Flotek(US:FTK)2022-05-17 18:01Financial Data and Key Metrics Changes - Revenue for Q1 2022 was $12.9 million, up 9% from Q1 2021 and 6% from Q4 2021 [36] - Adjusted EBITDA for Q1 2022 was a loss of $5.4 million, an improvement from a loss of $5.7 million in Q4 2021 and $6.6 million in Q1 2021 [37] - Cash and equivalents at the end of Q1 2022 were $24.8 million, compared to $11.5 million at year-end [38] Business Line Data and Key Metrics Changes - Chemistry Technologies revenue increased 2% sequentially, outperforming the market despite a flat overall market activity [22] - The company delivered over 17 million pounds of chemistry since the start of the partnership with ProFrac [19] - 12% of revenue in the quarter was attributed to new customers, with a 37% increase in the customer base since Q1 2021 [24] Market Data and Key Metrics Changes - Hydraulic fracturing fleet activity levels decreased dramatically at the start of the year but showed recovery in February and March, with March being the best month since January 2020 [16][22] - The company is experiencing inflationary pressures across its supply chain, impacting costs but is adjusting pricing to preserve margins [26][70] Company Strategy and Development Direction - The company has closed a transformational 10-year contract with ProFrac, expected to create a backlog of over $2 billion in revenue [10] - Future financial reporting will be on a consolidated basis rather than by segment, reflecting the scale of the chemistry technology business [16] - The focus is on providing differentiated solutions that maximize customer value while enhancing ESG performance [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving positive adjusted EBITDA by the end of Q4 2022 [11] - The partnership with ProFrac is expected to enhance access to C-suite executives and improve sustainability initiatives [53] - Management is confident in margin expansion due to increased volumes and improved pricing strategies [72][76] Other Important Information - The company sold its Waller, Texas facility for $4.3 million as part of monetizing noncore assets [39] - A new Vice President of Data Analytics has been appointed to drive profitable growth through market penetration and process improvement [28] Q&A Session Summary Question: What is the conservative revenue number per fleet per month for the chemicals division? - Management indicated revenue per fleet can range from $450,000 to $600,000 depending on the basin [50][51] Question: Is it getting easier to access C-suites post-ProFrac announcement? - Management noted that the ProFrac contract has elevated their profile and opened doors to C-suite discussions focused on sustainability [53] Question: How is the ramp-up with additional ProFrac fleets progressing? - Management reported no significant growing pains and is on track to onboard additional fleets [57][64] Question: What are the supply cost issues and pricing adjustments? - Management acknowledged competitive pressures but is confident in achieving margin expansion through higher volumes and pricing adjustments [70][72] Question: What gives confidence in reaching EBITDA positive by Q4? - Management highlighted improved revenue structure and operational efficiencies as key factors for confidence in achieving positive EBITDA [75][76]