Flotek buys ProFrac subsidiary assets for $105 million

HOUSTON - Flotek Industries, Inc. (NYSE: FTK), currently valued at $211.31 million in market capitalization, has acquired power generation assets and intellectual property from ProFrac GDM, LLC, a subsidiary of ProFrac Holding Corp. (NASDAQ: ACDC), for $105 million. The deal also includes a six-year dry lease agreement with ProFrac GDM for the acquired assets. According to InvestingPro data, Flotek has demonstrated remarkable performance with a 101.44% return over the past year, operating with a moderate debt-to-equity ratio of 0.12.

The acquired assets consist of mobile natural gas conditioning and distribution units with real-time gas monitoring and dual fuel optimization features. These units are designed for remote power generation and have applications across various markets. Flotek’s acquisition is aimed at expanding its Data Analytics Segment into the mobile power generation sector, aligning with its "Measure More" strategy.

Flotek’s CEO, Ryan Ezell, highlighted the significance of the agreement, stating that it provides a stable cash flow and is expected to be accretive to shareholders. Matt Wilks, Executive Chairman of ProFrac, also emphasized the partnership’s potential for growth and the strengthening of financial flexibility.

The acquisition is financed through a combination of offsetting order shortfall payments, equity issued to ProFrac, a secured promissory note, and future offsets against potential order shortfall payments. Flotek plans to hold a special shareholder meeting to approve the share issuance for the warrant conversion by the end of July 2025. InvestingPro subscribers can access detailed financial health metrics and 6 additional exclusive ProTips about Flotek’s investment potential, along with comprehensive valuation analysis in the Pro Research Report.

The Lease Agreement is projected to contribute approximately $14 million in rental revenue to Flotek during 2025, a 60% increase compared to 2024. From 2026, annual revenue under the Lease Agreement is expected to reach $27.4 million. This expansion provides Flotek with a scalable platform to offer new products and services in the rapidly growing remote power generation market.

The transactions were approved by a Special Committee of Flotek’s Board of Directors and advised by Lazard and King & Spalding, while ProFrac was advised by Piper Sandler and Brown Rudnick.

Flotek will discuss the details of the transactions in its earnings conference call scheduled for Wednesday, May 7, 2025. Analysts are optimistic about the company’s prospects, with price targets ranging from $10 to $11, suggesting potential upside from the current trading price of $7.13. This information is based on a press release statement and InvestingPro data, which provides real-time analysis and comprehensive financial metrics for over 1,400 US stocks.

In other recent news, Flotek Industries reported a notable 20% increase in revenue for the fourth quarter of 2024 compared to the same period in the previous year. The company’s adjusted EBITDA also saw a significant rise of over 11,000%, reaching $7 million. Flotek’s net income for the quarter stood at $4.4 million. These results were driven by strong performance in both their chemistry and data analytics segments, with data analytics service revenue growing by 124% year-over-year. The company also highlighted its international expansion, with substantial contributions from its operations in Saudi Arabia and the UAE. Flotek’s strategic focus on product innovation and market expansion seems to be paying off, as indicated by its top-three ranking among oilfield service stocks. The company has expressed cautious optimism for 2025, with plans to continue expanding its international and data analytics segments. Alliance Global Partners and other analysts have shown interest in Flotek’s growth, particularly in its international and data analytics operations.

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