Flotek Industries, Inc. EnerCom Denver – The Energy Investment Conference

Thanks, Ryan. All right. Make sure that microphone was clear.

A little feedback. Good morning. As mentioned earlier, I'm Ryan Ezell, the CEO here at Flotek. I'm super excited to be here this morning as we've made now 10 EnerCom for four years straight. Every time this year, we have an opportunity to update everyone on the performance of Flotek and how we've been executing on our strategy. For those of you who aren't aware of Flotek, we're a publicly traded company. Been publicly traded for over two decades. Most of you know us in the energy space as a chemistry company, and that's where it existed for multiple years. Since the current team has come on board, including myself, we created essentially a turnaround strategy for the organization focused on the convergence of real-time data analytics and innovative chemistry technologies.

We put the strategy in place at the mid-year of 2021, and we're very happy at what we've seen growing in terms of as we've transitioned the business to a real-time data analytics business delivered around Data as a Service component qualities. When you look at how the business is set up today, we have two distinct segments. One around chemistry technologies, which is built around our core platform of Prescriptive Chemistry Management services. The other one is our emerging data analytics division, which is built around a unique near-infrared technology that allows us to monitor chemistry and take measurements as fast as every five seconds and drive logic and advanced decision-making on a ton of operations.

Not only what we do in the upstream component of oil and gas, but now we're transitioning that business into behind-the-meter power generation, production chemistry, water management, infrastructure, all the way down to refineries and refined fuels, et cetera. It's also opened a significant amount of pathways for us to transition the business into other industrial platforms with the goal being is we're not seen as a pigeonholed oil and gas specialty chemistry company, but more of an industrialized platform around recurring revenue contracts, better profitability, and overall shareholder value. When you look quickly at the growth we've seen from the second quarter of 2025 to the second quarter of 2026, it's been dramatic as the company's gross profit basically just almost doubled.

Now you start to see the real-time data analytics is driving more than 51% of the gross profit for the organization driven by recurring revenue and backlog contracts. We talk about Flotek's expanding addressable market. When we took over coming in the early part of 2021, we only had about a $2 billion addressable market, and that complete market was exposed to transactional in nature and very much exposed to commodity pricing. The shift that we've seen in bringing our real-time data analytics has now opened up a series of pathways, a lot of other industrial processes like behind-the-meter power generation, water chemistry, advanced water monitoring, and the production chemistry side. We've seen our addressable market now expand to almost $20 billion, with $18 billion of that addressable market not necessarily tied to commodity pricing in oil and gas.

More importantly, we've seen the ability to now get long-term recurring revenue contracts at significantly improved margins backed by our real-time monitoring service and our Data as a Service contracts. Currently to date, Flotek has grown from having zero recurring revenue backlog in 2021 to over $500 million in recurring revenue backlog for growth of the organization. As you start to see this transformative approach take hold between our real-time data analytics and our advanced chemistry technologies. Looking at our second quarter performance, it's been a dramatic change in the business. We had the strongest revenue quarter in over a decade. We approached $100 million in revenue. When you look year-on-year, that's a 70% improvement. Gross profit was up 65%, and all the way down the board from EPS and all adjusted EBITDA, significant improvements year-over-year.

What's really exciting is that we talked about our emerging data analytics division, which is driving our recurring revenue backlog contracts, that we had a record quarter in the second quarter of 2026, which is up 85% on the first quarter, which was our prior record quarter, again, showing this business starting to gain momentum. The exciting part about our data analytics division is that the majority of these upstream technologies that's driving this growth only became commercial in the back half of 2025. So I would say that we're in the first inning of a nine-inning baseball game with this growth in terms of what we're seeing from data analytics. When you look at adjusted EBITDA and net income growth, we are 463% up on net income and 109% up on adjusted EBITDA year-on-year on the same quarter.

Now, how this has really impacted when you look at from a long-term look at Flotek, our transformational growth storyline continues. For almost five years, we've continued to show not only gross profit improvement but also revenue growth. We updated our guidance here at the end of the second quarter, and you can now see that the midpoint of our current guidance on both adjusted EBITDA and revenue represent 45% and 49% improvements on 2025 actuals. This doesn't include any of our recent power board contracts that we announced here prior to earnings in the second quarter.

So again, the transformation of the organization from where we were on a really small addressable market in 2021, this larger market and rapid growth is now showing the scalability, diversity, and size of Flotek that not only leads to improved shareholder returns but also overall stability for the organization in the long term. Diving into the segments a little bit more, our chemistry business continues to outperform the market. Since 2023, you've seen a decline in overall average frac fleet counts. Year on year, you see a drop from Q2 of 2025 to Q2 of 2026, but you see the significant growth where our domestic revenue was up 43% year on year.

More importantly, we had record highs in our international growth, driven by what we're doing in the Middle East with the Jafurah field with Saudi Aramco, our growth in Argentina, and also the growth that we're having in Abu Dhabi. So significant pickups there of almost 172%, not only driving more stable revenue. For long-term, most of this revenue that we have there is good for contracts up to five years. More importantly, we're seeing improved margins on full delivery systems. What's unique is that we are now coupling our chemistry technologies to our real-time data analytics to where you can make decisions stage by stage on water quality, production quality, different components of chemistry that's required for optimum output on hydraulic fracturing, and completion operations.

When you look at this back half of the year, we expect the international chemistry business to continue to grow as we now represent 100% of the hydraulic fracturing fluids in Saudi Aramco's largest field, the Jafurah field, and we expect those frac crews to grow by 50% by December. So again, strong revenue looking in the back half of the year. It talks to the strength of the strategy that we have around the convergence of real-time data analytics and our advanced chemistry technologies. We kind of dove into international growth here. This was a long-term component that we put into the business back in 2021, where we got not only our unconventional fluids approved by Saudi Aramco, which took a multi-year process, but speaks to our service delivery components as we've now achieved 100% of that market share.

What's unique about this, even with the disruptions that you've seen in some of the Middle East conflicts that's been going on, this field is very stable. It represents Saudi's largest investment in unconventional energy production that'll drive their internal economy. So we've seen that continue to grow, albeit we've had some supply chain difficulties where traditionally we would've come into Dammam. We've had to transfer operations and come into Jeddah. We've moved with that very smoothly, and that's allowed us to pick up additional work. We do feel like this field is going to continue to grow. What's exciting about it is subsequent with our chemistry technologies that have been applied there, we've also had our real-time data monitoring systems applied there for not only Transmix, gas monitoring for behind-the-meter power generation, and other adopted activities for Saudi Aramco.

We're transitioning this type of approach to other geographical footprints that we have in Argentina and what we have in Abu Dhabi and some of what we're doing in Qatar as we expect those environments to continue to expand over the year. Traditionally, what we see is when domestic energy may slow down, our international growth provides a lot of stability on that aspect. When you look at a lot of these economies over there are definitely hungry for advanced monitoring technologies to improve efficiency and operation. Our real-time data analytics drive this type of visibility and transparency on why you choose the chemistry that you do, how does it improve performance, and more importantly, how does it lead to overall efficiency output from the operations and better return on the capital invested.