** and, as of **December 31, 2023**, own **approximately 51% of the company's common stock** with the right to elect **four of seven board members**[122](index=122&type=chunk)[123](index=123&type=chunk) - A **material weakness** in internal control over financial reporting identified in 2022 was **remediated** as of **December 31, 2023**[131](index=131&type=chunk)[132](index=132&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B%2E%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - Not applicable[138](index=138&type=chunk) [Cybersecurity](index=20&type=section&id=Item%201C%2E%20Cybersecurity) The company maintains a Cybersecurity Incident Response Team (CIRT) and reports no material cybersecurity threats as of December 31, 2023 - The company has a **Cybersecurity Incident Response Team (CIRT)** that reports to the **Risk & Sustainability Committee** of the Board of Directors[139](index=139&type=chunk) - As of **December 31, 2023**, the company has **not identified any risks** from known cybersecurity threats that are reasonably likely to **materially affect** its business, operations, or financial condition[142](index=142&type=chunk) [Properties](index=21&type=section&id=Item%202%2E%20Properties) The company operates manufacturing, warehouse, research, and office facilities across the U.S. and internationally | Segment | Ownership | Location | | :--- | :--- | :--- | | Chemistry Technologies | Owned | Marlow, Oklahoma | | Chemistry Technologies | Owned | Raceland, Louisiana | | Chemistry Technologies | Leased | Dubai, United Arab Emirates | | Chemistry Technologies | Leased | Houston, Texas | | Data Analytics | Leased | Austin, Texas | | Corporate Headquarters | Leased | Houston, Texas | [Legal Proceedings](index=21&type=section&id=Item%203%2E%20Legal%20Proceedings) The company is not aware of any pending or threatened legal proceedings expected to materially affect its financial position or liquidity - The company states that it is **not aware** of any pending or threatened legal proceedings that are expected to have a **material effect** on its financial condition or operations[144](index=144&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[146](index=146&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205%2E%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under 'FTK', completed a 1-for-6 reverse stock split, and has no plans for cash dividends - The company's common stock trades on the **NYSE** under the ticker **"FTK"** A **1-for-6 Reverse Stock Split** was completed on **September 25, 2023**[149](index=149&type=chunk) - The company has **never declared or paid cash dividends** on its common stock and has **no current plans** to do so[149](index=149&type=chunk) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2023 | — | $ — | | Nov 2023 | 124 | $ 4.08 | | Dec 2023 | 5,627 | $ 3.83 | | **Total Q4 2023** | **5,751** | | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%207%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Flotek's 2023 financial performance significantly improved, driven by the ProFrac agreement, leading to positive gross profit and operating income [Consolidated Results of Operations](index=24&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated revenue increased 38% to $188.1 million in 2023, resulting in a gross profit of $24.3 million and net income of $24.7 million | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | **Total revenues** | **$188,058** | **$136,092** | | Cost of sales | $163,795 | $142,792 | | **Gross profit (loss)** | **$24,263** | **$(6,700)** | | SG&A | $27,873 | $27,124 | | Gain in fair value of contract consideration convertible notes | $(29,969) | $(75) | | **Income (loss) from operations** | **$23,223** | **$(35,421)** | | **Net income (loss)** | **$24,713** | **$(42,305)** | - The improvement in operating income was primarily driven by a **$31.0 million increase in gross profit**, a **$30.0 million gain** on the fair value of Contract Consideration Convertible Notes Payable, and a **$2.0 million decrease in R&D costs**[166](index=166&type=chunk) [Results by Segment](index=25&type=section&id=Results%20by%20Segment) In 2023, CT segment revenue grew to $179.9 million with $39.0 million operating income, and DA segment revenue increased to $7.5 million | Chemistry Technologies (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Revenue from external customers | $59,016 | $48,960 | | Revenue from related party | $120,903 | $81,618 | | **Income (loss) from operations** | **$39,043** | **$(14,729)** | | Data Analytics (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Revenue from external customers | $7,502 | $5,384 | | Revenue from related party | $637 | $130 | | **Loss from operations** | **$(53)** | **$(2,877)** | [Capital Resources and Liquidity](index=25&type=section&id=Capital%20Resources%20and%20Liquidity) As of December 31, 2023, the company had $5.9 million cash, secured a $13.8 million ABL, and resolved going concern doubts - The company entered into an **Asset-Based Loan (ABL)** in **August 2023**, with a **maximum borrowing base of $13.8 million** As of **Dec 31, 2023**, **$7.5 million was outstanding**[175](index=175&type=chunk)[176](index=176&type=chunk) - The ProFrac Agreement's minimum purchase requirements were **not met** for the June-Dec 2023 period, resulting in **$20.1 million in Contract Shortfall Fees** recognized as revenue and receivable **$10.0 million was collected by March 11, 2024**[180](index=180&type=chunk) - Based on **improved outlook**, cash on hand, and ABL availability, management concluded that the conditions raising substantial doubt about the Company's ability to continue as a going concern (disclosed in the 2022 report) **no longer exist**[181](index=181&type=chunk)[233](index=233&type=chunk) | Cash Flows (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,297) | $(44,632) | | Net cash (used in) provided by investing activities | $(1,014) | $5,331 | | Net cash provided by financing activities | $5,928 | $38,267 | [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) Management identifies critical accounting estimates for Contract Assets, Inventory Reserve, and Fair Value of Convertible Notes Payable - Critical accounting estimates include: - **Contract Assets:** Amortized over the ProFrac Agreement term based on forecasted revenues and tested for recoverability - **Reserve for Excess and Obsolete Inventory:** Inventory is written down to net realizable value based on usage estimates The reserve was **$6.1 million** at year-end 2023 - **Fair Value of Contract Consideration Convertible Notes Payable:** Valued using a Monte Carlo simulation until their conversion in 2023[191](index=191&type=chunk)[192](index=192&type=chunk)[195](index=195&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%207A%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are raw material prices, freight costs, and foreign currency, with no current use of hedging instruments - The company is primarily exposed to market risk from **raw material prices**, **freight costs**, and **foreign currency exchange rates**[198](index=198&type=chunk) - The company **does not currently use** financial instruments for **hedging purposes** but may do so in the future[198](index=198&type=chunk)[200](index=200&type=chunk) [Financial Statements and Supplementary Data](index=30&type=section&id=Item%208%2E%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements, KPMG's unqualified opinion with two CAMs, and notes detailing the company's financial turnaround [Report of Independent Registered Public Accounting Firm](index=30&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on the financial statements, highlighting two Critical Audit Matters: contract asset recoverability and going concern assessment - The auditor, **KPMG LLP**, issued an **unqualified (clean) opinion** on the consolidated financial statements[203](index=203&type=chunk) - The audit identified **two Critical Audit Matters (CAMs)**: 1. **Recoverability of contract assets:** Evaluating the key assumptions in the recoverability assessment, specifically forecasted revenue and costs under the ProFrac Agreement 2. **Going concern:** Evaluating management's assessment of its ability to continue as a going concern, particularly the forecasted cash flows[208](index=208&type=chunk)[211](index=211&type=chunk) [Consolidated Financial Statements](index=32&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements reflect significant improvement in 2023, showing total assets of $157.5 million, reduced liabilities, and a net income of $24.7 million | Selected Balance Sheet Data (in thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $76,447 | $80,074 | | Total Assets | $157,513 | $164,810 | | Total Current Liabilities | $47,782 | $151,371 | | Total Liabilities | $55,553 | $162,214 | | Total Stockholders' Equity | $101,960 | $2,596 | | Selected Operations Data (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $188,058 | $136,092 | | Gross Profit (Loss) | $24,263 | $(6,700) | | Net Income (Loss) | $24,713 | $(42,305) | | Basic EPS | $1.00 | $(3.41) | [Notes to Consolidated Financial Statements](index=37&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, resolution of going concern, ProFrac agreement revenue, convertible note conversion, reverse stock split, and NOL limitations - **Going Concern (Note 1):** Management concluded that substantial doubt about the Company's ability to continue as a going concern, which was disclosed for FY 2022, **no longer exists** as of **December 31, 2023**[233](index=233&type=chunk) - **Debt (Note 9):** **All convertible notes payable**, including those issued as contract consideration to ProFrac, were **converted into common stock or warrants during 2023**, **significantly deleveraging** the balance sheet[319](index=319&type=chunk)[324](index=324&type=chunk)[327](index=327&type=chunk) - **Income Taxes (Note 11):** An **ownership change in 2023** resulted in a **Section 382 limitation** on the future use of the company's **$192.9 million in U.S. net operating loss carryforwards (NOLs)**[345](index=345&type=chunk) - **Stockholders' Equity (Note 13):** The company completed a **1-for-6 reverse stock split** on **September 25, 2023** All share and per-share data have been **retroactively adjusted**[354](index=354&type=chunk) - **Related Party Transactions (Note 17):** Revenue from ProFrac Services, LLC was **$121.5 million in 2023** (**64.6% of total revenue**), which includes **$20.1 million in Contract Shortfall Fees** because **minimum purchase volumes were not met**[408](index=408&type=chunk)[409](index=409&type=chunk)[425](index=425&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=68&type=section&id=Item%209%2E%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section is not applicable, indicating no changes or disagreements with the company's accountants - Not Applicable[429](index=429&type=chunk) [Controls and Procedures](index=68&type=section&id=Item%209A%2E%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2023, having remediated a prior material weakness - Management concluded that disclosure controls and procedures were **effective** as of **December 31, 2023**[431](index=431&type=chunk) - A **material weakness** reported for the year ended December 31, 2022, related to controls over lease accounting, prepaid assets, and related-party revenue accruals, was **remediated** as of **December 31, 2023**[432](index=432&type=chunk)[433](index=433&type=chunk)[435](index=435&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of **December 31, 2023**[438](index=438&type=chunk) [Other Information](index=69&type=section&id=Item%209B%2E%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q4 2023 - **No director or officer** adopted or terminated a **Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the **fourth quarter of 2023**[440](index=440&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=70&type=section&id=Item%2010%2E%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information is **incorporated by reference** from the Company's **Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders**[444](index=444&type=chunk) [Executive Compensation](index=70&type=section&id=Item%2011%2E%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2024 Proxy Statement - Information is **incorporated by reference** from the Company's **Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders**[445](index=445&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=70&type=section&id=Item%2012%2E%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and related stockholder matters are incorporated by reference from the 2024 Proxy Statement - Information is **incorporated by reference** from the Company's **Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders**[446](index=446&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=70&type=section&id=Item%2013%2E%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related party transactions and director independence details are incorporated by reference from the 2024 Proxy Statement - Information is **incorporated by reference** from the Company's **Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders**[447](index=447&type=chunk) [Principal Accountant Fees and Services](index=70&type=section&id=Item%2014%2E%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services by KPMG LLP is incorporated by reference from the 2024 Proxy Statement - The company's independent registered public accounting firm is **KPMG LLP**[448](index=448&type=chunk) - Information on fees and services is **incorporated by reference** from the Company's **Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders**[448](index=448&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=71&type=section&id=Item%2015%2E%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including corporate documents, material contracts, and management compensatory plans - Lists key corporate documents, including the **Amended and Restated Certificate of Incorporation (Exhibit 3.1)** and **Second Amended and Restated Bylaws (Exhibit 3.5)**[450](index=450&type=chunk) - Includes material contracts such as the **Revolving Loan and Security Agreement (Exhibit 10.7)** and the **Chemical Products Supply Agreement with ProFrac Services, LLC (Exhibit 10.15)**[450](index=450&type=chunk)[451](index=451&type=chunk) - Contains management compensatory plans and agreements, including **employment agreements for the CEO and CFO**, and various **long-term incentive plan documents**[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk) [Form 10-K Summary](index=74&type=section&id=Item%2016%2E%20Form%2010-K%20Summary) The company indicates no Form 10-K summary is provided - None[453](index=453&type=chunk)

Financial Data and Key Metrics Changes - Full-year 2023 revenues grew by 38% compared to 2022, achieving the largest volume of product sold in the company's history [38][44] - Adjusted EBITDA improved by $28 million year-over-year, marking the first positive adjusted EBITDA for the full year since 2017 [44][48] - Net income for 2023 was $24.7 million, a significant recovery from a net loss of $42.3 million in 2022 [48] Business Line Data and Key Metrics Changes - Chemistry revenues from external customers increased by 21% in 2023, with a remarkable 100% increase from Q1 to Q4 2023 [44][45] - Data analytics revenue grew by 47% in 2023 compared to 2022, with a 250% increase in subscription-based revenue since 2022 [12][45] - The external chemistry business saw a 10% revenue increase in Q4 2023, while reservoir-centric technology sales related to complex nano-fluids surged by 75% [6][38] Market Data and Key Metrics Changes - Despite a slowdown in overall drilling and completion activity in North America, the impact on the company was mitigated due to its differentiated chemistry and data technologies [13] - The demand for oil and gas is expected to expand over the next decade, necessitating long-term investments to maintain production [14][41] Company Strategy and Development Direction - The company is focused on revenue growth, market share expansion, and cost efficiency gains, positioning itself to capitalize on both domestic and international opportunities [7][23] - The successful commercial launch of slickwater fluid systems in Saudi Arabia and the establishment of a new entity in Abu Dhabi are part of the strategy to enhance international market share [5][40] - The company aims to evolve into a data-as-a-service business model, enhancing its value proposition through technology and analytics [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategy and capitalize on growth opportunities, despite near-term volatility in commodity pricing [41][43] - The company anticipates continued growth in reservoir-centric and international chemistry revenues to offset challenges in the upstream completion environment [40][43] Other Important Information - The company has remediated internal control weaknesses disclosed in the previous year's 10-K, improving its financial position [17][43] - The company reported zero recordable and lost time incidents in operations, extending its safety streak to over 753 days [39] Q&A Session Summary Question: Timeline for JP3 pilot projects and revenue ramp-up - Management expects the new generation sensor to be online by the end of H1 2024, with revenue ramp-up anticipated in H2 2024 [54] Question: Opportunities in Saudi Arabia for slickwater technology - Management believes the shift towards gas drilling in Saudi Arabia presents significant opportunities as the market becomes more comfortable with the technology [56] Question: Impact of improved financial position on commercial discussions - The elimination of going concern language in public filings enhances the company's negotiating position with customers and suppliers [67] Question: Consideration of stock buyback - Management indicated that while they have stabilized the business, there are currently no plans for stock buybacks [88] Question: Growth factors away from ProFrac - Non-ProFrac related revenue has increased from 24-25% in Q1 to 45% by year-end, with significant growth in the Chemistry segment [85]

HOUSTON, March 12, 2024 /PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company") (NYSE: FTK) today announced operational and financial results for the fourth quarter and full-year ended December 31, 2023, highlighted by significant improvement in all profitability metrics, including net income, gross profit and adjusted gross profit(1). For the first time since 2017, the Company generated full-year positive adjusted EBITDA(1). Financial Summary (in thousands) Three months ended December 31, ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Financial Summary](index=1&type=section&id=Financial%20Summary) Flotek reported significant profitability improvements in Q4 and FY2023, achieving positive adjusted EBITDA for the first time since 2017, with full-year revenues up 38% year-over-year | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Total Revenues | $42,188 | $48,217 | $188,058 | $136,092 | | Gross Profit (Loss) | $9,430 | $(2,074) | $24,263 | $(6,700) | | Adjusted Gross Profit (Loss) | $10,661 | $(522) | $28,666 | $(1,884) | | Net Income (Loss) | $2,105 | $(19,026) | $24,713 | $(42,305) | | Adjusted EBITDA | $3,953 | $(5,079) | $1,488 | $(26,169) | [Full-Year 2023 Highlights](index=1&type=section&id=Full-Year%202023%20Highlights) The company achieved substantial financial improvements in 2023, returning to net income and positive adjusted EBITDA, driven by strong revenue growth and operational enhancements - Reported net income of **$24.7 million**, a **$67.0 million** year-over-year improvement, compared to a net loss of **$42.3 million** for 2022[4](index=4&type=chunk) YoY Improvement Metrics | Metric (YoY Improvement) | Amount (Millions) | | :----------------------- | :---------------- | | Gross Profit | $31.0 | | Adjusted Gross Profit | $30.6 | | Adjusted EBITDA | $27.7 | - Full year revenue of **$188.1 million** increased **38%** compared to 2022 revenue of **$136.1 million**; Chemistry revenue from external customers increased **21%**, and data analytics segment (JP3) revenues grew **47%** to **$8.1 million**[4](index=4&type=chunk) - Strengthened liquidity through an up to **$13.8 million** Asset Based Loan ("ABL") and solidified the senior leadership team with the appointment of Dr. Ryan Ezell as CEO[4](index=4&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO highlighted 2023 as a transformative year, restoring profitability, strengthening leadership, and enhancing liquidity, with anticipated significant growth in Data Analytics and sustained chemistry revenues for 2024 - **2023** was a transformative year, restoring profitability and delivering significant improvement in all key financial metrics, strengthening the leadership team, and enhancing liquidity[5](index=5&type=chunk) - The next generation of the JP3 Verax Near InfraRed measurement system is expected to scale the Data Analytics segment more quickly and deliver associated revenue growth of greater than **50%** in **2024**[6](index=6&type=chunk) - Anticipates sustained growth in reservoir centric and international chemistry revenues through global footprint expansion[6](index=6&type=chunk) [Financial Performance Overview](index=2&type=section&id=Financial%20Performance%20Overview) [Fourth Quarter and Full-Year 2023 Financial Results](index=2&type=section&id=Fourth%20Quarter%20and%20Full-Year%202023%20Financial%20Results) Flotek demonstrated strong financial recovery in 2023, achieving substantial improvements in gross profit, net income, and adjusted EBITDA, despite a Q4 revenue decline [Revenue](index=2&type=section&id=Revenue) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Total Revenues | $42.2M | $48.2M | -13% | $188.1M | $136.1M | +38% | | External Chemistry Revenue | N/A | N/A | +28% (Q4) | N/A | N/A | +21% (FY) | - Q4 2023 revenue decline was primarily due to lower North American land completion activity, partially offset by a **28%** increase in chemistry revenues from external customers[9](index=9&type=chunk) [Gross Profit (Loss)](index=2&type=section&id=Gross%20Profit%20%28Loss%29) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Gross Profit (Loss) | $9.4M | $(2.1)M | Improvement | $24.3M | $(6.7)M | Improvement | - Improvement in gross profit was driven by successful initiatives to reduce costs related to freight, logistics, and materials, alongside increased chemistry revenues from external customers and minimum purchase requirements from the ProFrac supply agreement[8](index=8&type=chunk)[9](index=9&type=chunk) [Adjusted Gross Profit (Non-GAAP)](index=2&type=section&id=Adjusted%20Gross%20Profit%20%28Non-GAAP%29) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Adjusted Gross Profit (Loss) | $10.7M | $(0.5)M | Improvement | $28.7M | $(1.9)M | Improvement | - Adjusted gross profit excludes non-cash items, primarily amortization of contract assets[9](index=9&type=chunk) [Selling, General and Administrative ("SG&A") Expense](index=2&type=section&id=Selling%2C%20General%20and%20Administrative%20%28%22SG%26A%22%29%20Expense) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----- | :------ | :------ | :----------- | :------ | :------ | :----------- | | SG&A Expense | $6.6M | $6.2M | +$0.4M | $27.9M | $27.1M | +$0.8M | - SG&A during Q4 2022 included a **$1.9 million** credit related to the reversal of a bonus accrual[10](index=10&type=chunk) [Net Income (Loss) and EPS](index=3&type=section&id=Net%20Income%20%28Loss%29%20and%20EPS) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Net Income (Loss) | $2.1M | $(19.0)M | Improvement | $24.7M | $(42.3)M | Improvement | | Diluted EPS | $0.07 | $(1.51) | Improvement | $(0.10) | $(3.41) | Improvement | - Net income (loss) for Q4 2022 and full-year 2023 and 2022 included non-cash gains (losses) on the fair value measurement of convertible notes payable totaling **($8.9) million**, **$30.0 million**, and **$0.1 million**, respectively[14](index=14&type=chunk) [Adjusted EBITDA (Non-GAAP)](index=3&type=section&id=Adjusted%20EBITDA%20%28Non-GAAP%29) | Metric | Q4 2023 | Q4 2022 | Change (YoY) | FY 2023 | FY 2022 | Change (YoY) | | :----- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Adjusted EBITDA | $4.0M | $(5.1)M | Improvement | $1.5M | $(26.2)M | Improvement | - Full-year **2023** marked the first year of positive adjusted EBITDA since **2017**[4](index=4&type=chunk) [Operational Highlights & Strategic Initiatives](index=3&type=section&id=Operational%20Highlights%20%26%20Strategic%20Initiatives) [Data Analytics Update](index=3&type=section&id=Data%20Analytics%20Update) Flotek is advancing its Data Analytics business with the next-generation JP3 Verax Near InfraRed measurement system, aiming for mid-2024 deployment, designed for scalability and reduced manufacturing costs - Next-generation JP3 Verax Near InfraRed measurement system is undergoing extensive field-trial testing, with customer deployment expected by **mid-2024**[11](index=11&type=chunk) - Engineering advances in the new JP3 analyzer will facilitate scale, accelerated production, and reduced manufacturing costs, allowing access to new markets[11](index=11&type=chunk) - Plans for **2024** include maintaining JP3's strong presence in the midstream market and accelerating penetration into the upstream market, including applications for production allocations and a flare monitoring pilot program for EPA compliance[12](index=12&type=chunk) [Balance Sheet and Liquidity](index=3&type=section&id=Balance%20Sheet%20and%20Liquidity) As of March 11, 2024, Flotek maintained a $5.3 million cash position and significantly reduced ABL borrowings compared to year-end 2023 Balance Sheet and Liquidity | Metric | March 11, 2024 | December 31, 2023 | | :----- | :------------- | :---------------- | | Cash and cash equivalents | $5.3 million | N/A | | ABL Borrowings Outstanding | $0.5 million | $7.5 million | [Financial Statements](index=6&type=section&id=Financial%20Statements) [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets detail Flotek's financial position at December 31, 2023, compared to 2022, showing changes in assets, liabilities, and equity Unaudited Condensed Consolidated Balance Sheets | ASSETS (in thousands) | December 31, 2023 | December 31, 2022 | | :-------------------- | :---------------- | :---------------- | | Cash and cash equivalents | $5,851 | $12,290 | | Accounts receivable, net | $13,687 | $19,136 | | Accounts receivable, related party | $34,569 | $22,683 | | Total current assets | $76,447 | $80,074 | | Total Assets | $157,513 | $164,810 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | December 31, 2023 | December 31, 2022 | | :-------------------------------------------------- | :---------------- | :---------------- | | Accounts payable | $31,705 | $33,375 | | Asset-based loan | $7,492 | — | | Convertible notes payable | — | $19,799 | | Contract Consideration Convertible Notes Payable | — | $83,570 | | Total current liabilities | $47,782 | $151,371 | | Total Liabilities | $55,553 | $162,214 | | Total Stockholders' Equity | $101,960 | $2,596 | [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The unaudited condensed consolidated statements of operations detail Flotek's revenues, costs, and expenses, leading to net income (loss) and EPS for Q4 and FY2023 versus prior year Unaudited Condensed Consolidated Statements of Operations | Metric (in thousands, except per share data) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :------------------------------------------- | :------ | :------ | :------ | :------ | | Revenue from external customers | $19,239 | $15,940 | $66,518 | $54,344 | | Revenue from related party | $22,949 | $32,277 | $121,540 | $81,748 | | Total revenues | $42,188 | $48,217 | $188,058 | $136,092 | | Cost of goods sold | $32,758 | $50,291 | $163,795 | $142,792 | | Gross profit (loss) | $9,430 | $(2,074) | $24,263 | $(6,700) | | Selling, general, and administrative | $6,570 | $6,166 | $27,873 | $27,124 | | Income (loss) from operations | $2,420 | $(16,896) | $23,223 | $(35,421) | | Net income (loss) | $2,105 | $(19,026) | $24,713 | $(42,305) | | Basic EPS | $0.07 | $(1.51) | $1.00 | $(3.41) | | Diluted EPS | $0.07 | $(1.51) | $(0.10) | $(3.41) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows present cash generated from or used in operating, investing, and financing activities for FY2023 and 2022 Unaudited Condensed Consolidated Statements of Cash Flows | Cash Flows (in thousands) | FY 2023 | FY 2022 | | :------------------------ | :------ | :------ | | Net cash used in operating activities | $(11,297) | $(44,632) | | Net cash (used in) provided by investing activities | $(1,014) | $5,331 | | Net cash provided by financing activities | $5,928 | $38,267 | | Net change in cash and cash equivalents and restricted cash | $(6,437) | $(934) | | Cash and cash equivalents and restricted cash at end of period | $5,953 | $12,390 | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) [Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings](index=10&type=section&id=Unaudited%20Reconciliation%20of%20Non-GAAP%20Items%20and%20Non-Cash%20Items%20Impacting%20Earnings) This section reconciles GAAP to non-GAAP measures like Adjusted Gross Profit, EBITDA, and Adjusted EBITDA, used by management to assess operating performance Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings | Metric (in thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Gross profit (loss) | $9,430 | $(2,074) | $24,263 | $(6,700) | | Adjusted Gross profit (loss) (Non-GAAP) | $10,661 | $(522) | $28,666 | $(1,884) | | Net income (loss) | $2,105 | $(19,026) | $24,713 | $(42,305) | | EBITDA (Non-GAAP) | $2,680 | $(16,504) | $28,453 | $(34,542) | | Adjusted EBITDA (Non-GAAP) | $3,953 | $(5,079) | $1,488 | $(26,169) | - Management believes adjusted gross profit, EBITDA, and adjusted EBITDA are useful for investors to understand operating performance and underlying business trends, excluding non-cash or non-recurring items[33](index=33&type=chunk) [Company Information & Outlook](index=4&type=section&id=Company%20Information%20%26%20Outlook) [2024 Guidance](index=4&type=section&id=2024%20Guidance) Flotek plans to release its 2024 guidance with the first quarter 2024 financial and operating results - **2024** guidance will be issued with the release of first quarter **2024** financial and operating results[15](index=15&type=chunk) [Upcoming Investor Event](index=4&type=section&id=Upcoming%20Investor%20Event) Flotek will participate in the 36th Annual Roth Conference in March 2024, with CEO and CFO hosting discussions and investor meetings - Flotek will participate in the **36th Annual Roth Conference** from **March 17-19, 2024**, with CEO Ryan Ezell participating in an industry panel and both CEO and CFO Bond Clement hosting one-on-one meetings[16](index=16&type=chunk) [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) Flotek hosted a conference call on March 13, 2024, to discuss Q4 and FY2023 results, with presentation materials available online - A conference call was held on **March 13, 2024**, to discuss Q4 and full-year **2023** results, with a recording and updated corporate presentation available on the company's website[17](index=17&type=chunk)[18](index=18&type=chunk) [About Flotek Industries, Inc.](index=4&type=section&id=About%20Flotek%20Industries%2C%20Inc.) Flotek Industries, Inc. is an advanced technology-driven company specializing in green chemical and data analytics solutions for the energy sector, focusing on sustainability and well performance - Flotek is an advanced technology-driven, green chemical and data analytics company providing unique completion solutions that positively impact sustainability and reduce environmental impact[19](index=19&type=chunk) - Holds an intellectual property portfolio of over **170 patents** and operates globally in more than **59 countries**[19](index=19&type=chunk) - Focuses on collaborative partnerships for sustainable and optimized chemistry and data solutions to improve well performance and customer returns on invested capital[19](index=19&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements, cautioning that actual results may differ due to risks and uncertainties, with no obligation to update - Statements in the press release are forward-looking and inherently subject to risks and uncertainties, meaning actual results may differ materially from those discussed[21](index=21&type=chunk)[22](index=22&type=chunk) - Readers are urged not to place undue reliance on these statements, and the company undertakes no obligation to revise or update them[22](index=22&type=chunk) [Investor Contact](index=5&type=section&id=Investor%20Contact) Investor contact information is provided, with Bond Clement, Chief Financial Officer, as the primary contact - Investor contact: Bond Clement, Chief Financial Officer, E: ir@flotekind.com, P: **(713) 726-5322**[23](index=23&type=chunk)

HOUSTON, March 4, 2024 /PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company") (NYSE: FTK) today announced that it has appointed Amy Blakeway as Senior Vice President, General Counsel, effective March 1, 2024. With over a decade of legal experience in the energy sector, Ms. Blakeway brings unique expertise that will further strengthen the leadership team and help advance the Company's growth strategy to drive market share gains through its differentiated chemistry and data solutions. Ryan Ezell, ...

Financial Data and Key Metrics Changes - The company reported positive adjusted EBITDA for the first time since Q3 2018, marking the ninth consecutive quarter of improvement [5][28] - Third quarter gross profit increased to $9 million compared to a gross loss of $2 million for the same period in 2022, with adjusted gross profit totaling $10 million [18][19] - Net income for Q3 was $1.3 million, a significant improvement from a net loss of $19 million in Q3 2022 [19] - Total revenues for Q3 were 4% higher year-over-year but down 6% sequentially due to market pullback in upstream drilling [35] Business Line Data and Key Metrics Changes - Transactional chemistry revenues grew 128% sequentially and over 250% annually, driven by the adoption of the Prescriptive Chemistry Management business model [11] - Data Analytics subscription-based revenue increased by 81% for the first nine months of 2023 compared to the prior year, with a 98% annualized retention rate [29] Market Data and Key Metrics Changes - The U.S. land rig count decreased by 19% and total frac fleets were down 12% from Q3 2022, indicating a broader market slowdown [31] - Despite the overall decline in drilling and completion activity, the company's impact was mitigated due to its differentiated chemistry and data technologies [31] Company Strategy and Development Direction - The company aims to capitalize on the demand for advanced chemistry and data solutions, with expectations for growth in various market verticals including industrial, geothermal, agricultural, solar, and hydrogen [15] - The corporate strategy is focused on maximizing production and return on investment for customers, leveraging differentiated technologies [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued demand for oilfield services in 2024 and beyond, emphasizing the need for long-term investments in production [15][32] - The company anticipates an approximately $27 million improvement in full-year 2023 adjusted gross profit compared to the previous year [51] Other Important Information - The company strengthened its liquidity with an asset-based loan, increasing credit availability from $10 million to $13.8 million [12][52] - The company completed a corporate office move, resulting in annualized savings of $1 million [12] Q&A Session Summary Question: Changes in fleet deployment and impact on gross margin - Management discussed the impact of fleet deployment changes, noting that the focus on gas-rich basins has improved gross margins [43][44] Question: Current backlog and pipeline opportunities - The company highlighted a diversified revenue stack with no single customer representing more than 8%, and almost 50% of Q3 revenue came from new customers [48] Question: Supply agreement with ProFrac - Management clarified that the supply agreement includes minimum annual chemistry purchase requirements, and expected shortfall payments positively impacted profitability [50]