HOUSTON, May 10, 2021 /PRNewswire/ -- Flotek Industries,
Inc. ("Flotek" or the "Company") (NYSE: FTK) today announced
results for the first three months ended March 31, 2021.
John W. Gibson, Jr., Chairman,
President, and Chief Executive Officer stated: "While we
experienced a slow start to the quarter due to the continued
challenging macro-environment and impacts of Winter Storm Uri, we are pleased with our
progress through the quarter as demand significantly increased
across both segments towards the end of the quarter and continued
into this quarter. We are excited about the momentum we have and
are optimistic about our opportunities for growth across our
business as the market continues its recovery in the latter half of
the year.
"We are accelerating our ESG solutions, which we believe will be
a key growth driver as the energy market increases its focus on ESG
amid an evolving regulatory framework. Over the years, we have
built a leading position as a developer of green chemistry
solutions, and we are delivering our suite of greener chemistry and
data solutions to meet our customers' evolving needs today.
Additionally, we continue to see significant opportunities in
international markets and are optimistic about the momentum we are
gaining in key growth markets. Lastly, we are strengthening our
liquidity to improve our financial flexibility. As a result of
these actions, we continue to be confident in our long-term
strategy, and I look forward to working with our outstanding
leadership team to further improve operational and financial
performance."
First Quarter Financial Results
- Consolidated Revenues: Flotek generated first quarter
2021 consolidated revenue of $11.8
million, down 2.8% from $12.1
million in the fourth quarter, and below $19.4 million in the first quarter last year. The
year-over-year decrease in revenue was driven by trends in the
macro-environment for U.S. onshore drilling and completion activity
and the COVID-19 pandemic continues to pressure productivity and
global customer demand.
- Consolidated Operating Expenses: Consolidated operating
expenses (excluding depreciation and amortization) were
$13.8 million in the first quarter
2021, a 39.6% decline from $22.8
million in the same period last year and a 43.3% decline
from the prior quarter. The year-over-year decline was driven by a
reduction in costs of sales due to lower sales, as well as lower
operating expense driven by consolidation of corporate facilities,
reduction of equipment rentals, lowered personnel costs and supply
chain expenses.
- Corporate General & Administrative Expenses
(CG&A): Corporate general and administrative expenses for
the first quarter of 2021 were $4.4
million, compared to $4.5
million for the first quarter of 2020 and $3.7 million for the fourth quarter of 2020. The
year-over-year decline was primarily driven by lower personnel and
severance costs that occurred in the first quarter 2020, as well as
a reduction in occupancy costs as the Company moved out of its
corporate headquarters and consolidated its Global Research &
Innovation Center. The sequential increase was primarily driven by
an increase in one-time legal, accounting and other professional
fees, offset by a decrease in compensation.
- Adjusted EBITDA: Adjusted EBITDA for the first quarter
2021 was a loss of $6.6 million,
slightly below the $6.8 million loss
in the fourth quarter of 2020, driven by an increase in one-time
professional fees, offset by lower compensation.
- Loss from Operations: The Company reported a loss from
operations for the first quarter 2021 of $8.3 million, or a loss of $0.12 per basic/diluted share, compared to a loss
from operations in the first quarter 2020 of $64.0 million, or a loss of $1.07 per basic/diluted share which included a
non-recurring charge of $57.5 million
related to the impairment of property, plant, and equipment,
right-of-use assets, and intangible assets.
Balance Sheet and Liquidity
As of March 31, 2021, the Company
had cash and equivalents of $33.9
million, with significant year-over-year improvements in
cash usage driven by operational efficiencies across the business.
Flotek also had a combined $5.7
million of loans outstanding pursuant to the Paycheck
Protection Program ("PPP") related to the "Cares Act."
Chemistry Technologies Segment: Energy Chemistries &
Professional Chemistries
In the first quarter, sales in the Chemistry Technologies
segment declined sequentially 5.0% to $10.3
million. The decrease was primarily a result of continued
market volatility in the macro-environment impacting energy supply
and major disruption in February from Winter Storm Uri, impacting the entire supply
chain. The segment experienced notable pickup in March as demand
significantly increased. Highlights from the quarter include:
- Despite the winter storm in February, the Company saw a rebound
in its domestic energy chemistries business, up 56%, on a
sequential basis. Internationally, following headwinds in market
activity and purchasing delays, the Company regained traction
towards the end of the quarter.
- The Company engaged with C-Suite leaders at E&Ps to
reintroduce the Company's Environmental, Social and
Governance-focused (ESG) value proposition to deliver
cost-effective, environmentally friendly, safer chemistry
solutions.
- In the quarter, the Company initiated key field trial
applications for its green, reservoir-centric chemistry
technologies.
- The Company hired Nathan Snoke
as Vice President of Energy Chemistries. A global leader in
differentiated oilfield services, Snoke joins the Company from
Halliburton, where he was most recently Senior Region Manager of
Europe, Eurasia, and Sub-Sahara
Africa, based in London. Nathan
brings more than 16 years of oil and gas experience to Flotek,
ranging from field operations to senior-level management across
multiple continents.
- In the first quarter, Flotek launched its new professional
chemistries brand, Flotek Protekol™, which includes a comprehensive
line of surface cleaners, degreasers, wipes, disinfectants and
sanitizers made in the USA.
- Flotek formed a strategic agreement with a major global
manufacturer of specialty and intermediate chemicals in the first
quarter to produce and package EPA-registered disinfectant
wipes.
- The Company hired Matthew
Sullivan as Vice President of Professional Chemistries to
lead business development. Sullivan has more 30 years of janitorial
and sanitizing sales and marketing expertise, including
Georgia-Pacific, Clorox,
Kimberly Clark and Scott
Worldwide.
Data Analytics Segment
In the first quarter, Data Analytics' sales improved 16.7%
sequentially to $1.5 million,
primarily driven by an increase in new equipment sales in
North America. Flotek continued to
enhance its offerings and increase its efficiency in delivering
solutions, while targeting new customers and markets to transform
their businesses through real-time data and analytics. Highlights
include:
- Added new customers and increased repeat purchases from
existing customers, demonstrating the value JP3 delivers to its
customers with the multi-applications of its technologies.
- Made progress on its international market entry strategy by
continuing meaningful engagement with potential customers in the
Middle East, Africa and Asia. During the first quarter, Flotek secured
its second pilot in the Middle
East and completed its site survey with its first
international pilot.
- Implemented software development enhancements by accelerating
Artificial Intelligence ("AI") and machine learning capabilities,
improving the precision of measurement between batches of refined
hydrocarbon products – reducing time, waste and money spent. During
the first quarter, the company launched its first application using
AI in batch interface for pipelines and successfully installed the
application in two locations.
- Accelerated discussions with customers on its "green benefits"
portfolio of applications which helps companies reduce their carbon
footprint, energy consumption and emissions. The Company will
continue to help customers improve their ESG performance through
its JP3 product offerings.
Termination of Agreement with Florida Chemical
Company
As previously disclosed in an 8-K filing on March 29, 2021, Flotek Chemistry, LLC, a
wholly-owned subsidiary of Flotek, delivered a notice of
termination for the Supply Agreement between Flotek and Florida
Chemical Company, LLC (FCC) dated February
28, 2019 following Florida Chemical's refusal to allow
Flotek to exercise its contractual rights to audit the books and
records related to the cost of terpene purchased. Flotek believes
it has sufficient terpene inventory and alternative terpene supply
sources to meet its requirements and does not intend to purchase
additional supplies of terpene from FCC.
Going forward, the Company's supply management strategy will
align terpene purchases with its demand and does not expect that
the termination of the Supply Agreement will have a material effect
on its operations or ability to meet customer needs.
Conference Call Details
Flotek will host a conference call on Tuesday, May 11, 2021, at 9:00 am CDT (10:00 a.m.
EDT) to discuss its first quarter results ended March 31, 2021. To participate in the call,
participants should dial 844-835-9986 approximately five 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 Industries, Inc. is a technology-driven, specialty
chemistry and data company that helps customers across industrial,
commercial and consumer markets improve their Environmental, Social
and Governance performance. Flotek's Chemistry Technologies segment
develops, manufactures, packages, distributes, delivers, and
markets high-quality cleaning, disinfecting and sanitizing products
for commercial, governmental and personal consumer use.
Additionally, Flotek empowers the energy industry to maximize the
value of their hydrocarbon streams and improve return on invested
capital through its real-time data platforms and green chemistry
technologies. Flotek serves downstream, midstream and upstream
customers, both domestic and international. Flotek 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 will, continue, 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. Further information about the
risks and uncertainties that may impact the Company are set forth
in the Company's most recent filing with the Securities and
Exchange Commission on Form 10-K (including, without limitation, in
the "Risk Factors" section thereof), 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.
Flotek Industries,
Inc.
|
Unaudited
Condensed Consolidated Balance Sheets
|
(in thousands,
except share data)
|
|
|
|
|
|
March 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
33,945
|
|
$
38,660
|
Restricted
cash
|
40
|
|
664
|
Accounts receivable,
net of allowance for doubtful accounts of $1,320
and $1,316 at March 31, 2021 and December
31, 2020, respectively
|
11,522
|
|
11,764
|
Inventories,
net
|
11,616
|
|
11,837
|
Income taxes
receivable
|
53
|
|
403
|
Other current
assets
|
2,179
|
|
3,127
|
Assets held for
sale
|
546
|
|
—
|
Total current
assets
|
59,901
|
|
66,455
|
Property and
equipment, net
|
8,258
|
|
9,087
|
Operating lease
right-of-use assets
|
2,217
|
|
2,320
|
Goodwill
|
8,092
|
|
8,092
|
Deferred tax assets,
net
|
220
|
|
223
|
Other long-term
assets
|
29
|
|
33
|
TOTAL
ASSETS
|
$
78,717
|
|
$
86,210
|
LIABILITIES AND
STOCKHOLDERS' & EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
6,483
|
|
$
5,787
|
Accrued
liabilities
|
17,931
|
|
18,275
|
Income taxes
payable
|
20
|
|
21
|
Interest
payable
|
46
|
|
34
|
Current portion of
operating lease liabilities
|
597
|
|
636
|
Current portion of
finance lease liabilities
|
61
|
|
60
|
Current portion of
long-term debt
|
5,023
|
|
4,048
|
Total current
liabilities
|
30,161
|
|
28,861
|
Deferred revenue,
long-term
|
104
|
|
117
|
Long-term operating
lease liabilities
|
8,099
|
|
8,348
|
Long-term finance
lease liabilities
|
80
|
|
96
|
Long-term
debt
|
642
|
|
1,617
|
TOTAL
LIABILITIES
|
39,086
|
|
39,039
|
Stockholders'
Equity:
|
|
|
|
Common stock, $0.0001
par value, 140,000,000 shares authorized; 78,275,814
shares issued and 72,702,298 shares
outstanding at March 31, 2021; 78,669,414 shares issued and 73,088,494 shares
outstanding at December 31, 2020
|
8
|
|
8
|
Additional paid-in
capital
|
360,537
|
|
359,721
|
Accumulated other
comprehensive income (loss)
|
30
|
|
(19)
|
Accumulated
deficit
|
(286,988)
|
|
(278,688)
|
Treasury stock, at
cost; 5,573,516 and 5,580,920 shares at March 31, 2021
and December 31, 2020,
respectively
|
(33,956)
|
|
(33,851)
|
Total stockholders'
equity
|
39,631
|
|
47,171
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
78,717
|
|
$
86,210
|
Flotek Industries,
Inc.
|
Unaudited
Condensed Consolidated Statements of Operations
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
3/31/2021
|
|
3/31/2020
|
|
12/31/2020
|
|
|
|
|
|
|
|
|
Revenue
|
$
11,770
|
|
$
19,416
|
|
$
12,106
|
|
Costs and
expenses:
|
|
|
|
|
|
|
Operating expenses
(excluding depreciation and amortization)
|
13,801
|
|
22,841
|
|
24,327
|
|
Corporate general and
administrative
|
4,361
|
|
4,493
|
|
3,744
|
|
Depreciation and
amortization
|
307
|
|
2,191
|
|
235
|
|
Research and
development
|
1,542
|
|
2,555
|
|
1,540
|
|
Loss (gain) on
disposal of long-lived assets
|
2
|
|
(33)
|
|
(2)
|
|
Impairment of fixed,
long-lived and intangible assets
|
-
|
|
57,454
|
|
-
|
|
Total costs and
expenses
|
20,013
|
|
89,501
|
|
29,844
|
|
Loss from
operations
|
(8,243)
|
|
(70,085)
|
|
(17,738)
|
|
Other (expense)
income:
|
|
|
|
|
|
|
Interest
expense
|
(18)
|
|
(4)
|
|
(20)
|
|
Other (expense)
income, net
|
(33)
|
|
(47)
|
|
179
|
|
Total other (expense)
income, net
|
(51)
|
|
(51)
|
|
159
|
|
Loss before income
taxes
|
(8,294)
|
|
(70,136)
|
|
(17,579)
|
|
Income tax (expense)
benefit
|
(6)
|
|
6,169
|
|
(102)
|
|
Net
loss
|
(8,300)
|
|
(63,967)
|
|
(17,681)
|
|
|
|
|
|
|
|
|
Loss per common
share:
|
|
|
|
|
|
|
Basic
|
$
(0.12)
|
|
$
(1.07)
|
|
$
(0.26)
|
|
Diluted
|
$
(0.12)
|
|
$
(1.07)
|
|
$
(0.26)
|
|
Weighted average
common shares:
|
|
|
|
|
|
|
Weighted average
common shares used in computing basic and diluted loss per common
share
|
68,447
|
|
59,836
|
|
67,586
|
|
Flotek Industries,
Inc.
|
Unaudited
Condensed Consolidated Statements of Cash Flows
|
(in
thousands)
|
|
Three months ended
March 31,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
(8,300)
|
|
$
(63,967)
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
Change in fair value of contingent consideration
|
(335)
|
|
-
|
Depreciation and amortization
|
307
|
|
2,191
|
Provision for doubtful accounts
|
-
|
|
597
|
Provision for excess and obsolete inventory
|
307
|
|
529
|
Impairment of right-of-use assets
|
-
|
|
7,434
|
Impairment of fixed assets
|
-
|
|
30,178
|
Impairment of intangible assets
|
-
|
|
19,842
|
Loss (gain) on sale of assets
|
2
|
|
(33)
|
Non-cash lease expense
|
105
|
|
184
|
Stock compensation expense
|
778
|
|
462
|
Deferred income tax provision (benefit)
|
2
|
|
(133)
|
Changes in current assets and liabilities:
|
|
|
|
Accounts receivable, net
|
255
|
|
1,675
|
Inventories, net
|
(78)
|
|
4,793
|
Income taxes receivable
|
267
|
|
(6,212)
|
Other current assets
|
405
|
|
3,645
|
Other long-term assets
|
541
|
|
-
|
Accounts payable
|
695
|
|
(7,666)
|
Accrued liabilities
|
(317)
|
|
(17,522)
|
Income taxes payable
|
89
|
|
226
|
Interest payable
|
12
|
|
-
|
Net cash used in operating
activities
|
(5,265)
|
|
(23,777)
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(19)
|
|
(42)
|
Proceeds from sale of
business
|
-
|
|
3,281
|
Proceeds from sale of
assets
|
2
|
|
34
|
Abandonment of
patents and other intangible assets
|
-
|
|
49
|
Net cash (used in) provided
by investing activities
|
(17)
|
|
3,322
|
Cash flows from
financing activities:
|
|
|
|
Purchase of treasury
stock
|
(105)
|
|
(45)
|
Proceeds from sale of
common stock
|
38
|
|
349
|
Payments for finance
leases
|
(14)
|
|
(51)
|
Net cash (used in) provided
by financing activities
|
(81)
|
|
253
|
Effect of changes
in exchange rates on cash and cash equivalents
|
23
|
|
(109)
|
Net change in
cash, cash equivalents and restricted cash
|
(5,340)
|
|
(20,311)
|
Cash and cash equivalents at
beginning of period
|
38,660
|
|
100,575
|
Restricted cash at beginning
of period
|
664
|
|
663
|
Cash and cash
equivalents and restricted cash at beginning of
period
|
39,324
|
|
101,238
|
Cash and cash equivalents at
end of period
|
33,945
|
|
80,263
|
Restricted cash at the end
of period
|
40
|
|
664
|
Cash, cash
equivalents and restricted cash at end of period
|
$
33,985
|
|
$
80,927
|
Flotek Industries,
Inc.
|
Unaudited
Reconciliation of Non-GAAP Items and Non-Cash Items Impacting
Earnings
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
GAAP Loss from
Operations and Reconciliation to Adjusted EBITDA
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
3/31/2021
|
|
3/31/2020
|
|
12/31/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
Operations (GAAP)
|
|
$
(8,300)
|
|
$ (63,967)
|
|
$
(17,681)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
18
|
|
4
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Income
|
|
(5)
|
|
(269)
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Benefit
(Expense)
|
|
6
|
|
(6,169)
|
|
102
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
307
|
|
2,191
|
|
235
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of Fixed
and Long Lived Assets
|
|
-
|
|
57,454
|
|
-
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(Non-GAAP)
|
|
$
(7,974)
|
|
$ (10,756)
|
|
$
(17,334)
|
|
|
|
|
|
|
|
|
|
|
|
Stock Compensation
Expense
|
|
738
|
|
462
|
|
833
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
Retirement
|
|
33
|
|
1,538
|
|
334
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
Write-Down
|
|
-
|
|
2,293
|
|
9,436
|
|
|
|
|
|
|
|
|
|
|
|
M&A Transaction
Costs
|
|
(157)
|
|
-
|
|
(366)
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
Step-Up
|
|
48
|
|
-
|
|
108
|
|
|
|
|
|
|
|
|
|
|
|
(Gain) loss on
Disposal of Assets
|
|
2
|
|
(33)
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
COVID-19 Related
Costs
|
|
-
|
|
-
|
|
202
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued Legal
Fees
|
|
518
|
|
249
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Winter Storm (Natural
Disaster)
|
|
199
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
(6,593)
|
|
$
(6,247)
|
|
$
(6,787)
|
|
|
(1) Management
believes that adjusted EBITDA for the three months ended March 31,
2021 and March 31, 2020, and the three months ended December 31,
2020, is useful to investors to assess and understand operating
performance, especially when comparing those results with previous
and subsequent periods. Management views the expenses noted above
to be outside of the Company's normal operating results. Management
analyzes operating results without the impact of the above items as
an indicator of performance, to identify underlying trends in the
business and cash flow from continuing operations, and to establish
operational goals.
|
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multimedia:http://www.prnewswire.com/news-releases/flotek-announces-first-quarter-2021-results-301288051.html
SOURCE Flotek Industries, Inc.