Flotek(US:FTK)2022-08-10 16:00Financial Performance - Total revenues for the three months ended June 30, 2022, were $29,373,000, a significant increase from $9,165,000 in the same period of 2021, representing a growth of 220%[16] - Net income for the three months ended June 30, 2022, was $6,240,000, a turnaround from a net loss of $(6,546,000) in the same period of 2021[18] - Comprehensive income for the three months ended June 30, 2022, was $6,327,000, compared to a comprehensive loss of $(6,563,000) in the same period of 2021[18] - The company reported a net income of $6.24 million for the six months ended June 30, 2022, compared to a net loss of $4.48 million for the same period in 2021[22] - Consolidated net loss for the six months ended June 30, 2022, was $4.5 million, an improvement from a net loss of $14.8 million in the same period of 2021[213] Cash and Liquidity - Cash and cash equivalents increased to $33,084,000 as of June 30, 2022, from $11,534,000 at the end of 2021, marking a growth of 187%[20] - The company expects to utilize a significant amount of cash in the next twelve months, with liquidity dependent on operating cash flow and access to financing[32] - The company has a history of losses and negative cash flows, which may impact future liquidity[32] - The net change in cash, cash equivalents, and restricted cash was an increase of $19.8 million for the six months ended June 30, 2022, compared to a decrease of $11.5 million in 2021[212] Assets and Liabilities - Total assets rose to $163,471,000 as of June 30, 2022, compared to $50,244,000 at December 31, 2021, reflecting a growth of 226%[14] - Total current liabilities increased to $114,998,000 as of June 30, 2022, from $18,777,000 at December 31, 2021, indicating a rise of 514%[14] - The total stockholders' equity increased to $38.56 million as of June 30, 2022, up from $20.19 million as of December 31, 2021[23] Revenue Segments - Revenue from chemical sales to ProFrac Services LLC for the three and six months ended June 30, 2022, was $16.5 million and $18.9 million respectively, net of amortization of contract assets of $0.7 million[158] - The Chemistry Technologies segment reported revenue of $12.1 million for the three months ended June 30, 2022, compared to $7.7 million in the same period of 2021, indicating a 57.5% increase[164] - The Data Analytics segment generated $713,000 in revenue for the three months ended June 30, 2022, down from $1.5 million in the same period of 2021, reflecting a decline of 51.7%[164] Expenses - Research and development expenses for the three months ended June 30, 2022, were $1,115,000, down from $1,466,000 in the same period of 2021[16] - Selling general and administrative expenses for the three months ended June 30, 2022, increased by $3.2 million, or 76.8%, compared to the same period in 2021[194] - Cost of goods sold for the three months ended June 30, 2022, increased by $20.9 million, or 194.0%, primarily due to increased revenues and one-time expenses related to ProFrac activity[193] Financing Activities - The company issued convertible notes resulting in proceeds of $21,150,000 during the six months ended June 30, 2022[20] - The Company issued Prefunded Warrants to ProFrac Holdings II, LLC for a total cash infusion of $19.5 million on June 21, 2022[143] - The Company funded working capital requirements with proceeds from warrants issued for $19.5 million during the six months ended June 30, 2022[204] Agreements and Contracts - A long-term supply agreement was established with ProFrac Services, LLC, requiring minimum chemical orders based on hydraulic fracturing fleet requirements, with a term of three years starting April 1, 2022[34] - The ProFrac Agreement was amended on May 17, 2022, increasing the minimum purchase obligation to 70% of ProFrac Services LLC's requirements and extending the term to 10 years[35] - The Company entered into a long-term supply agreement with ProFrac Services, LLC, requiring a minimum purchase obligation of chemicals equal to the greater of 33% of ProFrac's hydraulic fracturing fleets or a baseline from the first ten fleets, with a term of three years starting April 1, 2022[207] Market Outlook - The Company expects North American and International onshore activity to improve throughout 2022, driven by private exploration and production companies responding quickly to commodity price changes[182] - The Company expects international sales to increase over the next twelve months due to newly certified equipment for online analyzers[184] - The Company anticipates that supply chain issues will continue to impact operations, including rising freight costs and delays due to port congestion[188] Accounting and Valuation - The Company adopted ASU No. 2020-06 on January 1, 2022, which changes the accounting for convertible instruments, with no material impact on the financial statements as of that date[73] - The Company recognizes revenue based on a five-step model, ensuring that performance obligations are satisfied before revenue is recognized[56] - The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained[64]