Flowco Q2 Earnings Call Highlights

Flowco (NYSE:FLOC) reported second-quarter results that included sequential gross growth, adjusted EBITDA of astir $94 cardinal and $50 cardinal successful escaped currency flow, supported by rental-business growth, a full-quarter publication from its Valiant acquisition and stronger downhole-components sales.

President and Chief Executive Officer Joe Bob Edwards said gross roseate 13% from the archetypal quarter, portion adjusted EBITDA accrued 10%. The institution maintained an adjusted EBITDA borderline of astir 40% during the period. Rental gross accounted for 56% of quarterly revenue, providing what Edwards described arsenic a precocious grade of gross visibility.

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"The 2nd 4th demonstrated our quality to present profitable growth, make meaningful escaped currency flow, and proceed executing connected our semipermanent strategy," Edwards said.

Production Solutions Drives Sequential Growth

Total second-quarter gross was $236 million, up 13% sequentially. Chief Financial Officer Jon Byers said maturation was chiefly driven by the Production Solutions segment, wherever gross accrued 22% from the anterior 4th to $171 million. Adjusted conception EBITDA roseate astir 16% to $71 million.

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The summation was led by the downhole-components business, including contributions from Valiant, which Flowco acquired to grow its electrical submersible pump, oregon ESP, capabilities. Byers said Valiant was performing up of the company's expectations and that integration activities were substantially complete.

Production Solutions adjusted EBITDA borderline declined 229 ground points sequentially. Byers attributed the diminution to a gross premix displacement toward downhole components pursuing Valiant's inclusion, arsenic good arsenic higher operating and attraction costs, including lubricant and substance expenses.

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The institution expects those outgo pressures to proceed into the 3rd quarter. Management said it is seeking to mitigate the interaction done outgo management, maintenance-program efficiencies, overtime optimization and efforts to trim substance and lubricant costs wherever possible.

Edwards said lubricant costs are being affected by elevated refining ace spreads, and the institution has constricted quality to walk the higher costs done to customers. Flowco periodically locks successful lubricant prices, but its astir important existing declaration is priced 90 days successful advance, meaning third-quarter costs are mostly set, according to management.