2Q22 Results Will Show Glimpse of ProFrac Contract Impact



KEY POINTS
  • Flotek’s 2Q22 results will show glimpses of the impact the ProFrac chemical supply agreement could have on future growth.
  • On July 20, Flotek announced that it expects 2Q22 revenue to be more than $28 million, compared with 1Q22 revenue of $12.9 million. Total revenue for all of 2021 was $43.3 million.
  • During 2Q22, Flotek serviced an average of eight ProFrac hydraulic fracturing fleets. Management reported there were no service quality issues. During 3Q22, Flotek expects to service 16 or more fleets.
  • Flotek delivered ~40 million pounds of chemistry to customers during 2Q22, including ~31 million pounds (~78%) to ProFrac and ~9 million pounds (~22%) to other customers.
  • 2Q22 results will reflect some one-time expenses to ramp up activity to service the ProFrac contract. Costs incurred to increase the number of field deployment tanks (ISO) to 101 from 20, along with freight and logistics expenses, will likely translate into a negative EBITDA margin during 2Q22.
  • Management expects the company’s EBITDA margin to improve during 2H22 and that adjusted EBITDA could turn positive before the end of 4Q22.
  • The continued rollout of Flotek’s chemistry during 2H22 could allow the company to begin realizing some logistic efficiencies and increased purchasing power with suppliers to lower costs and improve margins.
  • ProFrac and Flotek are on pace to reach the full-fleet adoption as laid out in the supply agreement by the beginning of 2023.
  • Flotek is expected to release 2Q22 financial results and host a conference call the week of August 8.
COMPANY OVERVIEW

Flotek Industries is a technology-driven specialty green chemistry and data company. It creates solutions to reduce the environmental impact of energy production on air, water, land, and people. Flotek serves customers across industrial, commercial, and consumer markets, helping meet their goals of improving their performance relative to environmental, social, and governance (ESG) standards. The company’s proprietary green chemistries, specialty chemistries, logistics, and technology services enable its customers to pursue improved efficiencies and performance throughout the life cycle of their desired chemical applications program. Green chemistry applications span the entire upstream and downstream sectors of the oil and gas industry; geothermal energy companies, solar energy companies, and other advanced alternative energy companies also benefit from

best-in-class technology, field operations, and continuous improvement exercises that extend beyond sustainability practices. Flotek also markets green chemistry surface cleaning products to commercial and personal consumers. The company’s Data Analytics segment provides field-deployable real time, in-line optical analyzers for use in hydrocarbon liquid and natural gas measurement. Flotek is headquartered in Houston, Texas. The company’s homepage is www.flotekind.com.

Flotek’s 2Q22 results will show glimpses of the impact the ProFrac chemical supply agreement could have on future growth.

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