Flotek(FTK)2025-03-12 20:02Financial Performance - Total revenues for the year ended December 31, 2024, decreased by 187.0 million compared to 2023, primarily due to decreased activity under the ProFrac Agreement[158]. - Total revenues for 2024 were 188,058 in 2023[210]. - Consolidated net income for 2024 was 24.9 million in 2023[177]. - Net income for 2024 was 24,713 in 2023[212]. - Basic income per share decreased to 1.00 in 2023, reflecting a decline of 64%[210]. - Gross profit for the year ended December 31, 2024, increased by 39.4 million, resulting in a gross profit margin of 21.1% compared to 12.9% in 2023[158]. - Gross profit increased significantly to 24,263 in 2023[210]. - Revenue from external customers increased by 1,714 in 2024 from 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 12.2 million, primarily due to a 52.4 million, including 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 5.9 million in 2023[171]. - Net cash provided by operating activities was 11.3 million in 2023[177]. - Changes in working capital used 13.2 million in 2023[178]. - Net cash used in investing activities was 1.0 million in 2023[179]. - Net cash used in financing activities was 2.7 million in net payments on the ABL[180]. - The Asset Based Loan (ABL) provides up to 5.2 million in 2024, representing 28.2% of inventory, down from 96,456 in 2024, an increase of 26.2% from 170,796 in 2024, up 8.5% from 56,896 in 2024, compared to 4,404 in 2024 from 69.0 million as of December 31, 2024[201].