FLOTEK INDUSTRIES INC/CN/ Q4 FY2024 earnings call

• Q4 2024 total revenues rose 20% versus Q4 2023, led by a 21% jump in external customer revenue. Net income was $4.4 million and adjusted EBITDA was $7 million, up 111% and 78% respectively versus Q4 2023. Full year 2024 adjusted EBITDA reached $20.3 million, exceeding the guidance of $18.5 million by 10%.
• Key data analytics products: Vericel flare monitoring had 13 units in rental service and 2 sold in Q4 2024; Expect custody transfer use cases were 27% higher than the prior quarter; power generation units expanded to 15 active with 9 committed for 2025 delivery.
• SG&A costs declined 11% in 2024, net income in 2024 was $10.5 million or $0.34 per diluted share, contrasting with a net loss in 2023.

For the chemistry segment, Q4 2024 total chemistry revenues grew 18% versus Q4 2023. External customer chemistry revenue increased by 17% and related party chemistry revenue by 19% compared to the year-ago quarter. In the data analytics segment, revenue grew 74% versus Q4 2023, with service revenue up 124% year-over-year. Q4 2024 service revenue for data analytics was $1.6 million, the highest quarterly amount since the acquisition in 2020. Service revenue made up 46% of total data analytics revenue in 2024, compared to 35% in 2023.

• 2025 guidance to be issued in connection with first quarter results. 2024 adjusted EBITDA exceeded the top end of the guidance range.

• Forward-looking statements are subject to risks and uncertainties beyond control, which can cause actual results to differ materially from expectations. EPA regulations and potential delays impacted flare monitoring revenues in Q4 2024.

Q: Was curious to dig into international revenue growth, margins, and EPA impact A: Ryan Ezell discussed international strategy with growth in Saudi and UAE, Bond Clement mentioned international chemistry was ~$4.5M in Q4 and ~$9.2M in 2024. Ryan talked about margins from value-add technologies and EPA regulations delaying activity but major players continuing growth.

Q: Concerned about international pullback and data analytics products A: Ryan Ezell said international business helps smooth Q1 lumpiness. Donald Crist asked about data analytics products: Expect custody transfer monitors hydrocarbon quality, Vericel is for flare monitoring, Raman technology has exclusive agreement for field use.

Q: Inquired about data analytics milestones and North America outlook A: Ryan Ezell spoke about continuing to grow flare monitoring units, acceleration of custody transfer and power gen solutions in later 2025, and North America chemistry benefits in gas basins with prescriptive chemistry.

Q: Asked about North America oil/gas budgets and external customer growth A: Ryan Ezell discussed North America market dynamics, diversification of revenue streams, and success in prescriptive/predictive chemistry management providing ROI to customers.

Q: Followed up on working capital and data analytics capex A: Bond Clement said working capital expected to unwind in Q1, and data analytics capex will be more in 2025 but specific details not given