Flotek Industries

FLOTEK ANNOUNCES SECOND QUARTER 2022 FINANCIAL RESULTS

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FLOTEK ANNOUNCES SECOND QUARTER 2022 FINANCIAL RESULTS

HOUSTON, August 9, 2022 - Flotek Industries, Inc. (“Flotek” or the “Company”) (NYSE: FTK) today announced second quarter results for the three months ended June 30, 2022.

“I’m pleased to report our second quarter 2022 results in which revenue of $29.4MM increased 2.3x compared to the first quarter 2022 and 3.2x compared to the second quarter of 2021. Our Supply Agreement with ProFrac was effective as of April 1st, spans 10 years, and covers an equivalent volume of our full suite of downhole chemistries to serve 30 of their frac fleets or 70% of their total frac fleet, whichever is greater. While we are still in the early days of the contract, serving an average of 8 fleets in Q2, we remain confident in our ramp up to the full contract scope over the coming quarters. We also have no reason to expect that our relationship is bounded by the 30 fleet or 70% numbers. As we continue to provide exemplary service, ProFrac has the incentive to maximize chemical deliveries from Flotek due to the structure of our arrangement. ProFrac recently announced the acquisition of US Well Services which is expected to close in Q4. As a result, they expect to be operating 44 active frac fleets by the end of 2022. While 70% of 44 is a bit less than 31, we fully expect that we will win more of that business as we scale up” said John W. Gibson, Jr., Chairman, President, and Chief Executive Officer.

“While we are proud of our ability to increase volume and revenue thus far, and are confident that we have the capability to fulfill future demand, we recognize that the glide path to positive Adjusted EBITDA hinges on future margins. We further recognize that this was only the first quarter of the ProFrac contract, and economies of scale and operating leverage should drive better margins as we continue to grow. In addition to the challenge any company would face evolving to growth at this pace, we were confronted with a difficult freight & logistics environment which our team is working hard to neutralize. In summary, we remain committed to achieving positive Adjusted EBITDA margins and continue to be optimistic about the future and expect improving financial performance throughout the year.”

Key Second Quarter 2022 Financial Results

  • Total Revenues: Flotek generated second quarter 2022 consolidated revenue of $29.4 million, up 128% from $12.9 million in the first quarter of 2022, driven by increased activity with ProFrac and continued growth in deliveries to transactional Chemistry Technologies customers.
  • Net Income and EPS: The Company recorded net income of $6.2 million, or $0.08 per basic and $(0.05) diluted share, in the second quarter 2022 compared to a net loss of $10.7 million, or $0.15 per basic/diluted share, in the first quarter of 2022. The sequential improvement is primarily due to the change in fair value of contingent convertible notes payable of $17.2 million.
  • Non-GAAP Adjusted EBITDA: Adjusted EBITDA for the second quarter 2022 was negative $7.2 million, a 33% decline compared to negative $5.4 million in the first quarter 2022.

Operational Highlights

  • In the first quarter 2022, the Company entered into a long-term supply agreement with ProFrac Services, LLC (ProFrac), to provide full downhole chemistry solutions for the greater of 33% of ProFrac’s crews or 10 crews minimum for three years. In the second quarter, the Company entered into an amended agreement with ProFrac to expand the Agreement to a term of 10 years and 70% of ProFrac’s frac fleet or 30 hydraulic fracturing fleets, whichever is greater. The expansion was overwhelmingly approved by shareholders on May 9, 2022. Combined, the contracts are expected to exceed $2 billion in revenue over the next decade. Additional details can be found in the Company’s SEC and 10-Q filings.

Balance Sheet and Liquidity

  • As of June 30, 2022, the Company reported cash and equivalents of $33.1 million compared to $24.9 million at the end of the first quarter 2022, benefitted by the Private Investment in Public Equity (PIPE) transactions with ProFrac, which were disclosed previously.
  • On June 17, 2022, Flotek entered into a Securities Purchase Agreement with ProFrac. Pursuant to the Securities Purchase Agreement, the Company will receive $19,500,000 in cash and ProFrac will receive pre-funded warrants permitting ProFrac to purchase 13,104,839 shares of common stock of the Company at an exercise price equal to $0.0001 per share, representing a 20% premium to the 30-day volume average price of the Company’s common stock at the close of business on the day prior to the date of the Securities Purchase Agreement. ProFrac may not receive any voting or consent rights in respect of the Prefunded Warrants or the underlying shares unless and until the Company has obtained approval from a majority of its shareholders excluding ProFrac and its affiliates, and ProFrac has paid an additional $4,500,000 to the Company.
  • On April 18, 2022, the Company closed on a contract to sell the Waller, TX facility for $4.3 million. The proceeds are included in our second quarter 2022 results. In addition, the Company is currently entertaining an offer to sell the Monahans, TX facility and we expect to be able to close that sale in the coming quarters. The Monahans facility remained classified as held for sale as of June 30, 2022.

Conference Call Details

Flotek will host a conference call on August 10, 2022, at 9:00 a.m. CST (10:00 a.m. EST) to discuss its second quarter results for the three months ended June 30, 2022. Participants may access the call through Flotek’s website at www.flotekind.com under “Webcasts’’ or by telephone at 1-844-835-9986 approximately five minutes prior to the start of the call. Following the conclusion of the conference call, a recording of the call will be available on the Company’s website.

About Flotek Industries, Inc.

Flotek Industries, Inc. creates solutions to reduce the environmental impact of energy on air, water, land and people. A technology-driven, specialty green chemistry and data company, Flotek helps customers across industrial, commercial, and consumer markets improve their Environmental, Social, and Governance performance. Flotek’s Chemistry Technologies segment develops, manufactures, packages, distributes, delivers, and markets high-quality cleaning, disinfecting and sanitizing products for commercial, governmental and personal consumer use. Additionally, Flotek empowers the energy industry to maximize the value of their hydrocarbon streams and improve return on invested capital through its real-time data platforms and green chemistry technologies. Flotek serves downstream, midstream, and upstream customers, both domestic and international. Flotek 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 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 will, continue, 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. Further information about the risks and uncertainties that may impact the company are set forth in the Company’s most recent filing with the Securities and Exchange Commission on Form 10-K (including, without limitation, in the “Risk Factors” section thereof), 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.

Inquiries, contact:

Bernie Colson

SVP, Corporate Development & Sustainability

E: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

P: (713) 726-5322

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