HOUSTON,
March 6, 2019
/PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company")
(NYSE: FTK) today announced results for the three and twelve months
ended December 31, 2018. Since the
results of the Company's Consumer and Industrial Chemistry
Technologies ("CICT") segment are presented as discontinued
operations for all periods, the financial discussion and
comparisons substantially relate to Flotek's continuing
operations.
Full Year and Fourth Quarter Highlights
- Increased customer adoption of the Company's Prescriptive
Chemistry Management® ("PCM®") platform
throughout 2018 and completed the Company's transition to a
full-service wellsite delivery offering in major domestic
basins.
- Continued to gain traction in key international regions,
particularly with multiple clients in the Middle East.
- Executed strategic cost reduction initiatives since the
beginning of 2017 that have resulted in $19
million of total run rate savings in fourth quarter 2018
corporate general and administrative ("G&A") and Research &
Innovation ("R&I") expenses, excluding stock
compensation.
- Enhanced corporate governance with the addition of two
new independent and strategic members to Flotek's Board of
Directors during the year, while three long-standing board members
stepped down.
- Increased depth of Company's executive leadership team
through the appointment of a highly-experienced Chief Financial
Officer at the end of the fourth quarter of 2018.
- Grew fourth quarter 2018 domestic revenues by
approximately 6% from the third quarter.
Financial Summary
- Generated revenue of $43.4
million for the fourth quarter of 2018, as compared to
$53.7 million for the third quarter
and $55.3 million for the fourth
quarter of 2017. Revenue for the full year 2018 was $177.8 million versus $243.1 million for 2017.
- Increased fourth quarter 2018 income from continuing
operations to $9.9 million, or
$0.17 per diluted share, from a third
quarter loss of $4.9 million, or
$0.08 loss per diluted share, and a
loss of $8.4 million, or $0.15 loss per diluted share, for the fourth
quarter of 2017. For the full-year 2018, loss from continuing
operations was $73.1 million, or
$1.26 loss per diluted share, versus
a loss of $17.5 million, or
$0.30 loss per diluted share, for
2017.
- Reported a fourth quarter 2018 adjusted loss from
continuing operations of $6.1
million, or $0.10 loss per
diluted share, as compared to a loss of $4.4
million, or $0.08 loss per
diluted share, for the third quarter and a loss of $0.4 million, or $0.01 loss per diluted share, for the fourth
quarter of 2017. Adjusted loss from continuing operations was
$33.5 million, or $0.58 loss per diluted share, for the full-year
2018 versus $8.3 million, or
$0.14 loss per diluted share, for
2017.
- Adjusted earnings before interest, taxes, depreciation
and amortization ("Adjusted EBITDA"), was a loss of $6.0 million for the fourth quarter of 2018, as
compared to $0.6 million of earnings
for the third quarter and $5.5
million of earnings for the fourth quarter of 2017.
Full-year 2018 Adjusted EBITDA was a loss of $15.2 million versus $13.4
million of earnings in 2017.
- Improved net debt position as of December 31, 2018, to $46.7 million, down $4.9
million from $51.6 million at
September 30, 2018. Subsequent to
December 31, 2018, and as a result of
closing on the sale of Florida Chemical Company, LLC ("FCC")
effective February 28, 2019, Flotek
received net proceeds of approximately $165
million, after transaction costs and a working capital
adjustment, and paid off the entire outstanding balance on its
credit facility of $53.8 million.
Transaction price and net proceeds are subject to customary
post-closing adjustments.
Adjusted EBITDA and Adjusted Income from Continuing
Operations are Non-GAAP financial measures and are described and
reconciled to the closest GAAP measure in the attached tables at
the end of this release.
John Chisholm,
Flotek's Chairman, President and Chief Executive
Officer, commented, "2018 was a transformative year for Flotek,
having transitioned the majority of our channel to market directly
to the operator, through our full-service PCM® wellsite
delivery offering. We accomplished this evolution amidst rapidly
changing market dynamics, and I appreciate all of the hard work and
dedication by our valued team of employees as we moved through this
process. In addition, while we have not completed our strategic and
targeted cost-reduction efforts, I am pleased with the results and
progress over the past year. We will continue our austere
identification and execution of additional opportunities to
expeditiously remove costs from the business in order to best
position the Company for long-term success.
"During the fourth quarter 2018, and despite a broader
slowdown in industry activity, Flotek's domestic revenues increased
6% over the prior quarter, and, excluding a single large third
quarter customer order, our international revenues held relatively
flat quarter-over-quarter. Domestic revenue growth was driven
primarily by strength in our Mid-Continent region. On the
international front, we continued to see increased traction with
multiple clients in the Middle
East, while large differentials and the political climate
kept Canada at relatively low
activity levels for us. Importantly, our PCM® business
grew to comprise the majority of our domestic business, as the
industry continues to seek opportunities to structurally improve
costs by de-coupling the supply chain, while driving greater
transparency, control and efficacy in their fluid systems. This is
a trend that Flotek has championed and will continue to lead as we
leverage our direct-to-operator partnership approach and focus on
reservoir-centric fluid systems that enhance and improve
performance. This led to some margin erosion as we incurred higher
associated operating expenses to deliver to our client's wellsite,
and we are actively executing on a number of initiatives to lower
these associated costs."
Sale of Florida Chemical and Recent
Initiatives
- Announced on January 11,
2019, a $175 million all-cash
transaction (the "Transaction") for the sale of FCC to Archer
Daniels Midland Company ("ADM"). As part of the Transaction, Flotek
established reciprocal supply agreements with ADM to (1) secure
citrus terpene for an initial term of five years and expected
negligible impact to cost of goods sold, and (2) provide ADM with
technical blending capacity by Flotek of certain industrial product
lines for FCC.
- Closed the Transaction effective February 28, 2019, with the Company receiving net
proceeds of approximately $165
million, after related transaction fees and working capital
adjustments. In conjunction with the Transaction, Flotek paid down
the remaining balance of its credit facility. Transaction price and
net proceeds are subject to customary post-closing
adjustments.
- Formed the Strategic Capital Committee, chaired by
independent director David
Nierenberg, which will review and provide recommendations to
Flotek's Board of Directors as to the best use of remaining net
proceeds of $111 million from the
Transaction.
- Targeting additional reductions across G&A and
R&I expenses that are expected to be fully
realized by late 2019, and implementing additional key
operational initiatives in 2019 to drive greater manufacturing and
logistics efficiencies.
Fourth Quarter 2018 Financial Results
For the three months ended December
31, 2018, Flotek reported revenue of $43.4 million, a decrease of $11.9 million, or 21.4%, compared to $55.3 million in the same period of 2017. Revenue
decreased $10.3 million, or 19.1%,
compared to the third quarter of 2018.
Flotek reported income from continuing operations for the
three months ended December 31, 2018
of $9.9 million, an increase of
$18.3 million compared to a loss of
$8.4 million in the same period of
2017, primarily due to the recognition of income tax benefit in the
three months ended December 31, 2018
that more than offset the reduction in pretax income from
continuing operations for the three months ended December 31, 2018 versus December 31, 2017. Income (loss) from continuing
operations similarly increased $14.8
million compared to third quarter 2018. Contributing to the
increase over prior periods was the reversal of a valuation
allowance against the Company's deferred tax assets due to the
anticipated sale of FCC. Flotek reported income per
diluted share from continuing operations for the three months ended
December 31, 2018 of $0.17 compared to a loss of $0.15 for the three months ended December 31, 2017.
Excluding select items totaling
$16.0 million, net of tax, or
$0.27 per share, adjusted EPS from
continuing operations was a loss of $0.10 per share for the three months ended
December 31, 2018, compared to a loss
of $0.01 for the three months ended
December 31, 2017. (See our
Reconciliation of Non-GAAP Items and Non-Cash Items Impacting
Earnings at the conclusion of this release.)
Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") for the three months ended December 31, 2018, was a loss of $9.5 million, compared to earnings of
$3.2 million for the three months
ended December 31, 2017. Adjusted
EBITDA, which excludes select items, for
the three months ended December 31,
2018 was a loss of $6.0
million compared to fourth quarter 2017 positive adjusted
EBITDA of $5.5 million and third
quarter 2018 positive adjusted EBITDA of $0.6 million. Management believes that adjusted
EBITDA provides useful information to investors to better assess
and understand operating performance and cash flows.
(See the Reconciliation of Non-GAAP Items and Non-Cash
Items Impacting Earnings at the conclusion of this
release.)
Full Year 2018 Financial Results
For the twelve months ended December
31, 2018, revenue was $177.8
million, a decrease of $65.3
million, or 26.9%, compared to $243.1
million in 2017.
Income (loss) from continuing operations for the twelve
months ended December 31, 2018 was a
loss of $73.1 million, or $1.26
loss per diluted share, a decrease of $55.6
million compared to a loss of $17.5
million, or $0.30 loss per
diluted share in 2017.
Excluding select items of $39.5
million, net of tax, or $0.68
per share, adjusted EPS from continuing operations was a loss of
$0.58 for the twelve months ended
December 31, 2018, compared to a loss
of $0.14 for the twelve months ended December 31, 2017.
EBITDA for the twelve months ended December 31, 2018, was a loss of $68.2 million, compared to earnings of
$0.5 million for the twelve months
ended December 31, 2017. Adjusted
EBITDA, which excludes select items, for
the full-year 2018 was a loss of $15.2
million, compared to positive full year 2017 adjusted EBITDA
of $13.4 million.
Balance Sheet and Liquidity
Net debt at December 31, 2018,
was $46.7 million, including
$3.0 million in cash and $49.7 million of borrowings on the Company's
credit facility, which is $4.9
million lower as compared to net debt of $51.6 million as of September 30, 2018. Flotek's net working capital
position as of December 31, 2018 was
$110.5 million, including cash of
$3.0 million.
In conjunction with closing the Transaction effective
February 28, 2019, the Company paid
down the entirety of its credit facility borrowings, which totaled
$53.8 million and is expected to save
nearly $3 million in annual interest
expense from year-end 2018 levels. Additionally, it expects to have
meaningfully lower working capital levels as its energy segment
typically exhibits higher inventory turns and lower levels of
international accounts receivable, which typically carry longer
payment periods.
Outlook
Mr. Chisholm concluded, "Last week's sale of Florida Chemical
to ADM came on the heels of divesting two non-core segments in
2017, and was a win-win for both companies on multiple fronts. We
secured our key raw material supply of citrus terpene
for our Energy Chemistry Technologies business, which was our
original investment thesis in 2013, while ADM will be able to fully
realize the growth potential of Florida Chemical's increasing
market opportunity within Flavors and Fragrance applications. Both
parties will also benefit through the opportunity to jointly
explore and develop next generation technologies for the oil and
gas and agricultural industries. Finally, the Transaction provides
substantial financial flexibility as we focus on prudently growing
our position as a pure-play provider of customized,
performance-enhancing chemistry solutions to the upstream oil and
gas industry.
"Our go-forward efforts are focused on managing our
business to profitability and market share wins at a $50 per barrel WTI oil price environment. We will
do this by continuing our laser-focus on cost reduction initiatives
from top to bottom. Beyond our G&A and R&I streamlining
efforts, we are working to improve our overall operational
efficiencies, which will drive higher gross margins. We will also
continue to innovate upon our best-in-class suite of custom
chemistry solutions optimized for the reservoir, based on our
growing technical knowledge and experience from PCM®, to
meet the needs of our clients. A growing base of E&P's are
increasingly focused on decoupling their development programs and
optimizing their fluid design to ultimately improve their overall
reservoir recoverability. Flotek is differentiated by its expanding
platform of innovative, cost-effective solutions which can further
enhance operators' return on capital. Our PCM® platform
and broad portfolio of value-added chemistries are helping to drive
higher returns on our clients' invested capital, and we look
forward to demonstrating the value that our performance chemistry
brings as an important next step in lowering their cost per
BOE."
Conference Call Details
Flotek will host a conference call on Thursday, March 7, at 9:00
AM CT (10:00 AM ET) to discuss
its operating results for the three and twelve months ended
December 31, 2018. To participate in
the call, participants should dial 877-870-4263 approximately 5
minutes prior to the start of the call. The call can also be
accessed from Flotek's website at www.flotekind.com.
About Flotek Industries, Inc.
Flotek develops and delivers prescriptive, reservoir-centric
chemistry technologies to oil and gas clients designed to address
every challenge in the lifecycle of the reservoir and maximize
recovery in both new and mature fields. Flotek's inspired chemists
draw from the power of bio-derived solvents to deliver solutions
that enhance energy production. Flotek serves major and independent
energy producers and oilfield service companies, both domestic and
international. Flotek Industries, Inc. is a publicly traded company
headquartered in Houston, Texas,
and its common shares are traded on the New York Stock Exchange
under the ticker symbol "FTK." For additional information, please
visit Flotek's web site at
www.flotekind.com.
Forward-Looking Statements
Certain statements set forth in this Press Release constitute
forward-looking statements (within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) regarding Flotek Industries, Inc.'s business,
financial condition, results of operations and prospects. Words
such as expects, anticipates, intends, plans, believes, seeks,
estimates and similar expressions or variations of such words are
intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this
Press Release.
Although forward-looking statements in this Press Release
reflect the good faith judgment of management, such statements can
only be based on facts and factors currently known to management.
Consequently, forward-looking statements are inherently subject to
risks and uncertainties, and actual results and outcomes may differ
materially from the results and outcomes discussed in the
forward-looking statements. Factors that could cause or contribute
to such differences in results and outcomes include, but are not
limited to, demand for oil and natural gas drilling services in the
areas and markets in which the Company operates, competition,
obsolescence of products and services, the Company's ability to
obtain financing to support its operations, environmental and other
casualty risks, and the impact of government regulation.
Further information about the risks and uncertainties that
may impact the Company are set forth in the Company's most recent
filings on Form 10-K (including without limitation in the "Risk
Factors" Section), and in the Company's other SEC filings and
publicly available documents. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this Press Release. The Company undertakes no
obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the
date of this Press Release.
Flotek Industries,
Inc.
|
Unaudited
Condensed Consolidated Balance Sheets
|
(in thousands,
except share data)
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
3,044
|
|
$
4,584
|
Accounts receivable,
net of allowance for doubtful accounts of $1,190 and $673 at
December 31, 2018 and December 31, 2017, respectively
|
37,047
|
|
34,897
|
Inventories,
net
|
27,289
|
|
32,460
|
Income taxes
receivable
|
3,161
|
|
2,826
|
Assets held for
sale
|
118,470
|
|
54,508
|
Other current
assets
|
5,771
|
|
8,649
|
Total current
assets
|
194,782
|
|
137,924
|
Property and
equipment, net
|
45,485
|
|
52,786
|
Goodwill
|
-
|
|
37,180
|
Deferred tax assets,
net
|
18,663
|
|
12,713
|
Other intangible
assets, net
|
26,827
|
|
22,048
|
Other long-term
assets
|
126
|
|
527
|
Assets held for
sale
|
-
|
|
66,710
|
TOTAL
ASSETS
|
$
285,883
|
|
$
329,888
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
15,011
|
|
$
10,394
|
Accrued
liabilities
|
10,335
|
|
13,793
|
Interest
payable
|
8
|
|
43
|
Liabilities held for
sale
|
9,174
|
|
12,450
|
Current portion of
long-term debt
|
49,731
|
|
27,950
|
Total current
liabilities and total liabilities
|
84,259
|
|
64,630
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Preferred stock,
$0.0001 par value, 100,000 shares authorized; no shares issued and
outstanding
|
-
|
|
-
|
Common stock, $0.0001 par
value, 80,000,000 shares authorized; 62,162,875 shares issued and
57,342,279 shares outstanding at December 31, 2018; 60,622,986
shares issued and 56,755,293 shares outstanding at
December 31, 2017
|
6
|
|
6
|
Additional paid-in
capital
|
343,536
|
|
336,067
|
Accumulated other
comprehensive income (loss)
|
(1,116)
|
|
(884)
|
Retained earnings
(accumulated deficit)
|
(107,565)
|
|
(37,225)
|
Treasury stock, at
cost; 3,770,224 and 3,621,435 shares at December 31, 2018 and
December 31, 2017, respectively
|
(33,237)
|
|
(33,064)
|
Flotek Industries,
Inc. stockholders' equity
|
201,624
|
|
264,900
|
Noncontrolling
interests
|
-
|
|
358
|
Total
equity
|
201,624
|
|
265,258
|
TOTAL LIABILITIES
AND EQUITY
|
$
285,883
|
|
$
329,888
|
Flotek Industries,
Inc.
|
Unaudited
Condensed Consolidated Statements of Operations
|
(in thousands,
except per share data)
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
12/31/2018
|
|
12/31/2017
|
|
9/30/2018
|
|
12/31/2018
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
43,449
|
|
$
55,299
|
|
$
53,709
|
|
$
177,773
|
|
$
243,106
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
41,963
|
|
41,160
|
|
45,647
|
|
159,808
|
|
188,744
|
Corporate general and
administrative
|
6,833
|
|
7,719
|
|
7,476
|
|
31,467
|
|
41,492
|
Depreciation and
amortization
|
2,282
|
|
2,430
|
|
2,258
|
|
9,216
|
|
9,768
|
Research and
development
|
2,302
|
|
3,536
|
|
2,350
|
|
10,356
|
|
13,130
|
(Gain) loss on
disposal of long-lived assets
|
(563)
|
|
(109)
|
|
58
|
|
(443)
|
|
292
|
Impairment of
goodwill
|
-
|
|
-
|
|
-
|
|
37,180
|
|
-
|
Total costs and
expenses
|
52,817
|
|
54,736
|
|
57,789
|
|
247,584
|
|
253,426
|
(Loss) income from
operations
|
(9,368)
|
|
563
|
|
(4,080)
|
|
(69,811)
|
|
(10,320)
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(964)
|
|
(450)
|
|
(746)
|
|
(2,866)
|
|
(2,168)
|
Loss on sale of
business
|
-
|
|
-
|
|
(360)
|
|
(360)
|
|
-
|
Loss on write-down of
assets held for sale
|
-
|
|
-
|
|
-
|
|
(2,580)
|
|
-
|
Other income
(expense), net
|
(2,441)
|
|
174
|
|
10
|
|
(5,040)
|
|
1,096
|
Total other
expense
|
(3,405)
|
|
(276)
|
|
(1,096)
|
|
(10,846)
|
|
(1,072)
|
(Loss) income
before income taxes
|
(12,773)
|
|
287
|
|
(5,176)
|
|
(80,657)
|
|
(11,392)
|
Income tax benefit
(expense)
|
22,715
|
|
(8,640)
|
|
307
|
|
7,215
|
|
(6,112)
|
Income (loss) from
continuing operations
|
9,942
|
|
(8,353)
|
|
(4,869)
|
|
(73,442)
|
|
(17,504)
|
(Loss) income from
discontinued operations, net of tax
|
(1,385)
|
|
(136)
|
|
937
|
|
2,743
|
|
(9,891)
|
Net income
(loss)
|
8,557
|
|
(8,489)
|
|
(3,932)
|
|
(70,699)
|
|
(27,395)
|
Net loss
attributable to noncontrolling interests
|
1
|
|
-
|
|
-
|
|
358
|
|
-
|
Net income (loss)
attributable to Flotek Industries, Inc. (Flotek)
|
$
8,558
|
|
$
(8,489)
|
|
$
(3,932)
|
|
$
(70,341)
|
|
$
(27,395)
|
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Flotek shareholders:
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
9,943
|
|
$
(8,353)
|
|
$
(4,869)
|
|
$
(73,084)
|
|
$
(17,504)
|
(Loss) income from
discontinued operations, net of tax
|
(1,385)
|
|
(136)
|
|
937
|
|
2,743
|
|
(9,891)
|
Net income (loss)
attributable to Flotek
|
$
8,558
|
|
$
(8,489)
|
|
$
(3,932)
|
|
$
(70,341)
|
|
$
(27,395)
|
Basic earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.17
|
|
$
(0.15)
|
|
$
(0.08)
|
|
$
(1.26)
|
|
$
(0.30)
|
Discontinued
operations, net of tax
|
(0.02)
|
|
-
|
|
0.02
|
|
0.05
|
|
(0.17)
|
Basic earnings (loss)
per common share
|
$
0.15
|
|
$
(0.15)
|
|
$
(0.06)
|
|
$
(1.21)
|
|
$
(0.47)
|
Diluted earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.17
|
|
$
(0.15)
|
|
$
(0.08)
|
|
$
(1.26)
|
|
$
(0.30)
|
Discontinued
operations, net of tax
|
(0.02)
|
|
-
|
|
0.02
|
|
0.05
|
|
(0.17)
|
Diluted earnings
(loss) per common share
|
$
0.15
|
|
$
(0.15)
|
|
$
(0.06)
|
|
$
(1.21)
|
|
$
(0.47)
|
Weighted average
common shares:
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares used in computing basic earnings (loss) per common
share
|
58,517
|
|
57,196
|
|
58,319
|
|
57,995
|
|
57,580
|
Weighted average
common shares used in computing diluted earnings (loss) per common
share
|
58,517
|
|
57,196
|
|
58,319
|
|
57,995
|
|
57,580
|
Flotek Industries,
Inc.
|
Unaudited
Condensed Consolidated Statements of Cash Flows
|
(in
thousands)
|
|
Twelve Months
Ended
|
|
12/31/2018
|
|
12/31/2017
|
Cash flows from
operating activities:
|
|
|
|
Net income (loss)
attributable to Flotek Industries, Inc. (Flotek)
|
$
(70,341)
|
|
$
(27,395)
|
Income (loss) from
discontinued operations, net of tax
|
2,743
|
|
(9,891)
|
Income (loss) from
continuing operations
|
(73,084)
|
|
(17,504)
|
Adjustments to
reconcile loss from continuing operations to net cash (used in)
provided by operating activities:
|
|
|
|
Depreciation and
amortization
|
9,216
|
|
9,768
|
Amortization of
deferred financing costs
|
400
|
|
472
|
Provision for
doubtful accounts
|
839
|
|
157
|
Provision for excess
and obsolete inventory
|
2,418
|
|
388
|
Impairment of
goodwill
|
37,180
|
|
-
|
Loss on sale of
business
|
360
|
|
-
|
Loss on write-down of
assets held for sale
|
2,580
|
|
-
|
(Gain) loss on sale
of assets
|
(443)
|
|
292
|
Stock compensation
expense
|
7,050
|
|
10,643
|
Deferred income tax
(benefit) provision
|
(5,950)
|
|
181
|
Reduction in tax
benefit related to share-based awards
|
709
|
|
1,989
|
Changes in current
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
(2,606)
|
|
4,076
|
Inventories,
net
|
2,597
|
|
(3,442)
|
Income taxes
receivable
|
(1,116)
|
|
8,008
|
Other current
assets
|
3,177
|
|
12,001
|
Accounts
payable
|
4,631
|
|
(8,528)
|
Accrued
liabilities
|
(8,739)
|
|
(6,175)
|
Interest
payable
|
(35)
|
|
19
|
Net cash (used in)
provided by operating activities
|
(20,816)
|
|
12,345
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(3,559)
|
|
(4,197)
|
Proceeds from sales
of businesses
|
1,665
|
|
18,490
|
Proceeds from sale of
assets
|
1,387
|
|
689
|
Purchase of patents
and other intangible assets
|
(1,602)
|
|
(456)
|
Net cash (used in)
provided by investing activities
|
(2,109)
|
|
14,526
|
Cash flows from
financing activities:
|
|
|
|
Repayments of
indebtedness
|
-
|
|
(9,833)
|
Borrowings on
revolving credit facility
|
277,599
|
|
383,160
|
Repayments on
revolving credit facility
|
(255,818)
|
|
(393,776)
|
Debt issuance
costs
|
(111)
|
|
(579)
|
Purchase of treasury
stock related to share-based awards
|
(173)
|
|
(1,729)
|
Proceeds from sale of
common stock
|
341
|
|
654
|
Repurchase of common
stock
|
-
|
|
(5,203)
|
Proceeds from
exercise of stock options
|
-
|
|
21
|
Loss from
noncontrolling interest
|
(358)
|
|
-
|
Net cash provided by
(used in) financing activities
|
21,480
|
|
(27,285)
|
Discontinued
operations:
|
|
|
|
Net cash used in
operating activities
|
1,296
|
|
4,102
|
Net cash provided by
investing activities
|
(1,303)
|
|
(4,078)
|
Net cash flows
provided by discontinued operations
|
(7)
|
|
24
|
Effect of changes in
exchange rates on cash and cash equivalents
|
(88)
|
|
151
|
Net (decrease)
increase in cash and cash equivalents
|
(1,540)
|
|
(239)
|
Cash and cash
equivalents at the beginning of period
|
4,584
|
|
4,823
|
Cash and cash
equivalents at the end of period
|
$
3,044
|
|
$
4,584
|
Flotek Industries,
Inc.
|
Unaudited
Reconciliation of Non-GAAP Items and Non-Cash Items Impacting
Earnings
|
(in thousands,
except per share data)
|
|
GAAP Income (Loss)
from Continuing Operations and Reconciliation to Adjusted Net
Income (Loss) (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
12/31/2018
|
|
12/31/2017
|
|
9/30/2018
|
|
12/31/2018
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from
Continuing Operations (GAAP)
|
|
|
$
9,943
|
|
$
(8,353)
|
|
$
(4,869)
|
|
$
(73,084)
|
|
$
(17,504)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of 2017 Tax
Act to Income Tax Expese
|
|
|
-
|
|
7,308
|
|
-
|
|
-
|
|
7,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Asset
Valuation Allowance
|
|
|
(18,924)
|
|
-
|
|
158
|
|
2,855
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Items
Impacting Earnings, net of tax
|
|
|
2,889
|
|
657
|
|
284
|
|
36,682
|
|
1,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income (Loss) (Non-GAAP)
|
|
|
$
(6,092)
|
|
$
(388)
|
|
$
(4,427)
|
|
$
(33,547)
|
|
$
(8,345)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding (Fully Diluted)
|
|
|
58,517
|
|
57,196
|
|
58,319
|
|
57,995
|
|
57,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
(Loss) Per Share (Fully Diluted)
|
|
|
$
(0.10)
|
|
$
(0.01)
|
|
$
(0.08)
|
|
$
(0.58)
|
|
$
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Items
Impacting Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
& Severance:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Compensation
Expense
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
887
|
|
Cash
Payments
|
|
|
1,712
|
|
1,011
|
|
-
|
|
1,712
|
|
1,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on Sale of
Business
|
|
|
-
|
|
-
|
|
360
|
|
360
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
Write-down
|
|
|
-
|
|
-
|
|
-
|
|
1,000
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
Goodwill
|
|
|
-
|
|
-
|
|
-
|
|
37,180
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on Write-down of
Assets Held For Sale
|
|
|
-
|
|
-
|
|
-
|
|
2,580
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinuation of
Corporate Projects
|
|
|
1,945
|
|
-
|
|
-
|
|
3,165
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses Relating to
Closing of Business Venture
|
|
|
-
|
|
-
|
|
-
|
|
436
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Select
Items
|
|
|
$
3,657
|
|
$
1,011
|
|
$
360
|
|
$
46,433
|
|
$
2,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less income tax
effect at 21% for 2018 and 35% for 2017
|
|
|
(768)
|
|
(354)
|
|
(76)
|
|
(9,751)
|
|
(997)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Items
Impacting Earnings, net of tax
|
|
|
$
2,889
|
|
$
657
|
|
$
284
|
|
$
36,682
|
|
$
1,851
|
|
* Management believes
that adjusted Net Income for the three and twelve months ended
December 31, 2018 and December 31, 2017, and the three months ended
September 30, 2018, is useful to investors to assess and understand
operating performance, especially when comparing those results with
previous and subsequent periods. Management views the expenses
noted above to be outside of the Company's normal operating
results. Management analyzes operating results without the impact
of the above items as an indicator of performance, to identify
underlying trends in the business and cash flow from continuing
operations, and to establish operational goals.
|
Flotek Industries,
Inc.
|
Unaudited
Reconciliation of Non-GAAP Items and Non-Cash Items Impacting
Earnings
|
(in
thousands)
|
|
GAAP Income (Loss)
from Continuing Operations and Reconciliation to Adjusted EBITDA
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
12/31/2018
|
|
12/31/2017
|
|
9/30/2018
|
|
12/31/2018
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from
Continuing Operations (GAAP)
|
|
$
9,943
|
|
$
(8,353)
|
|
$
(4,869)
|
|
$
(73,084)
|
|
$
(17,504)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
964
|
|
450
|
|
746
|
|
2,866
|
|
2,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax (Benefit)
Expense
|
|
(22,715)
|
|
8,640
|
|
(307)
|
|
(7,215)
|
|
6,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
2,282
|
|
2,430
|
|
2,258
|
|
9,216
|
|
9,768
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(Non-GAAP)
|
|
$
(9,526)
|
|
$
3,167
|
|
$
(2,172)
|
|
$
(68,217)
|
|
$
544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Compensation
Expense
|
|
480
|
|
1,426
|
|
2,312
|
|
7,050
|
|
10,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (Gain) on Sale
of Assets
|
|
(563)
|
|
(109)
|
|
58
|
|
(443)
|
|
292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on Sale of
Business
|
|
-
|
|
-
|
|
360
|
|
360
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
Write-down
|
|
-
|
|
-
|
|
-
|
|
1,000
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
Goodwill
|
|
-
|
|
-
|
|
-
|
|
37,180
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on Write-down of
Assets Held For Sale
|
|
-
|
|
-
|
|
-
|
|
2,580
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinuation of
Corporate Projects
|
|
1,945
|
|
-
|
|
-
|
|
3,165
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses Relating to
Closing of Business Venture
|
|
-
|
|
-
|
|
-
|
|
436
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Executive
Retirement and Severance Expense
|
|
1,712
|
|
1,011
|
|
-
|
|
1,712
|
|
1,961
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
(5,952)
|
|
$
5,495
|
|
$
558
|
|
$
(15,177)
|
|
$
13,440
|
|
* Management believes
that adjusted EBITDA for the three and twelve months ended December
31, 2018 and December 31, 2017, and the three months ended
September 30, 2018, is useful to investors to assess and understand
operating performance, especially when comparing those results with
previous and subsequent periods. Management views the expenses
noted above to be outside of the Company's normal operating
results. Management analyzes operating results without the impact
of the above items as an indicator of performance, to identify
underlying trends in the business and cash flow from continuing
operations, and to establish operational goals.
|
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SOURCE Flotek Industries, Inc.