Flotek's Q3 Net Income Soars 704% on Strong Revenue Growth

TL;DR

**FTK is back, baby! Net income exploded 704% this quarter, signaling a strong rebound and growth trajectory.**

AI Summary

FLOTEK INDUSTRIES INC/CN/ (FTK) reported a significant increase in net income to $20.355 million for the three months ended September 30, 2025, up from $2.532 million in the prior-year period, representing a 704% increase. Total revenues grew to $56.031 million for the quarter, a 12.6% increase from $49.742 million in Q3 2024, driven by both external customer revenue of $22.941 million and related party revenue of $33.090 million. Gross profit more than doubled to $17.783 million from $9.119 million year-over-year. The company's Data Analytics segment expanded its mobile power generation solutions through an asset acquisition, facilitating the use of lower-cost field gas. A notable strategic change includes the issuance of a $39.560 million related-party note payable and a significant increase in property and equipment, net, to $20.822 million from $6.178 million at December 31, 2024. Deferred tax assets also surged to $30.351 million from $51 thousand, largely due to a valuation allowance release. Accounts receivable, related party, decreased to $44.831 million from $52.370 million, while overall current assets increased to $100.020 million from $96.456 million.

Why It Matters

This substantial increase in net income and revenue signals a strong operational turnaround and strategic execution for Flotek, particularly within its Data Analytics segment's expansion into mobile power generation. For investors, the 704% jump in net income and the significant increase in deferred tax assets due to a valuation allowance release could indicate improved financial health and future profitability. Employees may see increased job security and growth opportunities as the company expands its technology offerings. Customers, especially those in the oil and gas industry, benefit from Flotek's solutions that aim to reduce environmental impact and operational costs, potentially enhancing their own profitability and competitiveness in a challenging market.

Risk Assessment

Risk Level: medium — While net income surged, the company's reliance on related party transactions remains significant, with related party revenue at $33.090 million for the quarter and a $39.560 million related-party note payable. This concentration introduces counterparty risk. Additionally, the increase in accounts receivable, net, to $26.767 million from $17.386 million, and the allowance for credit losses rising to $716 thousand from $447 thousand, suggests potential collection challenges, despite no allowance for the related party accounts receivable.

Analyst Insight

Investors should closely monitor the company's related party exposure and its impact on cash flow and profitability. While the net income growth is impressive, further investigation into the sustainability of this growth, particularly from external customers, is warranted. Consider the long-term implications of the Data Analytics segment's expansion and its ability to diversify revenue streams beyond related parties.

Financial Highlights

debt To Equity

0.93

revenue

$56.031M

operating Margin

N/A

total Assets

$212.687M

total Debt

$102.189M

net Income

$20.355M

eps

$0.57

gross Margin

31.7%

cash Position

$4.603M

revenue Growth

+12.6%

Revenue Breakdown

Key Numbers

• $20.355M — Net Income (Q3 2025) (Increased 704% from $2.532M in Q3 2024)
• $56.031M — Total Revenues (Q3 2025) (Up 12.6% from $49.742M in Q3 2024)
• $17.783M — Gross Profit (Q3 2025) (More than doubled from $9.119M in Q3 2024)
• $30.351M — Deferred Tax Assets (Sep 30, 2025) (Significant increase from $51K at Dec 31, 2024, due to valuation allowance release)
• $39.560M — Note Payable - Related Party (Sep 30, 2025) (New long-term liability indicating related party financing)
• $20.822M — Property and Equipment, net (Sep 30, 2025) (Increased from $6.178M at Dec 31, 2024, reflecting asset acquisition)
• $44.831M — Accounts Receivable, Related Party (Sep 30, 2025) (Decreased from $52.370M at Dec 31, 2024)
• $0.57 — Basic EPS (Q3 2025) (Increased from $0.09 in Q3 2024)

Key Players & Entities

• FLOTEK INDUSTRIES INC/CN/ (company) — registrant
• ProFrac Services, LLC (company) — related party customer
• SEC (regulator) — Securities and Exchange Commission
• $20.355 million (dollar_amount) — Net income for Q3 2025
• $2.532 million (dollar_amount) — Net income for Q3 2024
• $56.031 million (dollar_amount) — Total revenues for Q3 2025
• $49.742 million (dollar_amount) — Total revenues for Q3 2024
• $39.560 million (dollar_amount) — Note payable - related party
• $30.351 million (dollar_amount) — Deferred tax assets, net, at September 30, 2025
• $51 thousand (dollar_amount) — Deferred tax assets, net, at December 31, 2024

FAQ

Risk Factors

• Related Party Transactions [medium — financial]: Significant revenue and financing from related parties ($33.090M revenue, $39.560M note payable) could present conflicts of interest or lack of arm's length terms, potentially impacting financial stability if these relationships change.
• Deferred Tax Asset Valuation [medium — financial]: The substantial increase in deferred tax assets to $30.351M from $51K is due to a valuation allowance release. This implies past profitability concerns, and future profitability is now assumed to utilize these assets, which could be at risk if performance falters.
• Asset Acquisition Integration [low — operational]: The acquisition of mobile power generation assets for the Data Analytics segment introduces operational integration risks. Successful integration is crucial for realizing the expected benefits of using lower-cost field gas.
• Increased Property and Equipment [low — financial]: A significant increase in Property and Equipment, net, from $6.178M to $20.822M, driven by asset acquisitions, requires careful management of capital expenditures and depreciation to ensure return on investment.
• Accounts Receivable Concentration [low — financial]: While Accounts Receivable, Related Party, decreased to $44.831M, it still represents a substantial portion of receivables, indicating a continued reliance on related entities for revenue collection.

Industry Context

The energy services sector is experiencing a dynamic period, with companies focusing on efficiency, emissions reduction, and technological integration. Flotek operates within this environment, offering both chemical solutions and data analytics to optimize hydrocarbon production and reduce environmental impact. The increasing emphasis on ESG factors and the utilization of field gas for power generation are key trends influencing strategic decisions.

Regulatory Implications

Flotek's operations are subject to environmental regulations concerning emissions and resource management. The company's focus on reducing environmental impact through its technologies aligns with evolving regulatory landscapes. Additionally, accounting standards for leases (ASC 842) and income tax disclosures (ASU 2023-09) necessitate careful compliance and transparent reporting.

What Investors Should Do

1. Monitor related party transactions closely.
2. Analyze the sustainability of deferred tax asset utilization.
3. Evaluate the performance of the Data Analytics segment post-acquisition.
4. Assess gross margin trends.

Key Dates

• 2025-09-30: Q3 2025 Earnings Report — Demonstrates significant revenue and net income growth, driven by strong performance in both segments and strategic asset acquisition.
• 2025-04-28: Lease Agreement with Related Party — Initiated operating lease revenue for mobile power generation assets, contributing to the Data Analytics segment's performance and indicating ongoing related-party business.
• 2025-01-01: Beginning of Fiscal Year 2025 — Sets the stage for the year's financial performance, with Q3 results showing substantial year-over-year improvements.

Glossary

Deferred tax assets, net

Represents future tax benefits that a company can use to reduce its taxable income. A valuation allowance is established when it's more likely than not that some portion or all of a deferred tax asset will not be realized. (The significant increase due to a valuation allowance release suggests improved future profitability expectations, but also highlights past periods where such benefits were uncertain.)

Related party

An entity or individual that has the ability to control or significantly influence the operating decisions of another entity. Transactions between related parties may not be conducted at arm's length. (A substantial portion of Flotek's revenue and a new significant note payable are with related parties, making these relationships critical to monitor.)

Valuation allowance

A contra-asset account used to reduce the carrying value of deferred tax assets to their estimated realizable amount. A release of this allowance indicates management's belief that future taxable income will be sufficient to utilize these assets. (The release of the valuation allowance on deferred tax assets is a primary driver for the surge in this balance and a key factor in the reported net income increase.)

Property and equipment, net

The historical cost of tangible assets used in the operation of a business, less accumulated depreciation. This category includes items like buildings, machinery, and vehicles. (The significant increase reflects strategic investments, likely through asset acquisitions, aimed at expanding operational capabilities, particularly in the Data Analytics segment.)

Operating lease

A lease agreement where the lessor retains ownership of the asset, and the lessee pays for the right to use the asset for a specified period. The asset remains on the lessor's balance sheet. (Flotek is recognizing lease revenue from an operating lease with a related party, contributing to its revenue stream and demonstrating a specific business model within its Data Analytics segment.)

Year-Over-Year Comparison

Compared to the prior year, Flotek Industries has demonstrated remarkable financial improvement. Total revenues increased by 12.6% to $56.031 million, while net income surged by an impressive 704% to $20.355 million. This substantial growth is reflected in the basic EPS, which rose from $0.09 to $0.57. Gross profit more than doubled, indicating enhanced operational efficiency or favorable market conditions. A key development is the significant increase in Property and Equipment, net, and the issuance of a large related-party note payable, alongside a substantial increase in deferred tax assets due to a valuation allowance release, signaling strategic investments and a positive outlook on future tax utilization.

Key Financial Figures

• $0.0001 — ange on which registered Common Stock, $0.0001 par value FTK New York Stock Exchange

Filing Documents

• ftk-20250930.htm (10-Q) — 1616KB
• a102consent.htm (EX-10.2) — 37KB
• a103guaranty.htm (EX-10.3) — 61KB
• a104equipmentrentalamendme.htm (EX-10.4) — 22KB
• a105ablconsent.htm (EX-10.5) — 10KB
• ex311_10qxq3-25.htm (EX-31.1) — 10KB
• ex312_10qxq3-25.htm (EX-31.2) — 10KB
• ex321_10qx3q25.htm (EX-32.1) — 4KB
• ex322_10qx3q-25.htm (EX-32.2) — 4KB
• image_02.jpg (GRAPHIC) — 29KB
• image_1.jpg (GRAPHIC) — 0KB
• 0000928054-25-000098.txt ( ) — 9983KB
• ftk-20250930.xsd (EX-101.SCH) — 64KB
• ftk-20250930_cal.xml (EX-101.CAL) — 120KB
• ftk-20250930_def.xml (EX-101.DEF) — 332KB
• ftk-20250930_lab.xml (EX-101.LAB) — 752KB
• ftk-20250930_pre.xml (EX-101.PRE) — 570KB
• ftk-20250930_htm.xml (XML) — 1753KB

Forward-Looking Statements 3

Forward-Looking Statements 3

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Unaudited Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024 4 Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 5 Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024 6 Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 7 Unaudited Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 8 Notes to Unaudited Condensed Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 40 Item 4.

Controls and Procedures

Controls and Procedures 40

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1. L egal Proceedings 42

Risk Factors 42

Item 1A Risk Factors 42 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 3. Defaults Upon Senior Securities 43 Item 4. Mine Safety Disclosures 43 Item 5. Other Information 43 Item 6. Exhibits 44

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS In this Quarterly Report on Form 10-Q (this "Quarterly Report"), unless the context otherwise requires, the terms "Flotek," the "Company," "we," "us" and "our" refer to Flotek Industries, Inc. and its wholly-owned subsidiaries. This Quarterly Report on Form 10-Q, and in particular, Part I, Item 2 — "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are not historical facts, but instead represent the current assumptions and beliefs regarding future events of Flotek, many of which, by their nature, are inherently uncertain and outside the Company's control. Such statements include, but are not limited to, estimates, projections, and statements related to the Company's business plan or performance under the ProFrac Agreement (defined below) or Lease Agreement (defined below), objectives, expected operating results, and assumptions upon which those statements are based. The forward-looking statements contained in this Quarterly Report are based on information available as of the date of this Quarterly Report. The forward-looking statements relate to future industry trends and economic conditions, forecast performance or results of current and future initiatives and the outcome of contingencies and other uncertainties that may have a significant impact on the Company's business, future operating results and liquidity. These forward-looking statements generally are identified by words including but not limited to, "anticipate," "believe," "estimate," "commit," "budget," "aim," "potential," "schedule," "continue," "intend," "expect," "plan," "forecast," "target," "think," "likely," "project" and similar expressions, or future-

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements FLOTEK INDUSTRIES INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) September 30, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 4,603 $ 4,404 Restricted cash 103 102 Accounts receivable, net of allowance for credit losses of $ 716 and $ 447 at September 30, 2025 and December 31, 2024, respectively 26,767 17,386 Accounts receivable, related party, net of allowance for credit losses of $ 0 at September 30, 2025 and December 31, 2024 44,831 52,370 Inventories, net 13,232 13,303 Other current assets 2,305 2,952 Current contract asset 8,179 5,939 Total current assets 100,020 96,456 Long-term contract asset 56,655 63,105 Property and equipment, net 20,822 6,178 Right-of-use assets 3,266 3,326 Deferred tax assets, net 30,351 51 Other long-term assets 1,573 1,680 TOTAL ASSETS $ 212,687 $ 170,796 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 35,073 $ 38,073 Accrued liabilities 4,925 5,912 Accrued liabilities, related party 7,248 — Income taxes payable 197 48 Interest payable, related party 1,008 — Current portion of operating lease liabilities 1,216 1,486 Current portion of finance lease liabilities 149 — Asset-based loan 6,662 4,789 Current portion of long-term debt — 60 Total current liabilities 56,478 50,368 Deferred revenue, long-term — 14 Note payable - related party, net of deferred financing costs 39,560 — Long-term operating lease liabilities 5,887 6,514 Long-term finance lease liabilities 264 — TOTAL LIABILITIES 102,189 56,896 Stockholders' equity: Preferred stock, $ 0.0001 par value, 100,000 shares authorized; no shares issued and outstanding — — Common stock, $ 0.0001 par value, 240,000,000 shares authorized; 31,102,241 shares issued and 29,989,657 shares outstanding at September 30, 2025; 30,938,073 shares issued and 29,826,508 shares outstanding at December 31, 2024 3 3 Additional paid-in ca

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Organization and Nature of Operations General Flotek strives to be the collaborative partner of choice for solutions that reduce the environmental impact of energy on air, water, land and people. An advanced technology-driven, chemical and data analytics company, Flotek seeks to provide unique and innovative solutions to its customers in both the domestic and international energy markets. The Company is committed to delivering products and services that endeavor to maximize customer returns by leveraging chemistry as the common value creation platform. The Company's Chemistry Technologies ("CT") segment designs, develops, manufactures, packages, distributes and markets optimized chemistry solutions that we believe help customers improve their return on invested capital, lower operational costs and realize tangible environmental benefits aimed at enhancing the profitability of hydrocarbon producers. The Company's Data Analytics ("DA") segment delivers real-time information and insights to its customers designed to enable optimization of operations and reduction of emissions and their carbon intensity. The Company's technologies are founded upon an industry leading field-deployable, in-line optical near-infrared spectrometer that measures the quality, quantity and composition of hydrocarbon flows. The instrument's response is processed with advanced chemometrics modeling, artificial intelligence and machine learning algorithms to deliver valuable insights to our customers every 15 seconds. The DA segment generates revenues through a combination of short and long-term equipment rentals (service revenue) and capital sales (product revenue). Customers of the DA segment span across the oil and gas industry, including oil and gas supermajors, some of the largest midstream oil and gas companies, large gas processing plants, independent exploration and production companies and oil field service companies that provide

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lessor Arrangements The Company accounts for leasing arrangements in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 842, "Leases" ("ASC 842"). On April 28, 2025, the Company entered into an equipment lease, the Lease Agreement (as defined below), with a related party customer under an operating lease arrangement (see Note 3, "Asset Acquisition"). At contract inception, an evaluation was performed to determine if the lease arrangement conveys the right to control the use of an identified asset. To the extent such rights of control were conveyed, a further assessment is made as to the applicable lease classification. In determining whether a transaction should be classified as a sales-type or operating lease, the Company considers the following criteria at lease commencement: (1) whether title of the asset transfers automatically or for a nominal fee by the end of the lease term, (2) whether the present value of the minimum lease payments equals or exceeds substantially all of the fair value of the leased asset, (3) whether the lease term is for the major part of the remaining economic life of the leased asset, (4) whether the lease grants the lessee an option to purchase the leased asset that the lessee is reasonably certain to exercise, and (5) whether the underlying asset is of such a specialized nature that it is expected to have no alternative use to the Company at the end of the lease term. If any of these criteria are met, the lease is classified as a sales-type lease. Based on the Company's assessment, and in accordance with ASC 842, the Lease Agreement was classified as an operating lease. For the three and nine months ended September 30, 2025 and 2024, the Company did not have any sales-type leases. For operating leases, rental income is recognized on a straight-line basis over the lease term as lease revenue. The cost of customer-leased equipment is

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lease Agreement and then prevailing market rates during the sixth year. The Lease Agreement does not include a purchase option for the purchase of the Leased Equipment at the end of the Lease Agreement term. The Company began recognizing lease revenue associated with the twenty-two operating mobile power generation assets on April 28, 2025, the effective date of the Lease Agreement. With respect to the Leased Equipment under construction, the Company began recognizing lease re

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