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What Affected Flotek Industries in 2Q17?

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Nov. 20 2020, Updated 12:24 p.m. ET

Flotek Industries’ revenue growth by segment

We’ll now look into Flotek Industries’ (FTK) segment performance in 2Q17. Revenues in the Energy Chemistry Technology (or ECT) segment rose 2% in 2Q17 over a year ago. The Consumer and Industrial Chemistry Technologies (or CICT) segment revenue, on the other hand, fell 7% during the same period. Flotek Industries makes up 0.06% of the iShares S&P Small-Cap 600 Value ETF (IJS). Since June 30, 2017, IJS fell 1% compared to a 32% decline in FTK’s stock price.

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Revenue growth compared with peers

The revenues of Baker Hughes, a GE Company (BHGE), remained unchanged in 2Q17 over 2Q16, while Fairmount Santrol Holdings’ (FMSA) revenues more than doubled during the same period. From 2Q16 to 2Q17, Nabors Industries’ (NBR) revenues rose ~10%. Read more on NBR in Market Realist’s Nabors Industries’ 2Q17 Earnings Missed Estimates.

Operating income growth

The Energy Chemistry Technology segment’s operating income rose 21.7% in 2Q17 over 2Q16. The Consumer and Industrial Chemistry Technologies segment witnessed a ~55% operating income decline during the same period.

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Flotek’s positive growth drivers

  • higher demand for prescriptive chemistry management platform
  • CnF price increases leading to expanding margins
  • 143% expansion of FTK’s CnF volumes from mid-2014 until 2Q17
  • asset sales enabled debt repayment

Flotek’s negative growth drivers

  • weaker-than-expected results in Canada, FTK’s largest international geography
  • the negative effect from raw material inflation in the citrus market (FTK’s CICT segments processes citrus oil, which is used in the consumer and oil & gas industry)

We’ll discuss the effect of the rig count and upstream operators’ capex on FTK’s financial performance next.

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