Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Q1 2024 Earnings Presentation
27 slides from Flotek Industries's earnings presentation, May 8, 2024
Slide 1: Corporate Update
) FLOTEK —_ Corporate Update May 2024
Slide 2: Forward-Looking Statements
// 2 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 con
Slide 3: Compelling Investment Opportunity
// 3 Compelling Investment Opportunity RETURN TO PROFITABILITY UNDERSCORES TURNAROUND EXECUTION Market leading Oil & Gas prescriptive chemistry solutions • Sustained growth in US and international O&G completion chemistry • Industry leading technology improving BOE uplift by +26% • Long-term contrac
Slide 4: Company Overview
// 4 Company Overview Founded: 1985 Employees: 143 Corporate Headquarters: Houston Countries with Clients: 59 Patents: >170 1Q 2024 Results: – Gross Profit Margin: 22% Headquarters Field Office – Net Income ($MM): $1.6 FTK Global Presence – Adj. EBITDA* ($MM): $4.0 – Debt to Adj. EBITDA*: 0.3x * Adj
Slide 5: A Purpose-Driven Company
// 5 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 Our Vision positive impact on We strive to be the collaborative partner of sustainability and choice
Slide 6: Our Strategic Priorities
// 6 Our Strategic Priorities Industry-Leading Innovation Expand Global Footprint Track record of delivering fit-for-purpose Sustainable growth in international optimized chemistry and data solutions revenues Sustainable Revenue Growth Strong Balance Sheet 10-year contracted chemistry volumes with D
Slide 7: 1Q 2024 Highlights: Improvement in Performance
// 7 1Q 2024 Highlights: Improvement in Performance Improved profitability with lower industry fleet counts • Delivered year-over-year growth: • Net income*: $10.8 million • Gross profit: $6.9 million • Adj. gross profit**: $7.4 million • Adj. EBITDA**: $7.9 million Poised to deliver sustained growt
Slide 8: Strong Revenue Performance
// 8 Strong Revenue Performance TRANSFORMATIVE YEAR WITH SIGNIFICANT GROWTH IN ALL PROFITABILITY METRICS Annual Segmented External Chemistry Revenue Total Revenue ($MM) Quarter 1 Comparison ($MM) $200.0 $14.0 $8.1 $180.0 $12.0 $160.0 $59.0 $5.5 $10.0 $140.0 $120.0 $8.0 $49.0 $100.0 $6.0 $11.7 $80.0
Slide 9: External Chemistry: Operator Seasonality
// 9 External Chemistry: Operator Seasonality ($MM) External Chemistry Sales by Quarter $19.0 286 $18.0 290 285 $17.0 279 $16.3 $15.5 280 273 External Chemistry Sales $15.0 $14.1 275 275 268 US Frac Fleets* $13.2 267 270 $13.0 $12.1 265 $11.7 266 258 $11.0 260 $9.3 $9.2 255 $9.0 255 250 245 $7.0 240
Slide 10: Delivering Rapid Improvement in Gross Profit
// 10 Delivering Rapid Improvement in Gross Profit CONSISTENT GROWTH IN PROFITABILITY METRICS Quarterly Consolidated Gross Profit (Loss) ($000’s) $10,000 • 1Q 2024 gross profit was positive for the fifth $7,500 consecutive quarter despite impacts of 1Q seasonality • Delivered a $6.9 million increase
Slide 11: Solid Financial Momentum Continues
// 11 Solid Financial Momentum Continues TREND OF PROFITABILITY IMPROVEMENT REACHES 11 CONSECUTIVE QUARTERS Quarterly Adjusted EBITDA*/Revenue 20% 10% 0% -10% • 1Q 2024 adj. EBITDA* increased $7.9 million over 1Q 2023 -20% -30% • 1Q 2024 was the 11th consecutive -40% quarter of improvement -50% • Mi
Slide 12: Complementary Segments Drive Growth
// 12 Complementary Segments Drive Growth CHEMISTRY AS A COMMON VALUE CREATION PLATFORM • Global presence in 59 countries Chemistry Technologies • Establishing collaborative partnerships with Sustainable chemistry solutions to maximize E&P operators and oil field service providers customer’s value c
Slide 13: Chemistry Technologies: Competitive Advantage
// 13 Chemistry Technologies: Competitive Advantage DELIVERING THE BEST UPLIFT PERFORMANCE IN INDUSTRY CnFTM Revenue Performance • Prescriptive Chemistry Management (PCM)TM $18.0 75% growth $16.3 Revenues ($ in MM) $15.0 • Proprietary energy chemistry solutions $12.0 • Dedicated chemistry management
Slide 14: Chemistry Technologies: New Markets
// 14 Chemistry Technologies: New Markets DIVERSIFIES CUSTOMER BASE AND PROVIDES FUTURE GROWTH OPPORTUNITIES Industrial Geothermal Agricultural Solar Hydrogen As smart systems develop, so will the demand for green chemistry solutions Positioned to capitalize on proprietary patents, technology advanc
Slide 15: Data Analytics: Industry Applications
// 15 Data Analytics: Industry Applications UTILIZING TECHNOLOGIES FOR EXPANSION INTO NEW MARKETS Upstream Midstream Downstream • Realtime product measurement • Gas processing plant control and • Realtime measurement to optimize improves accuracy of payments optimization distillation tower efficienc
Slide 16: Data Analytics: "Measure More" Strategy
// 16 Data Analytics: “Measure More” Strategy DIVERSIFYING REAL-TIME DATA MONITORING ACROSS CHEMISTRY LANDSCAPE Introduction of the new generation Cal-X JP3 Analyzer • Expected to unlock an estimated $700 million oil & gas upstream TAM* • 12x improvement in manufacturing/delivery time • Provides a 6
Slide 17: Data Analytics: New Flare Market (OOOOb/c)
// 17 Data Analytics: New Flare Market (OOOOb/c) Continuous and Autonomous Flare Monitoring EPA Regulation: • Requires hourly Net Heating Value measurement of the gas stream for 14 consecutive operating days. • Effective May 7th 2024 JP3 Technology: • Provides continuous and autonomous monitoring •
Slide 18: Complimentary Segments: Outlook
// 18 Complimentary Segments: Outlook THE NEXT PHASE OF TRANSFORMATION Chemistry • Prescriptive chemistry management (PCM)TM and unique patented products unlocks maximum production uplift • Pursuing strategic opportunities within production and pipeline chemistry markets leveraging real-time measure
Slide 19: Summary: Compelling Investment Opportunity
// 19 Summary: Compelling Investment Opportunity RETURN TO PROFITABILITY UNDERSCORES TURNAROUND EXECUTION Market leading Oil & Gas prescriptive chemistry solutions • Sustained growth in US and international O&G completion chemistry • Industry leading technology improving BOE uplift by +26% • Long-te
Slide 20: Appendix
bili) i Gi hp, de), ST sm ape TEU WB Appendix i Hebb hee Hee Et (_) FLOTEK
Slide 21: Recent Financials
// 21 Recent Financials Unaudited Condensed Consolidated Statement of Operations (in thousands, except share data)
Slide 22: Unaudited Condensed Consolidated Balance Sheets
// 22 Unaudited Condensed Consolidated Balance Sheets (in thousands, except share data)
Slide 23: Unaudited Condensed Consolidated Statements of Cash Flows
// 23 Unaudited Condensed Consolidated Statements of Cash Flows (in thousands)
Slide 24: Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings
// 24 Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings (in thousands) (1) (1) Management believes that adjusted gross profit, EBITDA and adjusted EBITDA for the three months ended March 31, 2024 and 2023 and 12 months ended December 31,2023, are useful to investors to
Slide 25: Data Analytics: Upstream Field Gas Usage
// 25 Data Analytics: Upstream Field Gas Usage Delivered 70% Reduction in Diesel and CNG usage • JP3 field gas monitoring system allows frac fleets and drilling rigs to safely run on field gas displacing more expensive and higher carbon footprint diesel • Provides meaningful cost savings compared to
Slide 26: Data Analytics: Upstream Market Disruptor
// 26 Data Analytics: Upstream Market Disruptor From 3 weeks to 5 Seconds! Upstream Custody Transfer challenges: • Readings only taken every 3 to 6 weeks with gas chromatography (gc) • Revenue degradation on inconsistent readings impacted by temperature, timing, and conditions • Requires onsite pers
Slide 27: Investor Contact
Investor Contact Mike Critelli Director of Finance ir@flotekind.com