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Flowco Holdings Inc. (FLOC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $193.2M, Adjusted EBITDA $76.5M (39.6% margin), and diluted EPS $0.21; rentals crossed $100M for the first time, lifting mix and margins sequentially .
  • Versus S&P Global consensus, revenue modestly beat ($193.2M vs $191.2M*) while EBITDA was near consensus ($76.5M Adjusted vs EBITDA consensus $75.8M*); Primary EPS (S&P definition) materially topped the street (actual 1.26 vs 0.32*) as measured by S&P’s “Primary EPS” framework. Values retrieved from S&P Global.
  • Management guided Q3 Adjusted EBITDA to $72–$76M, citing softness in equipment sales but resilience in high‑margin rentals; Q4 expected to improve with full quarter Archrock asset contribution .
  • Board declared a $0.08 dividend again, and announced completion of a strategic acquisition of 155 HPGL/VRU systems from Archrock (immediately accretive, helps temper 2026 capex) — key stock catalysts alongside guidance and rental mix expansion .

What Went Well and What Went Wrong

  • What Went Well

    • Rentals surpassed $100M for the first time, driving margin expansion and free cash flow; CEO: “strong second-quarter results… sequential improvements in both Adjusted EBITDA and Adjusted EBITDA Margins” .
    • Strategic acquisition of 155 HPGL/VRU systems (majority electric) from Archrock is “immediately accretive” and broadens customer footprint in the Permian; integration is plug‑and‑play .
    • Liquidity strong: $496.5M revolver availability as of Aug 1; dividend maintained at $0.08, reinforcing capital return and confidence .

  • What Went Wrong

    • Natural Gas Technologies revenue fell 14.9% q/q on weaker natural gas systems sales, although margin improved on favorable rental mix .
    • Production Solutions margin fell 202 bps q/q on lower sales gross margin despite higher revenue and operating leverage .
    • Management flagged moderating activity across customers and expects a sequential decline in Q3 product sales (VRUs, conventional gas lift packages; downhole components flat to slightly down) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$93.208 $192.350 $193.215
Rentals Revenue ($USD Millions)$51.579 $97.296 $102.104
Sales Revenue ($USD Millions)$41.629 $95.054 $91.111
Net Income ($USD Millions)$20.082 $27.045 $27.352
Adjusted Net Income ($USD Millions)$20.348 $32.769 $32.998
Adjusted EBITDA ($USD Millions)$40.236 $74.901 $76.488
Adjusted EBITDA Margin (%)43.2% 38.9% 39.6%
Diluted EPS ($USD)—$0.24 $0.21
SegmentMetricQ2 2024Q1 2025Q2 2025
Production SolutionsRevenue ($USD Millions)$56.626 $115.992 $128.245
Adjusted Segment EBITDA ($USD Millions)$32.684 $50.590 $53.343
Adjusted Segment EBITDA Margin (%)57.7% 43.6% 41.6%
Natural Gas TechnologiesRevenue ($USD Millions)$36.582 $76.358 $64.970
Adjusted Segment EBITDA ($USD Millions)$7.535 $28.662 $27.397
Adjusted Segment EBITDA Margin (%)20.6% 37.5% 42.2%
CorporateAdjusted Segment EBITDA ($USD Millions)$0.017 $(4.351) $(4.252)
KPIQ2 2024Q1 2025Q2 2025
Rentals Mix (% of Revenue)55.3% 50.6% 52.9%
Dividend per Share ($USD)—$0.08 $0.08
Revolver Availability ($USD Millions)—$547.4 (as of May 9) $496.5 (as of Aug 1)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)Q2 2025$74–$78 Actual delivered $76.5 Achieved within range
Adjusted EBITDA ($USD Millions)Q3 2025—$72–$76 New range introduced
Adjusted EBITDA Growth (YoY)FY 2025Low double-digit YoY growth expected “Finish close to the range” notwithstanding Q3 sales softness Maintained narrative
Corporate CostsH2 2025Buildout ongoing Slight increase expected in H2 Raised modestly
DividendQ2/Q3 2025$0.08 (Q1 declaration) $0.08 declared Aug 1 Maintained
Growth CapexFY 2025~$110M program “Come inside” prior plan given Archrock deal Lower vs prior
Maintenance CapexFY 2026~$20M baseline Slightly north of $20M as fleet grows Raised slightly
Capex OutlookFY 2026—Lower growth capex vs 2025 (tempered by Archrock assets) Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Rental mix and marginsMix shift to rentals; margin expansion on vapor recovery Rentals trending to “low‑mid 50%” by year-end; ~70% rental margins focus Rentals >$100M; margin up sequentially; continued mix lift Positive
HPGL adoption vs ESPsMarket leadership; technology development; multi‑well/e‑Grizzly Customers leaning in; tariff noise helps HPGL case Strong adoption; Archrock assets broaden footprint Positive
VRU demand and midstreamVRU strength driving NG Tech margins LNG/power demand improving nat gas outlook; midstream interest emerging Midstream pilots sold; constructive discussions continue Positive
Tariffs/supply chainVertically integrated, domestic sourcing advantage Minimal tariff exposure; domestic vendor (Ariel) “Minimal impact” from tariffs; electrification trend supportive Stable/defensive
Macro/Permian activity2024 growth in flat production environment Expect Q2 uncertainty; maintain EBITDA guidance Softer sales; privates moderating faster; rentals offset Mixed
Capital allocationROCE ~20% in Q4 ROCE ~18%; steady dividend; potential buyback later ~$46M FCF; Archrock accretive; dividend maintained Positive

Management Commentary

  • CEO: “Flowco delivered strong second-quarter results, with sequential improvements in both Adjusted EBITDA and Adjusted EBITDA Margins, while generating robust free cash flow.”
  • CEO on Archrock deal: “100% of these systems are electric… supported by contracts with new and existing blue chip customers in the Permian Basin… immediately accretive” .
  • CFO: “Quarterly rental revenues exceeded $100,000,000 in the second quarter for the first time ever… Adjusted EBITDA margins were up 65 bps as rental revenue represented an increased portion of our revenue mix.” .
  • CEO on macro: “Operators are further moderating activity… we’re seeing a continued emphasis on production optimization… driving steady demand” .
  • CFO: “We anticipate… benefit from restoration of 100% bonus depreciation for certain fixed assets.” .

Q&A Highlights

  • Acquisition integration and competitiveness: Management emphasized HPGL leadership, electric drive benefits, new customers, and idle units ready for deployment; expects low single‑digit EPS accretion and tempered 2026 capex due to deal .
  • Q3 guardrails: Rentals expected up; sales of VRU/compression packages down ~10% sequentially; downhole components flat; EBITDA guided $72–$76M .
  • Permian dynamics: Privates cutting activity faster than publics; consolidation moderates response among majors; rentals help maintain production .
  • Capex framework: 2025 growth capex “inside” ~$110M; 2026 lower; maintenance capex slightly north of ~$20M with fleet growth .
  • Midstream VRU: Sold “few dozen” small VRUs; pipeline for larger deployments with household‑name midstream operators .

Estimates Context

MetricQ1 2025Q2 2025
Revenue Consensus Mean ($USD)$198.7M*$191.2M*
Revenue Actual ($USD)$192.35M*$193.22M*
Revenue Surprise ($USD)$(6.35)M*+$2.0M*
Primary EPS Consensus Mean ($USD)$0.316*$0.323*
Primary EPS Actual ($USD)$0.454*$1.260*
Primary EPS Surprise ($USD)+$0.138*+$0.937*
EBITDA Consensus Mean ($USD)$76.51M*$75.84M*
EBITDA Actual ($USD)$69.40M*$70.35M*
EBITDA Surprise ($USD)$(7.11)M*$(5.49)M*

Values retrieved from S&P Global.
Note: Company emphasizes Adjusted EBITDA ($74.9M in Q1; $76.5M in Q2), which differs from S&P’s EBITDA definition .

Key Takeaways for Investors

  • Mix tailwind: Rentals surpassed $100M, lifting margins; expect rentals to “bleed higher” as % of revenue, offsetting sales softness .
  • Guidance reset near‑term: Q3 Adjusted EBITDA $72–$76M on weaker equipment sales; Q4 improvement expected with full quarter Archrock contribution .
  • Strategic M&A: Archrock assets immediately accretive to EPS/FCF, temper 2026 growth capex, and deepen electric fleet/customer relationships .
  • Capital returns intact: $0.08 dividend maintained; liquidity robust ($496.5M availability), supporting balanced growth and returns .
  • Defensive positioning: Domestic, vertically integrated supply chain minimizes tariff risk; electrification (e‑Grizzly) and HPGL leadership sustain share gains vs ESPs .
  • Segment pivot: Natural Gas Technologies sales softer, but margins up on rental mix; Production Solutions revenue up, margins down on mix — watch Q3 sales trajectory .
  • Actionable setup: Trade around guidance cadence and Archrock integration milestones; medium‑term thesis rests on rental mix expansion, HPGL/VRU adoption, and disciplined capital allocation .
## Appendix: Additional Data Points
- Free cash flow: “~$46M” in Q2, per management commentary **[2035149_2054699_1]**.
- Capex: ~$35.8M invested in Q2, focused on rentals; Q1 capex ~$27.9M **[2035149_2054699_3]** **[2035149_FLOC_3427896_3]**.
- ROCE: ~18% (Q1/Q2), ~20% in Q4 2024, highlighting capital efficiency **[2035149_FLOC_3427896_3]** **[2035149_2054699_3]** **[2035149_0000950170-25-041492_floc-ex99_2.htm:4]**.
- Balance sheet: Long‑term debt moved materially lower post‑IPO; revolver outstanding $226.6M as of Aug 1; borrowing base $723.1M **[2035149_0000950170-25-102358_floc-ex99_1.htm:5]** **[2035149_0000950170-25-102358_floc-ex99_1.htm:2]**.

## Non‑GAAP Notes
- Adjusted Net Income, Adjusted EBITDA, and Adjusted Segment EBITDA/Margins are non‑GAAP; reconciliations provided in the press release and 8‑K exhibits **[2035149_0000950170-25-102358_floc-ex99_1.htm:7]** **[2035149_0000950170-25-102358_floc-ex99_1.htm:8]** **[2035149_0000950170-25-102358_floc-ex99_1.htm:9]**.