HOUSTON, August 1, 2017 -- Flotek Industries, Inc. ("Flotek" or the "Company") (NYSE: FTK) today announced results for the three-months ended June 30, 2017. 

Highlights

• Revenue expanded 7% sequentially to $85.2 million and up 33% year-over-year.

• Domestic Complex nano-Fluid® (CnF®) volumes rose 6% and revenues were up 8% sequentially from first quarter 2017, and were up 49% and 62%, respectively, from the same period last year. 

• Domestic CnF® volumes set a Company quarter record in the second quarter 2017. 

• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, or Adj. EBITDA a non-GAAP measure, was $5.8 million.

• The Company will lead production expansions for CnF® and the Consumer and Industrial Chemistry Technologies (CICT) segment, while reducing Capex guidance for 2017.

• Cash general and administrative expenses (G&A) has declined 12% from the fourth quarter 2016, and further reductions are expected.

John Chisholm, Flotek’s Chairman, President and Chief Executive Officer commented, “During the second quarter, Flotek has dramatically transformed our business after the successful divestitures of our Drilling Technologies and Production Technologies segments.  We have reduced debt, lowered G&A, and experienced continued growth in Energy Chemistry Technologies. At the same time, execution in our Consumer and Industrial segment remains strong despite a challenging citrus market, which is showing signs of improvement into 2018. We now have zero term debt, and continue to be able to fund our growth with borrowings on our credit facility.  The Company has truly never been as financially stable with as many growth opportunities as seen today.

“While the expectations of the pace of the energy markets’ recovery will evolve, we continue to experience increasing demand for our customized CnF® technologies. Operators are increasingly moving toward our business strategy of delivering custom chemistry solutions directly via the Flotek Store®, while utilizing our Prescriptive Chemistry Management^SM program to focus on the complete fluid system.  In U.S. land, increasing numbers of operators are expanding their focus from mechanical variables to exploring custom chemistry and prescriptive delivery—where we demonstrate consistent and differentiated industry leadership. 

“Our Consumer and Industrial Chemistry Technologies segment has performed exceptionally well, providing topline and bottom-line benefits and diversification to our Company-wide performance. Although seasonal factors are expected during the third quarter, we are experiencing early signs of attractive long-term growth opportunities for this segment. We look forward to the growth to come as we have proven we can manage through even the most challenging times in citrus markets. We see potential for citrus oil pricing normalization in the coming quarters, and believe we will capitalize on this developing situation.

“Flotek is the custom chemistry technology company, and we are more focused as a Company than ever before. Our commitment to research and product innovation through the downturn has been critical for our growth. Our investments and innovation will continue to drive higher returns for our clients and increase their performance.  While many energy peers were cutting R&D and technology spending, we accelerated. And despite a very challenging citrus pricing environment in the past two years, we executed tremendously throughout our supply chain, which starts with our Consumer and Industrials Chemistry Technologies segment. The platform for growth is broadening and we remain committed to cost reduction and future cost control. This should deliver rapidly improving financial performance as we look ahead with excitement for what is to come for Flotek and our stakeholders.”

Earnings Before Interest, Taxes, Depreciation and Amortization, or EBITDA, for the three months ended June 30, 2017, was $2.0 million, compared to $2.5 million for the three months ended June 30, 2016. Second quarter 2017 adjusted EBITDA, which excludes $3.6 million of non-cash G&A and $0.2 million of one-time items related to executive retirement, was $5.8 million. Management believes that adjusted EBITDA provides useful information to investors to better assess and understand operating performance and cash flows.

A summary income statement reflecting second quarter results can be found at the conclusion of this release.

Second Quarter 2017 – Segment Highlights 

* Percentage change may be different when calculated due to rounding.

 ** Segment adj. EBITDA excludes stock based compensation and R&I allocations.

Energy Chemistry Technologies Highlights (ECT):

• Segment revenues increased 8.4% sequentially to $65.9 million, and up 51.8% year-over-year. 

• Global Complex nano-Fluid® (CnF®) volumes and revenue rose 1.6% and 1.2%, respectively, from the first quarter, and 43.1% and 51.1% from the same period last year. 

• Conventional chemistry (Non-CnF), revenue increased 26.8% sequentially from the first quarter 2017 due to increased demand in Prescriptive Chemistry Management^SM (PCM^SM) solutions. 

• Sequentially, segment gross margins declined by ~210 basis points to 34.6% due to conventional chemistry sales growth, while EBITDA margins improved ~80 bps to 24.1% due to fixed cost leverage.

• International revenues declined 56.2% sequentially from the first quarter 2017, and declined 53.2% from the second quarter 2016, primarily due to seasonal breakup in Canada.

• Domestic CnF® volumes have increased 143.3% since the cycle peak in Q3 2014 relative to EIA completion data (as of 7/17/17), which has declined 50.3%, and the U.S. Rig Count, which is down 48.4%. 

• Ongoing expansions of our core CnF® manufacturing facility are underway.  

Consumer and Industrial Technologies Highlights (CICT):

• Segment revenues increased 0.5% sequentially to $19.3 million, and down 6.8% year-over-year.

• Sequentially, segment gross margins declined by 11.3 percentage points to 17.0%, while EBITDA margins declined to 10.9% from 23.4% in the first quarter 2017 due to seasonal factors, product mix and citrus price inflation.

• CICT will lead a processing expansion effort, adding an eighth distillation unit to our existing footprint to enhance our portfolio of citrus flavor compounds. 

• CICT’s positive growth is, in large part, attributed to flavor and fragrance sales and highlights our focus on managing the supply chain and utilizing a broader range of molecules from citrus oils.

• In order to better serve the global flavor marketplace, CICT opened a business development facility in Japan.

Balance Sheet and Liquidity 

Net Debt decreased 17.9% from $47.9 million to $39.3 million, sequentially, while working capital demands were $10.9 million primarily driven by inventory growth due to future demand expectations, seasonal purchases and citrus price inflation. Total liquidity at quarter end was $25.6 million.

Flotek Outlook

In commenting about Flotek’s outlook, Mr. Chisholm added, “For the third quarter, we are anticipating sequentially higher revenues, driven by continued demand growth for CnF® along with select opportunities to win impactful projects in our PCM^SM platform through the Flotek Store®. This should lead to expanding EBITDA margins. While seasonal impacts will occur in the back half of 2017, we expect steady long-term growth to occur in our Consumer and Industrial Chemistries Technology segment.” 

Conference Call Details

Flotek will host a conference call on Wednesday, August 2nd, at 8:00 AM CDT (9:00 AM EDT) to discuss its operating results for the three months ended June 30, 2017. To participate in the call, participants should dial 800-698-0720 approximately 5 minutes prior to the start of the call. The call can also be accessed from Flotek’s website at www.flotekind.com.

About Flotek Industries, Inc.

Flotek develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. Flotek's inspired chemists draw from the power of bio-derived solvents to deliver solutions that enhance energy production, cleaning products, foods & beverages and fragrances. In the oil and gas sector, Flotek serves major and independent energy producers and oilfield service companies, both domestic and international. Flotek Industries, Inc. is a publicly traded company headquartered in Houston, Texas, and its common shares are traded on the New York Stock Exchange under the ticker symbol "FTK." For additional information, please visit Flotek's web site at www.flotekind.com. 

Forward-Looking Statements

Certain statements set forth in this Press Release 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 condition, results of operations and prospects. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Press Release.

Although forward-looking statements in this Press Release reflect the good faith judgment of management, such statements can only be based on facts and factors currently known to management. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, demand for oil and natural gas drilling services in the areas and markets in which the Company operates, competition, obsolescence of products and services, the Company's ability to obtain financing to support its operations, environmental and other casualty risks, and the impact of government regulation.

Further information about the risks and uncertainties that may impact the Company are set forth in the Company's most recent filings on Form 10-K (including without limitation in the "Risk Factors" Section), and in the Company's other SEC filings and publicly available documents. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Press Release. The Company undertakes no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Press Release.

IR Inquiries, contact:

Matthew Marietta 

Senior Vice President

Corporate Development, Investor Relations 

Flotek Industries 

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P: (713) 726-5348 

Media Inquiries, contact:

Danielle Allen

Senior Vice President

Global Communications & Technology Commercialization

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P: (713) 726-5322