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FLOTEK INDUSTRIES INC/CN/ (FTK)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered double‑digit top-line growth and material margin expansion: revenue $56.031M (+13% y/y), gross profit $17.783M (+95% y/y) and gross margin 32% (vs 18% y/y), driven by a surge in high‑margin Data Analytics and PWRtek rental revenues; diluted EPS was $0.53, helped by a $12.6M non‑cash tax benefit .
  • Clear beat vs S&P Global consensus: revenue $56.0M vs $52.9M estimate and diluted EPS $0.53 vs $0.16 consensus; estimate counts were thin (3 for revenue/EPS), but the magnitude of outperformance and mix shift to Data Analytics are likely to drive upward revisions in forward EBITDA/earnings expectations (S&P Global data)*.
  • Guidance raised: FY25 revenue to $220–$225M (from $200–$220M) and Adjusted EBITDA to $35–$40M (from $34–$39M), reflecting PWRtek ramp and growing Data Analytics backlog; CFO noted the revised midpoints imply +19% revenue and +85% Adj. EBITDA vs 2024 .
  • Catalysts: (1) First optical spectrometer to meet GPA 2172 custody transfer standard (XSPCT), unlocking digital valuation deployments; management targets 25–35 units by YE and >200 potential installations in pipeline . (2) Contracted PWRtek revenues expected at ~$27.4M in 2026 with ~89–90% gross margin, supporting sustained margin expansion and cash generation .

What Went Well and What Went Wrong

  • What Went Well

    • High‑margin mix drove step‑up in profitability: gross margin to 32% (from 18% y/y) on 232% Data Analytics revenue growth; segment gross margin reached 71% (vs 44% y/y) as PWRtek contributed $6.1M at ~89% margin .
    • Structural progress in recurring analytics: Q3 Data Analytics revenue equaled full‑year 2024 for the segment; management increased FY25 guidance ranges; 12th consecutive quarter of Adj. EBITDA improvement .
    • Technology validation and pipeline: XSPCT first to comply with GPA 2172; five Eagle Ford units exceeded 95% pass rates; pipeline of >200 installations and 25–35 targeted by YE .

  • What Went Wrong

    • Chemistry related‑party volumes (ProFrac) remained below minimums, requiring order shortfall accruals; while accretive to gross profit, it underscores dependency and variability in related‑party demand .
    • SG&A deleverage sequentially (13% of revenue vs 11% y/y) on higher personnel/professional fees (integrated audit, stock comp), though CFO expects Q4 G&A to trend down .
    • Non‑cash tax benefit ($12.6M) elevated GAAP EPS; CFO guided to a more normalized ~20% tax rate going forward—EPS run‑rate should normalize as the DTA allowance release laps .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($M)$49.742 $58.350 $56.031
Gross Profit ($M)$9.119 $14.407 $17.783
Gross Margin (%)18% 25% 32%
Net Income ($M)$2.532 $1.768 $20.355
Diluted EPS ($)$0.08 $0.05 $0.53
Adjusted EBITDA ($M)$4.840 $9.452 $11.721

Estimates vs Actuals (S&P Global):

MetricQ3 2025 ConsensusQ3 2025 Actual
Revenue ($M)$52.9 (3 est.)*$56.031
Diluted EPS ($)$0.16 (3 est.)*$0.53
  • Values marked with * are retrieved from S&P Global.

Segment Revenue ($M)

SegmentQ3 2024Q2 2025Q3 2025
Chemistry Tech – External$14.097 $22.542 $20.221
Chemistry Tech – Related Party$32.977 $29.878 $26.956
Chemistry Tech – Total$47.074 $52.420 $47.177
Data Analytics – Product$1.681 $1.820 $1.694
Data Analytics – Service$0.987 $4.110 $7.160
Data Analytics – Total$2.668 $5.930 $8.854

KPIs and Mix

KPIQ3 2024Q2 2025Q3 2025
Data Analytics Gross Margin (%)44% 63% 71%
PWRtek Revenue ($M)—$3.2 $6.1
PWRtek Gross Margin (%)—~90% ~89%

Notes: Management expects PWRtek revenue of ~$6.8M in Q4 2025 and ~$16.1M for FY25 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)FY 2025$200–$220 $220–$225 Raised
Adjusted EBITDA ($M)FY 2025$34–$39 $35–$40 Raised
  • Non‑GAAP reconciliation for forward‑looking Adj. EBITDA not provided due to variability of certain items (per company disclosure) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Data Analytics mix/DAASQ1: Initiated 2025 guidance; highlighted backlog build and “Measure More” strategy . Q2: DA revenue +189% y/y; margin tailwind from PWRtek; PWRtek expected >$27M in 2026 .DA revenue +232% y/y; 16% of company revenue; DA gross margin 71%; PWRtek $6.1M at ~89% margin; Q4 PWRtek ~$6.8M .Improving mix and margins.
PWRtek contract economicsQ1: Six‑year ~$160M backlog; 22 in service, 8 in build . Q2: ~$15M FY25 expected; 2026 >$27M; ~80–90% GM .All units in service; 2026 ~$27.4M revenue per lease terms; additional $2.1M YTD non‑contract revenues; 6 new customers testing .Scaling and diversifying outside anchor customer.
XSPCT custody transferQ2: 9 pilots moved to commercial; multi‑basin deployments; <1% variance vs GC .First optical spectrometer to meet GPA 2172; targeting 25–35 units by YE and >200 installations in pipeline .Validation achieved; pipeline building.
Chemistry trajectoryQ1: External chemistry +88% y/y; strongest in 5 years; international +280% . Q2: External +38% y/y despite (24%) fleet decline .External +43% y/y in Q3; related‑party volumes below minimum, OSP accrual supports GP; YTD chemistry +17% .Share gains; mix shift external; related‑party volatility.
International/MENAQ1: International growth highlighted . Q2: Positive outlook despite macro .YTD international ~$10M (+122% y/y); Aramco tender win by large customer expected to lift 2026 activity .Building into 2026.
Tax/GAAP EPS——$12.6M non‑cash tax benefit in Q3; go‑forward normalized tax rate ~20% .

Management Commentary

  • CEO: “Flotek delivered an outstanding third quarter… reporting total Company gross profit margin of 32%… Our Data Analytics segment delivered quarterly revenue comparable to the full year 2024… Our Chemistry Technologies segment continued to expand market share” .
  • CFO: “All of the PWRtek assets are now in service… we expect fourth quarter revenues to increase further to approximately $6.8 million… PWRtek revenues in 2026 are expected to be north of $27 million” .
  • CEO on XSPCT: “The XSPCT Analyzer was the first optical spectrometer to comply with… GPA 2172… We believe… will provide a significant advantage… as we aggressively expand its manufacture and field deployment” .

Q&A Highlights

  • Digital Valuation ramp: Management targets 25–35 units in service by YE, with >200 installation opportunities; cadence depends on customer deployment choices, not technology constraints .
  • PWRtek 2026 revenue: ~$27.4M per fixed lease rates; excludes incremental non‑contract power services; ~89–90% gross margin profile .
  • Tax rate forward: Following a $12.6M Q3 tax benefit from DTA allowance release, CFO guided to ~20% normalized tax rate .
  • ProFrac chemistry shortfall: Mechanics clarified—quarterly OSP accrual, settlement in Q1; $7.2M deferred liability to be offset against acquisition consideration at settlement .
  • International exposure: Expect follow‑through from Aramco mega‑tender awarded to customer; management expects positive impact into late Q4 and 2026 .

Estimates Context

  • Q3 2025 beats: Revenue $56.031M vs $52.9M consensus (3 est.) and diluted EPS $0.53 vs $0.16 consensus (3 est.)—driven by PWRtek mix (89% GM) and DA gross margin expansion to 71% . Values marked with * below are from S&P Global.
    • Revenue consensus $52.9M (3)* vs actual $56.031M .
    • EPS consensus $0.1567 (3)* vs diluted EPS $0.53 .
  • FY view: S&P Global shows FY25 consensus revenue ~$223.1M (3)* and EPS ~$0.92 (1), FY26 revenue ~$249.9M (3) and EPS ~$1.05 (2)*—raised company guidance and margin mix suggest upward bias to EBITDA/EPS trajectories contingent on DA execution.

Key Takeaways for Investors

  • Mix shift is the story: high‑margin PWRtek and DA services are structurally lifting gross/EBITDA margins, with contracted PWRtek revenue stepping up ~70% in 2026; expect estimate revisions higher on profitability .
  • Validation unlocks adoption: GPA 2172 compliance for XSPCT is a material commercial catalyst for custody transfer “digital valuation” deployments; watch the 25–35 YE units milestone and 2026 pipeline conversion .
  • Guidance raised and still conservative: Management lifted FY25 revenue/Adj. EBITDA ranges; sequential DA growth and international chemistry ramp (MENA) offer upside skew into 2026 .
  • Watch working capital and OSP mechanics: International scale‑up could temporarily absorb working capital; chemistry OSP settlement in Q1 may deliver $20–$25M net cash (after a $7.2M offset), bolstering liquidity .
  • Risk monitor: Related‑party chemistry volumes below minimums remain a variable; macro activity in North American frac and SG&A normalization are watch items despite improving leverage .
  • Trading lens: Near‑term, the beat/raise and DA catalysts (XSPCT, PWRtek) are positive momentum factors; medium‑term, execution on DA backlog and non‑contract power services diversification underpin the thesis .

Footnote: S&P Global consensus values are marked with *. All other figures are sourced from company filings and transcripts as cited.