SOURCE: Flotek Industries, Inc.

November 02, 2005 07:00 ET

Flotek Industries, Inc. Reports 2005 Third Quarter Results

HOUSTON, TX -- (MARKET WIRE) -- November 2, 2005 -- Flotek Industries, Inc. (AMEX: FTK) ("Flotek" or "the Company") today reported net profit for the three months ended September 30, 2005 of $1.8 million, or $0.24 per share, a 152% increase compared with net income of $0.7 million, or $0.11 per share, for the third quarter of the prior year. On a fully diluted basis, the Company earned $0.21 per share during third quarter 2005 as compared to $0.10 during third quarter 2004.

"Overall, we are pleased with the third quarter results, with revenues improved over last quarter, the completion of two strategic acquisitions in the latter part of the quarter, and expansion of our shareholder base to institutional investors through our private equity placement. Our operations were negatively impacted from Hurricane Katrina and Hurricane Rita with actual revenues approximately $1 million below management's expectations," commented Jerry Dumas, Chairman and Chief Executive Officer. "Looking ahead we are encouraged by the increase in overall sales activity to date in the fourth quarter."

Key developments during the third quarter included:

--  On July 27, 2005 Flotek's common stock began trading on the American
    Stock Exchange under the stock ticker symbol "FTK."  Prior to this date our
    common stock was traded on the OTC Bulletin Board market under the stock
    ticker symbol, "FLTK" or "FLTK.OB."  
    
--  On August 19, 2005, the Company purchased the assets of privately held
    Harmon's Machine Works, Inc. ("Harmon"), a down-hole oilfield and mining
    tool company located in Midland, Texas, for approximately $4.9 million.
    Harmon serves both the oilfield and mining industries, and offers
    significant strategic manufacturing and sourcing capabilities to our
    drilling products division.
    
--  On August 29, 2005, we completed a private offering of 1,300,000
    shares of common stock at a price of $16.30 per share to 18 accredited
    investors. Gross proceeds from the private offering were $21.2 million, net
    $19.9 million after related expenses .  Proceeds from the sale were used
    for general corporate purposes, strategic acquisitions, and repayment of
    existing indebtedness.  In connection with the sale, we covenanted with the
    private placement investors to file a registration statement with the SEC
    within 60 days of the completion of the private offering, covering resale
    of the shares by those investors.  We submitted our Form SB-2 registration
    statement with the SEC on October 28, 2005, within 60 days of the
    completion of the private offering.
    
--  On August 31, 2005, the Company purchased the assets of privately held
    Precision-LOR, Ltd. ("LOR"), a drilling tool rental and inspection service
    provider located in South Texas, for approximately $4.9 million.  LOR
    expands our drilling tools segment into the drill pipe inspection service
    industry and further expands the geographic footprint of our drilling tool
    rental operations.
    
Financial Results (in thousands, except per share amounts):
                          Three Months Ended          Nine Months Ended
                            September 30,                September 30,
                          2005          2004          2005          2004
                        --------      -------       --------      --------
Revenue                 $ 13,304      $ 5,671       $ 36,805      $ 15,278
Gross Profit            $  5,728      $ 2,497       $ 15,059      $  6,616
Operating Income        $  2,727      $   934       $  7,157      $  1,950
Net Income              $  1,770      $   703       $  5,226      $  1,379

Basic EPS               $   0.24      $  0.11       $   0.75      $   0.21
Diluted EPS             $   0.21      $  0.10       $   0.67      $   0.19

EBITDA                  $  3,149      $ 1,156       $  8,196      $  2,540
During the third quarter, based on management's projections for full year pretax income, the estimated effective tax rate was raised from 14.3% as of June 30, 2005 to 20.1% at September 30, 2005. We recorded a $0.7 million provision for income taxes during the third quarter 2005 as compared to $0.4 million during the second quarter and $0.2 million during the first quarter of 2005.

Flotek Industries, Inc. will review its quarterly financial results in an Internet presentation, commencing at 3:00 p.m. CST on Wednesday, November 2, 2005. Interested parties may listen to the live web cast, or a replay that will be available shortly after the presentation. The audio portion of the presentation will be accessible by telephone at (888) 217-1175 and can be replayed until November 4, 2005 by calling (800) 642-1687 and entering code 1895991.

EBITDA (earnings before interest, taxes, depreciation and amortization) is used as a supplemental financial measurement to assess liquidity and the ability to generate cash sufficient to pay interest costs. The following reconciliation of net income to EBITDA is provided since EBITDA is not a financial measure recognized by generally accepted accounting principles.

                          Three Months Ended          Nine Months Ended
                            September 30,                September 30,
                          2005          2004          2005          2004
                        --------      -------       --------      --------
EBITDA                  $ 3,149       $ 1,156       $  8,196      $  2,540
Depreciation and
 amortization           $   422       $   174       $  1,000      $    538
Interest                $   215       $   179       $    653      $    523
Income Taxes            $   742       $   100       $  1,317      $    100
Net Income              $ 1,770       $   703       $  5,226      $  1,379
More detail will be available in the Company's 10-QSB to be filed with the SEC. For product information and additional information on the Company, please visit Flotek's web site at http://www.flotekind.com.

Flotek is a publicly traded company involved in the manufacturing and marketing of innovative specialty chemicals, downhole drilling and production equipment, and management of automated bulk material handling, loading and blending facilities. It serves major and independent companies in the domestic and international oilfield service industry.

Statements made in this press release, including those relating to the positive direction of the Company, and increased revenue base, are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause results to differ materially from those set forth in these statements. Other factors identified in the Company's filings with the Securities and Exchange Commission could also affect the forward-looking statements contained in this press release.

Contact Information

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