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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Flotek Industries Inc | NYSE:FTK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.03 | -0.86% | 3.47 | 3.59 | 3.38 | 3.53 | 50,350 | 01:00:00 |
FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FLOTEK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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90-0023731
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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10603 W. Sam Houston Parkway N., Suite 300
Houston, TX
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77064
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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March 31, 2017
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|
December 31, 2016
|
||||
ASSETS
|
|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,826
|
|
|
$
|
4,823
|
|
Accounts receivable, net of allowance for doubtful accounts of $779 and $664 at March 31, 2017 and December 31, 2016, respectively
|
62,934
|
|
|
47,152
|
|
||
Inventories
|
64,677
|
|
|
58,283
|
|
||
Income taxes receivable
|
12,271
|
|
|
12,752
|
|
||
Assets held for sale
|
27,891
|
|
|
43,900
|
|
||
Other current assets
|
6,694
|
|
|
21,708
|
|
||
Total current assets
|
176,293
|
|
|
188,618
|
|
||
Property and equipment, net
|
74,327
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|
|
74,691
|
|
||
Goodwill
|
56,660
|
|
|
56,660
|
|
||
Deferred tax assets, net
|
20,044
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|
|
12,894
|
|
||
Other intangible assets, net
|
49,726
|
|
|
50,352
|
|
||
TOTAL ASSETS
|
$
|
377,050
|
|
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$
|
383,215
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LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
35,635
|
|
|
$
|
29,960
|
|
Accrued liabilities
|
7,841
|
|
|
12,170
|
|
||
Interest payable
|
49
|
|
|
24
|
|
||
Liabilities held for sale
|
4,638
|
|
|
4,961
|
|
||
Current portion of long-term debt
|
42,603
|
|
|
40,566
|
|
||
Total current liabilities
|
90,766
|
|
|
87,681
|
|
||
Long-term debt, less current portion
|
7,083
|
|
|
7,833
|
|
||
Total liabilities
|
97,849
|
|
|
95,514
|
|
||
Commitments and contingencies
|
|
|
|
||||
Equity:
|
|
|
|
||||
Cumulative convertible 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; 59,770,452 shares issued and 57,035,414 shares outstanding at March 31, 2017; 59,684,669 shares issued and 56,972,580 shares outstanding at December 31, 2016
|
6
|
|
|
6
|
|
||
Additional paid-in capital
|
321,980
|
|
|
318,392
|
|
||
Accumulated other comprehensive income (loss)
|
(964
|
)
|
|
(956
|
)
|
||
Retained earnings (accumulated deficit)
|
(21,808
|
)
|
|
(9,830
|
)
|
||
Treasury stock, at cost; 2,046,168 and 2,028,847 shares at March 31, 2017 and December 31, 2016, respectively
|
(20,371
|
)
|
|
(20,269
|
)
|
||
Flotek Industries, Inc. stockholders’ equity
|
278,843
|
|
|
287,343
|
|
||
Noncontrolling interests
|
358
|
|
|
358
|
|
||
Total equity
|
279,201
|
|
|
287,701
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
377,050
|
|
|
$
|
383,215
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue
|
$
|
79,954
|
|
|
$
|
63,812
|
|
Cost of revenue
|
52,212
|
|
|
40,018
|
|
||
Gross profit
|
27,742
|
|
|
23,794
|
|
||
Expenses:
|
|
|
|
||||
Selling, general and administrative
|
22,581
|
|
|
19,577
|
|
||
Depreciation and amortization
|
2,445
|
|
|
1,902
|
|
||
Research and development
|
3,141
|
|
|
1,947
|
|
||
Loss on disposal of long-lived assets
|
198
|
|
|
—
|
|
||
Total expenses
|
28,365
|
|
|
23,426
|
|
||
(Loss) income from operations
|
(623
|
)
|
|
368
|
|
||
Other (expense) income:
|
|
|
|
||||
Interest expense
|
(594
|
)
|
|
(408
|
)
|
||
Other (expense) income, net
|
154
|
|
|
(6
|
)
|
||
Total other expense
|
(440
|
)
|
|
(414
|
)
|
||
Loss before income taxes
|
(1,063
|
)
|
|
(46
|
)
|
||
Income tax benefit
|
320
|
|
|
17
|
|
||
Loss from continuing operations
|
(743
|
)
|
|
(29
|
)
|
||
Loss from discontinued operations, net of tax
|
(11,235
|
)
|
|
(30,156
|
)
|
||
Net loss
|
$
|
(11,978
|
)
|
|
$
|
(30,185
|
)
|
|
|
|
|
||||
Basic earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
Discontinued operations, net of tax
|
(0.19
|
)
|
|
(0.55
|
)
|
||
Basic earnings (loss) per common share
|
$
|
(0.20
|
)
|
|
$
|
(0.55
|
)
|
Diluted earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
Discontinued operations, net of tax
|
(0.19
|
)
|
|
(0.55
|
)
|
||
Diluted earnings (loss) per common share
|
$
|
(0.20
|
)
|
|
$
|
(0.55
|
)
|
Weighted average common shares:
|
|
|
|
||||
Weighted average common shares used in computing basic earnings (loss) per common share
|
57,673
|
|
|
54,744
|
|
||
Weighted average common shares used in computing diluted earnings (loss) per common share
|
57,673
|
|
|
54,744
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Loss from continuing operations
|
$
|
(743
|
)
|
|
$
|
(29
|
)
|
Loss from discontinued operations, net of tax
|
(11,235
|
)
|
|
(30,156
|
)
|
||
Net loss
|
(11,978
|
)
|
|
(30,185
|
)
|
||
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustment
|
(8
|
)
|
|
318
|
|
||
Comprehensive income (loss)
|
$
|
(11,986
|
)
|
|
$
|
(29,867
|
)
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(11,978
|
)
|
|
$
|
(30,185
|
)
|
Loss from discontinued operations, net of tax
|
(11,235
|
)
|
|
(30,156
|
)
|
||
Loss from continuing operations
|
(743
|
)
|
|
(29
|
)
|
||
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
3,032
|
|
|
2,250
|
|
||
Amortization of deferred financing costs
|
130
|
|
|
87
|
|
||
Loss on sale of assets
|
198
|
|
|
—
|
|
||
Stock compensation expense
|
3,011
|
|
|
2,058
|
|
||
Deferred income tax benefit
|
(7,403
|
)
|
|
(6,898
|
)
|
||
Reduction in tax benefit related to share-based awards
|
66
|
|
|
365
|
|
||
Changes in current assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(15,788
|
)
|
|
252
|
|
||
Inventories
|
(6,373
|
)
|
|
(10,479
|
)
|
||
Income taxes receivable
|
332
|
|
|
(10,308
|
)
|
||
Other current assets
|
13,923
|
|
|
31
|
|
||
Accounts payable
|
5,671
|
|
|
5,801
|
|
||
Accrued liabilities
|
1,265
|
|
|
12,274
|
|
||
Income taxes payable
|
97
|
|
|
(1,817
|
)
|
||
Interest payable
|
25
|
|
|
30
|
|
||
Net cash used in operating activities
|
(2,557
|
)
|
|
(6,383
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(1,877
|
)
|
|
(3,790
|
)
|
||
Proceeds from sale of assets
|
158
|
|
|
—
|
|
||
Purchase of patents and other intangible assets
|
(84
|
)
|
|
(131
|
)
|
||
Net cash used in investing activities
|
(1,803
|
)
|
|
(3,921
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments of indebtedness
|
(750
|
)
|
|
(1,785
|
)
|
||
Borrowings on revolving credit facility
|
98,863
|
|
|
96,000
|
|
||
Repayments on revolving credit facility
|
(96,826
|
)
|
|
(83,526
|
)
|
||
Debt issuance costs
|
(106
|
)
|
|
—
|
|
||
Reduction in tax benefit related to share-based awards
|
—
|
|
|
(365
|
)
|
||
Purchase of treasury stock related to share-based awards
|
(102
|
)
|
|
(154
|
)
|
||
Proceeds from sale of common stock
|
251
|
|
|
212
|
|
||
Proceeds from exercise of stock options
|
7
|
|
|
134
|
|
||
Net cash provided by financing activities
|
1,337
|
|
|
10,516
|
|
||
Discontinued operations:
|
|
|
|
||||
Net cash used in operating activities
|
(353
|
)
|
|
(169
|
)
|
||
Net cash provided by investing activities
|
353
|
|
|
169
|
|
||
Net cash flows used in discontinued operations
|
—
|
|
|
—
|
|
||
Effect of changes in exchange rates on cash and cash equivalents
|
26
|
|
|
60
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(2,997
|
)
|
|
272
|
|
||
Cash and cash equivalents at the beginning of period
|
4,823
|
|
|
2,208
|
|
||
Cash and cash equivalents at the end of period
|
$
|
1,826
|
|
|
$
|
2,480
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained Earnings (Accumulated Deficit)
|
|
Non-controlling Interests
|
|
Total Equity
|
||||||||||||||||||||
|
Shares
Issued
|
|
Par
Value
|
|
Shares
|
|
Cost
|
|
|||||||||||||||||||||||||
Balance, December 31, 2016
|
59,685
|
|
|
$
|
6
|
|
|
2,029
|
|
|
$
|
(20,269
|
)
|
|
$
|
318,392
|
|
|
$
|
(956
|
)
|
|
$
|
(9,830
|
)
|
|
$
|
358
|
|
|
$
|
287,701
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,978
|
)
|
|
—
|
|
|
(11,978
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||||
Stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
213
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
213
|
|
|||||||
Common stock issued in payment of accrued liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|||||||
Stock options exercised
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||||
Restricted stock granted
|
80
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
10
|
|
|
(102
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,180
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,180
|
|
|||||||
Balance, March 31, 2017
|
59,770
|
|
|
$
|
6
|
|
|
2,046
|
|
|
$
|
(20,371
|
)
|
|
$
|
321,980
|
|
|
$
|
(964
|
)
|
|
$
|
(21,808
|
)
|
|
$
|
358
|
|
|
$
|
279,201
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Drilling Technologies
|
|
|
|
||||
Revenue
|
$
|
6,797
|
|
|
$
|
6,456
|
|
Cost of revenue
|
(4,655
|
)
|
|
(5,431
|
)
|
||
Selling, general and administrative
|
(3,031
|
)
|
|
(4,665
|
)
|
||
Depreciation and amortization
|
—
|
|
|
(748
|
)
|
||
Research and development
|
—
|
|
|
(42
|
)
|
||
Gain (loss) on disposal of long-lived assets
|
73
|
|
|
—
|
|
||
Impairment of inventory and long-lived assets
|
—
|
|
|
(36,522
|
)
|
||
Loss from operations
|
(816
|
)
|
|
(40,952
|
)
|
||
Other expense
|
(71
|
)
|
|
(175
|
)
|
||
Loss on write-down of assets held for sale
|
(6,560
|
)
|
|
—
|
|
||
Loss before income taxes
|
(7,447
|
)
|
|
(41,127
|
)
|
||
Income tax benefit
|
2,713
|
|
|
14,499
|
|
||
Net loss from discontinued operations
|
$
|
(4,734
|
)
|
|
$
|
(26,628
|
)
|
|
|
|
|
||||
Production Technologies
|
|
|
|
||||
Revenue
|
$
|
3,153
|
|
|
$
|
2,021
|
|
Cost of revenue
|
(2,483
|
)
|
|
(1,911
|
)
|
||
Selling, general and administrative
|
(873
|
)
|
|
(1,211
|
)
|
||
Depreciation and amortization
|
—
|
|
|
(148
|
)
|
||
Research and development
|
(271
|
)
|
|
(267
|
)
|
||
Impairment of inventory
|
—
|
|
|
(3,913
|
)
|
||
Loss from operations
|
(474
|
)
|
|
(5,429
|
)
|
||
Other expense
|
(36
|
)
|
|
(20
|
)
|
||
Loss on write-down of assets held for sale
|
(9,717
|
)
|
|
—
|
|
||
Loss before income taxes
|
(10,227
|
)
|
|
(5,449
|
)
|
||
Income tax benefit
|
3,726
|
|
|
1,921
|
|
||
Net loss from discontinued operations
|
$
|
(6,501
|
)
|
|
$
|
(3,528
|
)
|
|
|
|
|
||||
Drilling Technologies and Production Technologies
|
|
|
|
||||
Loss from discontinued operations, net of tax
|
$
|
(11,235
|
)
|
|
$
|
(30,156
|
)
|
|
Drilling Technologies
|
|
Production Technologies
|
||||||||||||
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, net
|
$
|
5,328
|
|
|
$
|
5,072
|
|
|
$
|
1,993
|
|
|
$
|
1,784
|
|
Inventories
|
9,059
|
|
|
9,078
|
|
|
7,768
|
|
|
8,115
|
|
||||
Other current assets
|
272
|
|
|
278
|
|
|
381
|
|
|
370
|
|
||||
Long-term receivable
|
—
|
|
|
—
|
|
|
4,179
|
|
|
4,179
|
|
||||
Property and equipment, net
|
11,352
|
|
|
11,277
|
|
|
4,059
|
|
|
3,978
|
|
||||
Goodwill
|
15,333
|
|
|
15,333
|
|
|
1,689
|
|
|
1,689
|
|
||||
Other intangible assets, net
|
7,398
|
|
|
7,395
|
|
|
489
|
|
|
484
|
|
||||
Assets held for sale
|
48,742
|
|
|
48,433
|
|
|
20,558
|
|
|
20,599
|
|
||||
Valuation allowance
|
(25,531
|
)
|
|
(18,971
|
)
|
|
(15,878
|
)
|
|
(6,161
|
)
|
||||
Assets held for sale, net
|
$
|
23,211
|
|
|
$
|
29,462
|
|
|
$
|
4,680
|
|
|
$
|
14,438
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
3,162
|
|
|
$
|
2,472
|
|
|
$
|
834
|
|
|
$
|
914
|
|
Accrued liabilities
|
464
|
|
|
1,190
|
|
|
178
|
|
|
385
|
|
||||
Liabilities held for sale
|
$
|
3,626
|
|
|
$
|
3,662
|
|
|
$
|
1,012
|
|
|
$
|
1,299
|
|
Drilling Technologies:
|
|
||
Inventories
|
$
|
12,653
|
|
Long-lived assets:
|
|
|
|
Property and equipment
|
14,642
|
|
|
Intangible assets other than goodwill
|
9,227
|
|
|
Production Technologies:
|
|
||
Inventories
|
3,913
|
|
|
Total impairment
|
$
|
40,435
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Supplemental non-cash investing and financing activities:
|
|
|
|
||||
Value of common stock issued in payment of accrued liability
|
$
|
188
|
|
|
$
|
—
|
|
Exercise of stock options by common stock surrender
|
7
|
|
|
—
|
|
||
Supplemental cash payment information:
|
|
|
|
||||
Interest paid
|
$
|
553
|
|
|
$
|
382
|
|
Income taxes paid, net of refunds
|
114
|
|
|
2,264
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Products
|
$
|
78,514
|
|
|
$
|
61,999
|
|
Services
|
1,440
|
|
|
1,813
|
|
||
|
$
|
79,954
|
|
|
$
|
63,812
|
|
Cost of revenue:
|
|
|
|
||||
Products
|
$
|
50,691
|
|
|
$
|
39,246
|
|
Services
|
934
|
|
|
424
|
|
||
Depreciation
|
587
|
|
|
348
|
|
||
|
$
|
52,212
|
|
|
$
|
40,018
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Raw materials
|
$
|
31,637
|
|
|
$
|
28,626
|
|
Work-in-process
|
3,013
|
|
|
2,918
|
|
||
Finished goods
|
30,027
|
|
|
26,739
|
|
||
Inventories
|
$
|
64,677
|
|
|
$
|
58,283
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Land
|
$
|
6,355
|
|
|
$
|
5,837
|
|
Buildings and leasehold improvements
|
43,152
|
|
|
42,986
|
|
||
Machinery, equipment and rental tools
|
37,031
|
|
|
36,187
|
|
||
Equipment in progress
|
3,827
|
|
|
3,235
|
|
||
Furniture and fixtures
|
1,983
|
|
|
1,969
|
|
||
Transportation equipment
|
2,730
|
|
|
3,059
|
|
||
Computer equipment and software
|
11,969
|
|
|
11,844
|
|
||
Property and equipment
|
107,047
|
|
|
105,117
|
|
||
Less accumulated depreciation
|
(32,720
|
)
|
|
(30,426
|
)
|
||
Property and equipment, net
|
$
|
74,327
|
|
|
$
|
74,691
|
|
|
Energy Chemistry Technologies
|
|
Consumer and Industrial Chemistry Technologies
|
|
Total
|
||||||
Balance at December 31, 2016
|
$
|
37,180
|
|
|
$
|
19,480
|
|
|
$
|
56,660
|
|
Goodwill impairment recognized
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at March 31, 2017
|
$
|
37,180
|
|
|
$
|
19,480
|
|
|
$
|
56,660
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Cost
|
|
Accumulated Amortization
|
|
Cost
|
|
Accumulated Amortization
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||||
Patents and technology
|
$
|
16,965
|
|
|
$
|
4,799
|
|
|
$
|
16,815
|
|
|
$
|
4,537
|
|
Customer lists
|
30,877
|
|
|
6,930
|
|
|
30,877
|
|
|
6,518
|
|
||||
Trademarks and brand names
|
1,506
|
|
|
1,080
|
|
|
1,467
|
|
|
1,069
|
|
||||
Total finite-lived intangible assets acquired
|
49,348
|
|
|
12,809
|
|
|
49,159
|
|
|
12,124
|
|
||||
Deferred financing costs
|
1,804
|
|
|
247
|
|
|
1,804
|
|
|
117
|
|
||||
Total amortizable intangible assets
|
51,152
|
|
|
$
|
13,056
|
|
|
50,963
|
|
|
$
|
12,241
|
|
||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||||
Trademarks and brand names
|
11,630
|
|
|
|
|
11,630
|
|
|
|
||||||
Total other intangible assets
|
$
|
62,782
|
|
|
|
|
$
|
62,593
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Carrying value:
|
|
|
|
|
|
|
|
||||||||
Other intangible assets, net
|
$
|
49,726
|
|
|
|
|
$
|
50,352
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Long-term debt:
|
|
|
|
||||
Borrowings under revolving credit facility
|
$
|
40,603
|
|
|
$
|
38,566
|
|
Term loan
|
9,083
|
|
|
9,833
|
|
||
Total long-term debt
|
49,686
|
|
|
48,399
|
|
||
Less current portion of long-term debt
|
(42,603
|
)
|
|
(40,566
|
)
|
||
Long-term debt, less current portion
|
$
|
7,083
|
|
|
$
|
7,833
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Loss from continuing operations
|
$
|
(743
|
)
|
|
$
|
(29
|
)
|
Loss from discontinued operations, net of tax
|
(11,235
|
)
|
|
(30,156
|
)
|
||
Net loss - Basic and Diluted
|
$
|
(11,978
|
)
|
|
$
|
(30,185
|
)
|
|
|
|
|
||||
Weighted average common shares outstanding - Basic
|
57,673
|
|
|
54,744
|
|
||
Assumed conversions:
|
|
|
|
||||
Incremental common shares from stock options
|
—
|
|
|
—
|
|
||
Incremental common shares from restricted stock units
|
—
|
|
|
—
|
|
||
Weighted average common shares outstanding - Diluted
|
57,673
|
|
|
54,744
|
|
||
|
|
|
|
||||
Basic earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
Discontinued operations, net of tax
|
(0.19
|
)
|
|
(0.55
|
)
|
||
Basic earnings (loss) per common share
|
$
|
(0.20
|
)
|
|
$
|
(0.55
|
)
|
Diluted earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
Discontinued operations, net of tax
|
(0.19
|
)
|
|
(0.55
|
)
|
||
Diluted earnings (loss) per common share
|
$
|
(0.20
|
)
|
|
$
|
(0.55
|
)
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
•
|
Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
Term loan
|
$
|
9,083
|
|
|
$
|
9,083
|
|
|
$
|
9,833
|
|
|
$
|
9,833
|
|
Borrowings under revolving credit facility
|
40,603
|
|
|
40,603
|
|
|
38,566
|
|
|
38,566
|
|
|
Three months ended March 31,
|
||||
|
2017
|
|
2016
|
||
U.S. federal statutory tax rate
|
(35.0
|
)%
|
|
(35.0
|
)%
|
State income taxes, net of federal benefit
|
(2.2
|
)
|
|
(3.0
|
)
|
Non-U.S. income taxed at different rates
|
0.5
|
|
|
0.5
|
|
Excess tax benefit related to stock-based awards
|
6.2
|
|
|
—
|
|
Other
|
0.4
|
|
|
0.5
|
|
Effective income tax rate
|
(30.1
|
)%
|
|
(37.0
|
)%
|
Shares issued at December 31, 2016
|
59,684,669
|
|
Issued as restricted stock award grants
|
80,783
|
|
Issued upon exercise of stock options
|
5,000
|
|
Shares issued at March 31, 2017
|
59,770,452
|
|
•
|
Energy Chemistry Technologies designs, develops, manufactures, packages, and markets specialty chemistries used in oil and natural gas well drilling, cementing, completion, and stimulation. In addition, the Company’s chemistries are used in specialized enhanced and improved oil recovery markets. Activities in this segment also include construction and management of automated material handling facilities and management of loading facilities and blending operations for oilfield services companies.
|
•
|
Consumer and Industrial Chemistry Technologies designs, develops, and manufactures products that are sold to companies in the flavor and fragrance industry and the specialty chemical industry. These technologies are used by beverage and food companies, fragrance companies, and companies providing household and industrial cleaning products.
|
As of and for the three months ended March 31,
|
Energy Chemistry Technologies
|
|
Consumer and Industrial Chemistry Technologies
|
|
Corporate and Other
|
|
Total
|
||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Net revenue from external customers
|
$
|
60,765
|
|
|
$
|
19,189
|
|
|
$
|
—
|
|
|
$
|
79,954
|
|
Gross profit
|
22,302
|
|
|
5,440
|
|
|
—
|
|
|
27,742
|
|
||||
Income (loss) from operations
|
8,548
|
|
|
3,705
|
|
|
(12,876
|
)
|
|
(623
|
)
|
||||
Depreciation and amortization
|
1,849
|
|
|
579
|
|
|
604
|
|
|
3,032
|
|
||||
Capital expenditures
|
514
|
|
|
500
|
|
|
863
|
|
|
1,877
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
|
|
|
||||||||
Net revenue from external customers
|
$
|
44,679
|
|
|
$
|
19,133
|
|
|
$
|
—
|
|
|
$
|
63,812
|
|
Gross profit
|
18,769
|
|
|
5,025
|
|
|
—
|
|
|
23,794
|
|
||||
Income (loss) from operations
|
8,013
|
|
|
3,389
|
|
|
(11,034
|
)
|
|
368
|
|
||||
Depreciation and amortization
|
1,244
|
|
|
510
|
|
|
496
|
|
|
2,250
|
|
||||
Capital expenditures
|
3,014
|
|
|
143
|
|
|
633
|
|
|
3,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Energy Chemistry Technologies
|
$
|
196,155
|
|
|
$
|
184,328
|
|
Consumer and Industrial Chemistry Technologies
|
106,850
|
|
|
98,105
|
|
||
Corporate and Other
|
46,154
|
|
|
56,882
|
|
||
Total segments
|
349,159
|
|
|
339,315
|
|
||
Held for sale
|
27,891
|
|
|
43,900
|
|
||
Total assets
|
$
|
377,050
|
|
|
$
|
383,215
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
U.S.
|
$
|
64,649
|
|
|
$
|
52,607
|
|
Other countries
|
15,305
|
|
|
11,205
|
|
||
Total
|
$
|
79,954
|
|
|
$
|
63,812
|
|
•
|
Energy Chemistry Technologies designs, develops, manufactures, packages, and markets specialty chemistries used in O&G well drilling, cementing, completion, and stimulation. These technologies developed by Flotek’s Research and Innovation team enable customers to pursue improved efficiencies in the drilling and completion of wells.
|
•
|
Consumer and Industrial Chemistry Technologies designs, develops, and manufactures products that are sold to companies in the flavor and fragrance industries and specialty chemical industry. These technologies are used by beverage and food companies, fragrance companies, and companies providing household and industrial cleaning products.
|
•
|
Drilling Technologies assembles, rents, sells, inspects, and markets downhole drilling equipment used in energy, mining, and industrial drilling activities.
|
•
|
Production Technologies assembles and markets production-related equipment, including pumping system components, electric submersible pumps (“ESP”), gas separators, valves, and services that support natural gas and oil production activities.
|
•
|
Historical, current, and anticipated future O&G prices,
|
•
|
Federal, state, and local governmental actions that may encourage or discourage drilling activity,
|
•
|
Customers’ strategies relative to capital funds allocations,
|
•
|
Weather conditions, and
|
•
|
Technological changes to drilling and completion methods and economics.
|
•
|
Chemistries that improve the economics of their O&G operations,
|
•
|
Chemistries that meet the need of consumer product markets, and
|
•
|
Chemistries that are economically viable, socially responsible, and ecologically sound.
|
•
|
Historical, current, and anticipated future production levels of the global citrus (primarily orange) and guar crops,
|
•
|
Weather related risks,
|
•
|
Health and condition of citrus trees and guar plants (e.g., disease and pests), and
|
•
|
International competition and pricing pressures resulting from natural and artificial pricing influences.
|
•
|
O&G drilling and completion operations,
|
•
|
O&G production operations, and
|
•
|
Non-O&G industrial solvents.
|
TABLE A
|
Three months ended March 31,
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|
||
Average North American Active Drilling Rigs
|
|
|
|
|
|
|||
U.S.
|
742
|
|
|
551
|
|
|
34.7
|
%
|
Canada
|
295
|
|
|
173
|
|
|
70.5
|
%
|
Total
|
1,037
|
|
|
724
|
|
|
43.2
|
%
|
Average U.S. Active Drilling Rigs by Type
|
|
|
|
|
|
|||
Vertical
|
69
|
|
|
63
|
|
|
9.5
|
%
|
Horizontal
|
610
|
|
|
435
|
|
|
40.2
|
%
|
Directional
|
63
|
|
|
53
|
|
|
18.9
|
%
|
Total
|
742
|
|
|
551
|
|
|
34.7
|
%
|
Average North American Drilling Rigs by Product
|
|
|
|
|
|
|||
Oil
|
754
|
|
|
524
|
|
|
43.9
|
%
|
Natural Gas
|
283
|
|
|
200
|
|
|
41.5
|
%
|
Total
|
1,037
|
|
|
724
|
|
|
43.2
|
%
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue
|
$
|
79,954
|
|
|
$
|
63,812
|
|
Cost of revenue
|
52,212
|
|
|
40,018
|
|
||
Gross profit
|
27,742
|
|
|
23,794
|
|
||
Gross margin %
|
34.7
|
%
|
|
37.3
|
%
|
||
Selling, general and administrative costs
|
22,581
|
|
|
19,577
|
|
||
Selling, general and administrative costs %
|
28.2
|
%
|
|
30.7
|
%
|
||
Depreciation and amortization
|
2,445
|
|
|
1,902
|
|
||
Research and innovation costs
|
3,141
|
|
|
1,947
|
|
||
Loss on disposal of long-lived assets
|
198
|
|
|
—
|
|
||
(Loss) income from operations
|
(623
|
)
|
|
368
|
|
||
Operating margin %
|
(0.8
|
)%
|
|
0.6
|
%
|
||
Interest and other expense, net
|
(440
|
)
|
|
(414
|
)
|
||
Loss before income taxes
|
(1,063
|
)
|
|
(46
|
)
|
||
Income tax benefit
|
320
|
|
|
17
|
|
||
Loss from continuing operations
|
(743
|
)
|
|
(29
|
)
|
||
Loss from discontinued operations, net of tax
|
(11,235
|
)
|
|
(30,156
|
)
|
||
Net loss
|
$
|
(11,978
|
)
|
|
$
|
(30,185
|
)
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
Cash and cash equivalents
|
$
|
1,826
|
|
|
$
|
2,480
|
|
Current portion of long-term debt
|
(42,603
|
)
|
|
(44,765
|
)
|
||
Long-term debt, less current portion
|
(7,083
|
)
|
|
(16,470
|
)
|
||
Net debt
|
$
|
(47,860
|
)
|
|
$
|
(58,755
|
)
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net cash used in operating activities
|
$
|
(2,557
|
)
|
|
$
|
(6,383
|
)
|
Net cash used in investing activities
|
(1,803
|
)
|
|
(3,921
|
)
|
||
Net cash provided by financing activities
|
1,337
|
|
|
10,516
|
|
||
Net cash flows used in discontinued operations
|
—
|
|
|
—
|
|
||
Effect of changes in exchange rates on cash and cash equivalents
|
26
|
|
|
60
|
|
||
Net (decrease) increase in cash and cash equivalents
|
$
|
(2,997
|
)
|
|
$
|
272
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
Term loan
|
$
|
9,083
|
|
|
$
|
2,000
|
|
|
$
|
4,000
|
|
|
$
|
3,083
|
|
|
$
|
—
|
|
Estimated interest expense on term loan
(1)
|
1,258
|
|
|
538
|
|
|
682
|
|
|
38
|
|
|
—
|
|
|||||
Borrowings under revolving credit facility
(2)
|
40,603
|
|
|
40,603
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
23,442
|
|
|
2,701
|
|
|
4,761
|
|
|
3,980
|
|
|
12,000
|
|
|||||
Total
|
$
|
74,386
|
|
|
$
|
45,842
|
|
|
$
|
9,443
|
|
|
$
|
7,101
|
|
|
$
|
12,000
|
|
Period
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
(2) (3) (4)
|
||||||
January 1, 2017 to January 31, 2017
|
8,316
|
|
|
$
|
10.03
|
|
|
—
|
|
|
$
|
54,907,862
|
|
February 1, 2017 to February 28, 2017
|
1,508
|
|
|
$
|
12.35
|
|
|
—
|
|
|
$
|
54,907,862
|
|
March 1, 2017 to March 31, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
54,907,862
|
|
Total
|
9,824
|
|
|
$
|
10.39
|
|
|
—
|
|
|
|
|
(1)
|
The Company purchases shares of its common stock (a) to satisfy tax withholding requirements and payment remittance obligations related to period vesting of restricted shares and exercise of non-qualified stock options, (b) to satisfy payments required for common stock upon the exercise of stock options, and (c) as part of a publicly announced repurchase program on the open market.
|
(2)
|
In November 2012, the Company’s Board of Directors authorized the repurchase of up to
$25 million
of the Company’s common stock. Repurchases may be made in open market or privately negotiated transactions. Through
March 31, 2017
, the Company has repurchased
$20.1 million
of its common stock and
$4.9 million
may yet be used to purchase shares.
|
(3)
|
In June 2015, the Company’s Board of Directors authorized the repurchase of up to an additional
$50 million
of the Company’s common stock. Repurchases may be made in open market or privately negotiated transactions. Through
March 31, 2017
, the Company has not repurchased any of its common stock under this authorization and
$50.0 million
may yet be used to purchase shares.
|
(4)
|
A covenant under the Company’s Credit Facility limits the amount that may be used to repurchase the Company’s common stock. As of
March 31, 2017
, this covenant limits additional share repurchases to
$4.9 million
.
|
FLOTEK INDUSTRIES, INC.
|
||
|
|
|
By:
|
|
/s/ JOHN W. CHISHOLM
|
|
|
John W. Chisholm
|
|
|
President, Chief Executive Officer and
Chairman of the Board
|
FLOTEK INDUSTRIES, INC.
|
||
|
|
|
By:
|
|
/s/ H. RICHARD WALTON
|
|
|
H. Richard Walton
|
|
|
Executive Vice President and
Chief Financial Officer
|
1 Year Flotek Industries Chart |
1 Month Flotek Industries Chart |
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