HOUSTON, Oct. 22, 2014 /PRNewswire/ -- Flotek
Industries, Inc. (NYSE:FTK) ("Flotek" or the "Company")
today announced results for the three months ended September 30, 2014.
As reported on Form 10-Q filed with the U.S. Securities and
Exchange Commission, Flotek reported that revenue for the three
months ended September 30, 2014 was
$116.8 million compared to
$98.4 million for the three months
ended September 30, 2013.
Consolidated revenue for the three months ended September 30, 2014 increased $18.4 million, or 18.7%, relative to the
comparable period of 2013. The increase in revenue for the three
months ended September 30, 2014
compared to the same period of 2013 was primarily due to increased
sales in our Energy Chemical Technologies segment.
For the three months ended September 30,
2014, the Company reported net income of $14.3 million, or $0.26 per common share (fully diluted), compared
to net income of $9.0 million, or
$0.16 per common share (fully
diluted) for the same period in 2013.
Net income benefited by approximately $0.9 million related to the tax treatment of
certain deferred tax liabilities and other benefits related to the
2013 acquisition of Florida Chemical.
While quarterly revenues increased nearly 19% compared to the
same period a year ago, operating income rose over 38%, indicating
continued operating leverage from our expanding technology
platform.
"Flotek's record performance in the third quarter is testament
to the hard work and dedication of the entire Flotek team that
believes it can make a difference for our clients and our
shareholders," said John Chisholm,
Flotek's Chairman, President and Chief Executive Officer. "Our team
remains focused on building a world-class energy technology
company, anchored by innovative solutions that empower our clients
to make better wells, positively impacting the economics of the
entire energy value chain."
Chisholm added, "The acceleration of activity during the quarter
and into the first weeks of October suggests that the recent
volatility in commodity prices has not slowed our momentum and
appears to have had little, if any, impact on our ability to
continue our quest to gain market share across our product lines.
While the fourth quarter results still contain the challenges of
the holiday calendar, we are enthusiastic about the influence
FracMax™, new technologies and new product and territory
opportunities will have on our fourth quarter results. We continue
to believe the second-half of 2014 will be the most successful six
months in Flotek's history."
"That said, we will never underestimate the work ahead of us as
we continue to evangelize about the compelling benefits of Flotek's
Complex nano-Fluid® chemistries in unconventional well
completions," Chisholm added. "While the use of FracMax has already
had a marked impact on sales, we know the road ahead will not be
precisely straight and we must remain acutely focused on building
our empirical data base supporting the efficacy of our world class
chemistry. More exploration and production companies than ever now
know of and understand the substantial economic gains that result
from the use of Flotek's CnF® completion chemistries. With FracMax,
we expect that message to proliferate at a quickened pace over the
course of the next several months."
Operational Highlights
Flotek continues to make meaningful market penetration with its
patented suite of Complex nano-Fluid chemistries. The introduction
of FracMax, the Company's patent-pending software application for
comparing the performance of wells using Flotek's advanced
next-generation CnF completion fluids versus those that use
conventional surfactants, has been successful in fueling interest
in Flotek's innovative chemistries.
"The efforts of our chemistry sales team, armed with the robust
data in FracMax, continue to expand Flotek's reach," added
Chisholm. "During the quarter we added over a dozen validation
projects in addition to those already in progress and have a
similar number in the planning stages. While the validation process
doesn't result in a sale overnight, validations begun earlier in
the year are now providing meaningful data that support the thesis
that CnF chemistries provide an economic advantage for our clients.
While growth won't be linear – not unlike the adoption of any other
disruptive technology – we hope to look back a year from now and
appreciate the impact of FracMax on our sales and adoption
efforts."
The growth in CnF interest is ubiquitous across basins in
the United States. Use in the
Rockies and South Texas remains
strong and, during the quarter, there was a significant increase in
scheduled validations and use in the Permian Basin. In addition,
interest in the Mid-Continent and Appalachia grew during the
quarter. And, for the first time, a meaningful CnF project will
soon begin in California.
In addition, Flotek's chemistry research team, in collaboration
with key clients, has worked diligently to create an optimal suite
of CnF chemistries for use in the Bakken and Three Forks formations
in the Williston Basin. Flotek's willingness and ability to respond
to client needs and tailor its chemistry for sub-basin specific
applications has led to increased use in the Williston basin.
"Through advanced research and client collaboration, we believe
we have begun to crack the code of a very challenging, diverse rock
base in the Bakken," added Chisholm. "As a result of those efforts,
we will begin a recompletion validation for a major operator in the
Williston Basin in the coming weeks, opening a new market and
application for CnF, one that could be as large as the primary
completion market over time."
South of the border, Flotek continues to make progress in
Mexico with a CnF validation
project underway with a major energy company. The Company expects
the multiple well validation project to continue through the
balance of the year.
As suggested in Flotek's second quarter missives, business
continues to accelerate in Canada,
The summer drilling season has been the most active in Flotek's
history as leading Canadian pressure pumping companies embrace the
use of CnF as an economic benefit to operators. Activity is
especially robust in Alberta and
Eastern British Columbia with a
number of new clients converting to CnF.
"Our work in Canada and
Mexico is a natural extension of
our North American reach, something we continue to believe will
become more meaningful to our results through the balance of the
year and into 2015," added Chisholm. "CnF chemistry use is at
record levels in Canada and we see
no reason such growth will moderate in the coming months. In
Mexico, our validation work is
encouraging and we believe it will lead to meaningful opportunities
in the coming year."
Globally, Flotek continues to grow its chemistry business in
both the Middle East and
South America. Flotek Gulf, the
Company's Omani joint-venture, while progressing deliberately, made
significant progress during the quarter, with initial funding
completed and engineering and construction planning underway.
Flotek expects the initial Omani facilities to be operational in
the first half of 2015. More importantly, Flotek's presence in the
Middle East has resulted in
increased chemistry sales across the region, including into
Saudi Arabia.
In addition, Flotek's Microsolutions™ business – its recently
acquired drilling fluids technology – is being applied in a
validation project for Saudi Aramco which will commence in the
fourth quarter.
"While we continue to move deliberately in our Middle East venture, our presence is having a
positive impact on our results," added Chisholm. "Flotek continues
to grow its presence around the globe and is actively shipping
chemistry to multiple nations in the region. Also exciting is the
interest in both our new drilling fluids and enhanced oil recovery
technologies which are gaining traction in the region."
In Drilling Technologies, the Company's Teledrift®
measurement-while-drilling technology continues to be the market
leader in North America. Moreover,
Teledrift continues to grow internationally with work continuing to
grow in the Middle East,
South America and nations of the
Former Soviet Union.
In North America, through
September 30, 2014, Teledrift has
worked for 99 new clients during the year, indicating the continued
market growth of our vertical MWD offering. Also during the
quarter, Flotek introduced Telepulse, a horizontal guidance MWD
technology. Commercial validations are underway and
commercialization is expected in early 2015.
"While competition continues to stiffen, drilling efficiency
increases and vertical opportunities remain stagnant, Teledrift
remains a best-in-class technology and continues to gain market
share," added Chisholm. "With the introduction of Telepulse, our
horizontal guidance MWD offering, we believe the market
opportunities will expand further."
The Company continues to market the Stemulator®, an axial
vibration tool used both domestically and internationally. With
fine-tuning and tool enhancements largely complete, the Stemulator
is ready for full-scale commercial launch. The Company is currently
ramping up manufacturing, the speed of which is somewhat moderated
by a backlog in carbide coating processors. While commercial growth
should be seen in the fourth quarter, more rapid growth is expected
in the new year.
"With the Stemulator ready for broad-scale commercial roll-out,
the fourth quarter and – even more so – 2015 stand to be
transformational for Flotek's Downhole Technology business," added
Chisholm. "We are excited to be able to offer our clients the
'technology trifecta' to improve drilling efficiency. Combining
Telepulse, Stemulator and our downhole motors provides operators a
complete package that will further accelerate drilling efficiencies
and, at the same time, provide new revenue and profit opportunities
for Flotek."
Production Technologies, under the leadership of David McMahon, continues to refocus its efforts
on niche, added value technologies that will create a competitive
advantage for Flotek in the coming months. The Company is in the
advanced stages of exploring options to accelerate its growth in
unique technologies and services that will add value to Flotek
clients and stakeholders.
"David has built a solid foundation for the growth of our niche
Production Technologies segment," added Chisholm. "Third quarter
results show the impact of marketing just our Petrovalve to select
clients. We have quietly built the infrastructure to operate a
leading, niche production technologies business throughout key U.S.
basins. In the near future we expect to articulate a strategy that
will position our Production Technologies business to be a
meaningful contributor to both revenue and profits in the coming
year."
"Flotek's third quarter, I believe, represents an important
inflection point for your Company," concluded Chisholm. "While the
introduction of FracMax has transformed our chemistry marketing
efforts, our most valuable asset remains our people who arrive at
work each day searching for ways to make a difference for all of
our stakeholders, including our clients and shareholders. Nothing
shows the impact of that mindset more than measures of
productivity. From 2011 to today, on an annualized basis, revenue
per employee increased from $735,000
to $864,000, an increase of nearly
18%. Moreover, operating income per employee for the same period
rose from $139,000 to $152,000, an increase of nearly 10%. Both
measures are at or near the top of our industry, something all
members of the Flotek team should be proud of. We will work
diligently to continue that growth as we believe great
opportunities for growth remain in front of us."
Financial Update
A complete review and discussion of the Company's quarter-end
financial performance and position can be found in the Company's
quarterly report on Form 10-Q filed with the U.S. Securities and
Exchange Commission today.
Earnings Before Interest, Taxes, Depreciation and Amortization,
or EBITDA (a non-GAAP measure of financial performance), for the
three months ended September 30, 2014
was $25.2 million, an increase of
$6.0 million or 31.3%, compared to
$19.2 million for the three months
ended September 30, 2013.
The Company recorded stock-based compensation expense during the
quarter of $2.7 million ($1.7 million, net of tax). That compares to
stock-based compensation expense in the third quarter of 2013 of
$2.9 million ($1.9 million, net of tax).
A presentation of stock-based compensation and a reconciliation
of GAAP net income to EBITDA can be found at the conclusion of this
release.
Flotek's resilient operational performance continues to support
a strong balance sheet and financial position. During the quarter,
Flotek's total outstanding debt decreased by $15.3 million, or 27.0%, since June 30, 2014, Compared to outstanding debt on
December 31, 2013, Flotek has reduced
outstanding debt by $20.6 million, or
33.1%. Flotek's current borrowings on its revolver are
negligible.
Flotek's cash generation continues to be a primary driver of
debt reduction. Cash from Operations in the third quarter was
$21.5 million. For the first nine
months of 2014, Flotek generated Cash from Operations of
approximately $39.9 million, or about
$1 million per week. That compares to
just $39.5 million of Cash from
Operations for the full year in 2013.
Inventories were $81.4 million as
of September 30, 2014, an increase of
25.3% from $63.1 million as of
December 31, 2013. The increase is
largely attributable to an increase in citrus product inventory at
Florida Chemical, in anticipation of increased sales as well as
opportunistic buying based on our proprietary citrus pricing model.
Compared to June 30, 2014,
inventories decreased by $0.8
million.
Outstanding receivables as of September
30, 2014 were $69.3 million,
compared to $65.0 million as of
December 31, 2013. The Company's
allowance for doubtful accounts was at 0.9% of receivables.
Depreciation and amortization expense for the three months ended
September 30, 2014 increased by
$0.4 million, or 10.9%, relative to
the comparable period of 2013.
Interest and other expense remained relatively flat for the
three months ended September 30, 2014 as compared to the same
periods of 2013. The Company recorded an income tax provision of
$6.1 million, yielding an effective
tax rate of 29.8% for the three months ended September 30, 2014, compared to an income tax
provision of $5.6 million reflecting
an effective tax rate of 38.6% for the comparable period in
2013.
During the three months ended September
30, 2014, the Company identified and recorded a final
adjustment related to the acquisition of Florida Chemical. As a
result, net income increased by approximately $0.9 million and the Company's effective tax rate
decreased by approximately 4.9%. Flotek expects the tax rate in
future periods to reflect more traditional tax metrics. Current
deferred tax assets were increased by $1.2
million with a corresponding decrease to goodwill within the
consumer and industrial chemical technologies reporting unit.
Segment Details
Energy Chemical Technologies revenue for the three months ended
September 30, 2014 increased $16.5
million, or 32.0%, relative to the comparable period of
2013. Excluding the incremental revenue impact of
acquisitions of $1.5 million, revenue
increased $15.0 million, or 29.1%,
for the three months ended September 30, 2014 compared to the
same period of 2013. Increased sales of stimulation chemical
additives accounted for the majority of the revenue increase.
Revenue for the nine months ended September 30, 2014 increased
$49.1 million, or 34.1%, relative to
the comparable period of 2013. Excluding the incremental
revenue impact of acquisitions of $9.4
million, revenue increased $39.7
million, or 28.6%, compared to the same period of 2013,
primarily due to the increased sales of stimulation chemical
additives mentioned above.
Energy Chemical Technologies gross margin increased $6.6 million, or 30.1%, and $23.5 million, or 38.2%, for the three and nine
months ended September 30, 2014, respectively, compared to the
same periods of 2013 primarily due to the increase in product sales
revenue. Gross margin as a percentage of revenue
decreased to 41.7% for the three months ended September 30,
2014 from 42.3% in the same period of 2013, primarily due to a new
incentive pricing structure, increased logistics costs and
inventory adjustments during 2014, partially offset by improved
margins for xylene replacement products, expanded markets for CnF
and productivity improvements in the manufacturing process. Gross
margin as a percentage of revenue increased to 44.0% for the nine
months ended September 30, 2014 from 42.7% in the same period
of 2013, primarily due to the supply chain benefits of the Florida
Chemical acquisition.
Income from operations for the Energy Chemical Technologies
segment increased $3.7 million, or
22.5%, for the three months ended September 30, 2014, and
increased $15.4 million, or 34.0%,
for the nine months ended September 30,
2014 relative to the comparable periods of 2013. The
increase in income from operations for both periods is primarily
attributable to an increase in gross margin partially offset by
increased headcount, travel and associated costs related to the
pursuit of growth opportunities.
CICT revenue for the three months ended September 30, 2014
decreased $1.6 million, or 10.3%,
compared to the same period in 2013, primarily due to decreased
terpene sales between the two periods. Revenue for the nine months
ended September 30, 2014 increased $11.4 million, or 40.7%, from the comparable
period of 2013, as the segment was created in the second quarter of
2013 upon the acquisition of Florida Chemical.
CICT gross margin for the three months ended September 30,
2014 decreased $0.3 million, or 7.7%,
from the comparable period of 2013, primarily due to lower terpene
sales. Gross margin for the nine months ended September 30, 2014 increased $3.0 million, or 40.6%, from the comparable
period of 2013, primarily due to the segment being created in the
second quarter of 2013 upon the acquisition of Florida
Chemical. Gross margin percentage increased to 24.1% for the
three months ended September 30, 2014
from 23.5% in the same period of 2013, primarily due to increased
sales of higher margin flavor and fragrance products.
Gross margin as a percentage of revenue remained flat
for the nine months ended September 30,
2014 as compared to the same period of 2013.
Income from operations for the CICT segment decreased
$0.5 million, or 23.6%, for the three
months ended September 30, 2014 compared to the same period of
2013, primarily due to the revenue and gross margin factors
described above. Income from operations increased $0.4 million, or 9.0%, for the nine months ended
September 30, 2014 compared to the same period of 2013,
primarily due to the increased revenue between the two periods.
Drilling Technologies revenue for the three months ended
September 30, 2014 increased $2.4
million, or 8.5%, relative to the same period in 2013,
primarily due to an increase in actuated tool rentals, Teledrift
tool rentals, and increases in float equipment product sales.
Revenue for the nine months ended September 30, 2014 decreased
$4.2 million, or 4.9%, relative to
the same period in 2013, primarily due to a decrease in Teledrift
domestic rental revenue, decreased international drill pipe sales,
and decreased non-actuated tool rentals.
Product revenue for the three months ended September 30,
2014 increased by $0.9 million, or
9.9% compared to the same period of 2013 due to increased float and
centralizer equipment sales. Product revenue for the nine
months ended September 30, 2014
decreased by $2.8 million, or 9.8%,
relative to the same period in 2013 primarily due to decreased
international drill pipe sales for the mining industry and
decreased domestic motor sales.
Rental revenue for the three months ended September 30,
2014 increased $1.7 million, or
10.9%, compared to the same period of 2013. This increase can be
attributed to a 45.2% increase in actuated tool rental revenue in
the Bakken and a 22.9% increase in international Teledrift tool
rentals. Rental revenue for the nine months ended
September 30, 2014 decreased by $0.9
million, or 1.9%, compared to the same period of 2013.
This decline is due to a 5.1% decrease in Teledrift domestic tool
rental revenue attributed to competitive pricing pressure and
decreasing vertical rig counts, partially offset by an increase of
11.8% in actuated tool and Stemulator tool rentals for the nine
months ended September 30, 2014 as compared to the same
period of 2013.
Service revenue for the three and nine months ended
September 30, 2014 decreased $0.2
million, or 4.7%, and $0.5
million, or 4.6%, respectively, relative to comparable
periods of 2013. The decrease in service revenue was primarily
related to decreased rig service jobs and inspections.
Drilling Technologies gross margin for the three months ended
September 30, 2014 increased $1.1
million, or 10.2%, from the comparable period of 2013,
primarily due to the revenue factors mentioned above and a 5.4%
decrease in direct costs, primarily due to lower employee-related
compensation costs. Drilling Technologies gross margin for the nine
months ended September 30, 2014 decreased $2.1 million, or 6.2%, primarily due to the
reduction in revenue and increased Teledrift repair expenses.
Gross margin as a percentage of revenue remained relatively flat
for the three and nine months ended September 30, 2014.
Drilling Technologies income from operations for the three
months ended September 30, 2014 increased by $1.2 million, or 29.0%, as compared to the same
period of 2013. Income from operations as a percentage of
revenue increased to 18.6% for the three months ended
September 30, 2014, up from 15.6% for the same period of
2013. These increases are primarily due to reductions in
direct costs, increased rental activity, and increased product
sales. Drilling Technologies income from operations for the nine
months ended September 30, 2014 decreased by $2.4 million, or 15.7%, over the same period of
2013. Income from operations as a percentage of revenue decreased
to 15.9% for the nine months ended September 30, 2014, down
from 18.0% for the same period of 2013. These decreases are
primarily due to the decreased revenue explained above and
increased Teledrift repair expenses.
Revenue for the Production Technologies segment for the three
months ended September 30, 2014 increased by $1.1 million, or 28.3%, from the same period in
2013 due to increased sales of international valves, valve
equipment, and domestic hydraulic lifting units. For the nine
months ended September 30, 2014, revenue decreased by
$1.9 million, or 15.6%, relative to
the same period in 2013 as sales of pumps and pump equipment
declined.
Production Technologies gross margin increased by $1.2 million, or 94.2%, for the three months
ended September 30, 2014 as compared to the same period in
2013, and gross margin as a percentage of revenue increased to
48.8% for the three months ended September
30, 2014 from 32.3% for the same period in 2013. These
increases are due to product mix from increased international
Petrovalve sales and decreased domestic rod pump component sales.
Gross margin was flat for the nine months ended September 30, 2014, but gross margin percentage
increased to 42.4%, compared to 35.8% for the same period in 2013,
primarily due to the higher margins associated with the
international valve sales and improving margins on pump
equipment.
Income from operations increased by $0.8
million, or 105.9%, for the three months ended
September 30, 2014 compared to the same period in 2013,
primarily due to product mix. Income from operations decreased by
$0.8 million, or 29.0%, for the nine
months ended September 30, 2014 compared to the same period in
2013, primarily due to decreases in sales and increases in SG&A
costs attributable to employee-related expenses as the segment
continues to refocus and reposition for growth in the market.
Fourth Quarter Outlook
Overall activity continued to accelerate into the early weeks of
October, providing a positive start to the fourth quarter.
Continued chemistry market growth, a result of the introduction of
FracMax and new client and basin opportunities, as well as
continued strength in drilling technologies have provided a solid
start to the final quarter of 2014.
"While we are carefully watching recent commodity price
volatility for signs of changing oilfield activity patterns, we
have not seen any impact that would cause us to adjust our outlook
in the coming months," said Chisholm. "While we believe the recent
volatility will prove transient, we will continue to be diligent
observers of commodity price trends and be proactive in addressing
our potential markets as a result. To date, we simply don't see,
and don't believe, that short-term volatility in oil prices will
have any meaningful impact on activity and, as a result, Flotek's
growth objectives in the coming months. In fact, we see more
opportunities today than we did at this time last year or last
quarter."
Conference Call Details
Flotek will host a conference call on Thursday, October 23, 2014 at 7:00 a.m. Central Daylight Time to discuss its
operating results for the three months ended September 30, 2014.
To participate in the call, participants should dial
800-624-1547 approximately 5 minutes prior to the start of the
call. The call can also be accessed from Flotek's website
at www.flotekind.com.
About Flotek Industries, Inc.
Flotek is a global developer and distributor of innovative
specialty chemicals and down-hole drilling and production
equipment. Flotek manages automated bulk material handling, loading
and blending facilities. It serves major and independent companies
in the domestic and international oilfield service industry. Flotek
Industries, Inc. 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 Flotek's web site
at 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 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. Factors that could cause or contribute
to such differences in results and outcomes include, but are not
limited to, demand for oil and natural gas drilling services in the
areas and markets in which the Company operates, competition,
obsolescence of products and services, the Company's ability to
obtain financing to support its operations, environmental and other
casualty risks, and the impact of government regulation.
Further information about the risks and uncertainties that may
impact the Company are set forth in the Company's most recent
filing on Form 10-K (including without limitation in the "Risk
Factors" Section), 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.
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Three Months
Ended
|
|
|
|
|
|
9/30/2014
|
|
9/30/2013
|
|
|
|
|
|
(in thousands,
except per share data)
|
GAAP Net Income
and Reconciliation to EBITDA (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(GAAP)
|
|
|
|
$ 14,272
|
|
$ 8,968
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
424
|
|
530
|
|
|
|
|
|
|
|
|
|
Income Tax
Expense
|
|
6,064
|
|
5,648
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
4,462
|
|
4,025
|
|
|
|
|
|
|
|
|
EBITDA
(Non-GAAP)
|
|
|
$ 25,222
|
|
$ 19,171
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|
|
|
|
|
|
|
|
|
Select Non-Cash
Items Impacting Earnings
|
|
|
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|
|
|
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|
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Stock Compensation
Expense
|
|
|
$ 2,673
|
|
$ 2,877
|
|
|
|
|
|
|
|
|
|
Less income tax
effect
|
|
(936)
|
|
(1,007)
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|
|
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|
|
|
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|
|
Stock Compensation
Expense, net of tax
|
|
$ 1,737
|
|
$ 1,870
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding (Fully Diluted)
|
|
55,690
|
|
55,317
|
|
|
|
|
|
|
|
|
Stock Compensation
Expense Per Share (Fully Diluted)
|
|
$ 0.03
|
|
$ 0.03
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PART I — FINANCIAL INFORMATION
Item 1. Financial
Statements
FLOTEK INDUSTRIES,
INC.
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except share data)
|
|
|
September 30,
2014
|
|
December
31,
2013
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
5,257
|
|
$
|
2,730
|
Restricted
cash
|
801
|
|
—
|
Accounts receivable,
net of allowance for doubtful accounts of $645 and $872 at
September 30, 2014 and December 31, 2013,
respectively
|
69,253
|
|
65,016
|
Inventories,
net
|
81,439
|
|
63,132
|
Deferred tax assets,
net
|
2,840
|
|
2,522
|
Other current
assets
|
9,622
|
|
4,261
|
Total current
assets
|
169,212
|
|
137,661
|
Property and
equipment, net
|
83,270
|
|
79,114
|
Goodwill
|
71,131
|
|
66,271
|
Deferred tax assets,
net
|
14,090
|
|
15,012
|
Other intangible
assets, net
|
74,715
|
|
77,523
|
TOTAL
ASSETS
|
$
|
412,418
|
|
$
|
375,581
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
32,656
|
|
$
|
19,899
|
Accrued
liabilities
|
13,468
|
|
12,778
|
Income taxes
payable
|
1,018
|
|
3,361
|
Interest
payable
|
76
|
|
111
|
Current portion of
long-term debt
|
11,367
|
|
26,415
|
Total current
liabilities
|
58,585
|
|
62,564
|
Long-term debt, less
current portion
|
30,184
|
|
35,690
|
Deferred tax
liabilities, net
|
26,048
|
|
27,575
|
Total
liabilities
|
114,817
|
|
125,829
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Cumulative
convertible preferred stock, $0.0001 par value, 100,000 shares
authorized; no shares issued and outstanding
|
—
|
|
—
|
Common stock, $0.0001
par value, 80,000,000 shares authorized; 60,487,085 shares
issued and 53,938,945 shares outstanding at September 30, 2014;
58,265,911 shares issued and 51,804,078 shares outstanding at
December 31, 2013
|
6
|
|
6
|
Additional paid-in
capital
|
283,571
|
|
266,122
|
Accumulated other
comprehensive income (loss)
|
(397)
|
|
(359)
|
Retained earnings
(accumulated deficit)
|
36,489
|
|
(841)
|
Treasury stock, at
cost; 5,699,845 and 5,394,178 shares at September 30, 2014 and
December 31, 2013, respectively
|
(22,419)
|
|
(15,176)
|
Flotek Industries,
Inc. stockholders' equity
|
297,250
|
|
249,752
|
Noncontrolling
interests
|
351
|
|
—
|
Total
equity
|
297,601
|
|
249,752
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
412,418
|
|
$
|
375,581
|
FLOTEK INDUSTRIES,
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands,
except per share data)
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenue
|
$
|
116,761
|
|
$
|
98,388
|
|
$
|
324,653
|
|
$
|
270,217
|
Cost of
revenue
|
70,683
|
|
60,886
|
|
192,585
|
|
162,491
|
Gross
margin
|
46,078
|
|
37,502
|
|
132,068
|
|
107,726
|
Expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
21,499
|
|
19,542
|
|
63,924
|
|
58,640
|
Depreciation and
amortization
|
2,439
|
|
2,038
|
|
7,225
|
|
5,231
|
Research and
development
|
1,293
|
|
835
|
|
3,599
|
|
2,689
|
Total
expenses
|
25,231
|
|
22,415
|
|
74,748
|
|
66,560
|
Income from
operations
|
20,847
|
|
15,087
|
|
57,320
|
|
41,166
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
(424)
|
|
(530)
|
|
(1,259)
|
|
(1,495)
|
Other income
(expense), net
|
(87)
|
|
59
|
|
(306)
|
|
117
|
Total other income
(expense)
|
(511)
|
|
(471)
|
|
(1,565)
|
|
(1,378)
|
Income before
income taxes
|
20,336
|
|
14,616
|
|
55,755
|
|
39,788
|
Income tax
expense
|
(6,064)
|
|
(5,648)
|
|
(18,425)
|
|
(14,615)
|
Net
income
|
$
|
14,272
|
|
$
|
8,968
|
|
$
|
37,330
|
|
$
|
25,173
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
0.26
|
|
$
|
0.17
|
|
$
|
0.69
|
|
$
|
0.50
|
Diluted earnings per
common share
|
$
|
0.26
|
|
$
|
0.16
|
|
$
|
0.67
|
|
$
|
0.47
|
Weighted average
common shares:
|
|
|
|
|
|
|
|
Weighted average
common shares used in computing
basic earnings per common share
|
54,789
|
|
52,742
|
|
54,464
|
|
50,819
|
Weighted average
common shares used in computing diluted earnings per common
share
|
55,690
|
|
55,317
|
|
55,536
|
|
53,407
|
FLOTEK INDUSTRIES,
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
|
|
|
Nine months ended
September 30,
|
|
2014
|
|
2013
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
37,330
|
|
$
|
25,173
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
13,276
|
|
10,948
|
Amortization of
deferred financing costs
|
257
|
|
65
|
Accretion of debt
discount
|
—
|
|
55
|
Gain on sale of
assets
|
(2,552)
|
|
(3,452)
|
Stock compensation
expense
|
7,429
|
|
8,697
|
Deferred income tax
provision (benefit)
|
237
|
|
(315)
|
Excess tax benefit
related to share-based awards
|
(3,425)
|
|
(835)
|
Changes in current
assets and liabilities:
|
|
|
|
Restricted
cash
|
(450)
|
|
150
|
Accounts receivable,
net
|
(3,896)
|
|
(6,521)
|
Inventories
|
(18,035)
|
|
(2,055)
|
Other current
assets
|
(4,957)
|
|
259
|
Accounts
payable
|
12,617
|
|
(17,341)
|
Accrued
liabilities
|
1,019
|
|
4,931
|
Income taxes
payable
|
1,082
|
|
1,585
|
Interest
payable
|
(35)
|
|
16
|
Net cash provided by
operating activities
|
39,897
|
|
21,360
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(13,494)
|
|
(9,985)
|
Proceeds from sale of
assets
|
3,322
|
|
4,595
|
Payments for
acquisitions, net of cash acquired
|
(5,704)
|
|
(53,396)
|
Purchase of patents
and other intangible assets
|
(780)
|
|
—
|
Net cash used in
investing activities
|
(16,656)
|
|
(58,786)
|
Cash flows from
financing activities:
|
|
|
|
Repayments of
indebtedness
|
(8,506)
|
|
(9,777)
|
Proceeds of
borrowings
|
—
|
|
26,190
|
Borrowings on
revolving credit facility
|
305,750
|
|
231,696
|
Repayments on
revolving credit facility
|
(317,798)
|
|
(204,319)
|
Debt issuance
costs
|
(256)
|
|
(1,207)
|
Issuance costs of
preferred stock and detachable warrants
|
—
|
|
(200)
|
Excess tax benefit
related to share-based awards
|
3,425
|
|
835
|
Acquisition of
treasury stock related to share-based awards
|
(6,060)
|
|
(5,325)
|
Proceeds from sale of
common stock
|
763
|
|
567
|
Proceeds
from exercise of stock options
|
461
|
|
491
|
Proceeds from
exercise of stock warrants
|
1,545
|
|
323
|
Net cash (used in)
provided by financing activities
|
(20,676)
|
|
39,274
|
Effect of changes in
exchange rates on cash and cash equivalents
|
(38)
|
|
(179)
|
Net increase in cash
and cash equivalents
|
2,527
|
|
1,669
|
Cash and cash
equivalents at the beginning of period
|
2,730
|
|
2,700
|
Cash and cash
equivalents at the end of period
|
$
|
5,257
|
|
$
|
4,369
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/flotek-industries-inc-announces-third-quarter-2014-financial-and-operating-results-and-conference-call-information-398618799.html
SOURCE Flotek Industries, Inc.