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What Are Flotek Industries’ Growth Drivers for 4Q16?

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Jan. 18 2017, Updated 3:06 p.m. ET

Flotek Industries’ growth

Revenues in Flotek Industries’ (FTK) Energy Chemistry Technologies segment fell 25% in 3Q16 over 3Q15. The Consumer and Industrial Chemistry Technologies (or CICT) segment was a positive surprise for FTK in 3Q16. It witnessed 39% revenue growth in 3Q16 over 3Q15. Flotek Industries makes up 0.09% of the iShares S&P Small-Cap 600 Value ETF (IJS). The energy sector accounts for 4.4% of IJS.

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Revenue growth for FTK’s peers

What affected FTK’s earnings in 3Q16?

In 3Q16, FTK’s reported net loss was $2.7 million. This was a sharp decline over 3Q15 when FTK reported ~$1.9 million in net earnings. Year-over-year, FTK’s income deterioration reflects lower margins in the Energy Chemistry Technologies and Production Technologies segments.

FTK’s future business drivers

  • Compared to 2Q16, FTK’s CnF sales were resilient in 3Q16 despite a decline in completion activities in the upstream industry. FTK’s management believes that in 2017, the growth opportunities will improve with higher completion activities. Later in this series, we’ll discuss how the US rig count has risen since the end of 3Q16.
  • In the CICT segment, FTK’s management expects to see strong demand for its flavor compounds, which could provide growth opportunities for the coming periods.

Next, we’ll discuss what Flotek Industries’ management has to say about its outlook.

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