Flotek Industries announces first quarter financial results

Flotek Industries, Inc. in conjunction with its presentation at the Independent Petroleum Association of America, announced preliminary, select financial results for the quarter ended 31 March 2015. ??

First Quarter Preliminary, Select Financial Results?

While still finalising financial results for the quarter ended 31 March 2015, Flotek believes that revenue in the first quarter will exceed US$82 million. ??

“The rapid deceleration in commodity prices and resulting evisceration in oilfield activity had a marked impact on Flotek’s results in the first quarter,” said John Chisholm, Chairman, President and Chief Executive Officer of Flotek. “As we noted at our February analyst meeting, we expect the first half of 2015 to be sloppy and the first quarter didn’t disappoint in that regard. The decline in revenue approximated the decline in overall oilfield activity which was much more pronounced than nearly anyone would have expected. That said, we have been through industry cycles before and are well positioned to weather the tumult of the trough and emerge as a leader in oilfield technology, with a solid balance sheet and financial position to take advantage of opportunities as the industry emerges from the depths of the current cycle.”??

Flotek anticipates enterprise-wide gross margins should exceed 32% in the first quarter, largely a result of a weaker pricing environment. The company is actively working with suppliers to reduce input costs and believes cost reductions will partially offset margin erosion in the coming quarter.

For the three months ended 31 March 2015, Flotek expects to report a net loss of approximately US$1.5 million or US$.03 per share on a fully diluted basis. A portion of the loss is the result of one-time items that will be discussed in more detail in the company’s upcoming quarterly report and conference call. ?

Flotek expects first quarter Earnings Before Interest Taxes Depreciation and Amortization, or EBITDA, a non-GAAP measure of financial performance, is expected to be over US$3 million.

In the first quarter, Flotek generated over US$6 million in cash flow from operations, net of a US$5 million payment of 2014 employee incentive awards and US$4 million in seasonal inventory build within the Consumer and Industrial Chemistry Technologies segment. Adjusting for these items, the company generated over US$1 million per week during the first quarter, consistent with its historical cash generation profile.

Operating cash flows and proceeds from routine asset sales were utilized to fund capital expenditures of just under US$6 million and the acquisition of essentially all of the assets or International Hydralift LLC. Capital expenditures were largely focused on completion of projects initiated in 2014.??

During the quarter Flotek repurchased 180 190 shares of its common stock at an average price of US$14.71 per share for an aggregate total of approximately US$2.7 million. The repurchase was made pursuant to a US$25 million share repurchase program authorized by the Company’s Board of Directors in November, 2012.??

Cash balances increased by over US$1 million during the first quarter of 2015.??

Despite the deteriorating economic conditions, the Company’s receivable days sales outstanding remained within historical ranges at 61 days. Flotek continues to keep a close eye on customer payment habits, particularly among smaller North American customers; however during the first quarter the Company did not experience any significant deterioration in customer payment habits. ??

“While we aren’t satisfied with our performance in the first quarter, we believe Flotek remains positioned to take advantage of opportunities along the cyclical continuum,” concluded Chisholm. “While we can’t control the timing or magnitude of cyclical challenges, we can be nimble enough to adjust and remain opportunistic, focus on our core business and make certain our cash generation and balance sheet remain key priorities. By doing so, we ensure the best possible outcome in a challenging environment.”?

“On the chemistry front, we continue to see new validation opportunities and are working with over 40 companies in various stages of validation projects in North America,” added Chisholm. “While activity and pricing has moderated for all products, we have been pleased by the continued strength in chemistry inquiries and validation projects.”??

Adapted from press release by Joseph Green

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/22042015/flotek-first-quarter-financial-results-839/