Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Merger or Acquisition (May 2020)
13 slides from Flotek Industries's merger presentation, May 19, 2020
Slide 1: Acquisition of JP3: Maximizing Value of the Full Hydrocarbon Stream
Acquisition of JP3 Maximizing Value of the Full Hydrocarbon Stream with Real-Time Data and Analytics May 18, 2020
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: Compelling Acquisition Rationale
Compelling Acquisition Rationale • Adds high growth business with proven technology platform that supports digital transformation in the energy industry • Clear runway into $1 billion addressable market with significant international opportunity, utilizing Flotek’s global reach • JP3 delivers strong
Slide 4: Transaction Summary
Transaction Summary Transaction Details • Equity purchase of 100% ownership of JP3 Measurement, LLC, from private investors • Closed on Monday, May 18, 2020 • $25.0 million cash • 11.5 million shares of Flotek stock1 • $5.0 million cash earnout potential2 • Assumption of $1.3 million in debt JP3 Fin
Slide 5: JP3 Platform Technology Providing Real-Time Data & Analytics to the Full Hydrocarbon Stream
JP3 Platform Technology Providing Real-Time Data & Analytics to the Full Hydrocarbon Stream JP3 Leverages Cutting-Edge Optical Technology and Real-Time Data & Analytics Platforms to Maximize the Value of Oil, Natural Gas and Refined Fuels JP3 Mission • Since 2012, the company has provided real-time
Slide 6: The Need for Real-Time Data in the Modern Age of Oil & Gas Digitalization
The Need for Real-Time Data in the Modern Age of Oil & Gas Digitalization One Technology Platform – Wide Range of Applications Upstream Midstream Downstream Distribution Example: Example: Example: Example: Low-cost, real-time analysis of crude’s Gas process plants running Refineries can custom-blend
Slide 7: JP3 data solution overcomes limitations of traditional technologies
JP3 data solution overcomes limitations of traditional technologies JP3 Verax Edge Analyzers and Previous Technologies Viper Cloud Solutions • Environmental risks due to extracting Environmental • Zero emissions by design samples required for each analysis • Opportunity to quantify GHG emissions • L
Slide 8: JP3: Differentiated Data Solutions
JP3: Differentiated Data Solutions Cost Benefits Accruing to Customers Factors Driving Rapid Industry Adoption • Integrated Systems-based Approach • Actionable Analytics Driving Increased Profitability • Remote Access – Reduces Monitoring Cost • Regulatory Tailwinds from New Industry Standards • Hei
Slide 9: High Value Proposition for Clients Has Driven Adoption of JP3 Data Platform
High Value Proposition for Clients Has Driven Adoption of JP3 Data Platform • Strong customer base of over 60 clients across all segments of the market and including many of the market leaders in the midstream and downstream spaces • Transitioning from traditional equipment sales to DaaS revenue mod
Slide 10: JP3: Significant Market Opportunity
JP3: Significant Market Opportunity Total Addressable Market ~$1 Billion Annual Recurring Revenue Downstream 27% US Addressable Market 51% 22% Upstream Global Market Midstream Based on existing deployment of traditional equipment global, international markets present tremendous revenue opportunity.
Slide 11: JP3 Announces Joint Data Service Solution with Phillips to Reduce Transmix Generation
JP3 Announces Joint Data Service Solution with Phillips 66 to Reduce Transmix Generation Solution Yields ~50% reduction in transmix Dramatic increase in annual profits per site Refined Fuels Joint Sales and Marketing Agreement “By combining JP3’s revolutionary real-time analysis capabilities and dat
Slide 12: JP3: Double Digit Growth with Strong, Historical Margins
JP3: Double Digit Growth with Strong, Historical Margins JP3 Revenue by Segment $16,000,000 • Revenue CAGR of 58% over $14,000,000 past four years with over sixty $12,000,000 oil and gas customers, transitioning from traditional $10,000,000 equipment sales to Data as a $8,000,000 Service (DaaS) mode
Slide 13: Flotek + JP3: A Strong Future Together
Flotek + JP3: A Strong Future Together Positioned for accelerated growth • JP3 provides significant full-stream value creation with recurring revenue growth model • Flotek has liquidity to support and accelerate that growth Shared vision in data and technology advancing energy applications • JP3’s d