Q2 2025 Flowco Holdings Inc Earnings Call
Good morning and welcome to floco Holdings. Incs second quarter, 2025 results conference call. Today's call is being recorded and we have allocated 1 hour for prepared, remarks and Q&A.
At this time, I'd like to turn the conference over to Andrew lean, Packer vice, president Finance, corporate development, and investor relations at logo. Thank you. You may begin.
Good morning, everyone. And thanks for joining us for flow Coast. First quarter results. Before we begin, we would like to remind you that this conference call may include forward-looking statements.
These statements, which are subject to various risks uncertainties and assumptions. Could cause our actual results to differ materially from these statements. These risks uncertainties assumptions are detailed in this morning's press release as well as our filings with the SEC, which can be found on our website at IR flowco, dank.com
We undertake no obligation to revise or update, any forward-looking statements or information except as required by law.
During our call today, we will also reference certain non-gaap financial information. We use non-gaap measures as we believe, they more accurately represent the true, operational performance, and underlying results of our business.
The presentation of this non-gaap financial information is not intended to be considered in isolation, or as a substitute for the financial information, prepared and presented in accordance with gaap.
reconciliations of gaap to non-gaap measures can be found in this morning's press release and in our SEC filings,
Joining me on the call today is our president and chief executive officer. Joe Bob Edwards and our Chief Financial Officer. John buyers, following our prepared, remarks will open the call for your questions.
With that, I'll turn the call over to Joe Bob.
Thank you, Andrew, and good morning, everyone.
Before discussing our solid first quarter results, I want to take a moment to address the macro environment currently impacting our industry.
Over the past several weeks. The United States Upstream Outlook has come under pressure from evolving tariff. Policies OPEC, plus commentary. Suggesting accelerated production
And broader economic uncertainty.
Given this backdrop, I want to take a few moments to reiterate what we talked about during our IPO Road Show and on our fourth quarter, call several weeks ago, and that is Flo's. Differentiated business model in the context of the broader oil services sector
First and foremost FL Coast performance is driven by our customers, non-discretionary Opex rather than their capex.
Our results are tied to absolute levels of oil and gas production in the United States, not the number of active drilling rigs or frac spreads.
At current commodity price levels. Many of our customers have announced plans to modestly reduce Capital spending, however, most have reiterated or only slightly reduced their production expectations.
In fact, despite these market concerns, the EIA recently projected that the United States crude oil production, as a whole,
Will average at an all-time high of 13.4 million barrels per day in 2025.
From the 13.1 million barrels per day average in January of this year.
We're going to go live. So, uh, Andrew, you want to kick us off?
Yeah, I
I think that the statement that I previously made about the first quarter, um, you know, the first quarter metrics and with regard to, for looking statements and other metrics, just refer you back to our first quarter statements around, or looking statements and non-gaap. Reconciliations, we've posted our press release this morning and encourage you to review those, uh, risk statements that are stated in our first quarter in the end of the year, Joe Bob over to you great. Well, uh, again I apologize, everyone, sorry for that snap food but uh, we're going to um, go through what we actually pre-recorded yesterday, but we'll just do it in real time. Um, so we will Begin by walking you through our second quarter results and operational performance as well as our recent acquisition that we announced yesterday of hpgl, and VRU assets from Arch Rock.
After that, uh, John will provide a more detailed review of our financial performance. Our balance sheet, including some impressive efforts, improving our working capital position.
And then, finally, we'll give you some thoughts on Capital allocation uh, I'll then close by sharing our perspectives on the current market environment and how we see things shaping up for the third quarter and the remainder of the year. And then, finally, we'll open the call to your questions.
In the second quarter flow code delivered, strong financial performance generating adjusted ibida of 76.5 million while expanding margins by 65 basis points. Quarter over quarter,
we also generated approximately 46 million in free cash flow. Underscoring our disciplined execution and progress in working capital efficiency across the organization.
This performance was achieved despite the challenges. We face in today's difficult, macroeconomic environment, which I will touch on a bit later.
Our improved EBA and margin performance was largely driven by strong sequential growth in our high margin. Rental fleets, particularly within our high-pressure gas, lift and vapor recovery businesses.
Adoption of our HPGL solutions continues to grow as customers move away from legacy optimization methods and gain confidence in our technologies, which deliver greater uptime and accelerate production earlier in the well's life cycle.
At the same time, demand for our VRU offerings remains strong, supported by our favorable natural gas market dynamics, including rising LNG exports and increased gas-fired power generation.
As operators Place greater emphasis on generating cash flow in the current environment, rather than growth, these Technologies help enhance near-term returns, and maximize the long-term value of existing assets, hpgl, by improving recovery and operational, efficiency, and VRU by capturing and monetizing incremental natural gas. That would otherwise be vented or flood.
Cleared.
Both our hpgl and VRU Solutions are supported by our us-based supply chain and vertically integrated manufacturing footprint, which have seen minimal impact from the recently enacted tariffs.
This vertically integrated platform strengthens our ability to deliver reliably and cost-effectively while reducing exposure to current and potential tariffs that may affect competing Technologies.
Subsequent to the quarter and in support of accelerating growth in our high margin rental fleets. We completed the acquisition of 155 hpgl and VRU systems from Arch Rock, which they originally acquired as part of their acquisition of tops. In June of 2024,
100% of these systems are electric Drive.
And the large majority are hpgl units supported by contracts with new and existing bluechip customers in the Permian Basin.
We are actively integrating these systems into our Fleet and look forward to a seamless transition of operations delivered through our existing field service network.
This transaction marks, our first acquisition, post IPO and reflects our disciplined approach to m&a, targeting production, optimization opportunities at attractive, valuations that align with our long-term strategy.
Overall, I am very pleased with our operational and financial performance in the second quarter.
Despite a challenging macroeconomic environment. We again delivered top quartile Returns on Capital employed. While expanding margins and driving, strong free, cash flow generation.
This performance underscores the clear differentiation of our business and reinforces the resilience of our strategic positioning as a market leader exclusively focused on production optimization.
With that, I'm going to turn it over to John to provide more detail on the second quarter.
Thanks Joe Bob before reviewing, some of the key financial metrics and results for the second quarter. I'd like to provide a reminder on our historical financial information given the combination of flowco logistics and Estes in June of 2024,
Reflects only the historical performance for Estes, financial information for the first and second quarters of 2025, reflects the financials for the Consolidated entities.
Earning now to our financials second quarter performance, was in line with our expectations, driven by strong execution across segments and bolstered. As Joe Bob mentioned by the returns were realizing in our rental Fleet investments. In fact, our quarterly rental revenues, exceeded a hundred million dollars in the second quarter for the first time ever. We delivered a just a net income of 33 million on revenues of 193.2 million Revenue grew minimally while adjusted. I was up 2.1% quarter of a quarter as higher margin, rental Revenue increased, our profitability, even with the decrease in product sales revenue.
Adjusted ebita margins, were up, 65 basis points. As rental Revenue represented, an increased portion of our Revenue mix
In our Production Solutions segment, second quarter revenue was $128 million, with adjusted segment EBITDA of $53 million, an increase of 10.6% and 5.4%, respectively, from the first quarter of 2025 adjusted segment. EBITDA margins decreased quarter-over-quarter by 202 basis points.
The increases in Production Solutions revenue and adjusted. Ebita were the result of growth and higher operating leverage and our surface equipment rental business unit and strong sales in the downhole components adjusted segment. Ebit, Dom margin was down quarter over quarter due to increased sales in our lower margin downhill components, business unit,
In our natural gas technology segment. Second quarter Revenue, decreased 14.9% to 65 million compared with the first quarter while adjusted ebit. Do decrease 4.4% over the same period. The decrease in revenue and adjusted, EBA are attributable to a decrease in natural gas. System sales in the quarter.
Adjusted segment, EBA margins increase by 463 basis points due to favorable Revenue, mix shift towards vapor recovery from natural gas systems with regard to the Midstream opportunities. We've highlighted in Prior quarters within our natural gas technology segment. We successfully executed a few sales of smaller vapor recovery units designed to capture emissions in Midstream operations. We continue to engage in constructive discussions. With large Midstream operators and remain optimistic about the growing adoption of vapor recovery Solutions in this vertical.
Overall Consolidated second quarter, adjusted debit out was 76.5 Million, an increase of 2.1% from the first quarter of 2025 our top cortile, Evita margins and sequential growth illustrate the sustained demand for our differentiated Solutions and the ongoing focus on efficiency throughout our organization.
in this, in the second quarter, the majority of our 35.8 million cap, capital investment was focused on expanding our surface equipment and vapor recovery Fleet
Driven by sustained demand and attractive expected Returns on Capital employed. Our annualized adjusted return on Capital employed for the quarter was approximately 18% based on the quarter Outlook. We anticipate only Minor Adjustments to the organic uh, capital expenditure program discussed last quarter for the remainder of 2025, but we're monitoring the market outlook for capex Investments, that will impact 2026.
Subsequent to the quarter, as Joe Bob mentioned, we invested approximately $71 million in cash drawn from our revolving credit facility to acquire 155 HPGL and VRU systems from our truck. We executed this transaction at an attractive valuation, and it's expected to be accretive to both free cash flow per share and earnings per share.
We're actively integrating these assets and anticipate realizing a full quarter of benefit from them. In the fourth quarter of this year, we expect to lower our 2026 Capital expenditures as a result of this transaction.
We will continue to invest in growth while maintaining Capital discipline targeting High return opportunities, aligned with our Capital return framework.
For our organic growth opportunities, the typical investment lead time is approximately 6 months. These shorter cycle investments, combined with our vertically integrated manufacturing platform, provide the flexibility to scale capital deployment up or down as we respond to potential shifts in customer demand and market conditions.
Turning briefly to corporate costs and the second quarter, we reported 4.3 million of corporate expenses in line with the 4.4 million of cost in the first quarter. We anticipate a slight increase in corporate costs in the second half of the year as we complete the buildout of our public corporate function.
Subsequent to the quarter on July 4th the 1, big beautiful, bill was signed into law. We're continuing to assess the potential impacts of this legislation but we anticipate that we will benefit from the restoration of 100% bonus depreciation for certain fixed assets.
On July 23, 2025, we entered into an amendment with our two largest shareholders, GEC and White Deer, to revise the prior requirement that the company file a shelf registration statement within 180 days of the IPO. GEC and White Deer retain the right to request such filing in the future. The company does not currently have a shelf registration statement on file.
Turning to our balance sheet and liquidity, we ended the quarter in a strong financial position, using free cash flow generated during the period to reduce outstanding borrowings under our revolving credit facility.
As of August 1st 2025 total borrowing on the facility stood at 226.6 million including approximately 71 million drawn related to the our truck acquisition with the borrowing base of 723 million. We had about 497 million of availability under the facility
on August 1st flowco. Declared its second consecutive quarterly dividend of 8 cents per share. Payable on August 29th. This action reflects the board's continued confidence in the strength of our business model and the overall health of our balance sheet.
It also highlights our balance Capital, allocation strategy returning Capital to shareholders. We'll continue to invest in disciplined High return growth.
In summary we delivered another solid quarter meeting our Outlook with adjusted Eva within our guidance range. We executed effectively despite the challenging Upstream Market environment that negatively impacted product sales a trend, we anticipate will continue into the third quarter.
Joe Bob will share additional insights on our Market Outlook shortly looking ahead. Our emphasis on production optimization combined, with the resilience of our Solutions and strong customer relationships positions, as well to navigate a more uncertain, operating environment, back to you job.
Thanks John uh turning now to our view of the Upstream market and expectations for the remainder of 2025.
As we noted during our first quarter call evolving tariff policy increased oil supplies from OPEC plus, and broader. Macroeconomic uncertainty have continued to weigh on commodity prices as well as North American production Outlook more, broadly,
And these headwinds have persisted and in some areas have worsened leading to lower activity levels across our North American customer base, as operators respond to a more uncertain Outlook.
While our business is not directly tied to rig count or completion activity, that sustained moderation, exhibited by our customers over the last several months, is beginning to impact production trends more broadly.
The eia has recently revised its outlook for us, crude oil production downward. Now expecting production to be flat in 2026 versus 2025,
Furthermore cost cutting and reorganization efforts have slowed, our customers decision-making, impacting, the pace of spending.
Even in the areas of production optimization.
We remain well positioned as our production-oriented Solutions are Opex oriented non-discretionary services that help our customers maintain cash flow that said, the current market environment has modestly tempered our near-term growth, expectations for the second half of the year.
In particular, we now anticipate a sequential decline in product sales in the third quarter, most notably in the sale of vapor recovery units and conventional gas lift compression packages.
Downhill component, sales are also expected to be flat to slightly down.
Importantly, we continue to benefit from the strength of our high-margin rental fleet, which delivers visible free cash flow and helps to offset softness in these equipment sales.
Given the current market environment we're taking proactive steps to further, optimize our operations.
During the second quarter, we Consolidated a portion of our manufacturing capacity within our natural gas technology segment a decision which will reduce overhead and drive improvements in working capital efficiency.
We will continue to evaluate additional opportunities to streamline. Our operations while maintaining our commitments, to service quality.
So, what does all this mean, in terms of guidance?
We think adjusted Eva for the third quarter will be somewhere in the range of 72 to 76 million.
This range accounts for the current market uncertainty, the near-term, weakness and equipment sales that I described earlier as well as 2 months contribution of the recently acquired assets from our truck.
Speaking more broadly about the back half of the year and our full year expectations, we anticipate a better Q4 finishing the year. Close to the IBA dog. Growth range. Communicated on the first quarter call.
During the fourth quarter, we will benefit from a full quarter of earnings contribution. From the r truck assets as well as some equipment sales that are expected to occur before the end of the year.
such a challenging Market reflects the resilience of our production focused business, and the market share capture story for hpgl and VRU
So with that, I'll turn it back over to the operator for Q&A.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the restart keys.
1 moment, please while we pull for questions.
Our first question comes from the line of Iran GM. With JP Morgan, please proceed with your question.
Yeah, good morning gentlemen. I was wondering if you could provide maybe some additional details and color around the uh, acquisition from our truck. Uh, is this a deal that improves call the competitive dynamics of the hpgl VRU a kind of segments? And just maybe just general thoughts?
Um, in the back half of of the year, you mentioned 2 months is in your outlook for for, for 3 and 4.
Yeah Aaron. Thanks for the question. Good to hear from you. Um, so as you know, this is a technique that we pioneered we invented the high pressure, gas lift technique you know 6 7 years ago. Um and and we we maintain the market leader in this space. Um our truck ended up with these assets as I said, through their acquisition of tops last year. Um, and um, you know, it took them some time to figure out that these assets, uh, require different operating characteristics and different, um, you know, customer, uh, Service, uh, intensity. And so, um, through a series of discussions, we ultimately, um, I think arrived at a very good outcome, which is, um, you know, a consolidation of those assets into our Fleet. Um, the electrification theme is a very positive 1, uh, you know, 100% of these assets are electric, um, which is great. Uh, we're picking up some new customers, some customers that we've been working on, uh, both converting to the the method, as well, as you know, using up.
Us for quite some time. So that's positive and we're filling in, uh, more market share with existing clients as well. Um, very importantly, we're getting some idle units. Uh, they they were, um, they were a handful of of units that, uh, were not deployed, but but built and ready to go. Um, so that's good. That helps us with some available capacity to satisfy some existing customer demand and given kind of what's going on in the market. Uh, we obviously saw this
Come this acquisition coming. So we have uh, uh moderated. Our forward, capital spend appropriately. So as as John mentioned, this uh, this is going to really pull forward capex from 26, uh, which, which is a good thing and I think absent, any, any Rebound in the market, uh, condition will likely temper 2026 Capital? Uh, ambition for us. Um, so all in all a good deal, uh, we, uh, we think about value on this transaction, really, in a couple of different pieces. Obviously you've got contracted assets with, um, you know, immediately, uh, generating free cash flow the minute you buy them. So, um, you know, we allocate some Capital, some some, some purchase price allocation to the value of the existing contracts, um, and then obviously we know what it costs to build these things because we have a lot of them in our Fleet. So, um, so it it's a, it's a good deal. It's, it's immediately accretive, as we said, um, what do you think? John kind of you know, low single digit earnings accretion kind of thing? Yeah, that's right. Yep. And
And I think some some, some room to grow in 26 with the deployment of the idle units that we acquired.
Great. And and maybe my follow-up. Uh, Joe Bob, I was wondering if you could highlight some of the, um, thoughts around, Midstream and your, you know, uh, entry with some of the smaller vapor recovery units and and potential to grow, uh, with this, you know, Midstream customer base, uh, kind of over overtime.
Pulling systems to get comfortable with the way that they operate to get comfortable with the, uh, you know, the, the, uh, the operating, uh, efficiencies that we claim, as we, as we sell these units to them. Um, and and we've been, you know, led to believe that. Uh, that was the first step, uh, toward a, a much larger demand profile coming our way. Now, we'll see we've been working on this for a few quarters now. Um, and uh, again, well beyond trial phase, uh, but it could be, uh, could be something that is pretty exciting to talk about in the coming quarters.
Great. Thanks a lot.
You bet.
Thank you. Our next question comes from the line of Philip Junkworth from BMO Capital Markets. Please proceed with your question.
Thanks, thanks, good morning. Um, just on the on the reduction and permanent spending during the quarter. It looks to us like the activity declines have been broad-based across emps but uh wondering how you're viewing it in terms of public versus private Delaware versus Midland and but what what that means for flowco customers and overall market share
Yeah, Philip thanks for the question. Um,
You know, private, you know this right, private's definitely respond more aggressively than Publix, whether it's private equity-owned or family-owned, you know, family office owned, uh, private companies. So you're seeing rig count, declines, Frac spread, declines from privates, much more aggressively. Um, the consolidation that is taking taken place in the Parian. Um, has moderated the response from the Publix and you're seeing customers that are taking a, a much more long-term view, uh, to, uh, feel development. Um, the the very largest super majors are, uh, in in, in the case of 1, very, very large. Uh, company, they're still growing right, they're still uh, anticipating a doubling of production over the next 5 years or so, um, but it's definitely having an impact. You, you, you just see it in the production data. We're, we're flattening out, uh, projecting to, to, to stay roughly flat in 2026 based on latest estimates. Um, and, and, as I said, in our prepared remarks, it
It's starting to show up in uh, demand for services, even in in uh, in our wheelhouse. Now that being said,
Without our services and without the maintenance of existing production their production declines rapidly. Right. So so we we feel like we're better off than most in uh in places like the Permian to to help maintain and grow production when customers want it. So uh, in a in a challenging Market we we feel like we're in pretty good shape.
Right. And then you you, you mentioned, the moderating growth Capital Inn in 2026. It's given market conditions and and the Arts Rock acquisition. Uh, can you remind us how you view maintenance capex? And then uh, as far as the growth Capital component, is there any good way to think about that? In terms of sensitivity to overall production growth outlooks? Or as a percent of sales,
Look the the good news is and and John will give you a little bit more of a nuanced answer. But the good news is we don't have to make decisions on that. Right now we've got
You know, we control our own destiny with our vertical vertically integrated supply chain or vertically integrated manufacturing capabilities, as well as domestic Supply chains. Uh lead times for critical, components are about 6 months out, so we obviously keep an eye on that. Um, but uh, based on where we are today, we just think next year is going to be uh less uh growth capex compared to this year. The last several years. We've spent pretty consistently 100 to 150 million of growth capex to, to grow our business. Um, the Arch Rock acquisition helps off.
Set some of that expected growth in 26. And unless the market, uh, gets, uh, gets a lot better, uh, we just anticipate a more moderate spending level next year.
Yeah, I agree. I think you know we we had uh, indicate around 110 million of growth Capital this year. I think we'll, we'll come inside that particularly with the, uh, with the our truck acquisition. And then, as we get into Q4, um, we'll we'll start to make, you know, kind of more long-term decisions on on 2026 Capital spend. By, I do expect it would come down relative to the numbers. Joe Bob was talking about on maintenance Capital, we've run in that 20 million dollar range as our Fleet grows. We expect that to grow a little bit but not significantly. So I think you know, somewhere, uh, Slightly North of 20 is what we'd see in 2026.
Thank you.
As a reminder, if anyone has any questions, you may press star 1 on your telephone keypad to join the queue.
Our next question comes from the line of Derek VOD Heiser with Piper Sandler. Please proceed with your question.
Hey uh good morning guys. Uh wanted to ask a question about rentals. It was up 5% quarter over quarter. Um maybe if you could just you know pull that apart for us a little bit is this is this a sign of accelerated adoption? You're seeing from hpgl just taking over the Legacy ESP, just giving a lot of the Tariff related weaknesses that we've heard from some of the providers over the last few weeks. And with now rentals representing 53% of the company, how can we, how should we start thinking about? Where this could trend for the remainder of the year? And as we start thinking about 2026,
Hey, Derek. Thanks for the question. The rental increase has been pretty consistent over the last several years and you've nailed it. It has to do with market, adoption of hpgl, um, displacing Legacy production techniques, most notably esps, um, as well as vruce becoming.
You know, standard equipment on in particular, large permanent pads that get brought online. So you'll see a continued increase in rental Revenue um as a percentage of of total flow Revenue. Um certainly as our our product sales businesses are are reasonably flat.
Right? So, uh, just uh, from a mixed standpoint. You'll see rental revenues trending higher. You'll see our overall, uh, IBA margins continue to grind higher, um, and our, um, our return metrics, hopefully improving, as we invest more growth capital in higher returning assets.
Um, so that that's that's how we think about it. We think that growth uh, story that that market adoption story is is very much intact and as and as healthy, even in this challenging market. So uh, that's I think evidence by the fact that we had the confidence to to buy, uh, you know, 71 million dollars worth of equipment from our truck. So uh, so we're going to continue to uh to to talk about the virtues of hpgl, and VRU, and continue to invest as the market dictates
That's helpful. Um,
I guess just, you know, on the acquisition I know you already answered questions on it, but maybe, you know, help us understand the remaining competitive landscape there. I mean, as my understanding is during the IPO Road Show, there was not that many players in hpg and you have a commanding market share position. Obviously, you, you just grew that with this acquisition, but can you give us any sense as far as the remaining landscape out there? Um, and you know, how you're viewing that. And, and, and where market share could ultimately grow for hpgl?
Market is pretty small when you get right down to it. Derek we we have a commanding Market position, but if you think about who we compete with, it's not just the handful of players that are also offering high-pressure gas lift its the vast
Big uh, market for ESP.
Right. So it's still a, uh, a billion billion and a half dollar market, even in in, in today's environment, uh, and our penetration is higher than it was at IPO, but it's still not anywhere close to fully saturated. So so we really do our competitors as the inferior technology. And and so we will continue to to uh to to a stole, the virtues of, of the uh, of the method. Um, I know, that's not really the the the answer to the question you asked, but that's how we think about it.
Helpful. And if I could just squeeze 1, 1 more in, um, it seems like you can, uh, seamlessly integrate. These assets is any Capital required to fold them in and integrate into your Fleet.
No. The, the beauty of of really our Market position in the Permian is, these are
As close to seamless plug-and-play, as you can get. Um, I think we hired a grand total of 3 people, uh, associated with these, uh, new assets. So it's, it's, it's very efficient, uh, in the integration.
Got it. Great. Appreciate all the uh the color. I'll turn it back, you bet.
Thank you.
All right, next question comes from the line of David Smith with Pickering Energy Partners, please proceed with your question.
Hey, good morning, thank you for taking my question. Um, most of the, uh, acquisition ones have have been hit so just wanted to Circle back and and double check. Uh, if I caught the, the Q3 guidance correctly for a range of of 72 to 76, um and and sorry if I missed it. But wanted to ask, if you could help with just some some broad, gu guard rails around the the moving items, you know, um but particularly especially excluding, you know, the acquisition and out yesterday.
As as being roughly flat.
Uh, sequentially with with, you know, more of the impact on on Lower product sales, and maybe a little bit higher corporate cost.
Yeah, Dave, thanks for the question. Listen rental will continue to go to to, to bleed higher as a percentage of our Revenue as well as on a quarter over quarter basis. I anticipate it being up somewhat in Q3 as opposed to queue to Q2 what what's really happening is a couple of things, right? And and and I said it, but let's just let's just drill in on it a little bit.
Our product sales are made up of a couple of different things, right? It's the it's the sale of packages that we build, uh, in our, in our manufacturing facility for VRU or compressor packages. Right? And so, those are weak in Q3 and this is a backlog business. It's we've got a lot of visibility, we know the delivery schedules and as we look at Q3 um that business is going to be off sequentially, as I said, okay? So now what does that mean, right? That's that's among our lowest profit margin business. It's also business that we are deemphasized uh in favor of focusing more on our rental Fleet. Um, so that that that's a that's a line item. That's just going to be down quarter of a quarter somewhere in the order of 10%. Yeah.
um,
The the larger sales item in our gaap financials is the sale of downhole products uh, namely gas, lift, valves mandrills, plunger lift systems. Um, that's what we just anticipate that to be reasonably flat in the quarter, okay? So more broadly sales of of downhole components, flattish, sales of packaged equipment, to third parties, which are in backlog today, down, okay. Now again the backlog business, we're looking into Q4, it looks better in Q4. So we think it's transitory somewhat and we think that when you look at growth rates on a year-over-year basis from 24 to 25, um again I want to I want to make sure everybody has their numbers right on 24, in particular, our 24 Financial are not fully burdened for the full cost of being a public company.
And when you make that adjustment and you look at where we're going this year versus last year, we're still confident in that.
Previous guide from last quarter of roughly low double digit growth year-over-year. Okay, so I I I I just want to make sure we're talking about the same, the, the same comparisons. Um, so that that's that's kind of where we see it in Q3 more broadly into the end of Q4 Dave. And, uh, hopefully that's clear.
Very helpful. Thank you very much.
You bet.
We have reached the end of the question and answer session. I'll now turn the call back over to the management for closing remarks.
Excellent. Well thank you everyone. I hope you appreciated this live performance. Uh and uh look forward to following up with you in the coming weeks. I hope everybody's enjoying summer and uh we'll talk to you soon. Thanks.
Thank you. This concludes today's conference and you may disconnect your line at this time. Thank you for your participation.