Flotek Industries, Inc. Q2 FY2025 earnings call

• Segment Highlights: Data Analytics saw 452% growth in service revenues and 63% gross profit in Q2 2025. Chemistry Technologies had 38% revenue growth despite Frac fleet decline.
• Acquisitions and Contracts: Acquired 30 real-time gas monitoring and dual fuel optimization assets, secured a $156M multiyear contract for Data Analytics.
• Safety and Operations: MTI facility in Raceland, LA maintained a 10-year record with no lost time incidents, moving over 350 million pounds of dry products and 5.3 million gallons of liquid products.
• Technology Applications: PWRtek power generation solution, custody transfer with 9 commercial locations and 6 converting, VeraCal flare monitoring with nearly $1M revenue in Q2 2025.

Data Analytics Segment: Second quarter 2025 revenue rose 189% versus the second quarter of 2024, with revenue contributing 10% of total second quarter revenues (up from 4% a year ago). Service revenues increased 452% year-over-year, and gross profit was 63% in Q2 2025 vs. 30% in the same quarter a year ago. The segment acquired 30 real-time gas monitoring and dual fuel optimization assets, with 26 operating by end of July 2025 and all expected to be operating by January 1, 2026. A multiyear contract estimated to deliver $156 million in revenue was secured. Chemistry Technologies Segment: Second quarter 2025 revenue surged 38% year-over-year despite a 24% decline in average active Frac fleets.

• Revenue growth is expected, with Data Analytics driving margin and profitability expansion.
• PWRtek assets are expected to contribute over $27M in 2026 revenue.
• 2025 guidance reflects a conservative outlook for the Chemistry segment due to upstream activity uncertainties.

• Geopolitical and macroeconomic challenges causing commodities market volatility.
• Uncertainties around activity levels in the second half of 2025 affecting the completion chemistry market.

Q: Jeff Grampp asked about progress towards contracting additional PWRtek units to third parties.

A: Ryan Ezell responded that they've seen solid traction, with five customers in pilot phase, first smart filtration skid expected in next couple of weeks, and traction in rig power, grid power, and data center support.

Q: Jeff Grampp then asked about custody transfer's quantity of customers and geographies.

A: Ryan Ezell said a major E&P operator has units in virtually every U.S. major basin, 9 units commercial, 6 converting, with 8-10 customers in pilot phases.

Q: Jeff Grampp asked about PWRtek assets' 90% gross margins sustainability.

A: Bond Clement said margins are attractive and 80%-90% is a reasonable assumption going forward.

Q: Gerard Sweeney asked about size of non-ProFrac PWRtek customers.

A: Ryan Ezell said customers are split between oil & gas and energy infrastructure, with similar or bigger footprint to ProFrac.

Q: Gerard Sweeney asked about diligence difference between oil & gas and energy infrastructure customers.

A: Ryan Ezell said path to equipment on location is similar, but data centers have more refined gas processes.

Q: Gerard Sweeney asked about manufacturing capacity for PWRtek.

A: Ryan Ezell said there's plenty of backlog for Varex analyzers, with smart filtration skids in production and custody transfer units having larger enterprise deployment capabilities.

Q: Charles Fratt asked about energy infrastructure PWRtek non-ProFrac revenue timing.

A: Ryan Ezell said non-ProFrac revenue will start in Q3 2025, with acceleration in 2026.

Q: Charles Fratt asked about quantifying revenue potential per customer for PWRtek.

A: Bond Clement said rental of Varex units is less impactful, but Smart Skids could be meaningful.

Q: Charles Fratt asked about custody transfer revenue scaling.

A: Bond Clement said Q2 revenue was less than $50,000, expecting expansion with full quarters.

Q: Charles Fratt asked about chemistry business outlook.

A: Ryan Ezell said near-term softness in commodity chemicals, but strong adoption of proprietary technologies, with international business holding steady.

Q: Eric Swergold asked about sensors specs in power gen equipment.

A: Ryan Ezell said testing with top power gen manufacturers to optimize engine performance, working as a service with larger producers.

Q: Unidentified Analyst asked about data-driven ratio in chemistry revenue.

A: Ryan Ezell said data-driven part touches almost 80% of PCM business, with real-time data influencing chemistry prescriptions.

Q: Josh Jayne asked about focus on execution vs. M&A.

A: Ryan Ezell said focusing on executing with acquired assets but also selectively looking at M&A opportunities that are accretive to the business.