Group 1 - Flotek Industries (NYSE: FTK) has successfully doubled its share price over the last six months, a notable achievement compared to other companies in the Oilfield Services (OFS) sector [1] - The investment analysis provided by The Daily Drilling Report includes a model portfolio covering all segments of upstream oilfield activity, with weekly updates and ideas for both U.S. and international energy companies [1] Group 2 - The article highlights the expertise of an international oil industry veteran with 40 years of experience, emphasizing their specialization in the upstream oil sector [2]

Core Viewpoint - The article emphasizes the importance of timing and sustainability in stock trends for successful short-term investing, highlighting the need for strong fundamentals to maintain momentum [1][2]. Group 1: Stock Performance - Flotek Industries (FTK) has shown a solid price increase of 28.7% over the past 12 weeks, indicating investor confidence in its potential upside [4]. - FTK has also maintained a price increase of 4.4% over the last four weeks, suggesting that the upward trend is still intact [5]. - Currently, FTK is trading at 87.1% of its 52-week high-low range, indicating it may be on the verge of a breakout [5]. Group 2: Fundamental Strength - FTK holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for identifying stocks like FTK that are on an uptrend supported by strong fundamentals [3]. - The article suggests that investors should consider other stocks that meet similar criteria for potential investment opportunities [8].

Financial Performance - Total revenues for the year ended December 31, 2024, decreased by $1.0 million to $187.0 million compared to 2023, primarily due to decreased activity under the ProFrac Agreement[158]. - Total revenues for 2024 were $187,025, a slight decrease of 0.55% from $188,058 in 2023[210]. - Consolidated net income for 2024 was $10.5 million, down from $24.9 million in 2023[177]. - Net income for 2024 was $10,498, down 57.6% compared to $24,713 in 2023[212]. - Basic income per share decreased to $0.36 in 2024 from $1.00 in 2023, reflecting a decline of 64%[210]. - Gross profit for the year ended December 31, 2024, increased by $15.1 million to $39.4 million, resulting in a gross profit margin of 21.1% compared to 12.9% in 2023[158]. - Gross profit increased significantly to $39,386 in 2024, up 62.5% from $24,263 in 2023[210]. - Revenue from external customers increased by $4.2 million, or 7%, in the Chemistry Technologies segment for the year ended December 31, 2024, driven by increased sales with both new and existing customers[165]. - Research and development expenses decreased to $1,714 in 2024 from $2,486 in 2023, a reduction of 30.9%[210]. - Research and development expenses decreased by $0.8 million, or 31%, for the year ended December 31, 2024, due to lower personnel costs from headcount optimization[162]. - Operating income for the year ended December 31, 2024, decreased by $11.0 million to $12.2 million, primarily due to a $30.0 million gain in fair value of the Contract Consideration Convertible Notes Payable in 2023[163]. Customer and Revenue Concentration - Revenues from the ProFrac Agreement represented 62% and 65% of total revenues during 2024 and 2023, respectively[68]. - Revenue from the Company's three largest customers accounted for 75% and 73% of consolidated revenue for the years ended December 31, 2024 and 2023, respectively, indicating a significant customer concentration risk[79]. - The Company has seen an increase in concentration risk due to the ProFrac Agreement, which may impact customer relationships and revenue stability[86]. - As of December 31, 2024, amounts due from ProFrac Services, LLC totaled $52.4 million, including $32.4 million related to 2024 Contract Shortfall Fees[69]. - Contract Shortfall Fees recorded for the year ended December 31, 2024, amounted to $32.4 million due to unmet minimum purchase requirements under the ProFrac Agreement[171]. Innovation and Technology - The Environmental Protection Agency designated the Company's near-infrared spectrometer as an approved measurement technology, potentially opening new growth opportunities in the Data Analytics segment[20]. - The EPA approved the company's near-infrared spectrometer measurement system for flare monitoring, which could facilitate future growth opportunities[58]. - The Company is focused on driving innovation between the Chemistry Technologies and Digital Analytics segments to enhance efficiencies for E&P operators[55]. - The Company's Data Analytics segment provides real-time insights every fifteen seconds, enhancing operational efficiency and reducing emissions for customers[25]. - The company has gained traction with Verax™ analyzers in North American markets for critical applications requiring real-time compositional information[56]. Financial Condition and Risks - The Company may face downward pressure on prices due to increased competition, which could adversely impact revenues, margins, and operating results[74]. - The Company’s financial condition may be adversely impacted if it fails to develop and introduce new products or differentiate existing products[71]. - The Company’s ability to access capital markets is dependent on investor willingness and could affect its growth and competitive position[72]. - The principal supply issues for the next twelve months include fluctuating shipping costs, labor shortages, and availability of raw materials[59]. - The Company may not be able to pass along price increases to customers, potentially resulting in adverse impacts on margins and operating profits[83]. - The Company is exposed to potential allegations of patent infringement, which could lead to costly litigation and adversely affect financial results[77]. - The Company relies on a combination of patents, trademarks, and other methods to protect intellectual property, but there is no assurance that these measures will be effective[75]. - The Company is subject to complex environmental regulations, which could result in significant liabilities and impact financial condition[95]. - Regulatory pressures and environmental activism could reduce demand for the Company's products and services, adversely affecting financial condition and results of operations[101]. - The Company may face difficulties in sourcing key technical components for its products, which could hinder its ability to supply equipment or services[84]. - The Company may experience conflicts of interest due to its relationship with ProFrac Services LLC, which is both a major customer and the largest shareholder[121]. Capital Structure and Shareholder Matters - The Company is currently authorized to issue up to 240,000,000 shares of common stock, which may lead to dilution of current stockholders' ownership interests if additional shares are issued[123]. - As of December 31, 2024, ProFrac Holdings, LLC and its affiliates owned approximately 51% of the Company's common stock, potentially discouraging unsolicited acquisition proposals[127]. - The Company has no current plans to pay dividends on its common stock, requiring investors to rely on stock appreciation for returns[128]. - The Company has never declared or paid cash dividends on its common stock, and there are no current plans to do so[143]. - The Company may issue additional securities in connection with future acquisitions, which could adversely affect the trading price of its common stock[124]. - The Company may issue shares of preferred stock or debt securities with greater rights than its common stock, subject to NYSE rules[125]. - The Company's certificate of incorporation contains anti-takeover provisions that could discourage or prevent others from acquiring the Company[126]. Operational Performance - The Company achieved a total recordable incident rate (TRIR) of 0.50 for the year ended December 31, 2024, indicating a strong safety performance[46]. - The Company operates three manufacturing facilities and a research facility in the U.S., with two owned and the remainder leased[138]. - The Company’s operations are not significantly affected by seasonality, but weather conditions can impact client activity levels and operational performance[28]. - The Company could be adversely affected by severe weather conditions, leading to service curtailment and loss of productivity[116]. - Changes in laws and regulations related to hydraulic fracturing may negatively impact the Company's operations and revenue generation[103]. - The market price of the Company's common stock has been volatile, influenced by various external factors[118]. - The Company has not identified any risks from known cybersecurity threats that have materially affected its business as of December 31, 2024[137]. - The Company has established a Cybersecurity Incident Response Team (CIRT) to enhance its cyber incident response capabilities[134]. Cash Flow and Liquidity - The Company had unrestricted cash and cash equivalents of $4.4 million as of December 31, 2024, down from $5.9 million in 2023[171]. - Net cash provided by operating activities was $3.4 million in 2024, a significant improvement from a cash used of $11.3 million in 2023[177]. - Changes in working capital used $18.5 million of cash in 2024, compared to $13.2 million in 2023[178]. - Net cash used in investing activities was $1.8 million in 2024, primarily for capital additions, compared to $1.0 million in 2023[179]. - Net cash used in financing activities was $3.1 million in 2024, mainly due to $2.7 million in net payments on the ABL[180]. - The Asset Based Loan (ABL) provides up to $20.0 million of credit availability, with an interest rate of 9.5% as of December 31, 2024[172][174]. - The interest rate under the ABL was 9.5% in 2024, down from 11.0% in 2023, with a weighted-average interest rate of 10.8% for the year[193]. Inventory and Assets - The reserve for excess and obsolete inventory was $5.2 million in 2024, representing 28.2% of inventory, down from $6.1 million or 32.3% in 2023[187]. - Total current assets rose to $96,456 in 2024, an increase of 26.2% from $76,447 in 2023[207]. - Total assets increased to $170,796 in 2024, up 8.5% from $157,513 in 2023[207]. - Total liabilities increased slightly to $56,896 in 2024, compared to $55,553 in 2023[207]. - Cash and cash equivalents decreased to $4,404 in 2024 from $5,851 in 2023, a decline of 24.8%[207]. - Contract assets, net, were recorded at $69.0 million as of December 31, 2024[201].

Financial Data and Key Metrics Changes - Q4 2024 total revenues increased by 20% compared to Q4 2023, driven by a 21% rise in external customer revenue [11][25] - Q4 2024 net income was $4.4 million, and adjusted EBITDA was $7 million, representing increases of 111% and 78% respectively compared to Q4 2023 [13][25] - Full year 2024 adjusted EBITDA reached $20.3 million, up $18 million from 2023, marking the highest level since 2017 [13][36] - The stock performance in 2024 improved by 140%, ranking in the top three among oilfield service stocks [14] Business Line Data and Key Metrics Changes - External customer chemistry revenue increased by 50% sequentially in Q4 2024, with total chemistry revenues up 18% compared to Q4 2023 [27][28] - Data analytics service revenue grew by 124% year-over-year in Q4 2024, contributing to a total revenue increase of 74% in the data analytics segment compared to Q4 2023 [29][30] - International chemistry revenue in Q4 was approximately $4.5 million, with a total of $9.2 million for the year, indicating a nearly 300% sequential increase [46] Market Data and Key Metrics Changes - The international market contributed significantly to revenue growth, particularly in Saudi Arabia and the UAE, with a focus on slickwater fracturing systems [44][46] - The demand for oil and gas is expected to expand over the next decade, with a projected 15% increase in electricity demand in the US by 2030 [22] Company Strategy and Development Direction - The company aims to enhance shareholder value through continuous improvement, market share expansion, and innovative products [10][15] - Flotek is focusing on technology leadership by integrating data and chemistry solutions to address industry challenges [16][22] - The company plans to expand its addressable market through new technologies and applications, particularly in data analytics and power generation solutions [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about sustaining profitability momentum into early 2025 despite historical challenges in Q1 [23] - The company anticipates that international business will help smooth out seasonal fluctuations in revenue [58] - Management highlighted the importance of regulatory compliance and sustainability programs in driving growth [51][54] Other Important Information - The company achieved zero lost time incidents in field operations, emphasizing a commitment to safety [15] - SG&A costs declined by 11% in 2024, indicating improved operational efficiency [31] Q&A Session Summary Question: Contribution of international revenue in Q4 - Management noted that international chemistry revenue was about $4.5 million in Q4, with significant contributions from the UAE [46] Question: Margins on international sales - Management indicated that while some components have good margins, the majority of strong margins come from value-add technologies [48] Question: Impact of EPA regulations on business development - Management reported continued growth in flare monitoring services despite regulatory delays, with major players expanding their commitments [51] Question: Expectations for Q1 revenue - Management expects international business to help smooth out typical Q1 seasonality, with optimism for better performance compared to previous years [58] Question: Details on data analytics products - Management provided insights into the Expect custody transfer solution and its potential for real-time monitoring and transparency in gas quality [62][66] Question: Working capital expectations - Management confirmed expectations for a significant reduction in accounts receivable in Q1 due to shortfall payments [112]

Flotek Industries, Inc. (NYSE:FTK) Q4 2024 Earnings Conference Call March 11, 2025 10:00 AM ET Company Participants Mike Critelli - Director, Finance & IR Ryan Ezell - CEO & Director Bond Clement - CFO Conference Call Participants Jeff Grampp - Alliance Global Partners Donald Crist - Johnson Rice Gerry Sweeney - ROTH Capital Josh Jayne - Daniel Energy Partners Operator Good morning, ladies and gentlemen, and welcome to Flotek Industries, Inc. Fourth Quarter and Full Year 2024 Earnings Conference Call. At th ...

Earnings Announcement - Flotek Industries, Inc. announced the timing of its fourth quarter and full-year 2024 earnings press release on January 30, 2025[5] - The company provided expectations regarding certain fourth quarter 2024 results, although specific figures were not disclosed in the current report[5] - The press release is incorporated as Exhibit 99.1, which may contain detailed financial data and performance metrics[5] Company Information - The company is listed on the NYSE under the trading symbol FTK[3] - Flotek Industries, Inc. is not classified as an emerging growth company under the Securities Act[4] - The company’s principal executive office is located in Houston, TX[2] Compliance and Reporting - The report was signed by Chief Financial Officer Bond Clement, indicating official acknowledgment of the information presented[10] - The financial statements and exhibits related to the report are available for review, including an interactive data file[7] - The report does not include any liabilities under Section 18 of the Securities Exchange Act of 1934[6] - The report was filed in compliance with the Securities Exchange Act of 1934[9]

Core Insights - Flotek Industries reported its strongest quarterly results of 2024 in terms of revenue, gross profit, net income, and adjusted EBITDA for Q4 2024 [1][5][7] - The company achieved a significant increase in operational efficiency and service quality, marking the highest profitability metrics in nearly a decade [2][4] - Flotek's technology portfolio expanded with the introduction of three new Data Analytics solutions, leading to a notable transformation in service revenue [3][4] Financial Performance - Total revenues for Q4 2024 were $50.8 million, a 20% increase from $42.2 million in Q4 2023 [5][7] - Gross profit for Q4 2024 was $12.3 million, up 30% from $9.4 million in Q4 2023, with a gross margin of 24% [7][18] - Net income for Q4 2024 was $4.4 million, or $0.14 per diluted share, compared to $2.1 million, or $0.07 per diluted share, in Q4 2023 [7][18] Yearly Overview - Full-year 2024 total revenues were $187.0 million, slightly down from $188.1 million in 2023 [5][7] - Full-year gross profit increased to $39.4 million from $24.3 million in 2023, reflecting a strong operational performance [8][18] - Adjusted EBITDA for 2024 reached $20.3 million, significantly up from $1.5 million in 2023, exceeding guidance by 10% [7][18] Segment Performance - Chemistry Technologies segment reported external revenues of $21.1 million in Q4 2024, up from $18.0 million in Q4 2023, while related party revenues increased to $27.2 million [6][18] - Data Analytics segment saw a 124% increase in service revenue compared to Q4 2023, indicating a shift from product to service offerings [3][7] Future Outlook - The integration of Data and Chemistry is expected to drive innovations in the energy and infrastructure markets, enhancing customer asset returns and reducing costs [4][8] - Flotek plans to issue 2025 guidance alongside its Q1 2025 financial results [10]

Financial Results and Announcement - Flotek Industries will release its fourth quarter and full-year 2024 financial and operating results after market close on March 10, 2025 [1][2] - The earnings conference call is scheduled for March 11, 2025, at 9:00 a.m. CST [2] - Participants can access the call via Flotek's website, toll-free telephone, or a provided webcast link [3] - A recording of the call will be available on the Company's website post-conference [3] Company Performance and Strategy - The fourth quarter of 2024 is expected to be the strongest in terms of net income and adjusted EBITDA compared to previous quarters in 2024 [2] - The Company attributes its financial and operational improvements to employee efforts and the execution of its corporate strategy, which focuses on innovative data and chemical solutions [2] Company Overview - Flotek Industries is a chemistry and data technology company specializing in the Energy industry [5] - The Company leverages near real-time data to deliver innovative solutions aimed at maximizing customer returns [5] - Flotek holds over 130 patents and has more than 20 years of field and laboratory data [5] - The Company operates globally in over 59 countries [5] Partnerships and Sustainability - Flotek has established collaborative partnerships focused on sustainable and optimized chemistry and data solutions [6] - These partnerships aim to reduce the environmental impact of energy on land, air, water, and people [6] Non-GAAP Financial Measures - Adjusted EBITDA is a non-GAAP financial measure, and reconciliations to net income are provided in the Company's quarterly earnings releases [4]

Core Insights - Flotek Industries is positioned as a leader in environmental compliance solutions with its EPA-approved JP3 VeraCal analyzer, which is crucial for flare monitoring as regulatory pressures increase [1][12] - The company has experienced a significant stock price increase of 161.3% over the past year, indicating strong market confidence and growth potential [2] Company Overview - Flotek Industries, headquartered in Houston, TX, specializes in advanced chemical technologies and data analytics for the Oil/Energy sector, with two main segments: chemistry technologies and data analytics [4] - The chemistry technologies segment includes solutions like Complex nano-Fluid (CnF) for enhanced oil recovery, while the data analytics segment features JP3 gas measurement systems that enhance operational efficiency and compliance [4] Growth Catalysts - The data analytics segment has shown exceptional growth, with an 88% sequential gross profit increase in Q3 2024, and data as a service revenue rising by 40%, driven by demand for the JP3 analyzer [5] - The chemistry technologies segment also reported a 7% sequential revenue increase, particularly due to strong sales of Complex nano-Fluid technology, showcasing the company's innovative capabilities [7] Profitability Outlook - Flotek's adjusted EBITDA guidance for 2024 has been raised to $16.5-$18.5 million, reflecting a 35% increase from initial forecasts, and the company has achieved net income for five consecutive quarters [8] - The Zacks Consensus Estimate projects a 48.3% year-over-year EPS growth for 2025, indicating a positive trajectory for earnings [8] Earnings Estimates - Current earnings estimates for the upcoming quarters show a projected EPS of $0.10 for Q4 2024 and $0.29 for the full year, with a significant year-over-year growth estimate of 125% for 2024 [9]

Core Insights - The article emphasizes the importance of timing and sustainability in short-term investing, highlighting that successful entry into trends is crucial for profitability [1][2] Group 1: Stock Performance - Flotek Industries (FTK) has shown a significant price increase of 94.3% over the past 12 weeks, indicating strong investor interest [4] - The stock has also increased by 13.2% in the last four weeks, suggesting that the upward trend is still intact [5] - FTK is currently trading at 90.5% of its 52-week high-low range, indicating a potential breakout [5] Group 2: Fundamental Strength - FTK holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6] - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term performance [7] Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for identifying stocks like FTK that are on an uptrend supported by strong fundamentals [3][8] - The article suggests that investors should consider multiple screening strategies to find winning stock picks tailored to their investing style [8]