Flotek Industries, Inc. · NYSE:FTK
Flotek Industries — Howard Weil Energy Conference 2009
28 slides from Flotek Industries's conference presentation, Mar 23, 2009
Slide 1: Flotek Industries, Inc.: A Technology-Driven Growth Company
www.flotekind.com Flotek Industries, Inc. A Technology-Driven Growth Company Steve Reeves, EVP & COO Jempy Neyman, Sr. VP & CFO th Annual Howard Weil Energy Conference March 22-26, 2009 Exhibit 99.2
Slide 2: Forward Looking Statements and Non-GAAP Disclosures
Forward Looking Statements and Non-GAAP Disclosures Certain statements and information included in this presentation constitute “forward–looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on certain assumptions and analyses made
Slide 3: Introduction
Introduction Business Segments – Product overview – Application overview – Technology overview Financial Overview – Segment performance – FLOTEK performance – Capital structure
Slide 4: Drilling Products Segment
Drilling Products Segment CAVO mud motor line Open-bearing and sealed- bearing options Directional drilling and workovers Compliments Teledrift MWD technology
Slide 5: Drilling Products Segment
Drilling Products Segment Teledrift MWD products Real-time depth, azimuth, gamma and tool-facing measurement Proprietary, technology- oriented downhole rental tools 2009 release of TelePulse MWD system
Slide 6: Drilling Products Segment
Drilling Products Segment Full suite of oilfield drilling and mining tools Leading provider of downhole rental tools Complete bottom hole assembly Centralizer and drill bits sales Margin protection by bundling with technology products
Slide 7: Drilling Products Segment
Drilling Products Segment Complementary technologies – motors, telemetry and drill string tools 21.9 36.8 56.8 98.3 $0 $20 $40 $60 $80 $100 $120 In $M Revenue
Slide 8: Chemicals & Logistics Segment
Chemicals & Logistics Segment Proprietary specialty chemicals – For drilling, cementing, stimulation, acidizing and production – Customers include major service companies, independents and drilling contractors Logistics – Design, project manage and operate automated bulk handling/loading facilities
Slide 9: Micro-emulsion (ME) Frac Additive
Micro-emulsion (ME) Frac Additive Patented technology “Green” chemicals enhance unconventional gas production* – Well economics/viability – Actual production rates – Recoverable reserves – Well lifecycle Independent studies prove performance * The Oil & Gas Journal, “Trends in Unconventional Gas” De
Slide 10: Green River Basin
Green River Basin Independent 24-well study* + 33% estimated 20-year gas recovery + 40% estimated NPV Shut-ins recovered 100% of prior prod. vs. losses up to 50% without ME Increased production and enhanced recovery Effective fracture half-length over 1.5 times longer Avg EGR = 9.8 BCF Avg EGR = 7.3
Slide 11: Barnett Shale Production Enhancement
Barnett Shale Production Enhancement 250-well study* (SPE 100434, 2006) 41% increase in flowback 47% increase in gas production Less formation damage Production Enhancement** 6,430 129,873 190,802 9,090 50,000 100,000 150,000 200,000 250,000 Conv. surfactant Micro-emulsion *Study available at www.fl
Slide 12: Micro-emulsion (ME) Sales
Micro-emulsion (ME) Sales $4.2 $8.2 $26.0 $56.4 $77.4 $0 $10 $20 $30 $40 $50 $60 $70 $80 ME Gross Revenue Growth In $M
Slide 13: Chemicals & Logistics Segment
Chemicals & Logistics Segment Patented proprietary specialty chemicals Revenue In $M $29.6 $50.5 $86.3 $109.4 $0 $20 $40 $60 $80 $100 $120
Slide 14: Artificial Lift Segment
Artificial Lift Segment Petrovalve rod pump system Unique horizontal installation Optimizes rod pump efficiency Increases flow per stroke Improves economics and extends well life Eliminates gas locking
Slide 15: Artificial Lift
Artificial Lift Petrovalve vs. traditional ball and seat valve Petrovalve seats perfectly, unlike ball and seat valve Ball valve deteriorates, increasing maintenance, reducing production
Slide 16: Artificial Lift Segment
Artificial Lift Segment Gas Separator Patented downhole technology enhances production and improves efficiency of coal bed methane wells Enhances production by reducing solution gas lost in water recovery Reduces environmental impact
Slide 17: Artificial Lift Segment
Artificial Lift Segment Patented pumping system components widely used in unconventional horizontal and coalbed methane wells $1.4 $13.3 $14.9 $18.4 $0 $5 $10 $15 $20 Revenue In $M
Slide 18: Revenue by Business Segment
Flotek Revenue by Business Segment Steady growth over time Quarterly Revenue by Segment $0 $10 $20 $30 $40 $50 $60 $70 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Chemicals & Logistics Drilling Products Artificial Lift In $M $60.0M $37.8M $16.0M
Slide 19: Financial Highlights
Financial Highlights 2008 vs. 2007 – Includes Impairment charge of $67.7 million related to goodwill and other intangible assets – 43% revenue growth to $226 million – Gross profit margin remained constant at 40% – Loss from Operations of $30.8 million – Net loss of $31.9 million 2008 vs. 2007 Adjus
Slide 20: Strong Revenue and EBITDA Growth...
$12.0 $21.7 $37.1 $49.7 $0 $10 $20 $30 $40 $50 $60 2008* Strong Revenue and EBITDA Growth... Revenue EBITDA $226.1 $158.0 $100.6 $52.9 $0 $50 $100 $150 $200 $250 In $M In $M *adjusted excluding the effect of impairment of goodwill and other intangible assets
Slide 21: ...Has Sustained Earnings and EPS
...Has Sustained Earnings and EPS $0.85 $0.88 $0.61 $0.47 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 2008* $7.7 $11.4 $16.7 $16.4 $0 $5 $10 $15 $20 2008* In $M Diluted EPS Net Income *adjusted excluding the effect of impairment of goodwill and other intangible assets
Slide 22: Capital Structure
Capital Structure $115M Convertible Bonds Maturing in 2028 – 5.25% interest – No maintenance covenants – Cannot be put until 2013 – Strike price of $22.75 $40M Term Loan – Paid down $2M a quarter – Balance as of 12/31/08 is $34M $15M Revolver – Used for cash management – Balance is usually between $
Slide 23: Why Invest with Flotek?
Why Invest with Flotek? Sound Fundamentals – Strong cash flow – Manageable debt service, working capital and capital expenditures Proven growth – Strong organic growth and acquisition record – Expansion internationally and select domestic basins Technology driven – Patented products applicable to un
Slide 24: EBITDA Reconciliation
EBITDA Reconciliation This presentation contains references to EBITDA and Adjusted EBITDA. EBITDA is a non-GAAP financial measure that we define as net income (the most directly comparable GAAP financial measure) before interest, taxes, depreciation and amortization. Adjusted EBITDA is EBITDA adjust
Slide 25: EBITDA Reconciliation
EBITDA Reconciliation ($ in millions) Net Income $7.7 $11.4 $16.7 ($31.9) Interest Expense 0.8 1.0 3.5 10.2 Income Taxes 1.7 6.6 10.4 (9.1) Depreciation and Amortization 1.8 2.8 6.5 12.8 EBITDA 12.0 21.7 37.1 (18.0) Impairment of Goodwill Intangibles _ _ _ 67.7 Adjusted EBITDA $12.0 $21.7 $37.1 $49.
Slide 26: Reconciliation of non-GAAP Measures to GAAP Measures
Reconciliation of non-GAAP Measures to GAAP Measures We evaluate our results of operations before certain impairment items, and also view our results as adjusted for certain non-cash activities, as it is not indicative of our core operating activities. We believe our presentation of financial measur
Slide 27: GAAP to non-GAAP Reconciliation
GAAP to non-GAAP Reconciliation (in thousands, except per share amounts) Income From Operations $ (30,751) Impairment of Goodwill & Intangible Assets 67,695 Adjusted Income from Operations 36,944 Total other income (expense) $ (10,329) Income tax provision (effect of $19.3 million tax benefit) (10,1
Slide 28: Contact Us
Contact Us Flotek Industries, Inc. 2930 W. Sam Houston Parkway N. Suite 300 Houston, Texas 77043 713-849-9911 www.flotekind.com Brian Shannon, Investor Relations Manager At Flotek Industries, our mission is to provide the customers we serve with the best value to enhance their performance. This will
Flotek Industries — Howard Weil Energy Conference 2009 on 6ix