Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Q3 2023 Earnings Presentation
28 slides from Flotek Industries's earnings presentation, Nov 8, 2023
Slide 1: Corporate Update
Corporate Update November 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: Flotek is a Compelling Investment Choice
Flotek is a Compelling Investment Choice SIGNIFICANT IMPROVEMENT IN BUSINESS FUNDAMENTALS NOT REFLECTED IN SHARE PRICE • Strong leadership team with deep industry expertise to execute strategy • Fit-for-purpose chemistry and data analytics solutions continue to present differentiated value propositi
Slide 4: Corporate Snapshot
Corporate Snapshot Founded: 1985 Employees: 143 Corporate Headquarters: Houston Countries with Clients: >15 Patents: >170 Debt (09.30.23) ($mm): $3.5 Marlow, OK Raceland, LA Houston, TX (HQ) 3Q 2023 Adj. Gross Profit Margin: 22% Abu Dhabi, 2023 GUIDANCE UAE Headquarters Revenue ($mm): $185 - $200 Fi
Slide 5: 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 6: 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 7: Market Update: Sequential Drop in Activity
Market Update: Sequential Drop in Activity 270 Fleets As of 11/3 618 Rigs As of 11/3 Source: AOGR Source: AOGR Energy Sector Factors (Frac Services) Energy Sector Factors (Drilling Services) • Active frac fleets down Q/Q • Changes since 3Q 2022 • Tier II fleets being idled and many retired – Land ri
Slide 8: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights OPERATIONAL PERFORMANCE DRIVES STRONG GROWTH IN YEAR-OVER-YEAR PROFITABILITY METRICS • Reported positive adj. EBITDA* for the first time in five years and the ninth consecutive quarter of improvement • Transactional (“Non-ProFrac”) chemistry revenues have grown each qua
Slide 9: Strong Growth in Revenues
Strong Growth in Revenues Annual Consolidated Revenue (000’s) $250,000 • 3Q 2023 total revenues grew 4% year-over-year $200,000 $200 despite overall industry-wide activity slowdown Guidance Range $185 • Transactional chemistry revenues have grown $150,000 each quarter in 2023, mitigating impact of a
Slide 10: Delivering Rapid Improvement in Gross Profit
Delivering Rapid Improvement in Gross Profit Quarterly Consolidated Gross Profit (Loss) (000’s) $10,000 • 3Q 2023 gross profit was positive for the third consecutive quarter $7,500 • Anticipate ~$27MM** increase in 2023 adjusted gross profit* compared to 2022 $5,000 • ProFrac contract protects again
Slide 11: Strong Financial Momentum Continues
Strong Financial Momentum Continues Quarterly Adjusted EBITDA*/Revenue 20% 10% 0% • 3Q 2023 adj. EBITDA* increased -10% $11.7MM over 3Q 2022 -20% -30% • The first quarter of positive adj. EBITDA since 3Q 2018 -40% -50% • Ninth consecutive quarter of -60% improvement -70% -80% 2Q21 3Q21 4Q21 1Q22 2Q2
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 Chemistry Technologies • Establishing collaborative partnerships with Sustainable chemistry solutions to maximize E&P operators and oil field service providers
Slide 13: Chemistry Technologies Business Overview
Chemistry 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: Chemistry Technologies Applications
Chemistry Technologies 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 & Cem
Slide 15: Chemistry Technologies: The Flotek Advantage
Chemistry Technologies: The Flotek Advantage DELIVERING THE BEST UPLIFT PERFORMANCE IN INDUSTRY CnF Revenue Performance $7.0 • Prescriptive Chemistry Management (PCM) $6.0 $6.6 128% growth Revenues ($ in MM) • Proprietary energy chemistry solutions $5.0 $4.0 • Dedicated chemistry management team $3.
Slide 16: 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 17: 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 18: Broad Deployment and Utilization of JP3 Units
Broad Deployment and Utilization of JP3 Units 81 customers across all key basins 306 field units deployed with 635 individual measurement points JP3 Units Deployed // 18
Slide 19: Data Analytics: Extensive Industry Applications
Data Analytics: Extensive Industry Applications One Technology Platform Multiple Applications Midstream Downstream Upstream • Gas processing plant control and • Realtime measurement to • Realtime product measurement optimization optimize distillation tower improves accuracy of payments efficiency to
Slide 20: Data Analytics: Upstream Field Gas Usage
Data Analytics: Upstream Field Gas Usage 70% Reduction in Diesel/CNG usage Frac Trailer Mounted System • 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 • A three-pad customer case study July
Slide 21: Data Analytics: Upstream Market Disruptor
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) • Paid less on inconsistent readings impacted by temperature, timing, and conditions • Requires onsite personnel • JP3 te
Slide 22: Summary
Summary • Strong leadership team with deep industry expertise to execute strategy • Fit-for-purpose chemistry and data analytics solutions continue to present differentiated value proposition • Contractual chemistry commitments under the ProFrac agreement mitigates impact of the industry slowdown •
Slide 23: Appendix
CY FLOTEK Appendix
Slide 24: Recent Financials
Recent Financials Unaudited Condensed Consolidated Statement of Operations (in thousands, except share data) // 24
Slide 25: Unaudited Condensed Consolidated Balance Sheets
Unaudited Condensed Consolidated Balance Sheets (in thousands, except share data) // 25
Slide 26: Unaudited Condensed Consolidated Statements of Cash Flows
Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) // 26
Slide 27: 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 nine months ended September 30, 2023 and 2022, are useful to investors to assess and understand operating perfor
Slide 28: Investor Contact
Investor Contact Bond Clement Chief Financial Officer ir@flotekind.com (713) 726-5322