The Effect of a Credit Facility Agreement on Flotek’s Capex


Dec. 26 2016, Updated 9:05 a.m. ET

Flotek Industries’ operating cash flow

In this article, we’ll analyze how Flotek Industries’ (FTK) operating cash flow has trended over the past few quarters. We’ll also discuss how its capital expenditure (capex) affected its free cash flow (or FCF).

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Flotek Industries’ free cash flow

In the year ended 3Q16, Flotek Industries generated a negative FCF. FTK’s capex rose 26% between 3Q15 and 3Q16. The higher capex and lower CFO led to a negative FCF in 3Q16. In 3Q16, FTK’s FCF was -$0.2 million, compared with $4 million FCF in 3Q15.

In comparison, Schlumberger’s (SLB) 3Q16 FCF was -$1.0 billion, Tidewater’s (TDW) was $8.3 million, and Superior Energy Services’ (SPN) was $42 million. Flotek Industries makes up 0.15% of the iShares S&P Small-Cap 600 Value ETF (IJS).

Does FTK have any restriction on capex?

Effective September 30, 2016, Flotek Industries amended its credit facility agreement with PNC Bank. The amendment contains an annual limit on capex for 2016 of ~$20 million. The annual limit on capital expenditure is due to be affected if the undrawn availability of the revolving credit facility falls below $15 million.


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