Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Q2 2022 Earnings Presentation
25 slides from Flotek Industries's earnings presentation, August 2022
Slide 1: Investor Presentation
AUGUST 2022 Investor Presentation // NYSE: FTK
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements set forth in this presentation constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding Flotek Industries, Inc.’s business, financial conditio
Slide 3: Company Overview
Company Overview FLOTEK INDUSTRIES (FTK) Technology-driven chemistry and data analytics company Founded: 1985 Marlow, OK Raceland, LA Employees: ~140 Monahans, TX Houston, TX (HQ) Abu Countries with Clients: 15+ Dhabi, UAE Research Centers: 2 Headquarters Corporate Headquarters: Houston Offices Chem
Slide 4: Our Vision And Mission
Our Vision And Mission Sustainable Chemistry & Data Solutions Collaborative Partnerships Our Vision Flotek Industries, Inc. creates solutions to reduce the environmental impact of energy on air, water, land and people. Our Mission To be the collaborative ESG partner of choice for sustainable chemist
Slide 5: Strategic Priorities
Strategic Priorities Capital-light Growth Flawless Execution No new capital required to support Exemplary safety and service delivery robust growth Sustainable Revenue Strong Balance Sheet 10-year contract with guaranteed Low debt balance positions company minimum of $2B+ to prosper through the cycl
Slide 6: Flawless Execution
Flawless Execution Safety is Priority #1 Flotek – HSE Metrics • 412,160 hours worked with zero OSHA Average Recordable Lost Time Restricted DART Auto Recordable Injuries Year TRIR # of Employees Injuries Days Days (Days Away) Accidents • ISO 9001, EPA, and FDA certification – no 2018 0.963 357 5 180
Slide 7: Supportive Industry Fundamentals
Supportive Industry Fundamentals Increased Industry Stability – So Far This Cycle is Different • E&P focus on production stability and margin, not growth and market share • Capital discipline has been resilient across the value chain • Focus on ROIC and returning capital to shareholders Macro-enviro
Slide 8: Profrac Partnership Benefits
Profrac Partnership Benefits ProFrac Contract Proves FTK is Industry’s Collaborative Partner of Choice ProFrac Contract Revenue $250,000 • $2.1B in revenue backlog over 10 years • Take-or-pay aspect of contract provides $200,000 for predictability of cash flow • Contract provides industry imprimatur
Slide 9: Gaining Market Share – Customer Consolidation
Gaining Market Share – Customer Consolidation ProFrac Strategy Supportive of Flotek Growth 44 Fleets by the end of 2022 June 21: ProFrac announced an agreement to acquire Source: ProFrac US Well Services (USWS) in all stock transaction Investor Presentation / August 2022 // 9
Slide 10: Gaining Market Share – Customer Consolidation
Gaining Market Share – Customer Consolidation Market Share by Fleet Built-in revenue growth Current North America Frac Fleet • ~280 total NAM frac fleets Other Halliburton • Fully ramped ProFrac contract (30 fleets) translates to 11% market share • Served 8 ProFrac fleets on average in Q2 and rampin
Slide 11: Transactional Growth
Transactional Growth Managing for Rapid Growth Q2 2022 Revenue Breakdown Transactional revenue expansion continues to outpace frac fleet market • +13% base growth compared to Q1 2022 • +100% compared to Q2 2021 Transactional 47% ProFrac 53% Transactional business produces higher margins • Higher pro
Slide 12: Flotek Revenue Opportunity
Flotek Revenue Opportunity Managing for Rapid Growth Quarterly Consolidated Revenue $50,000 $45,000 Average Crew Count $40,000 • Q1 2022A – 0 $35,000 • Q2 2022A – 8 $30,000 • Q3 2022E – 16 $25,000 $20,000 $15,000 $10,000 $5,000 $- Q1 2020A Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021A Q4 202
Slide 13: Chemical Portfolio Strategy – Margin Improvement
Chemical Portfolio Strategy – Margin Improvement Multiple Opportunities to Drive Improved Margins COGS are the majority of cost Top Quartile SG&A (% of Revenue) Locked-in positive margin on industry Reducing costs loss-leading friction reducers • Reduced personnel costs while reinvesting in revenue
Slide 14: Capital-light Growth
Capital-light Growth Low Asset Utilization Rate Means Minimal Capex Required For Growth Marlow Liquid Blending Facility • Capacity ~ 60MM gallons/year • 35 bulk storage tanks: 755k gallons • Heated bulk storage: 195k gallons • Ambient bulk storage: 560k gallons Investor Presentation / August 2022 //
Slide 15: Path to Positive Adjusted EBITDA Margin
Path to Positive Adjusted EBITDA Margin Revenue Growth + Expense Management + Capital Light Growth = Positive Adjusted EBITDA Margin 2022 Quarterly Adjusted EBITDA Margin 0.0% -10.0% -20.0% -30.0% -40.0% -50.0% -60.0% -70.0% -80.0% Q1 2020A Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021A Q4 20
Slide 16: Strong Balance Sheet
Strong Balance Sheet Taking decisive action to preserve balance sheet strength and liquidity to weather all cycles Cash Balance as of June 30th, 2022 – $33.1MM ProFrac Equity Investment • ProFrac invested another $19.5MM in Flotek equity • Purchase of pre-funded warrants completed at a 20% premium t
Slide 17: Our Solutions: Accelerating ESG Goals For Our Customers
Our Solutions: Accelerating ESG Goals For Our Customers Our strategy is to improve our customers’ ESG Flotek Green Chemistry performance through green chemistry and digital transformation solutions. High-performance green chemistry Bio-based chemistry portfolio reduces liabilities in the event of •
Slide 18: Q2 2022 Highlights & Recent Trends
// Q2 2022 Highlights & Recent Trends // 18
Slide 19: Q2 2022 Highlights & Recent Trends
Q2 2022 HIGHLIGHTS & RECENT TRENDS Q2 2022 • ProFrac Supply Agreement effective April 1, 2022 • Consolidated revenue of $29.4MM was up 128% QoQ and 221% YoY, driven by the ProFrac Supply Agreement and continued growth in deliveries to transactional Chemistry Technologies customers • Excluding the $0
Slide 20: Q2 2022 Highlights & Recent Trends
Q2 2022 HIGHLIGHTS & RECENT TRENDS Q2 2022 • Strengthened our liquidity position significantly • $19.5MM pre-funded warrants issued to ProFrac at 20% premium to 30 day VWAP in June • Waller, TX: Sold facility for $4.3MM in April, 2022 and booked a $1.9MM gain • Cash position as of June 30, 2022 of $
Slide 21: Recent Financials
Three Months Ended Six Months Ended Recent Financials 6/30/2022 6/30/2021 3/31/2022 6/30/2022 6/30/2021 Unaudited Condensed Consolidated Revenue: Revenue from external customers $ 12,824 $ 9,165 $ 10,382 $ 23,206 $ 20,935 Statement of Operations Revenue from related party 16,549 — 2,497 19,046 — (in
Slide 22: Unaudited Condensed Consolidated Balance Sheets
June 30, 2022 December 31, 2021 Unaudited Condensed ASSETS Current assets: Cash and cash equivalents $ 33,084 $ 11,534 Consolidated Balance Restricted cash 40 1,790 Accounts receivable, net of allowance for doubtful accounts of $514 11,320 and $659 at June 30, 2022 and December 31, 2021 , respective
Slide 23: Unaudited Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2022 2021 Cash flows from operating activities: Unaudited Condensed Net loss $ (4,484) $ (14,846) Adjustments to reconcile net loss to net cash used in operating activities: Change in fair value of contingent consideration (134) (302) Consolidated Statements Change in fair
Slide 24: Unaudited Reconciliation of Non-GAAP Items
Unaudited Three Months Ended Six Months Ended Reconciliation of 6/30/2022 6/30/2021 3/31/2022 6/30/2022 6/30/2021 Non-GAAP Items Net income (loss) $ 6,240 $ (6,546) $ (10,724) $ (4,483) $ (14,846) Interest expense 1,597 17 668 2,265 35 and Non-Cash Interest income — (3) — — (8) Income tax (benefit)
Slide 25: Investor Contact
Investor Contact Bernie Colson SVP – Corporate Development & Sustainability investors@flotekind.com (713) 726-5322 // NYSE: FTK