Latest news with #Flowco
Associated Press
25-05-2025
- Business
- Associated Press
FLOC Investors Have Opportunity to Join Flowco Holdings Fraud Investigation with the Schall Law Firm
LOS ANGELES--(BUSINESS WIRE)--May 24, 2025-- The Schall Law Firm, a national shareholder rights litigation firm, announces that it is investigating claims on behalf of investors of Flowco Holdings ('Flowco' or 'the Company') (NYSE: FLOC ) for violations of the securities laws. The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors. Flowco reported its financial results for Q1 2025 on May 13, 2025. The Company missed consensus estimates on revenue and GAAP earnings. The Company claimed that 'the U.S. upstream outlook has been challenged by evolving tariff policies, OPEC+ commentary suggesting accelerated production, and broader economic uncertainty.' Based on this news, shares of Flowco fell by more than 12.5% on the same day. If you are a shareholder who suffered a loss, click here to participate. We also encourage you to contact Brian Schall of the Schall Law Firm, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, at 310-301-3335, to discuss your rights free of charge. You can also reach us through the firm's website at or by email at [email protected]. The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation. This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and rules of ethics. View source version on CONTACT: The Schall Law Firm Brian Schall, Esq. 310-301-3335 [email protected] KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA INDUSTRY KEYWORD: CLASS ACTION LAWSUIT PROFESSIONAL SERVICES LEGAL SOURCE: The Schall Law Firm Copyright Business Wire 2025. PUB: 05/24/2025 09:33 PM/DISC: 05/24/2025 09:32 PM
Business Wire
25-05-2025
- Business
- Business Wire
FLOC Investors Have Opportunity to Join Flowco Holdings Fraud Investigation with the Schall Law Firm
LOS ANGELES--(BUSINESS WIRE)-- The Schall Law Firm, a national shareholder rights litigation firm, announces that it is investigating claims on behalf of investors of Flowco Holdings ('Flowco' or 'the Company') (NYSE: FLOC) for violations of the securities laws. The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors. Flowco reported its financial results for Q1 2025 on May 13, 2025. The Company missed consensus estimates on revenue and GAAP earnings. The Company claimed that 'the U.S. upstream outlook has been challenged by evolving tariff policies, OPEC+ commentary suggesting accelerated production, and broader economic uncertainty.' Based on this news, shares of Flowco fell by more than 12.5% on the same day. If you are a shareholder who suffered a loss, click here to participate. We also encourage you to contact Brian Schall of the Schall Law Firm, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, at 310-301-3335, to discuss your rights free of charge. You can also reach us through the firm's website at or by email at bschall@ The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation. This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and rules of ethics.
Yahoo
14-05-2025
- Business
- Yahoo
Q1 2025 Flowco Holdings Inc Earnings Call
Andrew Leonpacher; Vice President, Finance Corporate Development and Investor Relations; Flowco Holdings Inc Joe Bob Edwards; President and Chief Executive Officer; Flowco Holdings Inc Jon Byers; Chief Financial Officer; Flowco Holdings Inc Arun Jayaram; Analyst; JP Morgan Derek Podhaizer; Analyst; Piper Sandler Phillip Jungwirth; Analyst; BMO Capital Markets Lloyd Byrne; Analyst; Jefferies David Smith; Analyst; Pickering Energy Partners Operator Good morning, and welcome to Flowco Holdings, Inc., first-quarter fiscal 2025 results conference call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Andrew Leonpacher, Vice President, Finance, Corporate Development and Investor Relations at Flowco. Thank you. You may begin. Andrew Leonpacher Good morning, everyone, and thanks for joining us for Flowco's first quarter results. Before we begin, we would like to remind you that this conference call may include forward-looking statements. These statements, which are subject to various risks, uncertainties and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties, assumptions are detailed in this morning's press release, as well as our filings with the SEC, which can be found on our website at We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial information. We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. The presentation of this non-GAAP financial information is not intended to be considered in isolation, or as a substitute for the financial information prepared and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this morning's press release and in our SEC filings. Joining me on the call today is our President and Chief Executive Officer, Joe Bob Edwards; and our Chief Financial Officer, Jon Byers. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Joe Bob. Joe Bob Edwards Thank you, Andrew, and good morning, everyone. Before discussing our solid first quarter results, I want to take a moment to address the macro environment currently impacting our industry. Over the past several weeks, the United States upstream outlook has come under pressure from evolving tariff policies, OPEC+ commentary suggesting accelerated production and broader economic uncertainty. Given this backdrop, I want to take a few moments to reiterate what we talked about during our IPO roadshow and on our fourth quarter call several weeks ago, and that is Flowco's differentiated business model in the context of the broader oil services sector. First and foremost, Flowco's performance is driven by our customers' non-discretionary OpEx rather than their CapEx. Our results are tied to absolute levels of oil and gas production in the United States, not the number of active drilling rigs or frac spreads. At current commodity price levels, many of our customers have announced plans to modestly reduce capital spending. However, most have reiterated or only slightly reduced their production expectations. In fact, despite these market concerns, the EIA recently projected that the United States crude oil production as a whole will average an all-time high of 13.4 million barrels per day in 2025, up from the 13.1 million barrels per day average in January of this year. While some have forecasted that domestic production growth may flatten or decline, we remain confident in the long-term strength of US shale and its pivotal role in satisfying global demand. Industry consolidation, the maturity of shale development and strong operator balance sheets, all contribute to what we believe is a more stable and sustainable landscape than in cycles past. Flowco's strategic focus on production optimization and our integral role in the critical path of our customers' operations uniquely positions us to deliver value as we work alongside operators to drive greater performance through this dynamic market backdrop. Second, I want to remind everyone that all of the products we sell and rent are manufactured here in the United States. We use predominantly domestically sourced components and raw materials. We operate 6 manufacturing centers of excellence across Texas, Oklahoma and Louisiana. We've conducted a thorough review of our supply chain, including a detailed analysis of our vendors' upstream sourcing and we are confident that the tariff measures currently under consideration by the administration will have minimal impact on our financial results. Moreover, our vertical integration and fully domestic supply chain give us a meaningful competitive advantage, enabling us to scale growth capital investments up or down with greater flexibility than many of our peers. Third, our two fastest-growing product lines; vapor recovery and high-pressure gas lift, continue to gain market share from legacy optimization and production methods such as electrical submersible pumps. This momentum continued through the first quarter, and we anticipate additional customer conversions throughout the remainder of 2025. As over 75% of the industry's ESPs are manufactured in China, we believe our competitive advantage with HPGL will only improve in an environment of heightened tariffs. In parallel, demand for vapor recovery units is becoming more ubiquitous as operators recognize the compelling economics of capturing and commercializing incremental natural gas. VRUs are a critical component of the production infrastructure that enables natural gas to reach high-growth end markets such as LNG export facilities and gas-fired power generation, both sectors with strong and durable long-term fundamentals. Fourth, we have a proven culture of innovation and a deeply customer-focused approach to problem solving, principles that remain constant regardless of commodity price movements. As we noted on our fourth quarter earnings call, we have successfully commercialized and are scaling our SurgeFlow product, which is part of our plunger lift solution. SurgeFlow is a piece of surface equipment installed as part of the wellhead assembly. It allows for a seamless conversion to plunger lift as a well matures, increasing efficiency and ultimately, profitability for our customers. In addition to SurgeFlow, our newly developed e-Grizzly High-Pressure Gas Lift solution allows customers to deploy high-pressure gas lift solutions across multiple wells while lowering both emissions and cost per barrel of oil. We are actively identifying new opportunities to apply our technology across the production landscape. And most notably, we continue to engage with midstream customers to expand the adoption of our VRU platform, which would further extend our reach and impact across the value chain. Finally, we remain confident in our ability to grow in a flat production environment, while delivering best-in-class returns on capital employed, or ROCE, and strong free cash flow generation. In the current market backdrop, we anticipate more muted growth in our product sales businesses as customers defer purchases or become more conservative in their spending, particularly our downhole conventional gas lift product offering and in the sale of conventional gas lift compression packages. That said, our outlook for our rental businesses remains unchanged. These operations continue to benefit from increasing customer adoption and a contracted revenue model, providing a high degree of visibility. As a result, we are maintaining our investment in these divisions. We've carefully reviewed our previously stated capital expenditure plans and anticipate only minor adjustments, reflecting the strength and resilience of our opportunity set, even amid evolving market conditions. We demonstrated the resiliency of our business in the first quarter, delivering growth in revenue, adjusted EBITDA and net income compared to the fourth quarter. We generated approximately $15 million of free cash flow during the quarter and have reduced our debt balance to $176 million as of last Friday, all while investing $30 million in high-return opportunities that exceeded the ROCE benchmark we shared last quarter. With that, I'll turn it over to Jon to provide more detail on our first quarter financial and operational performance. After his remarks, I'll close with a few thoughts before we open the line for Q&A. Jon? Jon Byers Thanks, Joe Bob. Before reviewing some of the key financial metrics and results for the first quarter, I'd like to provide a reminder on our historical financial information given the combination of Flowco, Flogistix and Estis in June of 2024. For clarity, note that any financial information presented prior to the June 20, 2024 business combination, such as the first quarter 2024 financials, reflects only the historical performance for Estis. Financial information in the first quarter of 2025 and the fourth quarter of 2024 reflects the financials for the consolidated entities. Turning now to our financials. First quarter performance was in line with our expectations, driven by strong execution across both our Production Solutions and Natural Gas Technologies business segments. We delivered adjusted net income of $32.8 million on revenue of $192 million. Revenue was up approximately 3.4%, while adjusted EBITDA was up 1.5% quarter-over-quarter. Adjusted EBITDA margins were down slightly for reasons I'll elaborate on within each segment discussion. In our Production Solutions segment, first quarter revenue was $116 million, with adjusted segment EBITDA of $50.6 million, an increase of 2.3% and 1.3%, respectively, from the fourth quarter of 2024. Adjusted segment EBITDA margins decreased modestly over the quarter by 44 basis points. The increases in Production Solutions' revenue and adjusted EBITDA were the result of higher operating leverage, combined with a progressive shift in revenue mix towards our surface equipment rental business unit from downhole solutions. Adjusted segment EBITDA margin was down slightly quarter-over-quarter due to expenses credited to the Production Solutions segment in the fourth quarter related to the establishment of our corporate function. Absent these credits, adjusted segment EBITDA margin would have grown. In our Natural Gas Technologies segment, first quarter revenue increased 5.1% to $76.4 million compared with the fourth quarter 2024. The increase in revenue is attributable to delayed Q4 natural gas system sales that shifted into the first quarter. Adjusted segment EBITDA also grew 3.1% to $28.7 million over the same period, while adjusted segment EBITDA margins decreased by 73 basis points due to a revenue mix shift towards natural gas systems from vapor recovery, a trend that we expect to reverse in the coming quarters. Overall, consolidated first quarter adjusted EBITDA was $74.9 million, an increase of 1.5% from Q4 2024. Adjusted EBITDA margins decreased by approximately 73 basis points due to a change in mix at the segment level and an increase in costs associated with building out our public corporate functions. In the first quarter, the majority of our capital investment of $27.9 million was directed towards expanding our surface equipment and vapor recovery rental fleet, given the projected demand and attractive expected returns on capital employed. Our annualized adjusted ROCE for the first quarter was approximately 18%. As a reminder, our adjusted ROCE calculation excludes amortization and intangibles associated with the merger transaction of June 2024 as our legacy businesses were combined rather than acquired. For any future potential inorganic growth, we would not apply the same adjustment. As Joe Bob mentioned, we anticipate only minor changes to the CapEx program we discussed in the fourth quarter. Our capital allocation decisions remain grounded in our capital return framework and are informed by real-time customer demand. Based on current analysis, we continue to expect incremental returns in excess of 20% on these investments. Looking ahead, we anticipate our capital investment in the rental fleet, coupled with potential muted growth in our sales business to drive a higher rental revenue mix and margin expansion in the second half of the year. Shifting briefly to corporate costs and reporting. As noted last quarter, we became a federal and state income taxpayer during the first quarter. For the portion of the quarter in which we were subject to corporate taxes, we incurred a blended effective tax rate of approximately 22%. When evaluating our tax expense and earnings per share, it's important to consider that we operated as a privately held limited liability company from January 1 through January 16, 2025, prior to our IPO. Turning to our balance sheet and liquidity. We ended the quarter in a strong financial position. As I mentioned on our Q4 call, we experienced a temporary increase in net working capital related to the integration of the business following the merger, a trend that we expect to continue in the second quarter. Even with the net working capital impacts in the first quarter, we generated $15 million of free cash flow, which we utilized to pay down the balance on our revolving credit facility. As of May 9, 2025, borrowings on the revolving credit facility were $175.6 million, with a borrowing base of $723 million. We had availability under the revolving credit facility of $547.4 million. Finally, reflective of the Board's confidence in our resilient business model, combined with our healthy balance sheet and cash generation, Flowco declared an $0.08 per share dividend on May 2, payable May 28, reinforcing our commitment to return value to our shareholders while investing in our business. In summary, we delivered another solid quarter, achieving our outlook, with EBITDA landing within our guidance range. Looking ahead, the growing demand for our solutions, our strategic focus and broad capabilities supporting production optimization position us well amid a more uncertain market backdrop. While broader industry pressures persist, we remain confident in our ability to grow adjusted EBITDA by low double-digit percentages year-over-year within this flat production environment. Back to you, Joe Bob. Joe Bob Edwards Thanks, Jon. We are very proud of our first quarter performance, our first quarter as a public company. And in the face of heightened market uncertainty, we remain committed to solid execution and delivering on our growth objectives. Turning now to our thoughts for the remainder of 2025. As Jon mentioned, we expect continued increases in EBITDA and further improvement in EBITDA margins throughout the year as our ongoing capital investment in our rental businesses continues to shift revenue mix in that direction. Jon mentioned year-over-year EBITDA growth in the low double-digit percentage range, and I'm comfortable with that. However, more immediately, our second quarter guidance will reflect some of the uncertainty and market pressures we've discussed today, particularly around the sale of certain downhole components and surface compression packages. Therefore, we are maintaining the same guidance range as Q1, $74 million to $78 million of EBITDA for Q2 2025. We will remain disciplined in our capital deployment, while actively identifying opportunities to further optimize our business. I want to extend my sincere thanks to all Flowco employees for their persistence, hard work and unwavering commitment to supporting our customers. We've been through environments like this before, and we know how to execute through volatility. While we anticipate continued market fluctuations, our strategic positioning, differentiated solutions and exceptional team give us confidence in our ability to navigate today's challenges and continue delivering strong returns for our shareholders. So with that, I'll turn it back over to the operator for Q&A. Operator Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Arun Jayaram, JP Morgan. Arun Jayaram Yeah. Joe Bob, I wanted to start with your thoughts on the competitive advantage of your domestically sourced -- largely domestically sourced supply chain and US manufacturing base. You highlighted how the bulk of ESPs are manufactured in China, obviously, with the tariff situation. I wonder if you could maybe elaborate on what this -- how this situation could benefit you disproportionately? Joe Bob Edwards Happy to do it, Arun, and thanks for the question. Hope you're doing well. So yeah, look, the ESP landscape is very mature, right? And the competitors in that market sector have really anchored their production capability in China. High-pressure gas lift, as you know, is a process that we pioneered several years ago using gas compression capability as an alternative. The gas compression expertise really exists and is able to be delivered through the unique way that we package the system, as well as the reliance on a critical supplier. And that critical supplier, aerial compression is based in the United States. They manufacture all of their compression units in Ohio. We have a very close relationship with them, consider them a critical vendor. They consider us to be a top customer. We visited their facilities last year and have a great dialogue with them on their supply chains, where do they cast their products, where their foundries. And so we're confident in what we've said, which is our domestic supply chain, we think, is a competitive advantage. Once we get to critical components, we bring them into our manufacturing facilities split between Texas and Oklahoma, package them up, send them out on location and put them in our rental fleet. So it's a very straightforward supply chain compared to what we compete against. Even before the tariff situation came into play, Arun, we felt that we had a very clear operational advantage against an ESP in certain well conditions. Reminder, like I said last quarter, this is not a tool for every brand-new horizontal well. It works in about 1/3 to 1/2 of the new high-volume liquids wells that are brought online. But where it fits, it's a better tool. And I think the increased tariff pressures that are put upon the competing technology are additional tailwind for us. Arun Jayaram Great. And then my follow-up, I was wondering if you could maybe help us understand what you view as the current mix between product sales and rental revenue? And just maybe if you could elaborate on Jon's comments about low double-digit growth year-over-year. Obviously, a lot of uncertainty in the marketplace, but that would imply, call it, a little bit of a higher second half EBITDA running range in the, call it, the low $80 million or high-70s. So, I just wanted if you could talk through what perhaps improves in the second half of the year based on your modeling? Joe Bob Edwards Jon can give you some numbers, but at a high level, Arun, we continue to invest in our rental business, mainly our high-pressure gas lift offering as well as more vapor recovery units. As you know, those come in at a higher margin than the product sales businesses that we offer to the market. So from a rental -- from a business mix standpoint, more rentals as a percentage of total will result in a higher EBITDA margin. I think we're comfortable telegraphing a nice growth trajectory in a relatively flat market given that incremental investment. And I don't think you're far off in terms of what you're thinking on a quarterly basis. Jon Byers Yeah, Joe Bob, I agree. I think with the more moderate outlook in our downhole components and natural gas systems business units within the 2 segments, we expect the trend that we've seen between rental and sales to kind of accelerate. So, you go back a couple of years, sales to rentals was probably 60-40. We've achieved about kind of a 50-50 split now, and we expect that to -- based on our continued investment in the fleet, we expect that to move up into the kind of low to mid-50s by year-end. Arun Jayaram Great, that's a lot of help. Thanks. Bye. Operator Derek Podhaizer, Piper Sandler. Derek Podhaizer Hey, good morning. Just wanted to kind of revisit your HPGL adoption outlook. You talked about 75% of ESP being manufactured in China. That might help the conversations with E&Ps a little bit. But have you seen any incremental wins with certain customers? Or should we still think about it as being characterized as just increasing your wallet share with your current customers? Maybe just some updated thoughts just around the adoption of HPGL so far? Joe Bob Edwards Derek, yeah, happy to lean into that a little bit. There's definitely increased market chatter around high-pressure gas lift. I think it's a combination of our IPO and the volume of conversations that we've had with industry participants as well as with the investor base about the technique. And the tariffs have only heightened that market chatter. We've had a few specific customer conversations that are encouraging, let's call it, broader market adoption or broader program adoption across acreage that's being developed compared to previously where they were hedging their bets a bit or still on a slower adoption curve, a wait-and-see attitude. I think more folks are leaning into it. Rising GORs help, obviously, and longer laterals, which produce higher IPs help. So, there are a lot of structural reasons even before you start talking about tariffs that are helping with increased adoption. I think any sort of tariff noise in the market, and we're late in the reporting cycle, but several have already indicated that they ordered a lot of equipment ahead of a potential tariff impact. Others are trying to actively diversify away from China, their supply chains. That's just going to create more disruption, I think, in the market as they try to respond to just an uncertain environment. So, we're going to continue to lean into it and think that the balance of 2025 should produce some incremental customer wins. Derek Podhaizer Got it. That's helpful. Maybe just something on shareholder returns. Great to see the $0.08 dividend that you guys recently announced. Maybe just taking a step back, how do you foresee growing your shareholder returns, whether it's a steady dividend growth, layer in a buyback at some point? Maybe just your overall thoughts as you look out over the next few years, how you see shareholder returns progress through the cycle? Joe Bob Edwards Great question. We had an extensive discussion about this at our most recent Board Meeting, and it follows up, Derek, as you know, the framework that we debated and outlined during our IPO. We are a returns-driven management team. The culture of returns really is embedded within the entire organization. We are incentivized to produce returns for shareholders. And our North Star is our ROCE roadmap, right? So, Jon quoted an 18% ROCE for Q1. That's slightly below our 20% ROCE that we raised money around at our IPO. We're going to continue to make decisions that impact returns on capital employed. So, that's the shareholder return that we are producing with the asset base that we have. We think if we can grow and continue to make investments in the business that are accretive to that level, we think that will produce a premium valuation and a positive outcome for shareholders. In terms of return of capital to shareholders, this dividend is a good first step. Obviously, we think a share buyback could make sense in the future. With a very limited float, we want to be careful with how much we lean into reducing that public float. But it's certainly in the tool bag, and we will continue to think about it going forward. But we think this nice first dividend is a commitment to shareholders that we made on the roadshow that we are following through with. We certainly think it's defensible through cycles. We believe our financial position today, our liquidity today can support it. So, we're happy to get it out there and hope that the market appreciates it. Derek Podhaizer Thanks, Joe Bob. Appreciate the comments. I'll turn it back. Operator Phillip Jungwirth, BMO Capital Markets. Phillip Jungwirth Thanks. Good morning, guys. You mentioned a higher rental versus product mix in the second half. And just as we think about the margin side for rentals, what are the main pushes and pulls here as we think about how that will evolve over the course of the year? Jon Byers Yeah. I think the driver is going to be pricing power, which we're -- we focus on that. We're pushing that as much as we can, but there's obviously limits with which we can do it. Overall, we don't have -- as we look at our forecast, we haven't really modelled a significant difference in margins relative to where we are in the rental business. So, right in that 70% range is what we're thinking about. Phillip Jungwirth Okay. Great. And one of the benefits of HPGL is mechanical availability. Just with producers closer to maintenance production, does reliability become a greater focus in the discussions? And also just how much more important is the high upfront cost for ESPs as producers look to manage cash flow? Joe Bob Edwards Yeah. Phillip, those are two key selling points. When commodity price fluctuations happen like they have, when CapEx budgets get trimmed as they are, there is a higher level of focus from our customer base on their existing production. And oil production is the mother's milk of an oil company, right? So, they've got production forecast and profit targets that they have to meet. And so the mechanical availability that we offer relative to the competing technique is not lost on them. And as you point out correctly, the high upfront capital costs as well as the ongoing maintenance cost of pump change-outs that happen over time as wells mature. So, we feel like we're in a good spot with HPGL, and that's, as I mentioned earlier, leading to increased customer adoption as well as more programmatic rollout of the technique across a broader series of locations. Phillip Jungwirth Great. thanks guys. Operator (Operator Instructions) Lloyd Byrne, Jefferies. Lloyd Byrne Thank you. Morning, fellas. Can you just comment on VRU growth? And I know you talked a little bit about LNG, but just how that trajectory can be different than high-pressure gas lift? Joe Bob Edwards Thanks, Lloyd. Good to hear from you. Yes, high-pressure gas -- or excuse me, vapor recovery adoption is increasing. And let's talk about why that was leading up to our IPO and what has changed in the last, say, six months. This is a great way for -- the deployment of vapor recovery systems are a great way for operators to eliminate fugitive methane emissions. Obviously, that has an environmental benefit. But what it also does is it allows operators to capture high BTU vapors. These are not just methane molecules but also include natural gas liquids that tend to trade at a higher price. So the growth in VRU up through today has largely been economics driven around that methane capture. Now, we've lived through the last couple of years, a period of depressed natural gas prices. Sometimes in the field, gas prices have approached 0. We have grown VRU adoption through that natural gas backdrop. What has changed in the last, call it, 6 months to 12 months is the dramatically improved outlook for natural gas demand in the United States, whether it's LNG exports or it's incremental natural gas demand from gas-fired power generation, we think the outlook for VRU today and more broadly, natural gas infrastructure today is as bright as it's been in quite some time. So, we're having incremental discussions with customers, not just upstream, our traditional customer base, but in the midstream around VRU adoption as a way to drive incremental profitability. And we think any new build-out of gas infrastructure or industrial facilities that utilize gas to either produce power or to export, or to make something in the petrochemical process is just more tailwind for VRU. Lloyd Byrne That's great. And just as a follow-up on some of your comments on the gas lift. Can you just talk about Grizzly and then maybe a little bit of SurgeFlow and a little bit more details there on how those are being received? Joe Bob Edwards Our e-Grizzly product line is an electric high-pressure gas lift system specifically configured to inject gas at a high pressure into multiple wellbores at the same time. That differs from our legacy offering, which is known as an e-Wolf, okay? Now the E in each of those products denotes the fact that it is electric drive compression, okay? We have those same products, same names just without the E that are powered by natural gas-fired gas compression, okay? So as operators electrify their production infrastructure and as they try to reduce their cost per BOE, 1 compressor to drive 2 wells, obviously, is economies of scale instead of having 1 high-pressure gas lift unit for 1 wellbore. So, certain operators are leaning into that. It really depends on how they're configuring their production infrastructure, their pads. So it's not for every customer. You have to really get ahead of the well pad design for this to make sense, and you have to have power to the well pad for this to be economic, okay? But it is something that we're noticing increased adoption of. Completely separately on the SurgeFlow side, as I said in my prepared remarks, SurgeFlow itself is a piece of wellhead infrastructure that is installed with the broader wellhead assembly. And it allows for the wellhead to be installed at the initial completion of the well, a first type of production method to be utilized. And then over time, it allows for a more seamless transition to plunger lift without incremental maintenance expenditure in the field compared to the way that plunger lift changeover or rod lift changeover is done today, okay? So it's an efficiency offering to our customers. And once our specific bit of hardware is demonstrated to customers, it's like a light bulb goes off. They completely understand why this is a better way of configuring this part of a wellhead assembly. And it's just driving a conversation around plunger lift more broadly. So, we're seeing some very nice uptake, some orders at scale from some very large operators. So, we look forward to sharing more about that as 2025 progresses. Lloyd Byrne Great, thank you. Operator David Smith, Pickering Energy Partners. David Smith Hey, good morning and thank you for taking my questions. So Bob, Regarding the relatively unchanged growth CapEx outlook for this year, I wanted to ask if the expected mix between the segments for growth CapEx is also relatively unchanged? Jon Byers David, that's correct. Joe Bob referenced some minor tweaks, but we're generally looking at -- if you take the 2 segments, it's kind of a 60-40 split in revenue. We're generally looking at the same allocation, kind of maybe plus or minus 5% relative to where we were at the beginning of the year. David Smith Okay. I appreciate that. And is it fair to think that the growth CapEx outlook is heavily supported by client conversations? And if so, can you speak to whether those clients are keeping their activity plans relatively unchanged, whether you're seeing growing share with that client base or perhaps this is meeting new demand with new clients? Joe Bob Edwards Yeah, David, it's a little bit of all of the above. Again, with the production focus, the conversations that we're having with clients are not nearly as stressful as you would expect those that are more drilling or completions oriented. So, you really kind of have to look through to each of our specific product lines. But within VRU and within high-pressure gas lift, the two fastest-growing product lines that we have, conversations with customers, I would say, are consistent with what we saw last quarter, if anything, a little bit better. And it has to do with what we talked about. The tariff noise that is in the market around the competing technique for HPGL as well as just the incremental natural gas fundamentals or more positive natural gas fundamentals that are driving adoption on VRU. So, I would hate to characterize things as overly rosy with our customers in this kind of current market backdrop, but things feel pretty good. David Smith Really appreciate the color. I'll turn it back. Operator (Operator Instructions) It appears that there are no further questions at this time. I would now like to turn the floor back over to Joe Bob Edwards for closing comments. Joe Bob Edwards Well, thank you, everyone, for tuning in and reach out if you have any questions. Look forward to seeing you next quarter. Thank you. Operator This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Sign in to access your portfolio
Yahoo
14-05-2025
- Business
- Yahoo
Flowco Holdings Inc (FLOC) Q1 2025 Earnings Call Highlights: Revenue Growth and Strategic ...
Revenue: $192 million, up approximately 3.4% quarter-over-quarter. Adjusted Net Income: $32.8 million. Adjusted EBITDA: $74.9 million, an increase of 1.5% from Q4 2024. Adjusted EBITDA Margins: Decreased by approximately 73 basis points. Production Solutions Revenue: $116 million, with adjusted segment EBITDA of $50.6 million. Natural Gas Technologies Revenue: $76.4 million, an increase of 5.1% from Q4 2024. Free Cash Flow: Approximately $15 million generated during the quarter. Debt Balance: Reduced to $176 million as of last Friday. Capital Investment: $27.9 million directed towards expanding rental fleet. Annualized Adjusted ROCE: Approximately 18% for the first quarter. Dividend: $0.08 per share declared, payable May 28. Revolving Credit Facility Borrowings: $175.6 million with availability of $547.4 million. Warning! GuruFocus has detected 4 Warning Signs with FLOC. Release Date: May 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Flowco Holdings Inc (NYSE:FLOC) reported a solid first quarter with revenue growth of 3.4% and adjusted EBITDA growth of 1.5% quarter-over-quarter. The company has a competitive advantage with its domestically sourced supply chain and US manufacturing base, which minimizes the impact of tariffs. Flowco's fastest-growing product lines, vapor recovery and high-pressure gas lift, continue to gain market share, benefiting from the shift away from Chinese-manufactured ESPs. The company generated approximately $15 million of free cash flow during the quarter and reduced its debt balance to $176 million. Flowco declared an $0.08 per share dividend, reinforcing its commitment to returning value to shareholders. Adjusted EBITDA margins decreased slightly due to a change in revenue mix and increased costs associated with building out public corporate functions. There is uncertainty in the market due to evolving tariff policies and broader economic conditions, which could impact future performance. The company anticipates muted growth in product sales as customers defer purchases or become more conservative in their spending. Flowco's adjusted ROCE for the first quarter was 18%, slightly below the 20% target set during their IPO. The company faces challenges in maintaining growth amid a flat production environment and broader industry pressures. Q: Joe Bob, could you elaborate on the competitive advantage of Flowco's domestically sourced supply chain and US manufacturing base, especially in light of the tariff situation affecting ESPs manufactured in China? A: Joe Bob Edwards, President and CEO: Our domestic supply chain is a significant competitive advantage. We rely on US-based suppliers like Aerial Compression, which manufactures in Ohio. This gives us a straightforward supply chain compared to competitors who rely on Chinese manufacturing. The tariff situation further strengthens our position, as our high-pressure gas lift (HPGL) systems are a better fit for certain well conditions and are less impacted by tariffs. Q: Can you discuss the current mix between product sales and rental revenue, and how you expect this to evolve, especially with the anticipated low double-digit EBITDA growth? A: Joe Bob Edwards, President and CEO: We continue to invest in our rental business, particularly in HPGL and vapor recovery units, which have higher margins than product sales. Currently, our revenue mix is about 50-50 between sales and rentals, and we expect rentals to increase to the low to mid-50s by year-end, driving higher EBITDA margins. Q: How is the adoption of high-pressure gas lift (HPGL) progressing, and have you seen any incremental wins with customers? A: Joe Bob Edwards, President and CEO: There's increased market chatter and adoption of HPGL, driven by our IPO and tariff pressures on ESPs. We've had encouraging conversations with customers, leading to broader program adoption. Structural factors like rising GORs and longer laterals also support increased adoption. Q: Could you provide insights into Flowco's approach to shareholder returns, particularly regarding dividends and potential buybacks? A: Joe Bob Edwards, President and CEO: We are committed to delivering returns through our ROCE roadmap. Our recent $0.08 dividend is a first step in returning capital to shareholders. While a share buyback is a possibility, we are cautious due to our limited float. Our focus remains on maintaining a defensible dividend and exploring buybacks as a future option. Q: What are the main factors influencing rental margins, and how do you see them evolving throughout the year? A: Jon Byers, CFO: Pricing power is a key driver, and while we push for it, there are limits. We expect rental margins to remain around 70%, with no significant changes anticipated in our forecast. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Business Wire
13-05-2025
- Business
- Business Wire
Flowco Holdings Inc. Reports First Quarter 2025 Results
HOUSTON--(BUSINESS WIRE)--Flowco Holdings Inc. (NYSE: FLOC) ('Flowco' or the 'Company'), a provider of production optimization, artificial lift and methane abatement solutions for the oil and natural gas industry, today announced financial results for the first quarter ended March 31, 2025. Where presented, the financial results for 2024 represent periods (i) during which Flowco's operating subsidiary, Flowco MergeCo LLC ('Flowco LLC'), was a privately-owned limited liability company and (ii) prior to the completion of Flowco's initial public offering in January 2025. Historical financial information for the periods ended in 2024 reflects information for Flowco LLC, and historical financial information presented prior to June 20, 2024 reflects only the historical financial information of Estis Compression LLC ('Estis') as the accounting predecessor prior to the business combination of Estis, Flowco Production Solutions, L.L.C. ('FPS') and Flogistix, LP ('Flogistix') and parent entities formed in connection with such business combination (the '2024 Business Combination'). Key First Quarter 2025 Highlights Revenues of $192.4 million, generating net income of $27.0 million and Adjusted Net Income 1 of $32.8 million Adjusted EBITDA 1 of $74.9 million Adjusted EBITDA Margin 1 of 38.9% In May 2025, Flowco's Board of Directors declared a quarterly cash dividend of $0.08 per share Robust balance sheet with $547.4 million of availability under our revolving credit facility as of May 9, 2025 Financial Summary Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024 (in thousands) Revenues $ 192,350 $ 185,993 $ 66,712 Net income 27,045 22,336 17,185 Adjusted Net Income (1) 32,769 28,779 17,574 Adjusted EBITDA (1) 74,901 73,779 34,226 Adjusted EBITDA Margin (1) 38.9 % 39.7 % 51.3 % Expand (1) Expand Joe Bob Edwards, President and CEO, commented, 'Flowco delivered solid first-quarter results, underscoring the resilience of our business and the strength of both our Production Solutions and Natural Gas Technologies operating segments. We believe our differentiated portfolio of products, technology and services continues to position us as a partner of choice for customers, while supporting our financial performance through dynamic markets. Over the past several weeks, the U.S. upstream outlook has been challenged by evolving tariff policies, OPEC+ commentary suggesting accelerated production, and broader economic uncertainty. At current commodity price levels, many of our customers have announced plans to modestly reduce capital spending, but most have reiterated or only slightly reduced their production expectations. Importantly, operators have also emphasized their commitment to generating cash flow through the cycle. Flowco's strategic focus on production optimization and our integral role in a critical path of our customers' operations uniquely positions us to deliver value, as we work alongside operators to drive greater performance through this dynamic market backdrop. We remain confident in our ability to generate growth year over year, even in a flat production environment. We continue to invest growth capital in our High Pressure Gas Lift and Vapor Recovery offerings, which are experiencing strong demand driven by broader customer adoption. Under the current tariff environment, we believe our High Pressure Gas Lift solution offers a cost-effective alternative to certain other competing technologies that may be negatively impacted by tariffs. Thanks to our vertically integrated manufacturing footprint and domestic supply chain, we believe our exposure to similar tariff-related cost pressures remains limited. Although we expect ongoing market volatility, our strategic positioning, innovative solutions and capital discipline give us confidence in our ability to navigate the current uncertainties and evolving market landscape while delivering attractive returns on capital employed.' Segment Information We report our results in two segments, Production Solutions and Natural Gas Technologies. Production Solutions includes the rental, sale and service associated with high pressure gas lift, conventional gas lift and plunger lift, including a range of digital solutions and other production related technologies. Natural Gas Technologies includes the design, manufacture, rental and sale of vapor recovery and natural gas systems. Corporate costs not directly related to either segment are categorized separately. (1) Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin are non-GAAP financial measures. See definitions of these measures and the reconciliation of GAAP to non-GAAP financial measures outlined in the reconciliation tables accompanying this release. Expand Production Solutions First quarter 2025 revenue for the Production Solutions segment increased 2.3% from the fourth quarter of 2024, and Adjusted Segment EBITDA increased 1.3% quarter over quarter for the same periods. The increase in revenue and Adjusted Segment EBITDA resulted from higher operating leverage. Adjusted Segment EBITDA Margin decreased 44 basis points due to credited expenses incurred in the fourth quarter related to the establishment of our corporate function. Natural Gas Technologies First quarter 2025 revenue for the Natural Gas Technologies segment increased 5.1% from the fourth quarter of 2024, primarily due to a shift in timing of sales within Natural Gas systems. Adjusted Segment EBITDA increased 3.1% quarter over quarter for the same periods, with Adjusted Segment EBITDA Margins down 73 basis points due to unfavorable revenue mix. Corporate Corporate Adjusted Segment EBITDA for the quarter ended March 31, 2025 was ($4.4) million, compared to ($3.9) million corporate Adjusted Segment EBITDA in the quarter ended December 31, 2024. The decrease in corporate Adjusted Segment EBITDA was primarily associated with the continued buildout of our public corporate functions. Balance Sheet & Liquidity As of May 9, 2025, the Company had outstanding borrowings under its senior secured revolving credit facility ('Credit Agreement') of $175.6 million and, with a current borrowing base of $723.0 million, had availability under the Credit Agreement of $547.4 million. Dividend Declaration On May 2, 2025, Flowco announced that its Board of Directors had declared a quarterly cash dividend of $0.08 per share of Class A common stock payable on May 28, 2025 to Class A common stockholders of record as of the close of business on May 14, 2025. Flowco MergeCo LLC, the Company's operating subsidiary, will make a corresponding distribution of $0.08 per unit to holders of its common units. Conference Call and Webcast Information Flowco will host a conference call on Tuesday, May 13, 2025, at 8:00 am. Eastern Time to discuss first quarter 2025 results. The conference call can be accessed live over the phone by dialing 1-877-704-4453 (for the U.S.) or 1-201-389-0920 (for International). A telephonic replay of the conference call will be available two hours after the call and can be accessed by dialing 1-844-512-2921 (for the U.S.) or 1-412-317-6671 (for International). The passcode for the call and replay is 13752793. A live webcast of the conference call will also be available under the Investor Relations section of Flowco's website at About Flowco Flowco is a leading provider of production optimization, artificial lift and methane abatement solutions for the oil and natural gas industry. The company's products and services include a full range of equipment and technology solutions that enable oil and natural gas producers to efficiently and cost-effectively maximize the profitability and economic lifespan of their assets. Forward-Looking Statements The information in this press release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this press release may be forward-looking statements. These statements generally relate to future events or our future financial or operating performance, and include, but are not limited to: statements regarding guidance or estimates related to the Company's results of operations or financial condition; industry trends, customer demand and industry outlook, and effects on Flowco's operations; Flowco's strategies and plans, including matters relating to the Company growth, capital expenditures, dividend policies, and leverage profile. When used in this press release, words such as 'expect,' 'project,' 'estimate,' 'believe,' 'anticipate,' 'intend,' 'plan,' 'seek,' 'forecast,' 'target,' 'predict,' 'may,' 'should,' 'would,' 'could,' and 'will,' the negative of these terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Flowco believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. These risks and uncertainties are described further in Item 1A under the heading 'Risk Factors' and elsewhere in our annual report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission. Flowco undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. (1) Basic and diluted earnings per of share and weighted average shares of Class A and Class B common stock outstanding for the period from January 16, 2025 through March 31, 2025, the period following the Company's initial public offering and the related reorganization transactions through the end of first quarter 2025 Expand Flowco Holdings Inc. Condensed Consolidated Balance Sheets As of March 31, 2025 December 31, 2024 (in thousands except share and per share amounts) Assets Current assets: Cash and cash equivalents $ 687 $ 4,615 Accounts receivable, net of allowances for credit losses of $1,306 and $1,169, respectively 134,301 120,353 Inventory 156,956 151,179 Prepaid expenses and other current assets 5,004 9,982 Total current assets 296,948 286,129 Property, plant and equipment, net 706,812 702,616 Operating lease right-of-use assets 18,065 19,480 Finance lease right-of-use assets 23,077 21,871 Intangible assets, net 294,724 302,522 Goodwill 249,692 249,692 Deferred tax asset 10,173 — Other assets 6,319 6,639 Total assets $ 1,605,810 $ 1,588,949 Liabilities, redeemable non-controlling interests and stockholders'/members' equity (deficit) Current liabilities: Accounts payable $ 31,722 $ 31,321 Accrued expenses 27,132 33,829 Current portion of operating lease obligations 7,530 6,809 Current portion of finance lease obligations 12,162 7,837 Deferred revenue 7,578 8,002 Total current liabilities 86,124 87,798 Long-term liabilities: Long-term debt, net 181,014 635,916 Tax receivable agreement liability 12,484 — Operating lease obligations, net of current portion 10,672 12,739 Finance lease obligations, net of current portion 9,934 13,389 Total long-term liabilities 214,104 662,044 Total liabilities 300,228 749,842 Commitments and contingencies Redeemable non-controlling interests 1,675,676 — Members' equity: Members' equity — 839,107 Total members' equity — 839,107 Stockholders' equity (deficit): Class A common stock, $0.0001 par value – 300,000,000 shares authorized; 25,721,620 shares issued and outstanding as of March 31, 2025; no such shares authorized, issued or outstanding as of December 31, 2024. 3 — Class B common stock, $0.0001 par value – 150,000,000 shares authorized; 64,823,042 shares issued and outstanding as of March 31, 2025; no such shares authorized, issued or outstanding as of December 31, 2024. 6 — Additional paid-in capital — — Retained earnings (deficit) (370,103 ) — Total stockholders' equity (deficit) to Flowco Holdings Inc. (370,094 ) — Total liabilities, redeemable non-controlling interests and members'/stockholders' equity (deficit) $ 1,605,810 $ 1,588,949 Expand Flowco Holdings Inc. Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, (in thousands) Cash flows from operating activities Net income $ 27,045 $ 17,185 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 34,119 11,712 Provision for inventory obsolescence 603 — Amortization of operating right-of-use assets 2,052 161 Amortization of deferred financing costs 335 117 (Gain) loss on sale of equipment (45 ) 389 Gain on lease termination (190 ) (120 ) Share-based compensation 4,962 17 Provision for deferred income taxes 2,648 — Allowance for credit losses 407 — Changes in operating assets and liabilities: Accounts receivable (14,355 ) (385 ) Inventory (6,380 ) (4,785 ) Prepaid expenses and other current assets 461 (1,263 ) Accounts payable - trade 401 2,301 Accrued expenses (6,943 ) 2,355 Deferred revenue (426 ) 109 Operating lease liabilities (1,848 ) (669 ) Finance lease liabilities (297 ) — Net cash provided by operating activities 42,549 27,124 Cash flows used in investing activities Additions to property, plant and equipment (27,850 ) (14,774 ) Proceeds from sale of property, plant and equipment 206 29 Payment for capitalized patent costs (19 ) — Net cash used in investing activities (27,663 ) (14,745 ) Cash flows used in financing activities Issuance of Class A common stock in IPO, net of underwriting discount 461,803 — Payment of offering costs (2,034 ) — Payments on long-term debt (564,764 ) — Proceeds from long-term debt 109,862 5,364 Payments on finance lease obligations (2,829 ) — Proceeds on finance lease terminations 37 120 Purchase of LLC Interests from Continuing Equity Owners (20,876 ) — Payment of debt issuance costs (13 ) — Distributions to members — (17,000 ) Net cash used in financing activities (18,814 ) (11,516 ) Net increase (decrease) in cash and cash equivalents (3,928 ) 863 Cash and cash equivalents Beginning of period 4,615 — End of period $ 687 $ 863 Expand Non-GAAP Financial Measures In addition to our results determined in accordance with generally accepted accounting principles in the United States ('GAAP'), the Company uses non-GAAP financial measures, such as Adjusted Net Income, EBITDA and Adjusted EBITDA, as well as Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin, in this press release to supplement financial information presented in accordance with GAAP. We believe that excluding certain items from our GAAP results provides management additional insight on the consolidated financial performance from period to period to project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our management and investors with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this press release. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. Non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The Company urges investors to review the reconciliation and not to rely on any single financial measure to evaluate our business. Adjusted Net Income Adjusted Net Income is a non-GAAP measure that we define as net income (loss) adjusted to eliminate the impact of (i) transaction-related expenses, (ii) share-based compensation, (iii) loss on the sale of equipment, (iv) loss on debt payments and (v) changes to the value of our inventory. Adjusted Net Income is a supplemental non-GAAP financial measure used by management, our stockholders and others to provide visibility on the profitability and financial strength of the Company by excluding certain expenses related to non-recurring Company transactions. Reconciliation from net income to Adjusted Net Income is set forth as follows: (1) Represents the transaction-related expenses as part of the 2024 Business Combination and non-capitalizable IPO related costs, which were expensed as incurred and included in the consolidated statements of operations. (2) Reflects non-cash compensation expense for equity-based awards to our employees and non-employee directors for the periods presented. (3) Reflects non-cash adjustment related to inventory fair value step-up from 2024 Business Combination which has been included in cost of sales. Expand Adjusted EBITDA and Adjusted EBITDA margin We define EBITDA as net income, adjusted to exclude interest expense, provision for income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude (i) share-based compensation expense, (ii) business combination-related expenses and (iii) other non-cash and non-recurring expenses. EBITDA and Adjusted EBITDA are key performance indicators we use in evaluating our operating performance and in making financial, operating and planning decisions. In particular, the exclusion of certain expenses in calculating EBITDA and Adjusted EBITDA provides additional visibility on operating performance across reporting periods by removing the effect of non-cash and/or non-recurring expenses. Accordingly, we believe that this measure provides useful information to our stockholders and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Reconciliation from net income to EBITDA and Adjusted EBITDA are set forth as follows: Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024 (in thousands) Net income $ 27,045 $ 22,336 $ 17,185 Interest expense 5,365 10,171 4,807 Provision for income taxes (1) 2,648 469 133 Depreciation and amortization 34,119 34,360 11,712 EBITDA 69,177 67,336 33,837 Transaction related expenses (2) 493 2,727 — Share-based compensation expense (3) 4,962 483 — Loss on sale of equipment (45 ) 70 389 Loss on debt extinguishment — — — Inventory valuation adjustments (4) 314 3,163 — Adjusted EBITDA $ 74,901 $ 73,779 $ 34,226 Expand (1) Previously issued non-GAAP information did not include provision for income taxes amounts as a reconciling item for the year ended December 31, 2023, as Texas margin tax was included within other expense in the previously issued consolidated statements of operations. In order to conform with current year's presentation, the Company reclassified Texas margin tax amounts from other expense into provision for income taxes, and consequently, have been included as a reconciling item to Adjusted EBITDA from net income for all periods presented above. (2) Represents the transaction-related expenses as part of the 2024 Business Combination and non-capitalizable IPO related costs, which were expensed as incurred and included in the consolidated statements of operations. (3) Reflects non-cash compensation expense for equity-based awards to our employees and non-employee directors for the periods presented. (4) Reflects non-cash adjustment related to inventory fair value step-up from 2024 Business Combination which has been included in cost of sales. Expand Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin In addition to business segment profit or loss, our management also evaluates Adjusted Segment EBITDA, which is presented on a business unit level for purposes of allocating resources and evaluating operating and financial performance. As discussed above, the Company operates and manages its business units in the following two operating and reporting segments: Production Solutions: relates to rentals, sales and services related to high pressure gas lift, conventional gas lift and plunger lift; including other digital solutions and methane abatement technologies. Natural Gas Technologies: relates to the design and manufacturing for the rental, sales and servicing of vapor recovery and natural gas systems. We define Adjusted Segment EBITDA as segment net income, as adjusted in the same manner as defined for EBITDA and Adjusted EBITDA above. Reconciliation from segment net income, which includes direct segment costs but excludes corporate costs not directly related to either segment, to Adjusted Segment EBITDA is set forth as follows: Three Months Ended Production Solutions Net income $ 29,032 $ 29,712 $ 14,978 Interest expense 93 (3,031 ) 4,807 Provision for income taxes 211 356 72 Depreciation and amortization 19,614 20,198 11,426 EBITDA 48,950 47,235 31,283 Transaction related expenses (1) — — — Share-based compensation expense (2) 1,280 329 — Loss on sale of equipment 46 41 389 Loss on debt extinguishment — (221 ) — Inventory valuation adjustments (3) 314 2,545 — Adjusted Segment EBITDA 50,590 49,929 31,672 Natural Gas Technologies Net income $ 11,632 $ 14,542 $ 2,224 Interest expense 202 (1,816 ) — Provision for income taxes 112 113 61 Depreciation and amortization 14,499 14,162 286 EBITDA 26,445 27,001 2,571 Transaction related expenses (1) — — — Share-based compensation expense (2) 2,308 154 — Loss on sale of equipment (91 ) 29 — Loss on debt extinguishment — — — Inventory valuation adjustments (3) — 618 — Adjusted Segment EBITDA 28,662 27,802 2,571 Corporate Net income $ (13,619 ) $ (21,918 ) $ (17 ) Interest expense 5,070 15,018 — Provision for income taxes 2,325 — — Depreciation and amortization 6 — — EBITDA (6,218 ) (6,900 ) (17 ) Transaction related expenses (1) 493 2,727 — Share-based compensation expense (2) 1,374 — — Loss on sale of equipment — — — Loss on debt extinguishment — 221 — Inventory valuation adjustments (3) — — — Adjusted Segment EBITDA (4,351 ) (3,952 ) (17 ) Total Adjusted EBITDA $ 74,901 $ 73,779 $ 34,226 Expand (1) Represents the transaction-related expenses as part of the 2024 Business Combination and non-capitalizable IPO related costs, which were expensed as incurred and included in the consolidated statements of operations. (2) Reflects non-cash compensation expense for equity-based awards to our employees and non-employee directors for the periods presented. Expand
