SOURCE: Flotek Industries, Inc.

May 10, 2006 06:00 ET

Flotek Industries, Inc. Announces First Quarter 2006 Earnings

HOUSTON, TX -- (MARKET WIRE) -- May 10, 2006 -- Flotek Industries, Inc. (AMEX: FTK) today announced revenues for the quarter ended March 31, 2006 of $16.1 million, an increase of 45.5% compared to $11.0 million for the quarter ended March 31, 2005. The first quarter of 2006 included the full quarter contribution of three drilling tool acquisitions completed in August 2005 and January 2006. In addition, continued strong growth in our Chemical and Logistics segment bolstered sales in the first quarter of 2006.

Gross profit rose 66.7% from $4.1 million for the first quarter of 2005 to $6.8 million for the first quarter of 2006. More importantly, gross profit as a percentage of revenues increased from 36.8% in the first quarter of 2005 to 42.2% in the first quarter of 2006. The significant increase in gross margin percentage is a result of price increases that were put into effect in 2005 in the Chemical and Logistics segment and the Drilling Tools segment while maintaining costs of goods. In addition, a continued shift in revenue mix towards higher margin proprietary specialty chemical sales and drilling tool rentals contributed to the gross profit margin increase in the first quarter of 2006. For example, sales of our biodegradable "green" chemicals increased 80.2% in the first quarter 2006 as compared to the first quarter 2005.

Income from operations for the quarter ended March 31, 2006 totaled $2.8 million which was a 57.3% increase over the same period last year. The Drilling Products segment was the largest contributor to this growth, with the recent acquisitions accounting for $0.3 million of the total $0.9 million growth in the Drilling Products segment quarter over quarter.

A provision for income taxes of $0.9 million was recorded in the first quarter of 2006. An effective tax rate of 34.5% was applied in the first quarter 2006 versus 9.4% in the first quarter 2005, resulting in a $0.8 million increase in the tax provision quarter over quarter. On a comparative basis, had pretax income been taxed at the first quarter 2005 effective tax rate of 9.4%, net income would have been $0.7 million higher which would be a $0.08 increase in basic earnings per share for the quarter. The significant increase in taxes is a result of decreased availability of accumulated net operating losses, an increase in our projected federal statutory rate based on estimated income levels, and an increase in our estimated state income tax liability.

Despite the significant increase in tax rate the Company generated $1.8 million in net income in the first quarter of 2006. This translated to basic earnings per share of $0.21 and diluted earnings per share of $0.19 for the quarter ended March 31, 2006.

Financial Results (in millions, except per share amounts):

                        Three Months Ended March 31,
                        ----------------------------
                            2006            2005
                        ------------    ------------
Revenue                 $       16.1    $       11.0
Gross Profit            $        6.8    $        4.1
Gross Profit %                  42.2%           36.8%
Operating Income        $        2.8    $        1.8
Net Income              $        1.8    $        1.5
Effective Tax Rate %            34.5%            9.4%

Basic EPS               $       0.21    $       0.22
Diluted EPS             $       0.19    $       0.20
Jerry D. Dumas, Sr., Chairman and Chief Executive Officer, commented, "During the first quarter of 2006 we were able to increase our gross profit margins because we have matured in the way we do business and produce our products. As a result, our margins are growing due to accepted price increases and the ability to produce our product at a lesser cost than a year ago. The downhole drilling tool acquisitions have enabled us to become more self-sufficient in producing our products, thus reduce our costs as well."

Flotek manufactures and markets innovative specialty chemicals, downhole drilling and production equipment, and manages automated bulk material handling, loading and blending facilities. It serves major and independent companies in the domestic and international oilfield service industry. For additional information, please visit Flotek's web site at http://www.flotekind.com.

Forward-Looking Statements

This Press Release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934) regarding Flotek Industries, Inc. 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-KSB (including without limitation in the "Risk Factors" Section) and Form 10-QSB to be filed, 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.

Contact Information

  • CONTACT:
    Flotek Industries, Inc.
    Rosalie Melia
    Corporate Secretary
    713.849.9911