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Why Flotek Industries’ 4Q17 Earnings Beat Estimates

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Nov. 20 2020, Updated 11:41 a.m. ET

Flotek Industries’ 4Q17 revenue

Flotek Industries (FTK) released its 4Q17 financial results on February 20. The company recorded operating revenues of $72.5 million in 4Q17, up 2.7% from the $70.6 million recorded in 4Q16. The increase in revenues in FTK’s Consumer and Industrial Technologies segments significantly contributed to the overall revenue rise in 4Q17.

Compared to 3Q17, however, Flotek Industries’ operating revenues fell 8.7%. By comparison, 4Q17 revenue for Baker Hughes, a GE Company (BHGE), FTK’s larger-market-cap peer, increased 7% over 3Q17, while Halliburton’s (HAL) revenues increased 9% during the period. Read more in Market Realist’s Halliburton: A Post-2017 Analysis.

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Flotek Industries’ 4Q17 earnings

The 4Q17 adjusted net earnings per share (or EPS) for Flotek Industries is -$0.01. This beat the consensus sell-side analysts’ EPS estimate. Cost reductions and higher-margin product sales pushed FTK’s adjusted earnings above analysts’ estimates.

Compared to 4Q16, FTK’s adjusted loss improved in 4Q17. On average, adjusted EPS fell short of the consensus EPS in the past 13 quarters. Flotek Industries is 0.09% of the iShares S&P Small-Cap 600 Value ETF (IJS). Since February 21, IJS has increased 6%, compared to a 56% fall in FTK’s stock price during this period.

What affected FTK’s reported earnings in 4Q17?

In 4Q17, FTK’s reported net loss was $8.49 million—a significant improvement compared to 4Q16, when FTK reported a ~$14 million net loss. In 4Q17, FTK recorded:

  • $7.3 million of tax expenses as a result of changes under the U.S. Tax Cuts & Jobs Act of 2017
  • $0.7 million (after-tax) related to executive retirement and severance

Compared to 3Q17, however, Flotek Industries’ net loss deteriorated further. In 4Q17, Schlumberger (SLB), the largest oilfield services company by market capitalization, reported $2.25 billion net loss. Learn about SLB’s 4Q17 earnings in Market Realist’s Schlumberger: What to Expect after Strong 4Q17 Earnings.

How did Flotek Industries do in 2017?

In fiscal 2017, FTK’s revenues increased 21% over fiscal 2016. It was able to cut down on net losses during this period. In fiscal 2017, FTK’s net loss was $27.4 million compared to a $49.1 million net loss in fiscal 2016. Improvement in the operating income in the Energy Chemistry Technologies contributed to the improvement in FTK’s earnings in fiscal 2017.

Next in this series, we’ll discuss Superior Energy Services’ (SPN) 4Q17 earnings.

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