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A Look at Flotek Industries’ Debt Position in 2Q17

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Flotek Industries’ debt

In 2Q17, Flotek Industries’ (FTK) total debt fell ~34% compared to 2Q16. Cash and marketable securities fell 11% during the same period. In effect, net debt fell 36% from 2Q16 to 2Q17. Net debt is short-term and long-term debt minus cash and marketable securities.

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Why FTK’s debt fell in 2Q17

On May 24, 2017, Flotek Industries sold its Drilling Technologies and Production Technologies segments. National Oilwell Varco (NOV) acquired the Drilling Technologies segment for $17 million. The Production Technologies segment was sold to an acquirer for $2.9 million. The proceeds from the transactions were used to reduce FTK’s long-term debt. These transactions have effectively put FTK in a debt-neutral position. Although FTK’s recent working capital demands exceeded its internal projections as a result of higher input costs, the company met higher working capital demands from current debt.

Net debt for FTK’s peers

Schlumberger’s (SLB) net debt by the end of 2Q17 was $12.6 billion, while Superior Energy Services’ (SPN) net debt was $1.1 billion. McDermott International’s (MDR) net debt was $147 million by the end of 2Q17. Read more on SLB in Market Realist’s Why Schlumberger’s 2Q17 Earnings Beat Estimates. FTK makes up 0.05% of the iShares Core S&P Small-Cap ETF (IJR). Year-to-date, IJR has risen 1% compared to a 35% fall in FTK’s stock price during the period.

Next, we will discuss Flotek Industries’ free cash flows.

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