Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Q2 2023 Earnings Presentation
29 slides from Flotek Industries's earnings presentation, Aug 9, 2023
Slide 1: Investor Presentation
Investor Presentation August 2023
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: Corporate Snapshot
Corporate Snapshot Founded: 1985 Employees: 143 Corporate Headquarters: Houston Countries with Clients: >15 Patents: >170 Long-Term Debt ($mm): $0.2 Marlow, OK Raceland, LA Houston, TX (HQ) 2Q 2023 Adj. Gross Profit Margin: 10% Abu Dhabi, 2023 GUIDANCE UAE Headquarters Revenue ($mm): $210-$230 Field
Slide 4: Flotek: A Purpose-Driven Company
Flotek: A Purpose-Driven Company Who We Are An advanced technology-driven, green chemical and data analytics company providing unique and innovative completion solutions Our completion solutions have a proven, positive Our Vision impact on We strive to be the collaborative partner of sustainability
Slide 5: Our Strategic Priorities
Our Strategic Priorities Industry-Leading Innovation Capital-light Growth Track record of delivering fit-for-purpose Modest capital required to support optimized chemistry and data solutions robust growth objectives Sustainable Revenue Strong Balance Sheet 10-year contract with ProFrac generates Min
Slide 6: Flotek is a Compelling Investment Choice
Flotek is a Compelling Investment Choice SIGNIFICANT IMPROVEMENT IN BUSINESS FUNDAMENTALS NOT REFLECTED IN SHARE PRICE • New leadership team with deep industry expertise poised to execute strategy • Complementary business segments drive rapid revenue expansion and significant improvement in profitab
Slide 7: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights OPERATIONAL EXCELLENCE AND RAPID IMPROVEMENT IN BUSINESS FUNDAMENTALS • Strong margin improvement contributes to 108% growth in gross profit compared to 1Q 2023 • Adjusted gross profit* was positive for second consecutive quarter and Reiterate full year up $6.7 MM or 4
Slide 8: Strong Growth in Revenue Continues
Strong Growth in Revenue Continues MANAGING FOR RAPID GROWTH Annual Consolidated Revenue (000’s) • 2Q 2023 total revenues increased 72% YoY $250,000 $230 • Delivered growth despite industry-wide activity $200,000 $210 } Guidance Range • slowdown Expect $210MM to $230MM for FY 2023 versus $136MM in 2
Slide 9: Rapid Improvement in Data Analytics Business
Rapid Improvement in Data Analytics Business STRONG GROWTH IN REVENUE Revenue (MM) • 1H 2023 revenue nearly equals full year 2022 • 2023 full-year revenue expected to nearly $12.0 double from 2022 $10.0 • In Q1 2023 received first prototype of next generation JP3 flow cell sensor for proprietary Ver
Slide 10: Cost Control Initiatives Continue to Enhance Profitability
Cost Control Initiatives Continue to Enhance Profitability RAPID IMPROVEMENT IN MARGINS Quarterly Consolidated Gross Profit (Loss) (000’s) • 2Q 2023 gross profit positive for second $3,500 consecutive quarter and up six-fold sequentially $2,500 • Adjusted gross profit* margin increased to 10% $1,500
Slide 11: Path to Profitability
Path to Profitability ANTICIPATE REACHING POSITIVE ADJUSTED EBITDA IN 2023 Quarterly Adjusted EBITDA*/Revenue 0% -10% • 2Q 2023 adj. EBITDA* improved 48% -20% sequentially -30% • 1H 2023 adj. EBITDA* improved by $6.8 MM from 1H 2022 -40% -50% • Improved adj. EBITDA* for eighth consecutive quarter -6
Slide 12: Complementary Segments Deliver Sustainable Growth
Complementary Segments Deliver Sustainable Growth GENERATING VALUE VIA DIRECT AND IN-DIRECT CHANNELS • Global presence in over 15 countries Chemical Technologies • Establishing collaborative partnerships with Sustainable chemistry solutions to maximize E&P operators and oil field service providers c
Slide 13: Chemical Technologies Business Overview
Chemical Technologies Business Overview • Technologically advanced products and services that significantly improve well performance and maximize value of customer’s business • Extensive portfolio of customized solutions that support operations across the value chain • Industry leader in delivering
Slide 14: Strong Presence Across in All Key Basins
Strong Presence Across in All Key Basins FLOTEK CHEMISTRY USED ON OVER 20,000 WELLS IN ALL MAJOR U.S. SHALE BASINS Bakken Denver-Julesburg Marcellus/Utica Mid-Continent San Joaquin Permian Basin Haynesville EagleFord Gulf of Mexico // 14
Slide 15: Chemical Technology Applications
Chemical Technology Applications A STRONG POSITION OF EXPERTISE IN ENERGY CHEMISTRY DRILLING & ENHANCED WATER STIMULATION PRODUCTION REMEDIATION OFFSHORE CEMENTING FLOODING Fluids to protect the Drilling & Cementing Enhancing maximum Drilling & Cementing Chemistries for Sustainable Drilling & Cement
Slide 16: The Flotek Advantage
The Flotek Advantage DELIVERING THE BEST UPLIFT PERFORMANCE IN INDUSTRY Permian Basin Average Cumulative BOE • Prescribed Chemistry Management (PCM) 400,000 • Proprietary energy chemistry solutions } 350,000 75 MBOE • Dedicated chemistry management team 300,000 Cumulative Production (BOE) • Customiz
Slide 17: Leveraging New Markets Diversifies Customer Base
Leveraging New Markets Diversifies Customer Base PROVIDES SIGNIFICANT FUTURE GROWTH OPPORTUNITY Industrial Geothermal Agricultural Solar Hydrogen As smart systems develop, so will the demand for green chemistry solutions Positioned to capitalize on proprietary patents, technology advancements and co
Slide 18: Data Analytics Business Overview
Data Analytics Business Overview • Provides accurate, real-time visibility into chemical composition flowing directly through a well-head, pipeline, power generator, refinery, and more. • Robust platform based on NIR Spectroscopy; doesn’t utilize consumables and there are no moving parts • Ability t
Slide 19: Data Analytics: Extensive Industry Applications
Data Analytics: Extensive Industry Applications One Technology Platform Multiple Applications Upstream Midstream Downstream • Realtime product quality analysis • Gas processing plant control and • Realtime measurement to to meet pipeline and storage optimization optimize distillation tower specs eff
Slide 20: Extensive Deployment and Utilization of JP3 Units
Extensive Deployment and Utilization of JP3 Units 81 customers across all key basins 306 field units deployed with 635 individual measurement points JP3 Units Deployed // 20
Slide 21: Asset-Based Loan Update
Asset-Based Loan Update MEANINGFULLY ENHANCES LIQUIDITY • Received credit approval regarding a proposed ABL • Credit supported by eligible A/R, inventory and real estate • Reviewing loan documents and completing final administrative matters • Anticipate update on ABL process before the end of August
Slide 22: Summary
Summary • Significant improvement in business fundamentals not reflected in share price • New leadership team with deep industry expertise poised to execute strategy • Complementary business segments drive rapid revenue expansion and significant improvement in profitability • Greater than 60% growth
Slide 23: Appendix
CY FLOTEK Appendix
Slide 24: An Industry Leader in Sustainable Solutions
An Industry Leader in Sustainable Solutions Green Chemistry IMPROVING PERFORMANCE THROUGH GREEN CHEMICAL SOLUTIONS • Empower customers with a social license to operate • Deliver value in the new sustainability-focused DATA world ANALYTICS CHEMISTRY A Global • Reduce the total cost of ownership and P
Slide 25: Recent Financials
Recent Financials Unaudited Condensed Consolidated Statement of Operations (in thousands, except share data) // 25
Slide 26: Unaudited Condensed Consolidated Balance Sheets
Unaudited Condensed Consolidated Balance Sheets (in thousands, except share data) // 26
Slide 27: Unaudited Condensed Consolidated Statements of Cash Flows
Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) // 27
Slide 28: Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings
Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings (in thousands)(1) (1) Management believes that adjusted gross profit and adjusted EBITDA for the three and six months ended June 30, 2023, and 2022, and the three months ended March 31, 2023, are useful to investors to
Slide 29: Investor Contact
Investor Contact Bond Clement Chief Financial Officer ir@flotekind.com (713) 726-5322