Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Enercom 2024
26 slides from Flotek Industries's conference presentation, Aug 19, 2024
Slide 1: Investor Presentation
Investor Presentation August 19, 2024
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: Flotek Industries: Unlocking Data & Chemistry in Energy
Flotek Industries UNLOCKING DATA & CHEMISTRY IN ENERGY 7 Consecutive Quarters Value Creation through Data Analytics of Improved Adj. EBITDA* Chemistry & Data Technology with High ROI Long-term ‘Take or Pay’ Strong Balance Sheet Tangible Environmental, Contract Insulates Risk with Low Debt Health, &
Slide 4: Complementary Segments Drive Growth
Complementary Segments Drive Growth CHEMISTRY AS A COMMON VALUE CREATION PLATFORM Founded: 1985 Chemistry Technologies Employees: 143 Sustainable chemistry solutions to Headquarters: Houston maximize customer’s value chain while minimizing their environmental impact Countries with Clients: 59 Patent
Slide 5: Quarterly Progress Since Enercom 2023
Quarterly Progress Since Enercom 2023 IMPROVED PROFITABILITY WITH LOWER INDUSTRY FLEET COUNTS ($000’s) $11,500 $9,170 $9,500 $7,500 Poised to deliver $5,500 $3,904 $4,439 sustained growth $3,500 $1,974 $1,500 and further market $(500) share gains through $(2,500) $(21) chemistry and $(2,003) Gross P
Slide 6: Strategic Execution Drives Results
Strategic Execution Drives Results $35 MILLION YEAR OVER YEAR IMPROVEMENT IN ADJUSTED EBITDA* Quarterly Adjusted EBITDA* $6.0 TTM Comparison: $4.0 2023 $2.0 2Q23 2Q24 Adj. EBITDA ($MM’s) $0.0 Gross Profit: $ 1.9MM $ 36.5MM -$2.0 Today SG&A: $ 29.6MM $25.4MM -$4.0 -$6.0 Net Income: $ (16.5MM) $ 6.9MM
Slide 7: Chemistry Technologies: Competitive Advantage
Chemistry Technologies: Competitive Advantage DELIVERING THE BEST UPLIFT PERFORMANCE IN INDUSTRY • Prescriptive Chemistry Management (PCM)TM • Proprietary energy chemistry solutions • Experienced chemistry energy team • Customized solutions to each well’s geology • AI Driven Analytics from >20,000 w
Slide 8: Unlocking Value Through Chemistry & Data
Unlocking Value Through Chemistry & Data DATA SUPPORTED GEOCENTRIC CHEMISTRY MODELING Data Analytics/Physics Based Modeling on >20k Wells • +10 years Field Completion Data • Reservoir Similarities and Physicochemical Properties • Production Uplift Curve Analysis • Basin Water and Frac Water Properti
Slide 9: Customer Case Study: Large Water Cuts
Customer Case Study: Large Water Cuts PRESCRIPTIVE CHEMISTRY MANAGEMENT IN ACTION Customer Challenge: Higher water flowback with a steeper production decline curve Approach: Application of Prescriptive Chemistry Analytics: • Comparing reservoir properties (temperature, pressure, composition, locatio
Slide 10: Customer Case Study: Large Water Cuts (Results)
Customer Case Study: Large Water Cuts PRESCRIPTIVE CHEMISTRY MANAGEMENT IN ACTION BOE from Prescribed Results: Chemistries Advanced Chemistry Analytics Identified a small molecule interaction under temperature and pressure resulting in emulsification damage. Volume (nL) Summary: • Frac Formulation c
Slide 11: Data Analytics: "Measure More Strategy"
Data Analytics: “Measure More Strategy” UTILIZING TECHNOLOGIES FOR EXPANSION INTO NEW MARKETS Upstream Midstream Downstream • Flare monitoring: comply with • Gas processing plant control and • Process Controls: real-time EPA regulations optimization measurement to optimize distillation tower efficie
Slide 12: Data Analytics: Upstream - Flare
Data Analytics: Upstream - Flare INITIAL PENETRATION INTO SIGNIFICANT UPSTREAM APPLICATIONS EPA Approval on Flaring Measurement Application • Expected to unlock an estimated $220 million oil & gas upstream TAM* annually • First EPA approved alternative measurement solution • We have received orders
Slide 13: Data Analytics: Upstream – Custody Transfer
Data Analytics: Upstream – Custody Transfer INITIAL PENETRATION INTO SIGNIFICANT UPSTREAM APPLICATIONS Houston San Antonio Example: 60 days of real-time BTU Values GC Spot Sample Lab Test We tested against Traditional Gas Chromatography (GC) • Zero GC Samples matched the 60-day Average Gas BTU Value
Slide 14: Liquids In "Dry Associated Gas"
Liquids In “Dry Associated Gas” $1.4MM* IN POTENTIAL ASSOCIATED GAS PROCEEDS Typical Spectral Response for Associated Gas During Trial High-Value Liquids Found in “Dry Gas” Water Liquids In “Dry Associated Gas” Line • Associated gas is “assumed” to be dry gas • GCs remove any liquids prior to measur
Slide 15: Comingling & Valuation Legal Risk
Comingling & Valuation Legal Risk Location: Eagle Ford Shale in South Texas. Background: E&P Operator, was involved in a significant class action lawsuit concerning the underpayment of royalties to over 2,700 royalty owners. Basis of Legal Allegations: 1. Improper Allocation: improperly allocated pr
Slide 16: Transparency with Real Time Data
Transparency with Real Time Data DIGITAL SAMPLING MITIGATES RISK AND HEIGHTENS TRANSPARENCY Potential Risk Industry* Error @4MMscf/d Total Risk Liquids in "Dry Associated Gas" 8% $373K $15B Annualized BTU Swings 25% $453K $49B Sampling Errors 20% $933K $39B Volume and Mass Flow Error 7% $346K $14B *
Slide 17: Flotek Industries
Flotek Industries UNLOCKING DATA & CHEMISTRY IN ENERGY 7 Consecutive Quarters Value Creation through Data Analytics of Improved Adj. EBITDA* Chemistry & Data Technology with High ROI Long-term ‘Take or Pay’ Strong Balance Sheet Tangible Environmental, Contract Insulates Risk with Low Debt Health, &,
Slide 18: Come Join Us
Come Join Us: September 4th - 5th 2024 at Gateway Conference Speaker: Ryan Ezell Four-Seasons San Francisco, CA September 12th at Invest: Houston Launch Conference JW Marriott: Galleria Houston, TX September 23rd-24th at SPE Annual Technical Conference Expo Ernest N. Morial Convention Center New Orl
Slide 19: Appendix
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Slide 20: Data Analytics: Upstream Power Generation
Data Analytics: Upstream Power Generation INITIAL PENETRATION INTO SIGNIFICANT UPSTREAM APPLICATIONS • 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 compa
Slide 21: JP3 Verax vs. Gas Chromatograph
JP3 Verax vs. Gas Chromatograph Technology JP3 Verax Gas Chromatograph Technology NIR Optical laser measurement Physical separation via carrier gases and columns with thermal detector Response Time 15 seconds per stream 4-15+ minutes per stream Sample System None Filters, pressure regulators, Chille
Slide 22: Recent Financials
Recent Financials Unaudited Condensed Consolidated Statement of Operations (in thousands, except share data) Three months ended Six months ended Twelve months ended June 30, June 30, June 30, 2024 2023 2024 2023 2024 2023 Revenue: Revenue from external customers $ 18,191 $ 17,820 $ 31,371 $ 29,472 $
Slide 23: Recent Financials
Recent Financials Unaudited Condensed Consolidated Statement of Operations (in thousands, except share data) Three months ended Six months ended June 30, June 30, 2024 2023 2024 2023 Income (loss) per common share (As adjusted, see Note 14): Basic $ 0.07 $ — $ 0.12 $ 1.06 Diluted $ 0.06 $ (0.11) $ 0
Slide 24: Recent Financials
Recent Financials Unaudited Condensed Consolidated Balance Sheets (in thousands, except share data) June 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 4,777 $ 5,851 Restricted cash 101 102 Accounts receivable, net of allowance for credit losses of $410 and $745 at Jun
Slide 25: Recent Financials
Recent Financials Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) // 25
Slide 26: Recent Financials
Recent Financials 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 periods presented above, are useful to investors to assess and understand operating performance,