HOUSTON, April 7, 2014 /PRNewswire/ -- Flotek
Industries, Inc. ("Flotek" or the "Company") (NYSE: FTK) today
announced it has entered into an Agreement to acquire certain
intellectual property that will expand Flotek's use of its patented
Complex nano-Fluid™ technology into drilling fluids systems,
providing a superior solution for a myriad of challenges,
especially those presented by unconventional drilling programs.
The intellectual property – including certain patents and trade
secrets – is being acquired from Anthony
Rea, via ARC Fluid Technologies, LLC. The technology relates
to the use of certain Flotek Complex nano-Fluid™ chemistries in
drilling fluid systems to provide superior performance in certain
conventional and unconventional drilling applications.
"Flotek and Tony Rea have been
working together for nearly a decade exploring applications of our
nanofluid chemistry into drilling fluid systems," said John Chisholm, Chairman, President and Chief
Executive Officer of Flotek. "This agreement is a natural extension
of that relationship and one that we believe will have a marked
impact on broadening the application of our Complex nano-Fluid™
chemistries across a well's life cycle."
In addition, Flotek and Rea have agreed to a two-year consulting
agreement whereby Rea will devote significant time and effort to
assisting Flotek to reach key players in the drilling fluids market
as well as exploration and production companies that will benefit
from the use of Flotek's Complex nano-Fluid™ technologies in the
drilling process.
"Tony's work, in collaboration with Flotek's scientific team,
has proven – in both the lab and the field – the efficacy of
Complex nano-Fluid™ chemistries in drilling fluid systems,
especially in certain unconventional drilling programs," added
Chisholm. "We look forward, with Tony's assistance, to quickly
growing awareness of the benefits of our chemistries in drilling
fluids systems – from better performance to a cleaner environmental
footprint – and creating a new market to expand the use of Complex
nano-Fluid™ technologies in both domestic and international
markets."
Preliminary First Quarter Results
Ahead of the
Company's presentation at the Independent Petroleum Association of
America New York Oil and Gas Investment Symposium this morning,
Flotek provides the following select, preliminary financial results
from the three-months ended March 31,
2014.
Flotek believes revenue should exceed $102 million, an increase of over 31% from the
same period in 2013. As previously noted, holidays and severe
winter weather had an impact on the first weeks of 2014. However,
despite the weakness in the first-half of January, revenue growth
accelerated consistently in the quarter, a trend – with the
exception of the impact of the annual winter break-up in
Canada – the Company expects
should continue in the second quarter.
Moreover, the Company expects overall gross margins should
exceed 42% for the first quarter, compared to 41.7% in the first
quarter of 2013 and 39.5% in the fourth quarter of 2013.
"While early January felt the impact of the holiday hangover and
weather-related issues, business accelerated consistently in
February and March and we finished the quarter with significant
momentum," said Chisholm. "And, while revenue growth in certain
segments was muted, energy chemistry growth was strong and key
segment margins improved nicely."
Energy Chemical Technologies revenue in the first quarter of
2014 are expected to be approximately 40% above year-ago levels and
nearly 10% greater than segment revenues in the fourth quarter of
2013. In addition, Energy Chemistry Technologies gross margins are
expected to remain at or above fourth quarter's robust levels.
"Flotek continues to make meaningful strides in the sale of its
core Complex nano-Fluids™ technologies which should be seen in our
first quarter energy chemistry results," added Chisholm. "While our
margins will fluctuate based on product mix from
quarter-to-quarter, the overall positive trend should continue into
the coming months."
Drilling Technologies segment revenue in the first quarter is
expected to be down modestly when compared to both the year-ago
quarter as well as the fourth quarter of 2013. The decline in
revenue is primarily the result of a decline in Teledrift rentals
in the Mid Continent and Southern regions due to seasonal weather
patterns and transient employment and logistics issues. Both
regions regained momentum in the later part of the quarter and are
continuing to re-accelerate. In addition, while our Stemulator™
agitation tool experienced a slower-than-expected start in January,
rentals ended the quarter strong, with March providing the
strongest monthly rental revenue to date, a trend Flotek expects to
continue in the second quarter.
The Company expects Drilling Technologies segment gross margins
to increase by over 500 basis points when compared to
fourth-quarter levels.
Flotek expects Artificial Lift Technologies segment revenues to
be approximately $2.3 million as the
Company begins to reposition this business under the leadership of
David McMahon. Gross margins should
be between 25-30%. Consumer and Industrial Chemistry Technologies
("CICT") revenue is expected to exceed $13
million. In addition, Flotek expects CICT segment gross
margins to exceed 31% for the quarter.
"While we are pleased with our first look at first quarter
results, we are more excited about the opportunities ahead in the
second quarter and the balance of the year," added Chisholm. "We
continue to find ways to create efficiencies in our organization
that should yield solid bottom-line results in the quarter. In
addition, our acquisitions of Florida Chemical and EOGA, as well as
our pending acquisition of Site Lark and this morning's announced
strategic alliance with Tony Rea and
ARC, not only are opportunistic uses of capital but also provide
significant strategic advantages as we continue to build a premier
oilfield technology concern with a focus on creating value for our
shareholders."
First Quarter Earnings Reporting Schedule
Flotek will
host a conference call on Tuesday, April 29,
2014 at 7:30 a.m.
Central Daylight Time to discuss its financial and operating
results for the three-months ended March 31,
2014. Flotek intends to provide dial-in information through
a press release on April 28,
2014.
Flotek plans to file its 10-Q after the market close on
Monday, April 28, 2014. In addition,
the Company will provide additional details regarding operating
results in a press release after the market close on April 28, 2014.
About Flotek Industries, Inc.
Flotek is a global
developer and distributor of a portfolio of innovative oilfield
technologies, including specialty chemicals and down-hole drilling
and production equipment. It serves major and independent companies
in the domestic and international oilfield service industry. 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.
SOURCE Flotek Industries, Inc.