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Earnings call: Flotek Industries reports a 38% increase in total revenue

Published 15/03/2024, 09:18 am
© Reuters.

Flotek Industries, a global technology-driven specialty chemical and data analytics company, reported a successful financial performance for the fourth quarter and the full year of 2023. The company announced a significant turnaround from a net loss in 2022 to a net income of $24.7 million in 2023.

With a 38% increase in total revenue and a substantial growth in data analytics revenue by 47%, Flotek also highlighted the expansion of its global presence and team. Looking ahead, Flotek anticipates continued growth in its key segments and is set to provide 2024 guidance in May, expecting positive adjusted EBITDA in each quarter of the coming year.

Key Takeaways

  • Flotek achieved profitability with a net income of $24.7 million in 2023, rebounding from a net loss the previous year.
  • Total company revenue increased by 38%, with significant growth in chemistry revenue from external customers and a 47% rise in data analytics revenue.
  • The company reduced SG&A expenses by 4% to $27.9 million and increased credit availability under the ABL to $13.8 million.
  • Flotek's leadership team was strengthened, and its global footprint expanded.
  • Positive adjusted EBITDA is expected for each quarter in 2024, with plans to release full-year guidance in May.
  • The company is not considering a stock buyback at this time and will participate in the 36th Annual ROTH Conference.

Company Outlook

  • Flotek expects sustained growth in reservoir-centric and international chemistry revenues.
  • A 50% growth in the data analytics business is anticipated for 2024.
  • The company focuses on revenue growth, market share expansion, and cost efficiency gains.

Bearish Highlights

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  • Flotek is currently not considering a stock buyback, focusing instead on stabilizing the business.

Bullish Highlights

  • The company eliminated the material weakness from its 10-K, signaling improved financial stability.
  • Flotek's improved financial position is expected to benefit commercial discussions with customers and potential partners.

Misses

  • There were no specific misses reported in the earnings call summary.

Q&A Highlights

  • CEO Bond Clement emphasized the elimination of the material weakness from the 10-K and the expectation of positive adjusted EBITDA throughout 2024.
  • Clement also clarified that the company's current priority is stabilizing the business rather than executing a stock buyback.

The earnings call underlined Flotek's strategic efforts to enhance its product offerings and optimize its financial health. With a focus on leveraging its chemistry and data analytics segments, Flotek (ticker not provided) is positioning itself for continued success in the evolving global market. The company's participation in the upcoming 36th Annual ROTH Conference will provide additional opportunities for investor engagement and discussions on its future prospects.

InvestingPro Insights

Flotek Industries' recent financial success, as highlighted in their latest earnings report, has been mirrored by some interesting metrics and analyst insights. According to InvestingPro, analysts are optimistic about Flotek's sales growth in the current year. This aligns with the company's own expectations of sustained growth in key segments, as mentioned in the article.

InvestingPro Data for Flotek shows a market capitalization of $105.7 million, indicating a relatively small but potentially nimble player in the specialty chemical and data analytics industry. The company's revenue has grown impressively over the last twelve months as of Q3 2023, with a 94.03% increase, which supports the article's note on Flotek's significant revenue growth.

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Moreover, the stock has experienced a significant return over the last week, with a 27.27% price total return. This could reflect a positive market reaction to the company's reported earnings and may interest investors looking for short-term gains.

InvestingPro Tips suggest that the stock is currently trading at a low P/E ratio relative to its near-term earnings growth, which could indicate that the stock is undervalued. This could be a crucial piece of information for value investors considering Flotek's stock. Additionally, with a PEG ratio of 0.44, the company's stock price growth is potentially in line with its earnings growth rate, making it an attractive option for growth investors.

For those interested in diving deeper into Flotek's financial health and future prospects, there are more InvestingPro Tips available at https://www.investing.com/pro/FTK. And for a limited time, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to a wealth of additional insights and tips. Currently, there are 11 additional tips listed in InvestingPro for Flotek, offering a comprehensive analysis for potential investors.

Full transcript - Flotek Industries Inc (FTK) Q4 2023:

Operator: Welcome to the Flotek Industries Fourth Quarter and Year-End 2023 Earnings Conference Call. At this time, note that all participant lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] Also note that this call is being recorded on Wednesday, March 13, 2024. And I would like to turn the conference over to Mike Critelli, Director of Finance at Flotek. Please go ahead, sir.

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Mike Critelli: Thank you, and good morning, everyone. We appreciate your participation in Flotek’s fourth quarter and full-year 2023 earnings conference call. Joining me on the call today are Ryan Ezell, Chief Executive Officer; and Bond Clement, Chief Financial Officer. On today’s call, we will first provide prepared remarks concerning our business and results for the fourth quarter and full-year 2023. Following that, we will open up the call for any questions you have. Flotek’s fourth quarter and full-year 2023 earnings press release was issued yesterday afternoon. We also posted an updated corporate presentation we will reference on today’s call. This can be found on the Investor Relations section of our website. In addition, today’s call is being webcast, and a replay will be available on our website following the conclusion of this call. Please note that the comments made on today’s call regarding projections or expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. In addition, please refer to the reconciliations provided in the earnings press release and corporate presentation as management may discuss non-GAAP metrics on this call. With that, I will turn the call over to our CEO, Ryan Ezell.

Ryan Ezell: Thank you, Mike, and good morning. We appreciate everyone’s interest in Flotek and for joining us today as we discuss our fourth quarter and full-year 2023 operational and financial results. I’m extremely pleased with our results as 2023 was truly a transformational year, in which, we restored profitability in all key financial metrics, enhanced our liquidity, and strengthened our leadership team through the execution of our corporate strategy utilizing chemistry as the common value creation platform. With a relentless focus on technology, we remain at the forefront of innovation and multidisciplinary advancements that continue to forge gains in market share through our differentiated chemistry and data analytic solutions. Both carry an undeniable value proposition that maximize our customer’s value chain, while generating a meaningful return on investment for our shareholders. With that in mind, I would like to turn to slide seven and touch on our key highlights for 2023 that Bond will discuss in detail in just a moment. We delivered strong year-over-year growth in all key profitability metrics, including gross profit, adjusted gross profit, and adjusted EBITDA, with the fourth quarter of 2023 adjusted EBITDA representing the 10th consecutive quarter improvement, and full-year 2023 marking our best year in nearly a decade. The total company revenue was up 38% compared to 2022, as we executed the largest volume of product sold in the company’s history. Chemistry revenues from external customers grew each quarter during the year, and were up over 21% compared to 2022. As a result of our rapidly-expanding customer base and then continued adoption of our prescriptive chemistry management business model, our customized engineering approach combined with our proprietary complex nano-fluid technologies continues to deliver wells that outperform adjacent competitor wells in all basins. Our data analytics revenue saw strong growth of 47% in 2023 versus 2022. The segment has seen a 250% increase in subscription-based revenue since 2022, which supports our strategy to evolve to a data-as-a-service business model. These subscription-based services have had a 95% annualized retention rate. We also expanded our global footprint with the successful commercial launch of our slickwater fluid systems in the Kingdom of Saudi Arabia, and established a new entity in Abu Dhabi to facilitate diverse market share growth and margin expansion internationally. We also recently announced the addition of Amy Blakeway as the newest member of our senior leadership team as our Senior Vice President and General Counsel. She will be an asset to the organization as she brings extensive sector experience, and joins at a pivotal time as we look to capitalize on both organic and inorganic growth opportunities. Most importantly, all of these achievements were accomplished with zero recordable and lost time incidents in the field of operations, thus extending the current streak to over 753 days without a recordable incident. I would like to take time to thank all of our employees for their commitment to safety and service quality in achieving these outstanding results. And I expect us to continue to build upon this momentum throughout 2024. Now, looking at the quarter in a bit more granularity, revenue was slightly down sequentially. This decrease is attributable to the fact that overall markets slowed down in upstream onshore activity that has been experienced this year as natural gas continues to face near-term pricing pressure. And despite this decline in overall drilling and completion activity, the impact on Flotek has been much less given the execution of our strategy around our differentiated and complementary chemistry and data technologies. To that end, we have continued to grow our external chemistry business revenues every quarter this year, and they were up another 10% in the fourth quarter. More importantly, we saw a 75% increase in our reservoir-centric technology sales related to complex nano-fluids. Furthermore, the chemistry purchase requirements contained in the long-term supply agreement with ProFrac were designed to mitigate the volatility of the market and provide some insulation to Flotek operations for maintaining economies of scale and stability. We expect sustained growth in reservoir-centric and international chemistry revenues that should help offset the headwinds of the slowing upstream completion environment. On a more macro level, the demand for oil and gas is expected to expand for the next decade with further requirements needed through 2045. Long-term investments in both short and long barrel cycles will be necessary to maintain production and add the required incremental supply. Despite the near-term volatility in commodity pricing, the fundamentals for energy-related services remain strong. The overall expansion of the global economy will continue to create substantial demand for all forms of energy which will increase service intensity within the sector. As we look ahead to 2024, our efforts remain laser focused on revenue growth, market share expansion, and cost efficiency gains as we are well-positioned to capitalize on opportunities both domestically and internationally. The continued adoption of our prescriptive chemistry management for improved reservoir performance, along with the launch of the next-generation JP3 measurement system, unlocks significant upstream market opportunities as the company expects the data analytics business to grow by 50% in 2024. We are confident that our expanding suite of services positions us to deliver unique and superior solutions to maximize our customers' value chain. Consistent with this outlook, we believe that the demand for our advanced chemistry and data solutions will continue to increase and will provide new opportunities in market verticals such as industrial, geothermal, agricultural, solar, and hydrogen. Now, I'll turn the call over to Bond to provide key financial highlights.

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Bond Clement: Thank you, Ryan, and thank you all for joining us this morning. Our 2023 results were outstanding by almost any measurement. We returned the company to profitability, delivering significant improvement in all key financial metrics. I echo Ryan's comments on our exceptional results, and I know the entire Flotek team is proud of what has been accomplished, not only in 2023, but over the last two years. Flotek's turnaround execution has established a much stronger financial position than a year ago, and we expect to build on this momentum in 2024. Evidencing this improvement in financial position, I'm happy to report that our 2023 10-K filing will confirm that the going concern doubt that our auditors asserted in their 2022 audit has been resolved. In addition, we expect to report in our 2023 10-K that we have remediated the internal control weaknesses that were disclosed in last year's 10-K. Let's run through a handful of key financial items for the fourth quarter and full-year of 2023. I will be referring to slides in the presentation we posted to the website yesterday. Slide seven highlights our accomplishments and the strong financial growth we delivered across the business. Headlining our results were annual improvements in revenue of $52 million, gross profit of $31 million, and adjusted EBITDA improving by $28 million year-over-year. As it relates to adjusted EBITDA, we reported another quarterly improvement during the fourth quarter. That represents two and a half years of sequential improvements in that metric. More importantly, full-year 2023 adjusted EBITDA was positive, as Ryan mentioned earlier, for the first time since 2017. Turning to the income statement, as shown on slide eight, we have achieved sustained growth in revenues since 2021, with our 2023 increases from both our chemistry and data analytics segments. Full-year 2023 revenues grew 38% over 2022, despite lower North American land completion activities during the second-half of the year. Our chemistry revenue from external customers increased by 21% during the year. More impressively, though, is comparing the fourth quarter of 2023 to the first quarter of 2023, revenue from external customers increased by 100%. In addition to our success growing our chemistry business, we generated strong growth from the data analytics segment as revenues associated with JP3 grew 47% over 2022 and are up almost 90% since 2021. Turning to slide nine, fourth quarter gross profit increased for the fourth consecutive quarter as we continue to deliver efficiencies across all aspects of the business supply chain. Fourth quarter gross profit grew to over $9 million compared to a gross loss of $2 million in the comparable 2022 period. We reported gross profit of $24 million for the full-year 2023 compared to a gross loss of $7 million last year, as the company benefited from the numerous cost improvements implemented throughout the year. Moving to slide 10, adjusted EBITDA of 17% sequential improvement from the third quarter of 2023, as that metric totaled $4 million. As noted earlier, this is the 10th consecutive quarter of improvement, a streak that goes back to the second quarter of 2021. Moving to SG&A, fourth quarter totaled $6.6 million compared to $6.2 million for the fourth quarter of last year. Full-year 2023 SG&A totaled $27.9 million compared to $27.1 million for the full-year 2022. On a percentage of revenue basis, 2023 SG&A was down by 500 basis points compared to 2022. It is worth noting that the fourth quarter and full-year numbers of 2022 included a $1.9 million credit related to the reversal of a bonus accrual. Excluding the benefit of that credit, fourth quarter '23 and full-year '23, SG&A were down 18% and 4% respectively from the 2022 periods. Moving to the bottom line, we reported net income of $2.1 million in the fourth quarter of 2023 compared to a net loss of $19 million during the fourth quarter of 2022. Net income for the full-year of 2023 was $24.7 million compared to a net loss of $42.3 million in 2022. Net income for 2023 did include a $30 million non-cash gain from the fair value measurement of our convertible notes. These notes matured during 2023, so we did not expect this type of volatility in our earnings going forward. Touching on the balance sheet, in October we announced that our credit availability under the ABL was increased from $10 million to $13.8 million. As of year-end, we had $7.5 million drawn under the ABL. As of Monday, we had less than $1 million drawn. Lastly, we're planning to provide 2024 guidance with our first quarter results in May. This is consistent with last year's process when we also issued guidance with first quarter 2023 results. While we're not providing formal guidance at this time, we do expect positive adjusted EBITDA each quarter in 2024, which we expect will result in another year of strong growth in that metric. In closing, Flotek continues to drive strong, repeatable performance with a focus on profitability. We anticipate further revenue growth in 2024, and we will maintain a sharp focus on reducing costs at every opportunity, particularly SG&A. I'll now turn the call back over to Ryan for closing comments.

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Ryan Ezell: Thanks, Bond. Turning to slide 17, we're extremely excited about 2024 as we have tremendous growth potential in both our Chemistry and Data Analytics segments. And we believe that Flotek represents a compelling investment opportunity today. Our 2023 results delivered profitability and we continue to be positioned for sustained growth as the collaborative partner of choice for sustainable chemistry and data solutions. I'm proud of the progress we made in 2023 and I'm confident in our ability to execute going forward. We appreciate all the continued support of our stakeholders and we hope that you share our excitement regarding the future of Flotek and we look forward to reporting on further progress. Operator, we are now ready to take questions.

Operator: Thank you. [Operator Instructions] And your first question will be from Don Crist at Johnson Rice. Please go ahead.

Donald Crist: Good morning, gentlemen. How are you all today?

Ryan Ezell: Good morning, Don.

Donald Crist: I wanted to touch on JP3. Obviously, you put a lot of language in both the presentation and the press release. But on those pilot projects, can you give us a projected timeline as to when some of those may come to fruition and when we can expect that ramp up in revenue? I know you've highlighted 50% year-over-year, but when we can kind of a timeline of those events?

Ryan Ezell: Yes, Don. This is Ryan. When I look at it right now, the big gating factor that is, is bringing the newer generation sensor online to commercial application, which we expect at the end of H1. So, we'll be looking at a ramp up of some of the revenue of these applications to come in line in H2, 2024, and continue out at 2025 and beyond. Driving a lot of that, when you look at the application of the Quad B and Quad C from the EPA on the flare gas and also some of the potential chain of custody measurements, a lot of those things are going to drive some unique opportunities for us to open up a $700-plus million market TAM when we look at it in terms of the upstream markets.

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Donald Crist: Okay. And taking that just one step further, assuming you catch the bumper of the car here, what manufacturing capabilities do you have on the sensor side to keep up with potential demand?

Ryan Ezell: Yes, that's a great question. And I think for us, that's what we're most excited about. Our capabilities now will be moving up to a probably about a 12x improvement in manufacturing velocity. In terms of you look at what we would have traditionally moved in volume last year, we can move that in less than a month now with the improved manufacturing. So, we've already got some pre-ordered. We invested some capital upfront to go ahead and frontload these units, particularly stuff that we'll be using in the upstream piece, which will be on a data-as-a-service model for us, and went ahead and made those capital investments upfront. So, we're really excited and confident that this manufacturing improvement as well as the improvement in the analyzer performance will be great for the company.

Donald Crist: Okay. Well, just one further from me, in Saudi, the opportunity on the slickwater side, obviously, you just introduced that there, but given their shift towards gas drilling and more traditional shale drilling, versus what they have done in the past, what kind of opportunity set do you think that offers you as you move through '24, and they get more comfortable with the technology?

Ryan Ezell: So, holistically for us, we've always had that presence in the international market, but I'd say it represented a not as material component of our overall revenue, but as part of our strategy of building what we call full cycle chemistry sales, having a diverse business in international markets was very important to us, which is our investment into the testing, which took about 18 months to get approved with Aramco (TADAWUL:2222) and then also what we did in Abu Dhabi. When you look at the system there, the impact it will have could potentially double the size of our international revenue even on a conservative basis year-on-year. So, I still think when you look at the activity of what we'll see there in Saudi, it will be material to what we do on the international side of the business. It will help significantly.

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Donald Crist: I appreciate the color. I'll get back in queue.

Ryan Ezell: Thank you.

Operator: Thank you. Next question will be from Jeff Robertson at Water Tower Research. Please go ahead.

Jeff Robertson: Thank you. Good morning.

Ryan Ezell: Good morning, Jeff.

Jeff Robertson: Ryan, on the JP3, can you talk about the margins that you could realize with the data-as-a-service uptake on that business? And then, secondly, when you're working with landowner groups on production allocations, how do you get landowner groups and producers on the same page to decide that the JP3 is the best solution for measurement?

Ryan Ezell: So, there's a couple of things on there. Looking first around the margin profiles, we haven't fully disclosed around what the margin profile specifically for JP3 is. What I will say is when we model it over onto the Data-as-a-Service business, it does give us about a 15% improvement, compared to the capital sale model over a three year time period and the return on that. So, it will bump for us, not only building our recurring revenue, but also the overall profitability of the segment. When you look at what we do on the chain of custody side, that is a unique application because there are thousands of wells for this type of work. And we've done an extensive amount of analysis on that. And so, we're actually working at with quite a few people, particularly if you take some of the trust, some of the legal components of that that actually handle the processing of the royalties, et cetera, as part of the chain of custody. Those have been some of the primary targets. What's also been unique for us is we worked with the Texas Railroad Commission, the Bureau of Land Management, and the EPA, different governing bodies around how we manage this. Because make no mistake, when you look at how they measure quality now, they're using a composite sample taken once every six to nine months, and they'll be getting this data every 10 seconds. So, it will make a significant change in the way, the royalties are allocated and how the payments work. And so, I think there will be a little bit of movement about how this goes on and particularly be at the gathering points and with the various trust, I think to do a lot of the royalty allocations is where the first impact that we'll see will be.

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Bond Clement: Yes, Jeff, I'll just add. Add something real quick. I think the operators and the mineral owners are clearly going to be aligned on this on one side. And then, I think where the conflict is going to come into play would be how the gathering or the purchasers -- first purchasers interpret the data that we're sharing and how do they reconcile those two between an instantaneous continuous measurement point, in terms of evaluating BTU quality versus, like Ryan said, one sample point every 30, 60, 90 days, whatever the situation is. How do they reconcile those two in ensuring that all stakeholders are paid on the accurate amount for the value of their product?

Jeff Robertson: If a midstream gatherer has a more accurate read on what the BTU content is headed their direction, wouldn't that make them more efficient in terms of how they process?

Ryan Ezell: 100%. And when you combine that with what our trans mix capabilities are, it's even better from that aspect.

Jeff Robertson: Ryan, on chemistry, you've obviously had the ProFrac agreement in place for a while now. When you look at external chemistry, do you look at the opportunity to form to take that from a transactional business to more of any kind of a strategic alliance and maybe just a basin centered alliance with any of the pressure pumpers?

Ryan Ezell: That's another good point, as part of our overall strategy is around that collaborative intimacy with these customers. So, as we began to really diversify our revenue stack, I would say we have a 50:50 split between service companies and E&P operators. But to your point, those relationships with E&P operators becomes extremely important when we look at our chemistry management and what we call the external transactional revenue stream, because we do build long-term partnerships. And what we're starting to see is they're becoming much stickier in performance because they are starting to realize the gains on the return investment in the chemistry. And if you go out and look at a lot of the public space with particularly some of the E&P operators, they are talking about chemistry being able to unlock additional barrels out of a reservoir on the different type curves. And so, we play an essential component in that. It not only brings a sustainable green technology, but also that dramatically improves reservoir performance. And so, what they see is to me that gives us a great opportunity for less volatile and longer standing relationships with the E&P operators.

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Jeff Robertson: And lastly, Ryan, do you think your chemistry solutions, in terms of well performance as companies do a longer laterals, does that put -- does that help the kind of chemistry solutions that Flotek provides in terms of driving demand, which can improve performance?

Ryan Ezell: Well, I think it all in line locks a huge opportunity because part of drilling these longer laterals, we look at well spacing. We look at overall fluid design from even how they drill them, the actual completion that they do, all those things become extremely important even when they look at the wellbore cleaning before they do the actual frac. And so, to further up this the chain we get involved with our chemistry, we can match the clay control, the corrosion inhibition, the proper surfactant technologies or any solvents that need to come in place, demulsification. And so, I think it's a huge opportunity. To me, as you get into the more difficult situation, a commoditized chemistry approach becomes not viable. You really have to look at how do you customize this chemical solution and Flotek is the best in the business at doing that. And that's where I really think it opens an additional opportunity for us.

Jeff Robertson: Thank you.

Ryan Ezell: Thanks, Jeff.

Operator: Thanks. [Operator Instructions] And your next question will be from Eric Swergold at Firestorm Capital. Please go ahead.

Eric Swergold: Hi, good morning gentlemen, and congratulations on navigating through a very difficult time, with ProFrac. Could you talk a little bit more about your business away from ProFrac and what gating factors there are at this point because you've done an admirable job growing your business away from ProFrac on the chemical side? What factors are holding you back at this point? Or is it really just a matter of how many salespeople you can get in front of how many customers? Thanks.

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Ryan Ezell: Good morning, Eric. You know what? I think, number one, if we look at the non-ProFrac related revenue as a percentage in Q1, we were sitting in the 24%, 25%. As we've exited the year, we see it sitting at 45%. And we've seen growth in that Chemistry segment of the business every quarter throughout the year. More importantly, Q1 to Q4 is almost a 200% growth. And so, for us, we're continuing to push in that terms of market share gain. I think that is typically a little bit longer sales cycle because it's a lot of the value add technologies and we are actually starting to see that continue to grow. We're seeing the Complex Nanofluid sales grow. And I think we're going to continue to see that. I don't feel that it's not necessarily always create that discontinuity piece there, but there's a multitude of advantages of what we do on the transactional piece and I think that's going to grow all the way through 2024. And then I think JP3 will continue to contribute with that significantly as we expect that 50% growth in 2024 as well. And I don't think there's much of it holding back. When you look at it right now, you're going to see probably a flat to down frac fleet activity in North America land. And what you're starting to see is a re-emergence that we call like Tier-1 customers where you see sustained plans that are long throughout the year. And that's the customers that we're pursuing right now to really get our chemistry in there and show the impact of some of these major basins. So, we're actually really excited about this opportunity to meet these headwinds, offer great opportunities for good teams to navigate the wind appropriately and really pick up some market share.

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Eric Swergold: Thank you.

Operator: Thank you. Next question will be from Jeff Robertson at Water Tower Research. Please go ahead.

Jeff Robertson: Thanks. Just to follow-up. Bond, with the material weakness, eliminated from the 10-K and the expectation of positive adjusted EBITDA throughout 2024, does that better financial position and better liquidities, does that further your Flotek's commercial discussions with customers and potential partners as you look at the business opportunities in front of you?

Bond Clement: Absolutely. Without a doubt, I mean, now you're talking to folks and you've got the going concern language in your public filings. I think that creates some anxiety. So, having the material, the going concern, I would say is more important. We're certainly glad to put both of them behind us. But having the going concern behind us and having our auditors agree that the financial outlook for the company is much more stable than this time last year will definitely be a benefit as we negotiate, rebates and various items with suppliers and customers.

Jeff Robertson: Thank you. Thanks for taking my follow-up.

Bond Clement: Thank you.

Operator: Thank you. [Operator Instructions] And your next question will be from Richard Rudgley at Glenbrook. Please go ahead.

Richard Rudgley: Hi, guys. Just a quick question really, given how strong your EBITDA is and your strategy is playing out and you're obviously projecting optimism as I hear it, obviously at the same time though, the stock really isn't being appreciated in the market. I mean it's down, I don't know sure, maybe before today about a 20% plus. And so, you're below book, I just wondered if you'd consider or have been considering at least a modest stock buyback? Thank you.

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Bond Clement: Thanks for the question, Richard, no, not at this time. I mean, when you look at what we've been doing with the company at least for the last 12 months, you could argue for the last 24 months is really to stabilize the business and get it on a path to profitability as we say. We feel like we've turned the corner certainly in that regard, but as it relates to buying back stock or other items to return cash to shareholder at this point in time, probably not at that cycle of maturity in terms of the company. Certainly, something that we hope to get to in the near term, but as we sit here today we don't have any plans to buy back shares.

Richard Rudgley: Okay, understood. Thank you.

Operator: Thank you. And at this time, Mr. Ezell, it appears we have no further questions. Please proceed, sir.

Ryan Ezell: Okay. I would like to remind you that Flotek will be participating in the 36th Annual ROTH Conference at the Ritz-Carlton in Dana Point, California next week. I'll be participating in an Oilfield Service Panel discussion on Monday, March 18 at 1:00 PM Pacific Time, where we are joined by Bond in hosting one-on-one meetings with investors during the conference. We look forward to seeing you at the conference next week. Thanks again for joining us today.

Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Have a good day.

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