Flotek Industries, Inc. Q3 FY2025 earnings call

• Flotek extended its track record of transforming into a Data - as - a - Service business model, achieving 12 consecutive quarters of adjusted EBITDA improvement. - Data Analytics segment saw service revenues increase 625% in Q3 2025 versus Q3 2024, with gross profit for Data Analytics segment rising to 71% in Q3 2025. The XSPCT analyzer was the first optical spectrometer to comply with oil and gas custody transfer standards known as GPA 2172. - Chemistry Technologies segment continued to deliver robust performance, with total chemistry revenues up 17% year - to - date and external chemistry revenues up 54% despite a decline in active frac fleets. PWRtek assets contributed $6.1 million in revenues during the quarter, driving a 50% sequential increase in data analytics revenue, and 2026 revenues from PWRtek are expected to be north of $27 million.

Data Analytics segment: In the third quarter of 2025, service revenues increased 625% versus Q3 2024, with gross profit reaching 71% in Q3 2025 compared to 44% in the same quarter a year ago. Data analytics revenue rose 232% versus Q3 2024, and Data Analytics segment revenue represented 16% of total company revenue in the third quarter, up from 5% in the year - ago quarter. Chemistry Technologies segment: Total chemistry revenues were flat versus the 2024 quarter on a quarterly basis, but on a year - to - date basis, total chemistry sales were up 17% from last year. External chemistry revenues grew 54% during the three months ended in 2025 versus the same period in 2024, despite a 24% decline in active frac fleets during the same period.

• The midpoint of the revised guidance implies 2025 revenue growth of 19% and adjusted EBITDA growth of 85% compared to last year. The adjusted EBITDA margin for 2025 is expected to be 17% compared to 11% in 2024. - It is expected that the Data Analytics segment will contribute to over half of the company's profitability in 2026. Flotek continues to secure long - term contracts for both the Chemistry Technologies and Data Analytics segments, bolstering confidence in stable revenue and profitability.

Forward - looking statements are subject to a number of risks and uncertainties, many of which are beyond the company's control. These risks and uncertainties can cause actual results to differ materially from those projected in forward - looking statements. Listeners are advised to review the earnings release and most recent 10 - K and 10 - Q filings for a more complete description of risk factors that could cause actual results to materially differ from those projected in forward - looking statements.

Q: Jeffrey Grampp wanted to know about the cadence of the ramp for digital valuation, including the goal to get to 25 units to 35 units by year - end and over 200 installations in the pipeline.

A: Ryan Ezell said pilot phases are complete, now in commercial phase, with multiple unit deployment starting in Q4 and rolling into 2026. Pilot phases are complete, full commercialization has occurred, manufacturing has been increased, and final terms are being worked out for customer rollout.

Q: Gerry Sweeney asked about the projected revenue for PWRtek in 2026.

A: Bond Clement said it's $27.4 million next year and for each of the next 5 years or so, and this excludes non - PWRtek power services mentioned earlier.

Q: Donald Crist asked about the international chemicals side, specifically regarding the big contract with Saudi and Flotek's participation.

A: Ryan Ezell said head teams are in Saudi to discuss business expansion, international revenues year - to - date are up 122%, and expect business to pick up in the back half of Q4 and heavily in 2026.

Q: Joshua Jayne asked about XSPCT's cost and efficiency gains and the chemistry business outlook.

A: Ryan Ezell said XSPCT provides real - time analysis every 15 seconds, improving measurement quality, accuracy, resolution, and reducing cost by around 50%. For the chemistry business, there's room to grow with efforts in stabilizing revenue streams, international opportunities like in the Middle East, and domestic opportunities as operators seek efficiency and maximum ROI.

Q: Unknown Analyst asked about projected additional PWRtek units in 2026 and tax - related questions.

A: Ryan Ezell said no specific guidance yet but goal is to double the paired fleet by the end of 2026, and the company will go back to a more normalized tax rate, likely around 20%. Regarding the chemistry shortfall penalty, there's a deferred liability and it will be offset against the PWRtek acquisition price in part.

Q: Joichi Sakai asked about data analytics gross margin normalization and payment delays in external chemistry.

A: Ryan Ezell said if PWRtek is a meaningful part of 2026 revenue, it will drive weighted average gross margins higher, likely closer to 80%. North America land customers have relatively low DSOs, but international customers, especially in the Middle East, pay a bit slower due to extended payment terms from major entities there.