Flotek Announces Increased 2024 Guidance, Improved Revenue, and Continued Profit Growth in Connection with Third Quarter 2024 Results
Financial Summary (in thousands, except 'per share' amounts)
|
Three Months Ended |
|
Nine Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
Total Revenues |
$ 49,742 |
|
$ 47,268 |
|
$ 136,267 |
|
$ 145,870 |
Gross Profit |
$ 9,119 |
|
$ 9,047 |
|
$ 27,108 |
|
$ 14,833 |
Adjusted Gross Profit (1) |
$ 10,695 |
|
$ 10,264 |
|
$ 31,421 |
|
$ 18,005 |
Net Income |
$ 2,532 |
|
$ 1,287 |
|
$ 6,068 |
|
$ 22,609 |
Diluted Income (Loss) Per Share |
$ 0.08 |
|
$ 0.04 |
|
$ 0.20 |
|
$ (0.18) |
Adjusted EBITDA (1) |
$ 4,840 |
|
$ 3,392 |
|
$ 13,303 |
|
$ (2,464) |
Third Quarter 2024 Highlights
- Generated total revenue of
$49.7 million , a 5% increase from the third quarter of 2023, highlighted by a 58% year-over-year increase in Data Analytics revenues. - Reduced SG&A by 12% from the third quarter of 2023 and by 9% sequentially from the second quarter of 2024.
- Reported net income of
$2.5 million and adjusted EBITDA(1) of$4.8 million , representing a year-over-year increase of 97% and 43%, respectively. - Reduced borrowings outstanding under the Asset Based Loan by 81% (or
$6.1 million ) compared to year-end 2023.
2024 Guidance: Stronger Profit Expectations
Based upon the Company's strong year-to-date operational performance and the outlook for the fourth quarter, the Company is increasing its 2024 guidance.
Management Commentary
Chief Executive Officer Dr.
In terms of profitability, adjusted EBITDA during the third quarter improved for the eighth consecutive quarter and, as a result, we are increasing our adjusted EBITDA guidance for the second time this year. Over the first nine months of 2024, we reported adjusted EBITDA of
Third Quarter 2024 Financial Results
-
Revenue:
Flotek reported total revenues of$49.7 million for the third quarter of 2024, which was an increase of$2.5 million , or 5% compared to the third quarter of 2023. Third quarter revenue increased 8% sequentially driven by a 7% sequential increase in Chemistry revenues and a 30% sequential increase in Data Analytics' revenue. Data Analytics segment revenue totaled$2.7 million during the third quarter of 2024, of which 25% was attributed toFlotek's new proprietary flare measurement application. -
Gross Profit: The Company generated gross profit of
$9.1 million with a margin of 18% during the third quarter 2024, as compared to gross profit of$9.0 million with a margin of 19% for the third quarter 2023. Gross profit margin during the third quarter of 2024 was lower than the 2023 period as a result of a shift in chemistry product mix as well as lower revenue during the 2024 period related to the minimum chemistry purchase requirements contained in the Company's long-term supply agreement. Partially offsetting these items was an increase in gross profit from the Company's Data Analytics segment, which contributed$1.2 million to third quarter 2024 gross profit, a 46% increase from the year ago quarter. -
Adjusted Gross Profit (Non-GAAP)
(1)
:
Flotek generated adjusted gross profit of$10.7 million during the third quarter 2024 compared to adjusted gross profit of$10.3 million for the third quarter 2023. Adjusted gross profit excludes non-cash items, primarily amortization of contract assets. -
Selling, General and Administrative ("SG&A") Expense: SG&A expense totaled
$5.7 million for the third quarter 2024 compared to$6.5 million for the third quarter 2023. The improvement was the result of lower personnel costs and professional fee expenses during the 2024 period. -
Net Income and EPS:
Flotek reported net income of$2.5 million , or$0.08 per diluted share, for the third quarter 2024. This compares to a net income of$1.3 million , or$0.04 per diluted share, for the third quarter 2023. -
Adjusted EBITDA (Non-GAAP)
(1)
: Adjusted EBITDA was
$4.8 million in the third quarter 2024 as compared to$3.4 million in the third quarter 2023. Third quarter 2024 adjusted EBITDA marked the eighth consecutive quarter of improvement.
(1) |
A non-GAAP financial measure. See the "Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings" section in this release for more information, including reconciliations to the most comparable GAAP measures. |
(2) |
A non-GAAP financial measure. See the "Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings" section in this release for more information, including reconciliations to the most comparable GAAP measures. We are unable to reconcile this forward-looking non-GAAP financial measure to the most directly comparable GAAP financial measure without unreasonable efforts, as we are unable to predict with a reasonable degree of certainty the impact of certain items that would be expected to impact the GAAP financial measure, including, among other items, the future amortization of our contract assets, certain stock-based compensation costs and the impact of the revaluation of certain liabilities, which is based upon our future stock price. These items do not impact the non-GAAP financial measure. |
Conference Call Details
An updated corporate presentation that will be referenced on the call will be posted to the Investor Relations section of
About
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
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) |
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|
|||
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 4,997 |
|
$ 5,851 |
Restricted cash |
101 |
|
102 |
Accounts receivable, net of allowance for credit losses of |
12,220 |
|
13,687 |
Accounts receivable, related party, net of allowance for credit losses of |
47,064 |
|
34,569 |
Inventories, net |
12,744 |
|
12,838 |
Other current assets |
2,687 |
|
3,564 |
Current contract asset |
6,480 |
|
5,836 |
Total current assets |
86,293 |
|
76,447 |
Long-term contract asset |
63,835 |
|
68,820 |
Property and equipment, net |
4,958 |
|
5,129 |
Operating lease right-of-use assets |
3,759 |
|
5,030 |
Deferred tax assets, net |
66 |
|
300 |
Other long-term assets |
1,738 |
|
1,787 |
TOTAL ASSETS |
$ 160,649 |
|
$ 157,513 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 37,395 |
|
$ 31,705 |
Accrued liabilities |
4,115 |
|
5,890 |
Income taxes payable |
54 |
|
45 |
Current portion of operating lease liabilities |
1,642 |
|
2,449 |
Current portion of finance lease liabilities |
— |
|
22 |
Asset-based loan |
1,426 |
|
7,492 |
Current portion of long-term debt |
104 |
|
179 |
Total current liabilities |
44,736 |
|
47,782 |
Deferred revenue, long-term |
35 |
|
35 |
Long-term operating lease liabilities |
6,871 |
|
7,676 |
Long-term debt |
— |
|
60 |
TOTAL LIABILITIES |
51,642 |
|
55,553 |
Commitments and contingencies |
|
|
|
Stockholders' equity: |
|
|
|
Preferred stock, |
— |
|
— |
Common stock, |
3 |
|
3 |
Additional paid-in capital |
464,143 |
|
463,140 |
Accumulated other comprehensive income |
133 |
|
127 |
Accumulated deficit |
(320,738) |
|
(326,806) |
|
(34,534) |
|
(34,504) |
Total stockholders' equity |
109,007 |
|
101,960 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 160,649 |
|
$ 157,513 |
Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) |
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|
Three Months Ended |
|
Nine Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Revenue: |
|
|
|
|
|
|
|
Revenue from external customers |
$ 16,565 |
|
$ 17,806 |
|
$ 47,935 |
|
$ 47,278 |
Revenue from related party |
33,177 |
|
29,462 |
|
88,332 |
|
98,592 |
Total revenues |
49,742 |
|
47,268 |
|
136,267 |
|
145,870 |
Cost of goods sold |
40,623 |
|
38,221 |
|
109,159 |
|
131,037 |
Gross profit |
9,119 |
|
9,047 |
|
27,108 |
|
14,833 |
Operating costs and expenses: |
|
|
|
|
|
|
|
Selling, general, and administrative |
5,714 |
|
6,526 |
|
18,056 |
|
21,303 |
Depreciation |
220 |
|
181 |
|
662 |
|
530 |
Research and development |
462 |
|
757 |
|
1,349 |
|
2,231 |
Severance costs |
— |
|
2 |
|
23 |
|
(28) |
Gain on sale of property and equipment |
— |
|
(38) |
|
(34) |
|
(38) |
Gain in fair value of Contract Consideration Convertible Notes Payable |
— |
|
— |
|
— |
|
(29,969) |
Total operating costs and expenses |
6,396 |
|
7,428 |
|
20,056 |
|
(5,971) |
Income from operations |
2,723 |
|
1,619 |
|
7,052 |
|
20,804 |
Other income (expense): |
|
|
|
|
|
|
|
Paycheck protection plan loan forgiveness |
— |
|
— |
|
— |
|
4,522 |
Interest expense |
(256) |
|
(160) |
|
(842) |
|
(2,537) |
Other income, net |
102 |
|
(91) |
|
151 |
|
(82) |
Total other income (expense) |
(154) |
|
(251) |
|
(691) |
|
1,903 |
Income before income taxes |
2,569 |
|
1,368 |
|
6,361 |
|
22,707 |
Income tax expense |
(37) |
|
(81) |
|
(293) |
|
(98) |
Net income |
$ 2,532 |
|
$ 1,287 |
|
$ 6,068 |
|
$ 22,609 |
|
|
|
|
|
|
|
|
Income (loss) per common share: |
|
|
|
|
|
|
|
Basic |
$ 0.09 |
|
$ 0.04 |
|
$ 0.21 |
|
$ 0.97 |
Diluted |
$ 0.08 |
|
$ 0.04 |
|
$ 0.20 |
|
$ (0.18) |
|
|
|
|
|
|
|
|
Weighted average common shares: |
|
|
|
|
|
|
|
Weighted average common shares used in |
29,613 |
|
29,358 |
|
29,498 |
|
23,291 |
Weighted average common shares used in |
30,897 |
|
30,688 |
|
30,655 |
|
28,034 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
|||
|
|||
|
Nine Months Ended |
||
|
2024 |
|
2023 |
Cash flows from operating activities: |
|
|
|
Net income |
$ 6,068 |
|
$ 22,609 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
Change in fair value of contingent consideration |
(46) |
|
(384) |
Change in fair value of Contract Consideration Convertible Notes Payable |
— |
|
(29,969) |
Amortization of convertible note issuance costs |
— |
|
83 |
Payment-in-kind interest expense |
— |
|
2,284 |
Amortization of contract asset |
4,341 |
|
3,665 |
Depreciation |
662 |
|
530 |
Amortization of asset-based loan origination costs |
243 |
|
36 |
Provision for credit losses, net of recoveries |
121 |
|
97 |
Provision for excess and obsolete inventory |
626 |
|
626 |
Gain on sale of property and equipment |
(34) |
|
(38) |
Non-cash lease expense |
1,661 |
|
2,316 |
Stock compensation expense |
915 |
|
(565) |
Deferred income tax expense |
233 |
|
50 |
Paycheck protection plan loan forgiveness |
— |
|
(4,522) |
Changes in current assets and liabilities: |
|
|
|
Accounts receivable |
1,346 |
|
3,472 |
Accounts receivable, related party |
(12,495) |
|
(2,082) |
Inventories |
(532) |
|
(776) |
Other assets |
849 |
|
(863) |
Accounts payable |
5,690 |
|
60 |
Accrued liabilities |
(1,730) |
|
(3,179) |
Operating lease liabilities |
(2,002) |
|
(2,636) |
Income taxes payable |
9 |
|
(54) |
Interest payable |
— |
|
(8) |
Net cash provided by (used in) operating activities |
5,925 |
|
(9,248) |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (continued) |
|||
|
|||
|
Nine Months Ended |
||
|
2024 |
|
2023 |
Cash flows from investing activities: |
|
|
|
Capital expenditures |
(491) |
|
(593) |
Proceeds from sale of assets |
34 |
|
68 |
Net cash used in investing activities |
(457) |
|
(525) |
Cash flows from financing activities: |
|
|
|
Payment for forfeited stock options |
— |
|
(617) |
Payments on long term debt |
(135) |
|
(104) |
Proceeds from asset-based loan |
122,600 |
|
27,750 |
Payments on asset-based loan |
(128,666) |
|
(24,380) |
Payment of asset-based loan origination costs |
(164) |
|
(502) |
Payments to tax authorities for shares withheld from employees |
(30) |
|
(246) |
Proceeds from issuance of stock |
88 |
|
48 |
Payments for finance leases |
(22) |
|
(24) |
Net cash (used in) provided by financing activities |
(6,329) |
|
1,925 |
Effect of changes in exchange rates on cash and cash equivalents |
6 |
|
13 |
Net change in cash and cash equivalents and restricted cash |
(855) |
|
(7,835) |
Cash and cash equivalents at the beginning of period |
5,851 |
|
12,290 |
Restricted cash at the beginning of period |
102 |
|
100 |
Cash and cash equivalents and restricted cash at beginning of period |
5,953 |
|
12,390 |
Cash and cash equivalents at end of period |
4,997 |
|
4,453 |
Restricted cash at the end of period |
101 |
|
102 |
Cash and cash equivalents and restricted cash at end of period |
$ 5,098 |
|
$ 4,555 |
Unaudited Reconciliation of Non-GAAP Items and Non-Cash Items Impacting Earnings (in thousands) |
|||||||
|
|||||||
|
Three Months Ended |
|
Nine Months Ended
|
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
Gross profit |
$ 9,119 |
|
$ 9,047 |
|
$ 27,108 |
|
$ 14,833 |
Stock compensation expense |
3 |
|
2 |
|
9 |
|
(135) |
Severance and retirement |
— |
|
— |
|
9 |
|
26 |
Contingent liability revaluation |
(19) |
|
(61) |
|
(46) |
|
(384) |
Amortization of contract asset |
1,592 |
|
1,276 |
|
4,341 |
|
3,665 |
Adjusted Gross profit (Non-GAAP) (1) |
$ 10,695 |
|
$ 10,264 |
|
$ 31,421 |
|
$ 18,005 |
|
|
|
|
|
|
|
|
Net income |
$ 2,532 |
|
$ 1,287 |
|
$ 6,068 |
|
$ 22,609 |
Interest expense |
256 |
|
160 |
|
842 |
|
2,537 |
Income tax expense |
37 |
|
81 |
|
293 |
|
98 |
Depreciation and amortization |
220 |
|
181 |
|
662 |
|
530 |
EBITDA (Non-GAAP) (1) |
$ 3,045 |
|
$ 1,709 |
|
$ 7,865 |
|
$ 25,774 |
Stock compensation expense |
272 |
|
268 |
|
915 |
|
(574) |
Severance |
— |
|
2 |
|
32 |
|
(28) |
Contingent liability revaluation |
(19) |
|
(61) |
|
(46) |
|
(384) |
Gain on disposal of assets |
— |
|
(38) |
|
(34) |
|
(38) |
PPP loan forgiveness |
— |
|
— |
|
— |
|
(4,522) |
Contract Consideration Convertible Notes Payable revaluation adjustment |
— |
|
— |
|
— |
|
(29,969) |
Amortization of contract asset |
1,592 |
|
1,276 |
|
4,341 |
|
3,665 |
Non-Recurring professional fees |
(50) |
|
236 |
|
230 |
|
3,612 |
Adjusted EBITDA (Non-GAAP) (1) |
$ 4,840 |
|
$ 3,392 |
|
$ 13,303 |
|
$ (2,464) |
|
|
(1) |
Management believes that adjusted gross profit, EBITDA and adjusted EBITDA for the three and nine months ended |
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