Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Q2 2022 Earnings Presentation
25 slides from Flotek Industries's earnings presentation, Aug 10, 2022
Slide 1: August 2022 Investor Presentation
AUGUST 2022 Investor Presentation // NYSE: FTK Exhibit 99.2
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 (FTK) Company Overview
FLOTEK INDUSTRIES (FTK) Technology-driven chemistry and data analytics company Founded: 1985 Employees: ~140 Countries with Clients: 15+ Research Centers: 2 Corporate Headquarters: Houston Company Overview Energy Chemistry Technologies Sustainable stimulation chemistry to maximize production and min
Slide 4: Our Vision And Mission
Our Vision And Mission 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 chemistry technology and digital analytics solutions. Value Proposition W
Slide 5: Strategic Priorities
Strategic Priorities Flawless Execution Exemplary safety and service delivery Capital-light Growth No new capital required to support robust growth Environmental Leadership Focus on protecting people, land, air, and water Investor Presentation / August 2022 // 5 Sustainable Revenue 10-year contract
Slide 6: Flawless Execution
Flawless Execution • 412,160 hours worked with zero OSHA Recordable Injuries • ISO 9001, EPA, and FDA certification – no major findings • Maintained HSE regulatory compliance in the areas of: Air Permits, Storm Water Permits, Haz Mat Reporting, Haz Waste Reporting, OSHA Programs and Reporting. Flote
Slide 7: Supportive Industry Fundamentals
Supportive Industry Fundamentals • 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 Increased Industry Stability – So Far This Cycle is Different US onshore:
Slide 8: ProFrac Partnership Benefits
Profrac Partnership Benefits • $2.1B in revenue backlog over 10 years • Take-or-pay aspect of contract provides for predictability of cash flow • Contract provides industry imprimatur and is not exclusive • Scale allows for greater cost efficiency through procurement • Friction reducers covered by a
Slide 9: Gaining Market Share – Customer Consolidation
Gaining Market Share – Customer Consolidation Source: ProFrac ProFrac Strategy Supportive of Flotek Growth 44 Fleets by the end of 2022 June 21: ProFrac announced an agreement to acquire 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 Built-in revenue growth • ~280 total NAM frac fleets • Fully ramped ProFrac contract (30 fleets) translates to 11% market share • Served 8 ProFrac fleets on average in Q2 and ramping up • FTK entitled to provide chemistry by volume on the greater of 30 f
Slide 11: Transactional Growth
Transactional Growth Managing for Rapid Growth Investor Presentation / August 2022 // 11 Transactional revenue expansion continues to outpace frac fleet market • +13% base growth compared to Q1 2022 • +100% compared to Q2 2021 Transactional business produces higher margins • Higher proportion of val
Slide 12: Flotek Revenue Opportunity
Flotek Revenue Opportunity Managing for Rapid Growth Quarterly Consolidated Revenue Investor Presentation / August 2022 // 12 Average Crew Count • Q1 2022A – 0 • Q2 2022A – 8 • Q3 2022E – 16 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 Q1 2020A Q2 2020A Q3 2020A
Slide 13: Chemical Portfolio Strategy – Margin Improvement
Chemical Portfolio Strategy – Margin Improvement Investor Presentation / August 2022 Reducing costs • Reduced personnel costs while reinvesting in revenue generating roles - net annualized cost savings of $1MM+ $- $10,000 $20,000 $30,000 $40,000 $50,000 2017 2018 2019 2020 2021 2022 (Budget) G&A R&D
Slide 14: Capital-light Growth
Capital-light 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 Low Asset Utilization Rate Means Minimal Capex Required For Growth 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 Investor Presentation / August 2022 // 15 -80.0% -70.0% -60.0% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% Q1 2020A Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021A Q
Slide 16: Strong Balance Sheet
Strong Balance Sheet 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 to 30 day VWAP Real Estate Asset Optimization • Waller, TX: Sold facility for $4.3MM in April,
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 performance through green chemistry and digital transformation solutions. • Our products are positioned to deliver value in an ESG-focused world. • We help our partners and customers enhance their l
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 • 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 $0.7MM non
Slide 20: Q2 2022 Highlights & Recent Trends
Q2 2022 HIGHLIGHTS & RECENT TRENDS • 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 $33.1MM A
Slide 21: Recent Financials: Statement of Operations
Recent Financials Unaudited Condensed Consolidated Statement of Operations (in thousands, except share data) // 21 Three Months Ended Six Months Ended 6/30/2022 6/30/2021 3/31/2022 6/30/2022 6/30/2021 Revenue: Revenue from external customers $ 12,824 $ 9,165 $ 10,382 $ 23,206 $ 20,935 Revenue from r
Slide 22: Unaudited Condensed Consolidated Balance Sheets
Unaudited Condensed Consolidated Balance Sheets (in thousands, except share data) // 22 June 30, 2022 December 31, 2021 ASSETS Current assets: Cash and cash equivalents $ 33,084 $ 11,534 Restricted cash 40 1,790 Accounts receivable, net of allowance for doubtful accounts of $514 and $659 at June 30,
Slide 23: Unaudited Condensed Consolidated Statements of Cash Flows
Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) // 23 Six months ended June 30, 2022 2021 Cash flows from operating activities: Net loss $ (4,484) $ (14,846) Adjustments to reconcile net loss to net cash used in operating activities: Change in fair value of contingent consid
Slide 24: Reconciliation of Non-GAAP Items and Non-Cash Items
Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings (in thousands) // 24 Three Months Ended Six Months Ended 6/30/2022 6/30/2021 3/31/2022 6/30/2022 6/30/2021 Net income (loss) $ 6,240 $ (6,546) $ (10,724) $ (4,483) $ (14,846) Interest expense 1,597 17 668 2,265 35 Inter
Slide 25: Investor Contact
Investor Contact Bernie Colson SVP – Corporate Development & Sustainability investors@flotekind.com (713) 726-5322 // NYSE: FTK