Flotek(FTK) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Financial Summary Flotek Industries reported strong financial growth for Q2 and H1 2025, with significant increases in total revenues, gross profit, Adjusted Net Income, and Adjusted EBITDA Financial Summary | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change (QoQ) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change (YoY) | | :----------------------------- | :------ | :------ | :-------------- | :-------- | :-------- | :-------------- | | Total Revenues | 58,350 | 46,152 | 26% | 113,712 | 86,526 | 31% | | Gross Profit | 14,407 | 9,170 | 57% | 26,856 | 17,991 | 49% | | Net Income | 1,768 | 1,974 | (10)% | 7,148 | 3,536 | 102% | | Diluted Income Per Share ($) | 0.05 | 0.06 | (17)% | 0.21 | 0.12 | 75% | | Adjusted Net Income | 5,963 | 1,974 | 202% | 11,343 | 3,536 | 221% | | Adjusted Diluted Income Per Share ($) | 0.16 | 0.06 | 167% | 0.33 | 0.12 | 175% | | Adjusted EBITDA | 9,452 | 4,439 | 113% | 17,232 | 8,464 | 104% | Second Quarter 2025 Highlights Key highlights for Q2 2025 include 26% total revenue growth, a significant increase in Data Analytics revenue contribution, and substantial growth in adjusted earnings - Total revenue grew 26%, fueled by Chemistry Technologies and the Data Analytics acquisition[3] - Data Analytics revenues increased to 10% of total revenues (from 4% in Q2 2024), improving gross profit margin by 500 basis points due to higher-margin service offerings[3] - Net income totaled $1.8 million ($0.05 per diluted share), while adjusted net income (excluding transaction expenses) was $6.0 million ($0.16 per diluted share)[3] - Adjusted EBITDA surged 113% to $9.5 million, marking the eleventh consecutive quarter of growth[3] Management Commentary Management emphasized the company's exceptional financial performance, successful strategic execution, robust growth in Data Analytics, and strong market share gains in Chemistry Technologies - Flotek delivered another quarter of exceptional financial performance, executing its corporate strategy and transforming the organization for the future[2] - The Data Analytics segment is experiencing robust growth, fueled by advanced analytics adoption and expansion into the power generation market, exceeding expectations[2] - The Chemistry Technologies segment continues to gain market share with strong demand for innovative chemical solutions[2] - Revenues through the first half of 2025 were 31% higher, and gross profit grew 49% over the same period, demonstrating success in expanding both business segments[2] Financial Performance Analysis Revenue Analysis Total revenues increased by 26% in Q2 2025 and 31% in H1 2025, driven by strong performance in both the Chemistry Technologies and Data Analytics segments Total Revenues | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change | | :------------------------ | :------ | :------ | :------- | :-------- | :-------- | :------- | | Revenue from external customers | 25,182 | 18,191 | 38.4% | 49,605 | 31,371 | 58.1% | | Revenue from related party | 33,168 | 27,961 | 18.6% | 64,107 | 55,155 | 16.2% | | Total revenues | 58,350 | 46,152 | 26.4% | 113,712 | 86,526 | 31.4% | Chemistry Technologies Revenue | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change | | :------------------- | :------ | :------ | :------- | :-------- | :-------- | :------- | | External Revenues | 22,542 | 16,361 | 38% | 44,551 | 28,047 | 59% | | Related Party Revenues | 29,878 | 27,741 | 8% | 60,607 | 54,755 | 11% | | Total | 52,420 | 44,102 | 19% | 105,158 | 82,802 | 27% | - Growth reflects Flotek's ability to capture market share despite a decline in North American frac fleets[9] Data Analytics Revenue | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change | | :-------------- | :------ | :------ | :------- | :-------- | :-------- | :------- | | Product Revenues | 1,820 | 1,306 | 39% | 3,482 | 2,238 | 56% | | Service Revenues | 4,110 | 744 | 452% | 5,072 | 1,486 | 241% | | Total | 5,930 | 2,050 | 189% | 8,554 | 3,724 | 130% | - Q2 2025 service revenues included approximately $3.2 million related to the Asset Acquisition[9] Gross Profit Gross profit increased by 57% to $14.4 million in Q2 2025, with the gross profit margin improving from 20% to 25% due to higher-margin Data Analytics revenues - Gross profit for Q2 2025 was $14.4 million, up 57% from $9.2 million in Q2 2024[6] - Gross profit as a percentage of revenue increased to 25% in Q2 2025 from 20% in Q2 2024[6] - The increase was driven by strong revenue growth in Chemistry Technologies (19%) and Data Analytics (189%), with higher-margin Data Analytics revenues boosting overall margins[6] Operating Expenses Total operating expenses increased to $11.82 million in Q2 2025, primarily due to $4.195 million in one-time asset acquisition expenses Selling, General and Administrative (SG&A) Expense - SG&A expense totaled $6.8 million for Q2 2025 (12% of revenues) compared to $6.3 million for Q2 2024 (14% of revenues)[7] - The increase in SG&A expenses was primarily due to higher non-cash stock compensation expense[7] Asset Acquisition Expenses - Asset acquisition expenses totaled $4.195 million for Q2 2025 and H1 2025[23] Net Income and Adjusted Net Income (Non-GAAP) Adjusted net income, excluding asset acquisition expenses, significantly increased by 202% to $6.0 million, demonstrating strong underlying operational performance Net Income and Adjusted Net Income (Non-GAAP) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change | | :-------------------------------- | :------ | :------ | :------- | :-------- | :-------- | :------- | | Net income | 1,768 | 1,974 | (10)% | 7,148 | 3,536 | 102% | | Adjusted net income (Non-GAAP) | 5,963 | 1,974 | 202% | 11,343 | 3,536 | 221% | | Net income per diluted share ($) | 0.05 | 0.06 | (17)% | 0.21 | 0.12 | 75% | | Adjusted net income per diluted share ($) | 0.16 | 0.06 | 167% | 0.33 | 0.12 | 175% | - Adjusted net income excludes transaction expenses related to the Asset Acquisition[3][27] Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by 113% to $9.5 million in Q2 2025, marking the eleventh consecutive quarter of growth and reflecting strong operational improvements Adjusted EBITDA (Non-GAAP) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change | | :-------------- | :------ | :------ | :------- | :-------- | :-------- | :------- | | Adjusted EBITDA | 9,452 | 4,439 | 113% | 17,232 | 8,464 | 104% | - This marks the eleventh consecutive quarter of Adjusted EBITDA improvement[3][11] Business Segment Review Chemistry Technologies The Chemistry Technologies segment achieved 19% revenue growth in Q2 2025, driven by a 38% increase in external customer revenues and successful market share capture - The segment's 19% revenue growth in Q2 2025 was driven by a 38% increase in external customer chemistry revenues[9] - This growth reflects Flotek's ability to capture market share despite a decline in North American frac fleets[9] - Related party revenues grew 8%, contributing to stable and diversified revenue streams[9] Data Analytics & PWRtek Update The Data Analytics segment's revenue surged 189% in Q2 2025, primarily from the PWRtek acquisition, which is projected to exceed initial revenue expectations - The Data Analytics segment achieved a 189% revenue increase in Q2 2025, with service revenues growing more than 450% to $4.1 million[9] - Q2 2025 service revenues included approximately $3.2 million related to the Asset Acquisition (PWRtek), which closed in late April 2025[9][11] - The PWRtek Asset Acquisition is on track to exceed initial expectations, with current projections of approximately $15 million in high-margin rental revenue during 2025, a 7% increase from previous estimates[11] - Revenues attributable to the Acquired Assets totaled $3.2 million in Q2 2025, with gross profit as a percentage of revenue totaling approximately 90%[11] Financial Outlook 2025 Guidance Flotek Industries maintains its previously issued 2025 guidance, projecting total revenue between $200 million and $220 million and Adjusted EBITDA between $34 million and $39 million 2025 Guidance | Metric | Guidance ($ millions) | | :------------- | :-------------------- | | Total Revenue | 200 - 220 | | Adjusted EBITDA | 34 - 39 | Corporate Information About Flotek Industries, Inc. Flotek Industries, Inc. is a leading chemistry and data technology company serving the Energy industry with a focus on sustainable and optimized solutions - Flotek Industries, Inc. is a leading chemistry and data technology company focused on servicing the Energy industry[16] - The Company's top tier technologies leverage near real-time data to deliver innovative solutions to maximize customer returns[16] - Flotek has an intellectual property portfolio of over 130 patents, over 20 years of field and laboratory data, and a global presence in more than 59 countries[16] - Flotek has established collaborative partnerships focused on sustainable and optimized chemistry and data solutions, aiming to reduce the environmental impact of energy[17] Forward-Looking Statements The report contains forward-looking statements regarding Flotek's business and prospects, which are subject to inherent risks and uncertainties - Forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially[18] - Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release[18] - The Company undertakes no obligation to revise or update any forward-looking statements[18] Investor Relations & Conference Call Details Flotek hosted an earnings conference call on August 6, 2025, and provides contact information for investor relations - The Company plans to host its earnings conference call on Wednesday, August 6, 2025, at 9:00 a.m. CDT (10:00 a.m. EDT)[12] - Participants may access the call through Flotek's website or by telephone[13] - A recording of the call will be available on the Company's website following the conclusion[15] - Investor contact: Mike Critelli, Director of Finance & Investor Relations, ir@flotekind.com[19] Unaudited Condensed Consolidated Financial Statements Balance Sheets Total assets slightly increased to $172.24 million at June 30, 2025, while total liabilities significantly increased to $100.39 million due to a new related-party note payable Balance Sheets | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :-------------------------- | :------------ | :---------------- | | Total Assets | 172,243 | 170,796 | | Total Liabilities | 100,393 | 56,896 | | Total Stockholders' Equity | 71,850 | 113,900 | - Significant increase in total liabilities primarily due to a $39.54 million Note payable - related party[21] Statements of Operations The statements of operations show total revenues of $58.35 million for Q2 2025 and net income of $1.77 million, with operating costs impacted by acquisition expenses Statements of Operations | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :-------------------------- | :------ | :------ | :-------- | :-------- | | Total revenues | 58,350 | 46,152 | 113,712 | 86,526 | | Cost of goods sold | 43,943 | 36,982 | 86,856 | 68,535 | | Gross profit | 14,407 | 9,170 | 26,856 | 17,991 | | Total operating costs and expenses | 11,820 | 6,948 | 18,702 | 13,661 | | Income from operations | 2,587 | 2,222 | 8,154 | 4,330 | | Net income | 1,768 | 1,974 | 7,148 | 3,536 | - Asset acquisition expenses of $4.195 million significantly impacted operating costs in Q2 and H1 2025[23] Statements of Cash Flows Net cash from operating activities increased significantly to $2.82 million for H1 2025, reflecting improved operational performance and higher net income Statements of Cash Flows | Metric | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :---------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | 2,822 | 827 | | Net cash used in investing activities | (1,302) | (195) | | Net cash used in financing activities | (740) | (1,765) | | Net change in cash and cash equivalents and restricted cash | 625 | (1,075) | - Operating cash flow improved significantly, driven by higher net income and various adjustments[25] Non-GAAP Reconciliations Adjusted Net Income Reconciliation Adjusted Net Income for Q2 2025 was $5.96 million after excluding $4.195 million in asset acquisition expenses from GAAP Net Income to show core operating performance Adjusted Net Income Reconciliation | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :-------------------------------- | :------ | :------ | :-------- | :-------- | | Net income | 1,768 | 1,974 | 7,148 | 3,536 | | Adjustments: Asset acquisition expenses | 4,195 | — | 4,195 | — | | Adjusted net income (Non-GAAP) | 5,963 | 1,974 | 11,343 | 3,536 | - Management believes adjusted net income is useful for assessing operating performance by excluding non-recurring asset acquisition expenses[27] Adjusted EBITDA Reconciliation Adjusted EBITDA for Q2 2025 was $9.45 million, reconciled from GAAP Net Income by adding back interest, taxes, depreciation, amortization, and other non-recurring items Adjusted EBITDA Reconciliation | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :-------------------------------- | :------ | :------ | :-------- | :-------- | | Net income | 1,768 | 1,974 | 7,148 | 3,536 | | Interest expense | 983 | 308 | 1,212 | 586 | | Income tax expense | 17 | 15 | 81 | 257 | | Depreciation and amortization | 374 | 222 | 626 | 442 | | EBITDA (Non-GAAP) | 3,142 | 2,519 | 9,067 | 4,821 | | Stock compensation expense | 676 | 331 | 1,137 | 643 | | Amortization of contract asset | 1,434 | 1,482 | 2,916 | 2,749 | | Non-Recurring professional fees | 4,195 | 121 | 4,195 | 280 | | Adjusted EBITDA (Non-GAAP) | 9,452 | 4,439 | 17,232 | 8,464 | - Adjusted EBITDA excludes certain non-cash or non-recurring items to provide a clearer view of underlying business trends and cash flow[28] - Non-Recurring professional fees include $4.2 million of expenses related to Asset Acquisition for Q2 and H1 2025[29]