Q2 2025 Flotek Industries Inc Earnings Call

We will conduct a question and answer session. If at any time. During this call. If you require immediate assistance. Please press star zero for operator. This call is being recorded on Wednesday August six 2025, I would now like to turn the conference over to Michael Kutani Director of Finance and Investor Relations.

Speaker #3: Good morning, ladies and gentlemen. Welcome to Flutech Industry's second quarter 2025 earnings conference call. At this time, all lines are in a listen-only mode.

Speaker #3: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Go ahead.

Thank you and good morning, we're thrilled to have you with us for Flotek.

Speaker #3: This call is being recorded on Wednesday, August 6th, 2025. I would now like to turn the conference over to Michael Critelli, Director of Finance and Investor Relations.

Second quarter 2025 earnings conference call.

Today I'm joined by Ryan is L, Chief Executive Officer, and Bond Clement Chief Financial Officer, We will start with prepared remarks, covering our business operations and financial performance. Following that we will open up the floor for questions.

Speaker #3: Please go head.

Speaker #4: Thank you, and good morning. We're thrilled to have you with us for Flotek's second quarter 2025 earnings conference call. Today, I'm joined by Ryan Ezell, Chief Executive Officer, and Bon Clement, Chief Financial Officer.

Yesterday, we announced our second quarter 2025 results and an updated earnings presentation, both of which are available on the Investor Relations section of our website.

Speaker #4: We will start with prepared remarks, covering our business operations and financial performance. Following that, we will open up the floor for questions. Yesterday, we announced our second quarter 2025 results, and an updated earnings presentation.

This call is being webcast with a replay available on our website shortly after its conclusion.

Please note that the comments made on today's call may include forward looking statements, which include our projections or expectations for future events forward looking statements are subject to a number of risks and uncertainties many of which are beyond our control.

Speaker #4: Both of which are available on the Investor Relations section of our website. This call is being webcast with a replay available on our website shortly after its conclusion.

Speaker #4: Please note that the comments made on today's call may include forward-looking statements. Which include our projections or expectations for future events. Forward-looking statements are subject to a number of risks and uncertainties.

These risks and uncertainties can cause actual results to differ materially from those projected in forward looking statements.

We advise listeners to review our earnings release, and most recent 10-K and 10-Q filings for a more complete description of risk factors that could cause actual results to materially differ from those projected in forward looking statements.

Speaker #4: Many which are beyond our control. These risks and uncertainties can cause actual results to differ materially from those projected in forward-looking statements. We advise listeners to review our earnings release and most recent 10-K and 10-Q filings for a more complete description of risk factors that could cause actual results to materially differ from those projected in forward-looking statements.

Please refer to the reconciliations provided in the earnings press release, and Investor presentation as management will be discussing non-GAAP metrics on this call.

With that I will turn the call over to our CEO wind as well.

Speaker #4: Please refer to the reconciliations provided in the earnings press release and investor presentation as management will be discussing non-GAAP metrics on this call. With that, I will turn the call over to our CEO, Ryan Ezell.

Thank you Mike and good morning, we appreciate everyone's interest in Flotek and for joining US today as we discuss our second quarter of 2025 operational and financial results.

About the quarter the sector continued to face dynamic geopolitical and macroeconomic challenges that have generated volatility within the commodities market.

Speaker #5: Thank you, Mike, and good morning. We appreciate everyone's interest in Flutech. If you're ining us today, as we discuss our second quarter of 2025, operational and financial results.

Despite these headwinds the flotek team demonstrated a resilient focus on executing our corporate strategy driving transformation and delivering our sixth consecutive quarter of revenue and gross profit growth alongside our 11th consecutive quarter of adjusted EBITDA improvement.

Speaker #5: Throughout the quarter, the sector continued to face dynamic geopolitical and macroeconomic challenges that have generated volatility within the commodities market. Despite these headwinds, the Flutech team demonstrated a resilient focus on executing our corporate strategy driving transformation and delivering our six consecutive quarters of revenue and gross profit growth alongside our 11th consecutive quarter of adjusted EBITDA improvement.

As a result, Flotek continued its track record of increasing market share in both of our complementary business segments. As we remain unwavering in our commitment to excellence and value creation for our shareholders and customers throughout the convergence of innovative data and chemistry solutions.

Speaker #5: As a result, Flutech continued its track record of increasing market share in both of our complementary business segments as we remain unwavering in our commitment to excellence and value creation for our shareholders and customers throughout the convergence of innovative data and chemistry solutions.

With that I'd like to touch on some key highlights for the quarter referenced in slide five.

Ron will discuss later in the call.

As part of our measured more strategy and the data analytics segment, we acquired 30 real time gas monitoring and dual fuel optimization assets to accelerate flotek strategic expansion into the energy infrastructure sector.

Speaker #5: With that, I'd like to touch on some key highlights for the quarter referenced in slide five, that Bon will discuss later in the call.

Speaker #5: As part of our Measure More strategy in the data analytics segment, we acquired 30 real-time gas monitoring and dual fuel optimization assets to accelerate Flutech's strategic expansion into the energy infrastructure sector.

26 were operating at the end of July and all 30 are expected to be operating by January one 2026.

We continued to build our revenue backlog in the data analytics segment by securing a multi year contract estimated to deliver $156 million in revenue, while providing substantial earnings growth and free cash flow for the segment.

Speaker #5: Twenty-six were operating at the end of July, and all 30 are expected to be operating by January 1st, 2026. We continue to build our revenue backlog in the data analytics segment by securing a multi-year contract estimated to deliver $156 million in revenue while providing substantial earnings growth and free cash flow for the segment.

Total revenue during the quarter rose, 26% versus the second quarter of 2024 highlighted by 189% increase in data analytics revenue, our strongest quarter ever.

And at 38% increase in external chemistry revenue.

Speaker #5: Total revenue during the quarter rose 26% versus the second quarter of 2024, highlighted by a 189% increase in data analytics revenue—our strongest quarter ever.

Gross profit climbed to 57% versus the second quarter of 2024 with the second quarter of 2025 gross profit margin rising to 25%.

Speaker #5: And at 38% increase in external chemistry revenue. Gross profit climbed 57% versus the second quarter of 2024, with the second quarter of 2025 gross profit margin rising to 25%.

Net income totaled $1 8 million, however, excluding $4 2 million in asset acquisition expenses adjusted net income totaled $6 million.

Which is a 202% improvement versus the second quarter of 2024 and more than a 10% improvement sequentially.

Speaker #5: Net income totaled 1.8 million; however, excluding $4.2 million in asset acquisition expenses, adjusted net income totaled $6 million. Which a $202% improvement versus the second quarter of 2024.

And adjusted EBITDA was up 113% versus the second quarter of 2024 and up more than 20% sequentially.

And above all these milestones were achieved with zero lost time incidents in the field of operations.

Speaker #5: And more than a 10% improvement sequentially. An adjusted EBITDA was up $113% versus the second quarter 2024, and up more than 20% sequentially. And above all, these milestones were achieved with zero lost time incidents in the field of operations.

Also want to spotlight, our MTI facility in <unk>, Louisiana, which is remarkably maintained a 10 year record with no Osha recordable.

During that period MTI has moved over 350 million pounds of dry products at $5 3 million gallons of liquid products, such an extraordinary feat.

Speaker #5: I also want to spotlight our MTI facility in Raceland, iana, which is remarkably maintained a 10-year record with no orphaned ables. During that period, MTI has moved over 350 million pounds of dry products, and $5.3 million gallons of liquid products.

So we want to thank all of our employees for their hard work and commitment to safety and service quality and achieving these outstanding results.

I remain excited about <unk> future as we strengthen our position as a technology leader spearheading innovation and delivering tailored data and chemistry solutions that meet our customers' specific needs, we're committed to shaping the industry's future by leveraging chemistry as the common value creation platform.

Speaker #5: Such an extraordinary feat. So we want to thank all of our employees for their hard work and commitment to safety and service quality in achieving these outstanding results.

Speaker #5: I remain excited about Flutech's future as we strengthen our position as a technology leader spearheading innovation and delivering tailored data and chemistry solutions that meet our customer-specific needs.

Now, let's dive into the details referencing slide nine of the Investor earnings day.

Today I want to spotlight the remarkable progress in our data analytics segment. We saw service revenues increased 452% in the second quarter of 2025 versus the second quarter of 2024, elevating gross profit to 63% in the second quarter of 2025 versus <unk> 30 per.

Speaker #5: We're committed to shaping the industry's future by leveraging chemistry as the common value creation platform. Now, let's dive into the details referencing slide nine of the investor earnings day.

Speaker #5: Today, I want to spotlight the remarkable progress in our data analytics segment, which saw service revenues increase $452% in the second quarter of 2025, versus the second quarter of 2024.

In the same quarter a year ago.

This transformational growth in data driven service revenue is empowered by Threep upstream technology applications power generation custody transfer and flare monitoring.

Speaker #5: Elevating gross profit to $63% in the second quarter 2025, versus 30% in the same quarter a year ago. This transformational growth in data-driven service revenue is empowered by three upstream technology applications.

All of which are fueling significant advancements for our organization, while generating recurring revenue backlog.

First is our transformative power generation solution, which has evolved from a novel analytical approach into a game changer for the energy infrastructure sector that we call power Tech.

Speaker #5: Power generation, custody transfer, and flare monitoring. All of which are fueling significant advancements for our organization while generating recurring revenue backlog. The first is our transformative power generation solution, which has evolved from a novel analytical approach into a game changer for the energy infrastructure sector that we call PowerTech.

Well began as advanced analytics has grown its a comprehensive into an fuel management platform redefining performance standards and operations within the sector.

Looking at slide 11.

A 2025, we acquired 30 patented real time gas monitoring and dual fuel optimization assets.

Speaker #5: What began as advanced analytics has grown into a comprehensive end-to-end fuel management platform, redefining performance standards and operations within the sector. Looking at slide 11, in April of 2025, we acquired 30 patented real-time gas monitoring and dual fuel optimization assets.

This transaction instantly shrink things our presence across all U S basins, adding turnkey capacity for fuel valuation conditioning and distribution to support remote and mobile energy services.

Speaker #5: This transaction instantly strengthens our presence across all US basins, adding turnkey capacity for fuel valuation, conditioning, and distribution to support remote and mobile energy services, data center and grid power generation infrastructure.

Data center and grid power generation infrastructure.

In connection with the asset acquisition, we also secured a six year contract anchoring and estimated $156 million in recurring revenue backlog, while generating improvements in annual operating income and boosting free cash flow.

Speaker #5: In connection with the asset acquisition, we also secured a six-year contract anchoring an estimated $156 million in recurring revenue backlog while generating improvements in annual operating income and boosting free cash flow.

At the heart of Powertech, as our <unk> analyzer, which goes beyond data collection to deliver custody transfer grade measurements.

It provides precise btu volume reporting to royalties invoicing and performance guarantees.

Speaker #5: At the heart of PowerTech is our Verax Analyzer, which goes beyond data collection to deliver custody transfer and grade measurements. It provides precise BTU, volume reporting for royalties, invoicing, and performance guarantees.

Complementing this our patented ESD trailers actively remove liquids and contaminants.

Additionally, high Btu hydrocarbon feeds to meet exact turbine or engine performance specifications.

Because every site in great condition are unique with integrated Coriolis metering automated CMG blending a seamless backup connections, allowing operators to Swiss rules or go off grid with a single button resolving major constraints to development of datacenter and grid power infrastructure.

Speaker #5: Complementing this are patented ESD trailers actively remove liquids and contaminants. Conditioning high BTU hydrocarbon feeds to meet exact turbine or engine performance specifications. Because every site and grid condition are unique, we've integrated Coriolis metering, automated CNG blending, and seamless backup connections, allowing operators to switch fuels or go off-grid with a single button resolving major constraints to the development of data center and grid power infrastructure.

The power Tech is about more than just technology.

<unk> control.

Operators interact seamlessly through an old trailer H M. A R. A unified web portal that is accessible on desktop tablet or smartphone.

Speaker #5: But PowerTech is about more than just technology. It's about control. Operators interact seamlessly through an on-trailer HMI or a unified web portal that is accessible on desktop, tablet, or smartphone.

Our cloud based portal enables a monitoring of why a btu trades <unk> corio as flow meter readings and automated <unk> blend controls combined with custom alarm thresholds to automatically isolate all spec hydrocarbon feeds and protect high value turbines are engines for catastrophic damage thus minimizing that.

Speaker #5: Our cloud-based portal enables the monitoring of live BTU trends, H2S alerts, Coriolis flow meter readings, and automated CNG blend controls combined with custom alarm thresholds to automatically isolate off-spec hydrocarbon feeds and protect high-value turbines or engines from catastrophic damage thus minimizing downtime and operational risk while enhancing safety.

Time and operational risk while enhancing safety.

All data flow securely through our patented edge to cloud pipeline, ensuring zero manual intervention and.

Into encryption full audit trails, a compliant custody transfer record keeping.

Building on the success. We've also taken delivery of our first smart filtration skids, a minimal footprint unit that integrates custody transfer analyzers to remove liquids monitor btu and emissions.

Speaker #5: All data flows securely through our ented edge-to-cloud pipeline, ensuring zero manual intervention and end-to-end encryption full audit trails and compliant custody transfer record keeping.

Speaker #5: Building on the success, we've also taken delivery of our first smart filtration skid, a minimal footprint unit that integrates custody transfer analyzers to remove liquids, monitor BTU and emissions, and auto divert out-of-spec gas.

To divert out of spec gas.

On expanding.

Our external customer base, we expect field deployment in the third quarter 2025.

With a potential capital expenditure payback in less than three months.

Finally.

Speaker #5: Focus on expanding our external customer base, we expect field deployment in the third quarter of 2025 with a potential capital expenditure payback in less than three months.

Over 35.

Data analytics patents position Flotek as a leader.

Across the natural gas value chain.

When considering our capabilities for advanced fuel blending.

Zero emissions analytics custody transferred gave flows sale measurements wireless ESC actuation secure edge to cloud data transmission we.

Speaker #5: Finally, our over 35 data analytics patents position Flutech as a leader across the natural gas value chain. When considering our capabilities for advanced fuel blending, zero emissions analytics, custody transfer gate flow cell measurements, wireless ESD actuation, and secure edge-to-cloud data transmission, we deliver unmatched monitoring, control, and safety for field gas operations.

We delivered unmatched monitoring.

Control and safety fulfill gas operations.

Now, let's transition to slide 12.

Well go down into our second upstream application custody transfer.

Since January of 2025, our leading E&P partner has been piloting this solution in multiple basins and.

Speaker #5: Now, 's transition to slide 12. We'll dive into our second upstream application, custody transfer. Since January of 2025, a leading EMP partner has been piloting this solution in multiple basins.

In a single pilot site, we pinpointed, an annual customer opportunity I'll go up to $3 5 million.

This highlights the significant value the solution creates.

Currently nine of the custody transfer locations are now fully commercial reverting to recurring monthly revenue.

Speaker #5: At a single pilot site, we pinpointed an annual customer opportunity of up to 3.5 million. This highlights the significant value the solution creates. Currently, nine of custody transfer locations are now fully commercial, converting to recurring monthly revenue.

Six additional locations are expected to convert to recurring monthly revenue in the third quarter of 2025 with further expansion expected.

Additionally, we are actively pursuing opportunities with other domestic operators and targeted <unk> in the middle East.

Speaker #5: Six additional locations are expected to convert to recurring monthly revenue in the third quarter of 2025, with further expansion expected. Additionally, we are actively pursuing opportunities with other domestic operators and targeted NOCs in the Middle East.

This groundbreaking application sets, a new standard in oil and gas industry, delivering unprecedented transparency and minimizing enterprise risk for producing wells like never before.

Monitoring hydrocarbon quality and composition in real time, and taking the measurements every five seconds, we successfully unlocked a new market for Flotek.

Speaker #5: This groundbreaking application sets a new standard in oil and gas industry, delivering unprecedented transparency, and minimizing enterprise risk for producing wells like never before.

Let's move to our third upstream application the <unk> flare monitoring solution, we continue to see operation demand in the second quarter of 2025, realizing nearly $1 million in revenue where.

Speaker #5: By monitoring hydrocarbon quality and composition in real-time, and taking the measurements every five seconds, we successfully unlocked a new market for Flutech. Let's move to our third upstream application, the Veracal flare monitoring solution.

We're navigating through the rapidly changing regulatory landscape and partnering with operators in Florida developers to deliver value that goes beyond compliance unlocking new efficiencies and environmental benefits for our clients.

Speaker #5: We continue to see operational demand in the second quarter 2025, realizing nearly $1 million in revenue. We're navigating through the rapidly changing regulatory landscape and partnering with operators and flare developers to deliver value that goes beyond compliance, unlocking new efficiencies and environmental benefits for our clients.

It's clear that our transformational strategy to grow the data analytics segment through upstream applications is gaining traction.

But what is most important is what it means for our stakeholders and investors.

Our data driven strategy ensures predictable recurring revenue and cash flow delivering stability and long term value. Our proprietary data technologies is superior measurement accuracy enables velocity and decision control that establish a high barrier to entry secured client loyalty to support our value.

Speaker #5: It's lear that our transformational strategy to grow the data analytics segment through upstream applications is gaining traction. But what is most important is what it means for our stakeholders and investors.

Speaker #5: Our DAS-driven strategy ensures predictable recurring revenue and cash flow delivering stability and long-term value. Our proprietary data technologies and superior measurement accuracy enable velocity and decision control that establish a high barrier to entry.

Based service model.

And long term.

Origin subscriptions position flotek for sustained growth and margin expansion driving significant shareholder value over time.

Speaker #5: Secure client loyalty and support our value-based service model. And long-term, high margin subscriptions position Flutech for sustained growth and margin expansion, driving significant shareholder value over time.

Lastly, our.

Our chemistry technology segment continues to deliver robust performance driven by the differentiation of our prescriptive chemistry management services and our expanding international presence as shown on slide 13.

Speaker #5: Now, ly, our chemistry technology segment continues to deliver robust performance driven by the differentiation of our prescriptive chemistry management services and our expanding international presence, as shown on slide 13.

Slide 14 underscores the resilient performance of our chemistry segment with second quarter 2025 revenue surging, 38% year over year. Despite a 24% decline in average active frac fleets during the same period.

Speaker #5: Slide 14 underscores the resilient performance of our chemistry segment with second quarter of 2025 revenue surging 38% year-over-year despite a 24% decline in average active frac fleets during the same period.

While we anticipate potential commodity price volatility in the second half of 2025, we view this as a strategic opportunity to further expand our market share by accelerating the adoption of our prescriptive chemistry management solutions and enhancing asset values for our customers.

Speaker #5: While we anticipate potential commodity price volatility in the second half of 2025, we view this as a strategic opportunity to further expand our market share by accelerating the adoption of our prescriptive chemistry management solutions and enhancing asset values for our ustomers.

It's evident that our chemistry team has executed our strategy flawlessly, despite the near to medium term headwinds.

While uncertainties around activity levels in the second half of 2025 persist due to the macro factors that we.

It could affect the completion chemistry market, we remain focused on defining these challenges delivering differentiated chemistry and data services.

Speaker #5: It's evident that our chemistry team is executing our strategy flawlessly despite the near- to medium-term headwinds. While uncertainties around activity levels in the second half of 2025 persist due to the macro factors that could affect the completion of the chemistry market, we remain focused on defying these challenges, delivering differentiated chemistry and data services to provide our customers with industry-leading returns on their investment.

Our customers with industry, leading returns on their investment.

We are confident that our expanding suite of services position us to deliver superior solutions to a variety of our industry's most challenging problems, while maximizing our customers' value chain.

Now I'll turn the call over to bond to provide key financial highlights.

Speaker #5: We are confident that our expanding suite of services will position us to deliver superior solutions to a variety of our industry's most challenging problems while maximizing our customers' value chain.

Thanks, Ron.

We decided to discuss our second quarter performance released yesterday afternoon.

This marks our first opportunity to assess the financial contribution of our newly acquired gas conditioning assets and the accompanying long term lease as.

Speaker #5: Now, I'll turn the call over to Bon to provide key financial highlights.

Speaker #6: Thanks, Ryan. Excited to discuss our second quarter performance release yesterday afternoon. This marks our first opportunity to assess the financial contribution of our newly acquired gas conditioning assets and the accompanying long-term lease.

As we reported yesterday, our new power Tech assets had a meaningful impact on our second quarter numbers.

Operating for only two months of the quarter, they generated $3 2 million in revenues and contributed roughly $3 million gross profit.

The addition of this new high margin revenue drove total company gross margins for the quarter to 25% or up approximately 200 basis points sequentially.

Speaker #6: As we reported yesterday, our new PowerTech assets had a meaningful impact on our second quarter numbers. Operating for only two months of the quarter, they generated $3.2 million in revenues and contributed roughly $3 million in gross profit.

As shown in slide nine of our deck, our power tech assets serve as a clear catalyst for margin and profitability expansion.

Speaker #6: The addition of this new high-margin revenue drove total company gross margins for the quarter to 25% or up approximately 200 basis points sequentially. As shown in slide nine of our deck, our PowerTech assets served as a clear catalyst for margin and profitability expansion.

Diving improvements not only within the data analytics segment, but also at the corporate level <unk>.

<unk> Powertech impact during the first quarter of 2025, the data analytics segment contributed just 8% of total company gross margin.

Speaker #6: Driving improvements not only within the data analytics segment but also at the corporate level. Emphasizing PowerTech's impact, during the first quarter of 2025, the data analytics segment contributed just 8% of total company gross margin.

Compare that with the second quarter of this year, where that contribution was up to 26%.

The numbers become even more compelling when you consider our expectation that third quarter revenue from these assets will surpass second quarter levels with full year revenue contributions projected to reach approximately $15 million.

Speaker #6: Compare that with the second quarter of this year where that contribution was up to 26%. The numbers become even more compelling when you consider our expectation that third quarter revenue from these assets will surpass second quarter levels.

Based on the fixed rental rates in the lease and with all of our power Tech assets and service for our full year 2026 revenues are expected to be north of $27 million.

Speaker #6: With full-year revenue contributions projected to reach approximately $15 million. Based on the fixed rental rates in the ase, and with all of PowerTech assets in service for a full year, 2026 revenues are expected to be north of $27 million.

Considering the Powertech generated only 5% of second quarter revenue, but provided a remarkable 21% of total company gross profit it's clear the strategic weight data analytics will carry and driving profitability over the coming quarters and the duration of the six year lease.

Speaker #6: Considering the PowerTech generated only 5% of second quarter revenue, but provided a remarkable 21% of total company gross profit, it's clear the strategic weight data analytics will carry in driving profitability over the coming quarters in duration of the six-year lease.

Moving to the quarterly results as Ryan mentioned in the second quarter marked our sixth consecutive quarter of revenue growth.

Revenue growth was led by 189% increase in the data analytics segment versus the euro quarter highlighted by the increase in service and rental related revenues driven by the power Tech assets.

Speaker #6: Moving through the quarterly results, as Ryan mentioned, the second quarter marked our sixth consecutive quarter of revenue growth. Revenue growth led by $189% increase in the data analytics segment versus the year of growth quarter.

Data analytics segment revenue represented 10% of total second quarter revenues up from 4% a year ago on.

On the chemistry front total revenue grew 19% versus the year ago quarter.

Speaker #6: Highlighted by the increase in service and rental-related revenues driven by the PowerTech assets. Data analytics segment revenue represented 10% of total second quarter revenues, up from 4% a year ago.

Please see slide 14 in our earnings deck that reflects the growth in our chemistry revenues over the last several quarters against the backdrop of declining active frac fleets.

Speaker #6: On the chemistry front, total revenue grew 19% versus the year-ago quarter. Please see slide 14 in our earnings deck that reflects the growth in our chemistry revenues over the last several quarters against a backdrop of declining active frac fleets.

SG&A cost during the quarter were up versus the second quarter of last year due to higher stock compensation.

Compensation costs, however, on a percentage of revenue basis, G&A was 12% this quarter versus 14% a year ago.

Speaker #6: SG&A costs the quarter were up versus the second quarter of last year due to higher stock compensation costs. However, on a percentage of revenue basis, G&A was 12% this quarter versus 14% a year ago.

Net income for the quarter totaled $1 8 million or <unk> <unk> per share and it was impacted by $4 2 million in asset acquisition costs, which primarily related to legal and various advisory services.

Excluding the expense expense acquisition costs, adjusted net income totaled $6 million or <unk> 16 per diluted share.

Speaker #6: Net income for the quarter totaled $1.8 million, or $0.05 per share. And it was impacted by $4.2 million in asset acquisition costs, which primarily related to legal and various advisory services.

Please refer to slide 26 for the reconciliation between net income and adjusted net income.

Speaker #6: Excluding the expensed acquisition costs, adjusted net income totaled $6 million, or $0.16 per diluted share. Please refer to slide 26 for the reconciliation between net income and adjusted net income.

As it relates to second quarter share count as noted in the release shares outstanding at June 30th did include the weighted average impact of the 6 million shares underlying the warrant that was part of the consideration for the power Tech acquisition.

Speaker #6: As it ates to second quarter share count, as noted in the release, shares outstanding at June 30th did include the weighted average impact of the $6 million shares underlying the warrant that was part of the consideration for the PowerTech acquisition.

Looking at slide six during the second quarter, we continued our streak with respect to adjusted EBITDA. We have now posted 11 consecutive quarters of improvement.

Not only was our second quarter adjusted EBITDA, 21% higher sequentially, but when you look at it through the first six months adjusted EBITDA is running more than 100% higher than the first half of last year.

Speaker #6: Looking at slide six, during the second quarter, we continued our streak with respect to adjusted EBITDA. We have now posted 11 consecutive quarters of improvement.

Similar to what we saw on the gross profit margin side, our second quarter adjusted EBITDA margin increased by 200 basis points sequentially, primarily as a result of the new data analytics assets.

Speaker #6: Not only was our second quarter adjusted EBITDA 21% higher sequentially, but when you look at it through the first six months, adjusted EBITDA is running more than 100% higher than the first half of last year.

In yesterday's release, we reconfirmed, our 2025 guidance, which we have summarized on slide six the.

Speaker #6: Similar to what we saw in the gross profit margin side, our second quarter adjusted EBITDA margin increased by 200 basis points sequentially, primarily as a result of the new data analytics assets.

The midpoint of our revenue and adjusted EBITDA guidance indicates growth of 12% and 80% respectively as compared to the 2024 metrics.

Speaker #6: And yesterday's release, we reconfirmed our 2025 guidance, which we have summarized on slide six. The midpoint of our revenue and adjusted EBITDA guidance indicates growth of 12% and 80%, respectively, as compared to the 2024 metrics.

Assuming the midpoint of both metrics implies a 17% adjusted EBITDA margin as compared to only 11% in 2024.

Further underscoring the positive margin impact that we witnessed during the second quarter with respect to the Powertech assets <unk>.

Speaker #6: Assuming the midpoint of both metrics implies a 17% adjusted EBITDA margin as compared to only 11% in 2024, further underscoring the positive margin impact that we witnessed during the second quarter with respect to the PowerTech assets.

Consistent with last quarter's call our guidance reflects a conservative outlook for the second half of the year as it relates to our chemistry business given the continued industry data points and commentary regarding potentially slowing upstream activity.

Speaker #6: Consistent with last quarter's call, our guidance reflects a conservative outlook for the second half of the year, as it relates to our chemistry business, given the continued industry data points and commentary regarding potentially slowing upstream activity.

Touching on the balance sheet, our June 30 financials reflect the full impact of the power Tech transaction.

As a reminder, consideration included a portion of our 2024 and 2025 chemistry shortfall payments.

<unk> $40 million note and a warrant for 6 million shares.

Speaker #6: Touching on the balance sheet, our June 30 financials reflect the full impact of the PowerTech transaction. As a reminder, consideration included a portion of our 2024 and 2025 chemistry shortfall payments, a $40 million note, and a warrant for $6 million shares.

To wrap up my comments on the financials second quarter delivered strong performance highlighted by steady growth in revenue margins and profitability.

Based on this initial quarter of results from the Powertech assets. It's clear we are on track to significantly rebalanced, our profitability mix transitioning from chemistry technologies is the primary contributor today to data analytics emerging as the leading driver of profitability in the near future.

Speaker #6: To wrap up my comments on the cials, the second quarter delivered strong performance, highlighted by steady growth in revenue, margins, and profitability. Based on this initial quarter of results from the PowerTech assets, it's clear we're on track to significantly rebalance our profitability mix, transitioning from chemistry technologies as the primary contributor today to data analytics emerging as the leading driver of profitability in the near future.

With that I'll hand, the call back to Ryan for closing remarks.

Thanks, Bob the second quarter of 2025 results build upon our now multiyear track record of consistently posting improved financials.

Speaker #6: With that, I'll hand the call back to Ryan for closing remarks.

Our 2025 guidance points to another year of impressive impressive financial improvement.

Speaker #5: Thanks, Bon. The second quarter of 2025 results build upon our now multi-year track record of consistently posting improved financials. Our 2025 guidance points to another year of impressive financial improvement as we continue to execute our corporate strategy leveraging chemistry as the common value creation platform.

We continue to execute our corporate strategy leveraging chemistry as the common value creation platform.

Looking at slide seven I remain convinced we are still in the early inning of Flotek transformation.

We continue to grow and maximize returns for our customers and shareholders across the entire value chain of the energy landscape.

Speaker #5: Looking at slide seven, I remain convinced we are still in the early ending of Flutech's transformation as we continue to grow and maximize returns for our ustomers and shareholders across the entire value chain of the energy landscape.

Our transformative and strategic entry into the energy infrastructure sector is expected to provide a significant increase in high margin data analytics revenue.

Cash flow for years to come.

The growth of our upstream applications, we anticipate that data analytics segment will contribute over half of the company's profitability in 2026.

Speaker #5: Our transformative and strategic entry into the energy infrastructure sector is expected to provide a significant increase in high-margin data analytics revenue and cash flow for years to come.

We have secured long term contracts for both our chemistry technologies and data analytics segments bolstering confidence in <unk> ability to deliver stable revenue and profitability, while effectively shielding our business from the impacts of commodity price fluctuations.

Speaker #5: Through the growth of our upstream applications, we anticipate the data analytics segment will contribute to half of the company's profitability in 2026. We have secured long-term contracts for both our chemistry technologies and data analytics segments bolstering confidence in Flutech's ability to deliver stable revenue and profitability while effectively shielding our business from the impacts of commodity price fluctuations.

Finishing with slide 15, we believe no other company in our industry is better positioned to deliver the cutting edge technologies needed to tackle the unique challenges of the energy and infrastructure sectors.

I'm incredibly proud of our progress and confident in our team's ability to execute moving forward.

Speaker #5: Finishing with slide 15, we believe no other company in our industry is better positioned to deliver the cutting-edge technologies needed to tackle the unique challenges of the energy and infrastructure sectors.

Given the growth potential for our chemistry technologies and data analytics segments, we see flotek is a compelling investment opportunity.

Speaker #5: I'm incredibly proud of our progress and confident in our team's ability to execute moving forward. Given the growth potential for our chemistry technologies and data analytics segments, we see Flutech as a compelling investment opportunity.

I want to thank you for your continued support and we're eager to share our vision for <unk> future and look forward to updating you on our progress in the quarters ahead.

Operator, we're ready to open the floor for questions.

Thank you, ladies and gentlemen, well now begin the question and answer session to ask a question you May press star one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing anarchy.

Speaker #5: I want to thank you for your continued support, and we're eager to share our vision for Flutech's future and look forward to updating you on our progress in the quarters ahead.

Speaker #5: Operator, we're ady to open the floor for questions.

Your question. Please press star two.

Speaker #2: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press the star one on your telephone keypad.

Our first question comes from the line of Jeff <unk> with Northland Capital markets. Please go ahead.

Speaker #2: If you're using a speaker phone, the speaker for your handset before pressing any keys. To withdraw your question, please press the star two. With that, our first question comes from the line of Jeff Grant with Northland Capital Markets.

Hi, guys nice quarter.

Good morning, Joe Brian was.

I was hoping to get an update on.

Progress towards contracting additional power Tech units to third parties is as I recall I believe most if not all of these units are earmarked to pro Frac.

Speaker #2: Please go head.

Speaker #7: Morning, guys. Nice quarter.

Speaker #5: what is Jeff?

Speaker #7: Brian was Brian was hoping to get an update on, progress towards contracting additional PowerTech units, to third parties. As I recall, I believe most, if not all, of these units are are earmarked to pro frac.

I know you guys have some demand from other parties. So just curious to get an update on those efforts.

Yes, that's a great Chris and one we're happy to answer this morning that we've seen solid traction. We've now got an additional five customers that we are going through the pilot phase of testing the <unk> monitoring.

Speaker #7: I know you guys have some demand from from other parties, so just curious to get an update on those efforts.

Speaker #5: Yeah. That's that's a a great question and one we're appy to answer this morning that we've seen, solid traction. we've now got an additional five customers that we are going through the pilot phase of testing the Verax monitoring, proving the application that we'll transfer into the next step of moving the larger assets like, an ESD-NGD combo or one of our new smart filtration skids on the location.

Proven the application that will transfer into the next step of moving the larger assets like <unk> combo or one of our new smart filtration skus on the location. So we do expect the first mark filtration is geared to be out in the next couple of weeks and we have accelerated the capital builds on the rest of the equipment to start to.

To answer the building demand. So we're really excited about it and we're not only seeing it from the aspect of will advocate should it be a rig power, which should be dual fuel or equally turbines, but we're also seeing solid traction and grid power as some of the data center support as well so.

Speaker #5: So, we do expect the first smart filtration skid to be out in the next couple of weeks. And we have accelerated, the capital builds on the rest of the equipment to start to answer the building demand.

Speaker #5: So we're really excited about it. And, and 're not only seeing it from the aspect of what I would consider to be, rig power, which would be dual fuel but we're also seeing a solid traction in grid power and some of the data center support as well.

Exciting time for what's going to be coming in the future of power Tech.

Awesome, that's great to hear.

And then shifting to custody transfer.

Was hoping to kind of dive into a little bit with the.

Speaker #5: So, exciting time for what's gonna be coming in the future of PowerTech.

These C locations that have gone commercial here can you give a sense of I guess quantity of customers or geographies I think you've mentioned one.

Speaker #7: Awesome. That's that's great to hear. and then, shifting to to custody transfer, was hoping to kinda dive into, a little bit with the, these few locations that have gone commercial here.

One customer in a few different basins, but just curious kind of the the breadth or depth of both both number of customers as well as the different geographies that you guys are getting some traction.

Speaker #7: Can you give a sense of, I guess, quantity of customers or geographies? I think you

Yeah, Yeah, so the the bigger the larger scale.

Speaker #7: mentioned, one customer and a ew different basins, but just curious kinda the the or, e-fleet turbines, breadth or depth of both num both number of customers as well as, the geographies you guys are getting traction in.

Pilot program that would be a bit conducted in one of the major E&P operators here in North America.

Those units, we actually had units operating in virtually every U S. Major basin right now with that one and Theyre kind of all as we have started a pilot program. We put we install units and after 60 days of actual monitoring they switch over and convert to commercial so.

Speaker #7: Thanks.

Speaker #5: Yeah. Yeah. So the the the bigger, the larger scale, pilot program that we have been conducting in one of the major EMP operators here, in North America, that those units, we actually have units operating in virtually every US major basin right now with that one.

Now fully activated none of them on the commercial they started generating revenue at the back half or the back of last week of May.

Speaker #5: And they're kind of on, h, as we had started the pilot program, we put we install units in the after, 60 days of actual monitoring.

First of June.

<unk> had six more are now converting that numbers continue to climb.

Speaker #5: They switch over and convert to commercial. So we've now fully activated nine of them under commercial. They started generating revenue at the back half or the back of last week of May, first of June, we've had six more that are now converting in that number is continuing to climb.

First of all is it converted we're out mostly in the Permian basin, we're seeing them come online.

Now what we call the Rockies region, and then we've got some move into the northeast as well that'll be coming alive.

Actually got another.

Speaker #5: the first ones that converted were out mostly in the Permian basin. we're seeing them come online in, what we call the the Rockies, region.

I'd say eight to 10 customers that we have monitoring custody transfer in pilot phases and the reason we call a pilot is because they are there.

Speaker #5: And then we've some moving to the Northeast as well that'll be coming online. We've actually got another I would say 8 to 10 customers that we have monitoring custody transfer in pilot phases and the reason we call them pilot is because they're they're they're doing different things at different locations.

Doing different things in different locations some of them, we're doing a longer term test session will replace the monetary things they do on spot.

Sampling, where they wont do any manual handling this will turn into the true valuation component of the <unk>.

Speaker #5: Some of we're doing a longer-term test. Actually, we're replacing the monetary things they do on spot, or composite sampling to where they won't do any manual handling.

Flow and gas, but we've also got some that are just looking for NGL productions in the first 60 to 90 days when they bring a well online so they're all doing different things at different locations as part of the custody transfer, but like as I mentioned earlier I'm extremely bullish on this application I think it'll be one of our larger segments into future here for Flotek.

Speaker #5: This will turn into the true, valuation component of the of the flowing gas. But we've also got some that are just looking for, NGL productions in the first 60 to 90 days when they bring a well online.

Speaker #5: So they're all doing different things at different locations. That's part of custody transfer. But, like, I mentioned earlier, I'm 'm extremely bullish on this application.

Great. That's super helpful detail, if I could just sneak one more in I think the release noted.

Something like 90% gross margins on the power Tech assets I think you guys were initially targeting something more like 80% I know, it's still early but just any commentary on the potential sustainability at that level would be interesting to hear.

Speaker #5: And I think, it'll be one of our larger, segments in future here for Flutech.

Speaker #7: Great. That's super helpful detail. if if I can just sneak one more in. I I ink the release noted something like 90% gross margins on the PowerTech assets.

Yes, Jeff we obviously were pleased with the margins in the first quarter keep in mind it.

Speaker #7: I I think you guys were initially targeting something more like 80%. I know it's still early, but just any commentary on the potential sustainability at at that level would be interesting to hear.

Those assets were only operating for a part of the quarter roughly two months we.

We still think margins are going to be very attractive.

Speaker #8: Yeah. Jeff, we we obviously were pleased with, the margins in the first quarter. Keep in mind that, those assets were only operating for a part of the, the quarter, roughly two months.

It's hard to say, if theyre going to be sustained at 90%, but as we as we said initially our expectations, we're going to be north of north of 80%. So I think 80% to 90% is probably a reasonable assumption going forward as we sit here today.

Speaker #8: we still think margins are gonna be very attractive. I you know, it's hard to say if they're gonna be sustained at 90%, but as we as we said initially, our expectations were gonna be north of north of 80%.

Sounds good thanks, Bob I'll turn it back.

And your next question comes from the line of Gerry Sweeney with Roth Capital. Please go ahead.

Speaker #8: So, I ink 80 to 90 percent's probably a reasonable assumption going forward as we sit here ay.

Hi, Good morning, Brian Bond, Mike Thanks for taking my call.

Speaker #7: Sounds good. Thanks, Bon. I'll turn it back.

Hey, Gerard.

I'm doing well.

Speaker #2: And your next question comes from the line of Jerry Sweeney with Rod Capital. Please go head.

So.

Just a follow up.

Question on on the power Tech side, you had mentioned five customers I think.

Speaker #9: good morning. Ryan Bon, Mike. Thanks for taking my call.

<unk> customers.

Speaker #5: Hey, Jerry. How are ou?

Customers are using the power tech or or piloting or whatever words or talking to you.

Speaker #9: I'm doing well. so just a follow-up, question on on the PowerTech side. You've ioned five customers or, I ink, five customers are using the PowerTech or or or piloting or whatever words they're king to you.

<unk>.

Market to those five customers with 5%.

So.

Initially I would say that they are split so.

Two of them are very specific to oil and gas.

Speaker #9: How big of a market do those five customers represent?

Operations that type of option B rig tower.

Three of them are related to.

Speaker #5: So initially, I would say that they're lit. Two of them are very specific to oil and gas. Operations of turbines should be rig power.

Energy infrastructure, which would be great power support.

Launching gas for data centers.

And I always say that.

When you look at if we were to achieve any type of scale. There. There is a similar size to our largest customer.

Speaker #5: And then three of them are related to, energy infrastructure, which would be grid power support, or monitoring gas for a data centers. and I would say that, you know, you when you look at if we were to achieve any type of scale, they're they're in similar size to our largest customer, which would be what we're doing with the ProFrex power gen.

Which would be what we're doing with <unk> power Gen. So they all have similar footprints if not bigger.

Customers yes.

Got it is there a difference in terms of.

<unk>.

The depth of it.

Maybe due diligence between oil and gas guys any energy infrastructure.

Speaker #5: So they all have similar footprints, if not bigger. all five of these customers. Yeah.

Maybe getting across the finish line.

Speaker #9: Got it. All right. Is there a difference in terms of the depth of maybe due diligence between the oil and gas guys and the energy infrastructure?

Yes.

<unk>.

Believe it or not.

The path to getting equipment on location is similar to what we did when we did the primary deal with pro Frac is the first thing we do show the validity and the capabilities of the various monitoring system, which is the heart of all of these pieces of equipment.

Speaker #9: maybe getting across the finish line?

Speaker #5: Yeah. You know, it's it's we're believe it or not, the the path to getting equipment on location is similar to what we did when we we did the primary deal with ProFreq is the first thing we do is show the validity and the capabilities of the Verax monitoring system, which is the heart of all these pieces of equipment.

And we use a gone a couple of weeks of chest, where they're testing to field gas in the combination with current knockout systems they have on location.

And then we move into the larger assets if I can I can you use.

<unk> combo, which is the monitoring stop gap with.

Speaker #5: and we usually go on a a a couple of weeks of tests they're testing the field gas, seeing the in combination with the current knockout systems they have on location.

With distribution or move it to a smart filtration is good with distribution.

Z as water filtration, a very similar it's just a footprint is a little smaller for the.

Speaker #5: and then we move into the larger assets like in like an ESD-NGD combo, which is the monitoring stop gap with distribution or we move it to a smart filtration skid with distribution.

Or this is more skewed.

And.

The diligence part of the churn that comes into it as they are.

They both if youre using a really remote and raw field gas theyre very similar Oliver when you look at some of these are the <unk>.

Speaker #5: the ESD and smart filtration are very similar. It's just a footprint. It's a little smaller for the, for the smart skid. and, you know, the the the diligence part in turn, it comes into it is they they they both, if you are using a really remote and raw field gas, they're very similar.

Power facilities particular data centers a lot of them are getting more what I consider to be refined I'll also we call city level gas. So they have a little bit different process, it's more about metering and.

Speaker #5: However, when you look at some of these, the power facilities, particularly data centers, a lot of them are getting more what I consider to be refined almost what we call city-level gas.

Valuation of volume coming through as much as is the control of worried about a lot of liquids coming through if that makes sense.

Gotcha, and then secondarily.

Speaker #5: So they have a little bit different process. It's more about metering and, valuation and volume coming through as much as it is the the control of worrying about a lot of liquids coming through, if that makes sense.

I'll jump back in line just manufacturing capacity.

Where do you stand on that front, just maybe even medium potential demand as we move into next year.

Yes.

Speaker #9: Gotcha. And then secondarily, then I'll jump back in line. just manufacturing capacity, you know, where do you stand on that front? Just maybe even meeting potential demand as we move into next year.

I would say from.

Many of those service line I'll talk about power Tech first we have plenty of <unk>.

Backlog of <unk> analyzers to answer the demand and as you see we had acquired those initial 30 assets. We've got 26 of the 34 more come in we've already built our first smart filtration skid, we have it moving in operations. We have now ordered additional one of those coming online and we're working all placing additional orders of <unk>.

Speaker #5: Yeah. You know, it's, I would say from depending on the service line, I'll talk about PowerTech first. we have plenty , backlog of Verax analyzers to answer the demand.

Speaker #5: And and as you see, we had acquired those initial 30 assets. We've got 26 of the 30 will be for more coming. We've already built our first smart filtration skid.

Most of them have anywhere from.

Four to eight week timeline to bill. So I think we're going to be able to keep up we've got multiple builders that can actually because we've got kind of proprietary framing on though is that it's not they're not very difficult I would say to be able to take long lead times.

Speaker #5: We have it moving in operations. We've now ordered additional ones of those coming online. And we're working on placing additional orders of ESD-NGDs. Most of them have anywhere from a 4 to 8-week, timeline to build.

Speaker #5: So I I think we're onna be able to keep up. We've got, multiple builders that can actually, because we've got kind of, proprietary framing those.

When you look at the custody transfer we've got about 200 plus units available for deployment and we are steadily streamlining of bringing those data because we feel like there'll be larger numbers of those a comparison to the analyzers is used for power Tech is that field deployment starts to grow but we are still in the process of doing some more advanced <unk>.

Speaker #5: So it it's not it's not they're very difficult, I say, to build or take long lead times. when you look at the custody transfer, we've got about 200-plus units available for deployment.

And again, we expect units as they come online.

Speaker #5: And we are steadily streamlining and bringing ose in because we feel like there'll larger numbers of those in comparison to the analyzers that are used for PowerTech as as that, field deployment starts to grow.

Gotcha.

Sorry, I lied.

Question, but you mentioned 200 units for field capacity, so I mean, youre expecting that to ramp significantly over the next 12 18 months.

Speaker #5: but we are still in the process of doing some more advanced streamlining on the expect units as they come online.

That type of Hong Kong.

Speaker #9: Gotcha. sorry. I lied. Last question. But you you mentioned 200 units for field custody. So, I mean, you're you're expecting that to ramp significantly over the next 12 to 18 months with that type of backlog of stuff?

Yeah. So the great part is that you know our original we call. It our core business, where we're doing Reid vapor pressure monitoring retrans mix because their multichannel units, we could put one or two units.

In a refinery and they can monitor multiple areas. It was when you look at what we're doing here of custody transfer. These orders are coming in anywhere from 8% to 20 units at a time.

Speaker #5: Yeah. So the great part is that, you know, our original what we called our core business where we were doing reed vapor pressure monitoring or transmix, because they're multi-channel units, we can put one or two units in a, refinery and they can monitor multiple areas at once.

For a full deployment in areas. So they have a much larger enterprise deployment capabilities and what we would traditionally see in the older core business, which is exactly the reason why we put so much in the upstream is the competitive advantage, we have and our ability to launch it in real time, plus the larger scale deployment opportunities.

Speaker #5: When you look at what we're doing here on custody transfer, these orders are coming in anywhere from 8 to 20 units at a time.

Speaker #5: for a full deployment in an area. So they have a much larger enterprise deployment capabilities than what we would traditionally see in the older core business, which is exactly the ason why we push so much into the upstream is the competitive advantage we have.

Got it.

I appreciate it I'll jump back in line.

Quarter, yes.

Yes. Thank you.

And your next question comes from the line of Paul <unk> with Alliance Global Partners. Please go ahead.

Speaker #5: And our ability to be able to itor it in real time, plus the larger scale deployment opportunities.

Speaker #9: Got it. I appreciate it. we'll jump back in line. Thanks. Great

Hi, Good morning, you covered a lot of ground, but can we just.

Speaker #5: Okay.

Speaker #9: quarter.

Speaker #5: Yeah. Thank you.

Maybe look at the.

Energy infrastructure and power Tech business.

Speaker #2: And your next question comes from the line of ProFreq with Alliance Global Partners. Please go ahead.

The non.

Non pro Frac revenue when do you think that's going to hit.

Speaker #10: Hi. Good morning. you covered a lot of ground, but can we just, maybe look at the, you know, energy infrastructure, the PowerTech business? the non you ow, non-ProFreq revenue, when do you think that's gonna hit the, you know, hit the operating results?

Hit the operating results and could you give us sort of an order of magnitude about the.

That level that we might see this year.

Non pro Frac customer score the power Tech sector.

Speaker #10: And can you give us sort of an order of magnitude about the, you ow, the level that we might see this year in, you know, non-ProFreq customers for, you know, the PowerTech sector?

So we will start seeing revenue from non appropriate customers in Q3.

This year.

And that will continue to expand because the rental rates are what we would do for the service from just a <unk>, we're proving it out versus when we get to higher day rates for the full systems one.

All location are quite a bit different so we will start seeing a lot of the various initial various revenue already coming through because majority of the use of already been delivered.

In July <unk>.

We will start to see that come into a larger scale in the back half of the year, but we'll definitely see some in 2025 with a pre rapid acceleration, but what we'll see in 'twenty six.

Great.

Or any way Ryan to quantify that.

The revenue potential per customer.

Hum.

Is it even relevant to look at the 30 units generating 27 million of bond your revenue and compare that to your new customers.

Is that the way to read that or is it am I missing something.

Hey, Poe, it's bond you got to remember when we talk about power service. It can be a combination of a lot of different types of activities.

What we're doing with a lot of new nonperforming customers today is simply the rental of the <unk> unit, which as Ryan mentioned, Canada. The brains of the skids that we bought in connection with the Powertech deal. So obviously those are not going to be as impactful from a revenue perspective, but when we talk about the smart scan did we just.

Pulled out our first one we expect to put that into service in Q3.

I think it's too early for us to start getting into financial details relative to the economics of these smart skids since we havent placed one with a customer today, but.

But those those units could be could.

Could be very meaningful financially similar to what we see with <unk>.

With the payers of ESD and.

Distribution schemes with program.

Okay.

Can we do the same thing for the custody transfer business.

Looks like third quarter, you might see some revenue there.

Could you sort of quantify what you might've seen or you might have booked in the second quarter, and then sort of how it.

It's up over the rest of the year.

Yes second quarter was very small.

Less than $50000 in terms of <unk>, we do expect that obviously to expand with a full quarter of revenue again don't want to get into individual.

Rental rates on these units given the fact that we're trying to expand.

Customer acceptance of the technology and we're in some pretty highly competitive discussions right now.

Okay.

Really helpful. Thank you Bonnie.

And then.

But last call you were.

A lot of commodity price volatility, obviously and you were somewhat cautious on the chemistry side of business looking at the second half of the year.

Can you update your view on the outlook for the chemistry business right now relative to what you said on the first call.

Last call.

So I think I think we have seen.

Go back.

Danny a 180 days, we've seen quite a bit of fluctuation in the market.

I do think that as we mentioned earlier there has been some core factors impacted commodity pricing on the geopolitical aspect as well as the.

The impacts of what the back half of the year demand may be you look at OPEC plus versus what a lot of the OECD countries, including the IEA think on demand did impact the absorption I would say a normalization of Saudi is an improved production out into the market. How it plays to the price of oil and also.

How much of the demand for natural gas influences this pricing upward direction I.

I do feel that we will see that near term softness.

And the way it impacts us is.

You look at where proprietary technologies and the reason that we continue to grow and there's been a reduction in active frac fleets is that people at our customers seeing the improvements in the reservoir production and utilization of our chemistry. So I think when you look at our proprietary technology of our complex nano fluids surfactants stimulations, we will see those.

Continue to expand and grow as a great adoption, where I think our chemistry business will be most impacted mobile the commodity chemicals like friction reducers is going to be pricing pressure on those and those are like the very commoditized chemicals, So where I guess, where I'm going with that is we will see great production out of our higher margin Tech.

And we will see a little bit of impact on the <unk> sales, what I was looking at what temperature side.

Will probably carry through.

Into the back half of Q4, we are starting to see a little light in the tunnel in the back half of Q4.

National business, I think is going to hold pretty steady.

Not growth for the activity, we see in Saudi.

And I think with the natural gas demand.

But we will eventually have to come alive and well see some improvement there were very strong and allow the natural gas basins in comparison to the commodity battles that we see in the Permian.

Great very helpful. Thanks, Brian.

Okay.

And your next question comes from the line of Eric Swergold with Firestorm capital. Please go ahead.

Thanks, guys and congratulations to our entire team both for repositioning maybe be able to grow through a downturn and also continuing to move.

Move up value in terms of product.

Quantity.

And then we will take.

That's question, but.

Okay.

Sure.

Sure.

<unk> into power Gen equipment from the top powergen equipment manufacturers. Thanks.

Do you mind, just repeating that you broke up a little bit there.

My question was can you discuss the efforts to get your sensors.

<unk> into power Gen equipment from the top power Gen equipment manufacturers.

Yes.

Great.

Question, Eric and what we're seeing now is that we've had some.

We've got multiple partners right now that are at the supply.

A lot of the I'll say, the upper end turbine and engine production that we are testing to where there is most of the testing. We're doing now is to optimize the performance and lifetime of the engine in terms of doing dynamic adjustments to fuel and air control go into them to maximize that they run at the optimum rate.

<unk> wear and tear and costly failure of these pieces of equipment. So we are involved in that and what's been unique is that.

Traditionally there is two approaches are looking at that one would it be like an OEM part they will come with a turbine or a dual fuel asset.

Come a service and we've moved towards it working with these larger producers that are becoming a service that they offer and we are the brains of the service so that is progressing and making good progress.

We definitely consider those are strong opportunities for us in the back half of this year. One of those is one of the pilot programs that we're running now that I mentioned earlier.

Great. Thanks, a lot and congratulations again on doing such a good job repositioning the company to grow through a downturn.

Yeah I appreciate it thank you.

And your next question comes from the line of Chris Sakai with singular research. Please go ahead.

I'm in for gout sheet.

And with your continued push into prescriptive analytics through chemistry optimization, roughly what portion of chemistry revenue now directly ties to data driven services and how do you expect that ratio to change by next year.

That's quite unique in that I would say that the data driven part of what we do on the PCI side of the business.

Such as almost 80% of what we do because we're we look at it from on the completion side right now we are taking.

Real time data from water quality of different pieces, we make adjustments to the Cambridgeshire there plus everything that we do on the PCM side, when we bring in and we test whether drill cuttings core samples.

Nishu crude potential composition county water.

Different pieces with you and XRD, we plug those into kind of a metric models to help us prescribed the technology that we use our location and then therefore, we tweak down basic control and optimization.

<unk> is technically in a way touching almost all will be due on the PCM service then.

We do sell some bulk chemistry that is just on a price basis, but the big majority of our external customers now use PCM service, what youre going to see from Flotek and if you look I believe it's all slide 10 that the infrastructure slides that we have we are now moving our expect units and the real time monitoring of hydrocarbon quantity.

Use which will lead to opportunities too.

<unk> production chemistry on the backend. We're also looking at advanced techniques monitoring water on the front end it real time, where we can adjust on the fly with technologies.

She said, we use based on water quality is going to get in the water in shape. So did you get the most optimum.

Production from your Frac so.

It's pretty I mean every component when you when we really say you are starting now to see the convergence of real time data and optimized prescribed chemistry, we're at the tip of the spear is doing that for the industry and we're going to continue to evolve that and drive that as part of our differentiation in the in the business going forward.

Slide seven just a quick.

Quick question.

And your next question comes from the line of Josh <unk> with <unk> Energy partners. Please go ahead.

Thanks first one for me just I guess, a shorter term question could you walk through the expected delta between the low and high end of the guidance range looking into the back half of the year.

Which segments are going to drive it one way or the other.

I would assume because of the size just of where it sits today its probably the chemistry side of the business, but maybe you could talk if there's some variability from some of the other businesses that's ultimately driving.

The expected outcome and the guidance ranges.

Yeah, I mean, Josh we talked about I think Ron and I alluded to each in some of our comments.

The real variability in the guidance, particularly on the revenue side is going to be.

The back half on the chemistry outlook.

It's primarily going to be focused on North America, we've obviously showing some resilience relative to.

D correlating with the declining active frac fleets.

But.

We're just taking a conservative look as it relates to our guidance in the back half of the year recognizing.

And that ultimately may come to see us on the chemistry side on the data side, we feel really good given the fact that.

As we continue to bring more power tech units online throughout the year that revenue stream is expected to increase sequentially in the third quarter and then again in the fourth quarter. So that's obviously going to be supportive to revenue and obviously with the margins that those assets put up supportive to the adjusted EBITDA guidance.

Understood. Thanks, and then maybe just a.

More of a strategic question for Ryan I mean, it's been in the <unk>.

Credibly busy the last 12 months of expansion.

And to a number of different business lines.

Also growing internationally et cetera is it safe to say that over the next sort of six to nine months. The company is going to be more focused on executing with what you've acquired and built or are there other things that youre looking at on the M&A side that could ultimately complement some of these.

Moving forward, maybe just how youre thinking about that would be helpful. Thanks.

Okay.

Look at <unk>.

Ill look at that this is a.

Albeit there is what I would consider to be macro headwinds.

I'll look at this period over the next six to eight months as a great opportunity for the company to further advance our strategy.

There's no doubt we're heavily focused on and our operations teams at commissioning the new assets that we're building and the growth of our power Tech business and expansion of custody transfer and our.

Chemistry technologies segments are.

Significantly focused on further expanding the adoption of our <unk>.

Complementary services that help improve reservoir, but I do believe if you look at where we sit in the value that we bring those opportunities for not only.

Do potential activity that could expand our data analytics footprint, but also look for opportunities that do both in the growth of chemistry and data and so I think that for US we're going to continue to look at focus of opportunities to do some potential.

Inorganic activities that could expand what we do in our footprint that combine the chemical sales with more our measure more plus control strategy on the data side. So.

We will be selectively looking at ways to potentially consolidate came to your businesses and to grow our data analytics business is August one core value as that.

They are accretive immediately to the business and so that's that's the driving factor there.

Understood. Thank you I'll turn it back.

Thank you and we have no further questions at this time I would like to turn it back to Michael quick Kelly for closing remarks.

Thank you everyone for joining our call today, please join us at some of our upcoming events Entercom August 17th for the 20th in Denver, Colorado.

I'll also be at the Gateway Conference September 3rd through the fourth in San Francisco, California.

We're also excited to be part of the New York Stock Exchange Technology Summit October 14th in New York City.

And then lastly.

Our Permian power connection Conference September 2000, 1930, where we hope to showcase some of our new power Tech Smart filtration skid. So please come join us.

And again, thanks to everyone for joining us today and support of Flotek and we look forward to speaking to you again soon thank you.

Thank you presenters and this concludes today's conference call. Thank you all for joining you may now disconnect.