Flotek(FTK) - 2025 Q1 - Quarterly Report

Part I Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, showing a 37% revenue increase to $55.4 million and net income growth to $5.4 million Unaudited Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $170.2 million, with liabilities decreasing to $50.5 million due to loan repayment, increasing stockholders' equity to $119.7 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $97,347 | $96,456 | | Total Assets | $170,237 | $170,796 | | Total Current Liabilities | $44,403 | $50,368 | | Total Liabilities | $50,533 | $56,896 | | Total Stockholders' Equity | $119,704 | $113,900 | - Cash and cash equivalents increased to $6.3 million from $4.4 million at year-end 2024[18] - The asset-based loan was fully paid off, with the balance decreasing from $4.8 million at year-end 2024 to zero[18] Unaudited Condensed Consolidated Statements of Operations Q1 2025 saw total revenues increase 37% to $55.4 million, with gross profit reaching $12.4 million and net income more than tripling to $5.4 million Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $55,362 | $40,374 | +37.1% | | Gross Profit | $12,449 | $8,821 | +41.1% | | Income from Operations | $5,567 | $2,108 | +164.1% | | Net Income | $5,380 | $1,562 | +244.4% | | Diluted EPS | $0.17 | $0.05 | +240.0% | Unaudited Condensed Consolidated Statements of Cash Flow In Q1 2025, operating activities generated $7.3 million in cash, leading to a net cash increase of $1.8 million after investing and financing outflows Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,313 | $3,887 | | Net cash used in investing activities | ($591) | ($152) | | Net cash used in financing activities | ($4,828) | ($4,411) | | Net change in cash | $1,849 | ($634) | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail accounting policies, segment performance, related party transactions, and the post-quarter $105 million acquisition of power generation assets from ProFrac - The company operates in two segments: Chemistry Technologies (CT) and Data Analytics (DA), supported by a Research & Innovation (R&I) function[33][34][35] - A significant subsequent event occurred on April 28, 2025, involving the acquisition of mobile power generation assets from ProFrac GDM, LLC for total consideration of $105 million, settled via an offset of contract shortfall fees, a new warrant, a promissory note, and offsets against future shortfall fees[101][102] - Revenue from related party ProFrac Services, LLC was $30.9 million in Q1 2025, accounting for 55.9% of total revenue, including $7.5 million recognized for Contract Shortfall Fees expected for the 2025 measurement period[86][87][99] Q1 2025 Segment Performance (in thousands) | Segment | Total Revenue | Income (Loss) from Operations | | :--- | :--- | :--- | | Chemistry Technologies | $52,738 | $8,891 | | Data Analytics | $2,624 | ($124) | | Corporate and Other | - | ($3,200) | | Total | $55,362 | $5,567 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, highlighting a 37% revenue increase, the strategic post-quarter acquisition of power generation assets, and sufficient liquidity for the next twelve months - Consolidated revenue for Q1 2025 increased by $15.0 million (37%) year-over-year, driven by higher sales volumes to external customers and increased activity with ProFrac[138] - A key post-quarter event was the acquisition of mobile power generation assets from ProFrac for $105 million, which will be integrated into the Data Analytics segment and is expected to significantly impact its future results[114][115][137] - The company believes its cash, operating cash flow, future Contract Shortfall Fees from the ProFrac Agreement, and ABL availability will be sufficient to fund operations for the next twelve months[149] Q1 2025 vs Q1 2024 Segment Operating Income (in thousands) | Segment | Q1 2025 Income (Loss) | Q1 2024 Income (Loss) | | :--- | :--- | :--- | | Chemistry Technologies | $8,891 | $6,106 | | Data Analytics | ($124) | ($424) | | Corporate and Other | ($3,200) | ($3,574) | Quantitative and Qualitative Disclosures about Market Risk No material changes to market risk disclosures from the 2024 Annual Report are reported, with key exposures remaining in interest rates, raw material prices, freight, and foreign currency - Primary market risks include interest rates, raw material prices, freight costs, and foreign currency exchange rates[164] - There have been no material changes to the market risk profile since the 2024 Annual Report[164] Controls and Procedures As of March 31, 2025, disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[166] - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[168] Part II Legal Proceedings No material changes in legal proceedings have occurred since the 2024 Annual Report, with no current proceedings expected to have a material adverse effect - There have been no material changes in legal proceedings since the 2024 Annual Report[170] Risk Factors This section updates risk factors, adding new concerns regarding U.S. trade policy, integration of acquired assets, and significant reliance on ProFrac agreements - A new risk factor highlights potential adverse effects from changes in U.S. trade policies and tariffs, which could increase costs for materials in both the CT and DA segments[172][173] - The company identifies risks associated with the integration of the newly acquired assets from ProFrac, including potential difficulties in assimilation and higher-than-expected operating costs[177][178] - A significant risk is the company's heavy reliance on the ProFrac Supply Agreement and the new Lease Agreement, which are expected to be major sources of liquidity[180][181] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred in Q1 2025, though 1,673 shares were repurchased for employee tax withholding obligations - There were no unregistered sales of equity securities in Q1 2025[185] Issuer Repurchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 0 | $ - | | Feb 2025 | 500 | $9.03 | | Mar 2025 | 1,173 | $7.48 | | Total | 1,673 | | Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the first quarter of 2025[189] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications (Rule 13a-14(a) and Section 1350) and Inline XBRL documents[190]