| Summary of Financial Information for Reportable Segments |
Summarized financial information for our reportable segments is as follows:
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Stimulation Services |
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Proppant Production |
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Manufacturing |
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Other |
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Eliminations |
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Total |
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Three Months Ended September 30, 2024: |
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Revenue |
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External customers — services |
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$ |
506.5 |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
506.5 |
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External customers — product sales (1) |
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— |
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40.1 |
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12.2 |
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16.5 |
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— |
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68.8 |
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Intercompany (2) |
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0.6 |
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12.7 |
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49.3 |
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34.8 |
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(97.4 |
) |
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— |
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Total Revenue |
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$ |
507.1 |
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$ |
52.8 |
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$ |
61.5 |
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$ |
51.3 |
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$ |
(97.4 |
) |
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$ |
575.3 |
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Adjusted EBITDA (3) (4) |
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$ |
112.6 |
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$ |
17.3 |
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$ |
0.1 |
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$ |
4.8 |
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$ |
— |
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$ |
134.8 |
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Depreciation, depletion and amortization |
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|
88.0 |
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|
19.6 |
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4.4 |
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0.7 |
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— |
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|
112.7 |
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Investment in property, plant & equipment |
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61.3 |
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8.1 |
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0.3 |
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0.3 |
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— |
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70.0 |
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Three Months Ended September 30, 2023: |
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Revenue |
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External customers — services |
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$ |
485.4 |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
485.4 |
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External customers — product sales (1) |
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— |
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69.5 |
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1.5 |
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17.8 |
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— |
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88.8 |
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Intercompany (2) |
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4.1 |
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28.9 |
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42.3 |
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30.8 |
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(106.1 |
) |
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— |
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Total Revenue |
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$ |
489.5 |
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$ |
98.4 |
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$ |
43.8 |
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$ |
48.6 |
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$ |
(106.1 |
) |
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$ |
574.2 |
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Adjusted EBITDA (3) (4) |
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$ |
93.3 |
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$ |
51.6 |
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$ |
1.6 |
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$ |
2.8 |
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$ |
— |
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$ |
149.3 |
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Depreciation, depletion and amortization |
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|
89.2 |
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|
20.2 |
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1.4 |
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0.7 |
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— |
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111.5 |
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Investment in property, plant & equipment |
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40.6 |
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9.3 |
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2.4 |
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0.3 |
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— |
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52.6 |
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As of September 30, 2024: |
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Cash and cash equivalents |
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$ |
6.7 |
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$ |
11.9 |
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$ |
1.9 |
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$ |
5.0 |
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$ |
— |
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$ |
25.5 |
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Total current assets |
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532.5 |
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|
107.3 |
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239.8 |
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79.8 |
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(279.4 |
) |
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|
680.0 |
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Property, plant, and equipment, net |
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892.6 |
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831.7 |
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86.4 |
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16.0 |
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(1.4 |
) |
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1,825.3 |
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Total assets |
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2,962.2 |
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|
980.0 |
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461.1 |
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194.5 |
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(1,462.0 |
) |
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3,135.8 |
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Current portion of long-term debt |
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85.8 |
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|
77.9 |
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6.7 |
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1.5 |
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— |
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|
171.9 |
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Long-term debt |
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691.2 |
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292.5 |
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17.6 |
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— |
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— |
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1,001.3 |
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Total liabilities |
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1,873.7 |
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|
157.1 |
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378.3 |
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51.9 |
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(554.7 |
) |
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1,906.3 |
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Stimulation Services |
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Proppant Production |
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Manufacturing |
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Other |
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Eliminations |
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Total |
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Nine Months Ended September 30, 2024: |
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Revenue |
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External customers — services |
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$ |
1,504.8 |
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$ |
— |
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$ |
— |
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|
$ |
— |
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|
$ |
— |
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|
$ |
1,504.8 |
|
External customers — product sales (1) |
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|
— |
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|
147.1 |
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|
36.4 |
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|
47.9 |
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|
— |
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|
231.4 |
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Intercompany (2) |
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|
25.2 |
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52.9 |
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|
124.5 |
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|
92.7 |
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(295.3 |
) |
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— |
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Total Revenue |
|
$ |
1,530.0 |
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|
$ |
200.0 |
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|
$ |
160.9 |
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$ |
140.6 |
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|
$ |
(295.3 |
) |
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$ |
1,736.2 |
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Adjusted EBITDA (3) (4) |
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$ |
345.1 |
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$ |
71.4 |
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$ |
4.6 |
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$ |
12.8 |
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$ |
(3.6 |
) |
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$ |
430.3 |
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Depreciation, depletion and amortization |
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|
258.5 |
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|
59.2 |
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|
9.3 |
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2.2 |
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(0.3 |
) |
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|
328.9 |
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Investment in property, plant & equipment |
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164.0 |
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|
19.4 |
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|
7.9 |
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|
0.5 |
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— |
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|
191.8 |
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Nine Months Ended September 30, 2023: |
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Revenue |
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|
|
|
|
|
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|
|
|
|
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External customers — services |
|
$ |
1,879.8 |
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|
$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
1,879.8 |
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External customers — product sales (1) |
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|
— |
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|
200.7 |
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|
13.2 |
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|
47.2 |
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— |
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|
261.1 |
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Intercompany (2) |
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8.1 |
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|
89.7 |
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|
128.8 |
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|
102.3 |
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(328.9 |
) |
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— |
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Total Revenue |
|
$ |
1,887.9 |
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|
$ |
290.4 |
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$ |
142.0 |
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$ |
149.5 |
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$ |
(328.9 |
) |
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$ |
2,140.9 |
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|
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Adjusted EBITDA (3) (4) |
|
$ |
421.9 |
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|
$ |
150.7 |
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$ |
12.7 |
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|
$ |
(6.4 |
) |
|
$ |
— |
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|
$ |
578.9 |
|
Depreciation, depletion and amortization |
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|
275.2 |
|
|
|
49.9 |
|
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|
3.3 |
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|
2.3 |
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|
— |
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|
|
330.7 |
|
Investment in property, plant & equipment |
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|
190.7 |
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|
|
39.7 |
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|
|
2.9 |
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|
0.6 |
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|
|
— |
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|
233.9 |
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|
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As of December 31, 2023: |
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Cash and cash equivalents |
|
$ |
1.3 |
|
|
$ |
17.7 |
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|
$ |
0.4 |
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|
$ |
5.9 |
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|
$ |
— |
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|
$ |
25.3 |
|
Total current assets |
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|
445.8 |
|
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|
181.2 |
|
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|
164.7 |
|
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|
70.6 |
|
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(224.2 |
) |
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|
638.1 |
|
Property, plant, and equipment, net |
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|
881.6 |
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|
859.8 |
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|
19.8 |
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|
17.8 |
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|
— |
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|
1,779.0 |
|
Total assets (5) |
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2,483.9 |
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|
1,160.1 |
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|
243.9 |
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|
188.7 |
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|
(1,005.9 |
) |
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|
3,070.7 |
|
Current portion of long-term debt |
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|
46.2 |
|
|
|
71.6 |
|
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|
1.0 |
|
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|
7.6 |
|
|
|
— |
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|
126.4 |
|
Long-term debt |
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|
611.2 |
|
|
|
328.2 |
|
|
|
2.6 |
|
|
|
0.1 |
|
|
|
— |
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|
|
942.1 |
|
Total liabilities |
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|
1,404.5 |
|
|
|
225.7 |
|
|
|
201.5 |
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|
|
55.5 |
|
|
|
(145.1 |
) |
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|
1,742.1 |
|
(1)
Our proppant production segment recognized noncash revenue associated with acquired contract liabilities of $8.9 million and $16.4 million for the three months ended September 30, 2024 and 2023, respectively, and $36.1 million and $41.0 million for the nine months ended September 30, 2024 and 2023, respectively. Refer to Item 8 "Financial Statements and Supplementary Data" in our Annual Report for information about our acquired contract liabilities.
(2)
In our other business activities, Flotek recorded revenue of $6.7 million and $8.0 million for the three months ended September 30, 2024 and 2023, respectively, and $23.8 million and $10.0 million for the nine months ended September 30, 2024 and 2023, respectively, related to contract shortfalls because the stimulation services segment did not purchase the minimum contractual commitment of chemistry products from Flotek.
(3)We evaluate the performance of our segments based on Adjusted EBITDA. We define Adjusted EBITDA as our net income (loss) before (i) interest expense, net, (ii) income taxes, (iii) depreciation, depletion and amortization, (iv) (loss) gain on disposal of assets, net, (v) stock-based compensation, and (vi) other charges, such as certain credit losses, gain (loss) on extinguishment of debt, gain (loss) on investments, acquisition and integration expenses, litigation expenses and accruals for legal contingencies, acquisition earnout adjustments, severance charges, goodwill impairments, gains on insurance recoveries, transaction costs, third-party supply commitment charges, and impairments of long-lived assets.
(4)
Adjusted EBITDA for the stimulation services segment included an intercompany supply commitment charge of $6.7 million and $8.0 million for the three months ended September 30, 2024 and 2023, respectively, and $23.8 million and $10.0 million for the nine months ended September 30, 2024 and 2023, respectively, because this segment did not purchase the minimum contractual commitment of chemistry products from Flotek.
(5)
Total assets for the stimulation services segment includes our investment in BPC prior to acquisition, which was $23.4 million as of December 31, 2023. The gains and losses associated with this investment are not included in our segment profit measure of adjusted EBITDA.
The following table reconciles Adjusted EBITDA for our reportable segments to net income:
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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|
2024 |
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|
2023 |
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|
2024 |
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|
2023 |
|
Adjusted EBITDA of reportable segments |
|
$ |
134.8 |
|
|
$ |
149.3 |
|
|
$ |
430.3 |
|
|
$ |
578.9 |
|
Interest expense, net |
|
|
(40.6 |
) |
|
|
(40.2 |
) |
|
|
(117.8 |
) |
|
|
(116.1 |
) |
Depreciation, depletion and amortization |
|
|
(112.7 |
) |
|
|
(111.5 |
) |
|
|
(328.9 |
) |
|
|
(330.7 |
) |
Income tax benefit (expense) |
|
|
1.5 |
|
|
|
6.7 |
|
|
|
24.9 |
|
|
|
(9.6 |
) |
Loss on disposal of assets, net |
|
|
1.4 |
|
|
|
1.3 |
|
|
|
2.5 |
|
|
|
0.3 |
|
Gain (loss) on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(0.8 |
) |
|
|
4.1 |
|
Acquisition earnout adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.6 |
|
Stock-based compensation |
|
|
(1.1 |
) |
|
|
(2.3 |
) |
|
|
(6.1 |
) |
|
|
(7.6 |
) |
Stock-based compensation related to deemed contributions |
|
|
— |
|
|
|
(2.1 |
) |
|
|
— |
|
|
|
(19.7 |
) |
Provision for credit losses, net of recoveries |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
Transaction costs |
|
|
(3.9 |
) |
|
|
— |
|
|
|
(3.9 |
) |
|
|
— |
|
Severance charges |
|
|
(0.7 |
) |
|
|
(1.1 |
) |
|
|
(2.5 |
) |
|
|
(1.1 |
) |
Acquisition and integration costs |
|
|
(2.0 |
) |
|
|
(2.6 |
) |
|
|
(5.1 |
) |
|
|
(20.1 |
) |
Supply commitment charges |
|
|
(9.4 |
) |
|
|
— |
|
|
|
(9.6 |
) |
|
|
— |
|
Impairment of goodwill |
|
|
(6.8 |
) |
|
|
— |
|
|
|
(74.5 |
) |
|
|
— |
|
Gain on insurance recoveries |
|
|
— |
|
|
|
— |
|
|
|
3.2 |
|
|
|
— |
|
Litigation expenses and accruals for legal contingencies |
|
|
(2.9 |
) |
|
|
(10.3 |
) |
|
|
(16.9 |
) |
|
|
(23.5 |
) |
Unrealized loss on investments, net |
|
|
(1.1 |
) |
|
|
(5.1 |
) |
|
|
(0.9 |
) |
|
|
(24.1 |
) |
Net income (loss) |
|
$ |
(43.5 |
) |
|
$ |
(17.9 |
) |
|
$ |
(106.1 |
) |
|
$ |
37.3 |
|
|