FLOC 8-K
Flowco Holdings Inc. (FLOC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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(Registrant’s telephone number, including area code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
Securities registered pursuant to Section 12(b) of the Act:
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Texas, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02. Results of Operations and Financial Condition.
On November 5, 2025, Flowco Holdings Inc. issued a press release announcing its results for the third quarter ended September 30, 2025. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information being furnished pursuant to this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
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Description |
99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FLOWCO HOLDINGS INC. |
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By: |
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/s/ Jonathan W. Byers |
Name: |
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Jonathan W. Byers |
Title: |
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Chief Financial Officer |
Date: November 5, 2025
3
Exhibit 99.1
Flowco Holdings Inc. Reports Third Quarter 2025 Results
HOUSTON -- (BUSINESS WIRE) -- Flowco Holdings Inc. (NYSE: FLOC) (“Flowco” or the “Company”), a provider of production optimization, artificial lift and methane abatement solutions for the oil and natural gas industry, today announced financial results for the third quarter ended September 30, 2025.
Where presented, the financial results for 2024 represent periods (i) during which Flowco’s operating subsidiary, Flowco MergeCo LLC (“Flowco LLC”), was a privately-owned limited liability company and (ii) prior to the completion of Flowco’s initial public offering in January 2025. Historical financial information for the periods ended in 2024 reflects information for Flowco LLC, and historical financial information presented prior to June 20, 2024 reflects only the historical financial information of Estis Compression LLC (“Estis”) as the accounting predecessor prior to the business combination of Estis, Flowco Production Solutions, LLC and Flogistix, LP and parent entities formed in connection with such business combination (the “2024 Business Combination”).
Key Third Quarter 2025 Highlights
Financial Summary
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Three Months Ended |
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September 30, |
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June 30, |
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September 30, |
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(in thousands) |
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Revenues |
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$ |
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176,941 |
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$ |
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193,215 |
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$ |
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189,365 |
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Net income |
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34,273 |
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27,352 |
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20,646 |
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Adjusted Net Income (1) |
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37,301 |
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32,998 |
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31,179 |
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Adjusted EBITDA (1) |
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76,803 |
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76,488 |
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74,017 |
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Adjusted EBITDA Margin (1) |
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43.4 |
% |
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39.6 |
% |
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39.1 |
% |
Joe Bob Edwards, President and CEO, commented, “Flowco delivered another quarter of solid operational and financial execution, with incremental Adjusted EBITDA growth, continued margin expansion, and strong free cash flow generation. Since becoming a public company, we have achieved consecutive quarterly growth in Adjusted EBITDA while expanding margins, underscoring the resiliency of our financial model and the operating leverage we are realizing across the business. Our performance reflects a shift toward our high-margin rental portfolio, which is growing through targeted investment and incremental customer demand for high-pressure gas lift and vapor recovery systems. The integration of the assets from our recent transaction has progressed smoothly—driving improved profitability and strengthening our position in high-margin, electric-drive rental systems.
While the broader market faced headwinds in the third quarter, operators continued to prioritize production optimization and efficiency—investing in technologies that enhance reliability and returns—an approach that favors Flowco’s differentiated, technology-driven solutions. As we enter the final quarter of 2025, we remain focused on disciplined capital
deployment while evaluating opportunities to return capital to shareholders through dividends and share repurchases. We will continue to invest in product development, manufacturing efficiency, and operational automation to further strengthen our competitive position and expand the value we deliver to customers. Flowco remains well positioned to generate consistent results, strong cash flow, and compelling long-term value for our shareholders.”
Segment Information
We report our results in two segments, Production Solutions and Natural Gas Technologies. Production Solutions includes the rental, sale and service associated with high pressure gas lift, conventional gas lift and plunger lift, including a range of digital solutions and other production related technologies. Natural Gas Technologies includes the design, manufacture, rental and sale of vapor recovery and natural gas systems. Corporate costs not directly related to either segment are categorized separately.
Segment Financial Information
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Three Months Ended |
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September 30, |
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June 30, |
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September 30, |
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(in thousands) |
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Production Solutions |
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Revenues |
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$ |
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125,596 |
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$ |
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128,245 |
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$ |
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111,686 |
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Adjusted Segment EBITDA (1) |
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55,260 |
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53,343 |
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47,421 |
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Adjusted Segment EBITDA Margin (1) |
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44.0 |
% |
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41.6 |
% |
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42.5 |
% |
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Natural Gas Technologies |
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Revenues |
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$ |
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51,345 |
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$ |
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64,970 |
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$ |
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77,679 |
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Adjusted Segment EBITDA (1) |
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25,317 |
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27,397 |
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26,596 |
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Adjusted Segment EBITDA Margin (1) |
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49.3 |
% |
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42.2 |
% |
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34.2 |
% |
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Corporate |
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Revenues |
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$ |
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— |
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$ |
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— |
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$ |
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— |
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Adjusted Segment EBITDA (1) |
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(3,774 |
) |
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(4,252 |
) |
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— |
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Adjusted Segment EBITDA Margin (1) |
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nm |
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nm |
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nm |
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Total |
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Revenues |
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$ |
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176,941 |
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$ |
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193,215 |
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$ |
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189,365 |
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Adjusted Segment EBITDA (1) |
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76,803 |
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76,488 |
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74,017 |
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Adjusted Segment EBITDA Margin (1) |
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43.4 |
% |
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39.6 |
% |
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39.1 |
% |
Production Solutions
Third quarter 2025 revenue for the Production Solutions segment decreased 2.1% from the second quarter of 2025, primarily due to a decrease in sales in the Downhole Components business unit. Adjusted Segment EBITDA increased 3.6% quarter over quarter for the same period, with Adjusted Segment EBITDA Margin increasing 240 basis points. The increase in Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin resulted from favorable revenue mix, higher operating leverage and an increase in sales gross margin quarter over quarter.
Natural Gas Technologies
Third quarter 2025 revenue for the Natural Gas Technologies segment decreased 21.0% from the second quarter of 2025, primarily due to a decrease in sales in the Natural Gas Systems business unit. Adjusted Segment EBITDA
decreased 7.6% quarter over quarter for the same period, with Adjusted Segment EBITDA Margin increasing 714 basis points due to favorable revenue mix from rentals.
Corporate
Corporate Adjusted Segment EBITDA for the quarter ended September 30, 2025 was $(3.8) million, compared to $(4.3) million Corporate Adjusted Segment EBITDA in the quarter ended June 30, 2025.
Balance Sheet & Liquidity
As of October 31, 2025, the Company had outstanding borrowings under its senior secured revolving credit facility (“Credit Agreement”) of $205.2 million and, with a current borrowing base of $723.5 million, had availability under the Credit Agreement of $518.3 million.
Dividend Declaration
On October 31, 2025, Flowco announced that its Board of Directors had declared a quarterly cash dividend of $0.08 per share of Class A common stock payable on November 26, 2025 to Class A common stockholders of record as of the close of business on November 14, 2025. Flowco MergeCo LLC, the Company’s operating subsidiary, will make a corresponding distribution of $0.08 per unit to holders of its common units.
Conference Call and Webcast Information
Flowco will host a conference call on Wednesday, November 5, 2025, at 8:00 am Eastern Time to discuss third quarter 2025 results. The conference call can be accessed live over the phone by dialing 1-877-704-4453 (for the U.S.) or 1-201-389-0920 (for International). A telephonic replay of the conference call will be available two hours after the call and can be accessed by dialing 1-844-512-2921 (for the U.S.) or 1-412-317-6671 (for International). The passcode for the call and replay is 13756630. A live webcast of the conference call will also be available under the Investor Relations section of Flowco’s website at ir.flowco-inc.com.
About Flowco
Flowco is a leading provider of production optimization, artificial lift and methane abatement solutions for the oil and natural gas industry. The company’s products and services include a full range of equipment and technology solutions that enable oil and natural gas producers to efficiently and cost-effectively maximize the profitability and economic lifespan of their assets.
Forward-Looking Statements
The information in this press release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this press release may be forward-looking statements. These statements generally relate to future events or our future financial or operating performance, and include, but are not limited to: statements regarding guidance or estimates related to the Company’s results of operations or financial condition; industry trends, customer demand and industry outlook, and effects on Flowco’s operations; Flowco’s strategies and plans, including matters relating to the Company growth, capital expenditures, dividend policies, and leverage profile. When used in this press release, words such as “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “forecast,” “target,” “predict,” “may,” “should,” “would,” “could,” and “will,” the negative of these terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Flowco believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking
statements. These risks and uncertainties are described further in our annual report on Form 10-K for the year ended December 31, 2024 and our quarterly report for the period ended September 30, 2025 filed with the Securities and Exchange Commission. Flowco undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
Flowco Holdings Inc.
Condensed Consolidated Statement of Operations
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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June 30, |
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September 30, |
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September 30, |
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September 30, |
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(in thousands except share and per share amounts) |
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Revenues: |
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Rentals |
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$ |
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106,966 |
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$ |
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102,104 |
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$ |
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87,240 |
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$ |
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306,366 |
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$ |
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184,982 |
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Sales |
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69,975 |
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91,111 |
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102,125 |
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256,140 |
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164,303 |
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Intercompany revenue |
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— |
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— |
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— |
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— |
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— |
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Total revenues |
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176,941 |
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193,215 |
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189,365 |
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562,506 |
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349,285 |
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Operating expenses: |
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Cost of rentals (exclusive of depreciation |
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29,295 |
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27,602 |
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25,274 |
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83,748 |
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48,956 |
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Cost of sales (exclusive of depreciation |
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44,888 |
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62,579 |
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75,535 |
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173,033 |
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124,073 |
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Intercompany cost of sales - sales |
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— |
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— |
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— |
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— |
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— |
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Selling, general and administrative |
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28,980 |
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32,683 |
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25,012 |
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92,197 |
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36,204 |
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Depreciation and amortization |
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38,953 |
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33,165 |
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30,581 |
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106,237 |
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56,502 |
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(Gain) loss on sale of equipment |
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232 |
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68 |
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72 |
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255 |
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727 |
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Income from operations |
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34,593 |
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37,118 |
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32,891 |
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107,036 |
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82,823 |
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Other expenses: |
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Interest expenses |
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(2,757 |
) |
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(6,445 |
) |
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(11,861 |
) |
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(14,567 |
) |
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(22,174 |
) |
Loss on debt extinguishment |
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— |
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— |
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(221 |
) |
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— |
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(221 |
) |
Other expenses, net |
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229 |
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559 |
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233 |
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521 |
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(1,813 |
) |
Total other expenses |
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(2,528 |
) |
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(5,886 |
) |
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(11,849 |
) |
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(14,046 |
) |
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(24,208 |
) |
Income before provision for income taxes |
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32,065 |
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31,232 |
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21,042 |
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92,990 |
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58,615 |
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Provision for income taxes |
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2,208 |
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(3,880 |
) |
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(396 |
) |
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(4,320 |
) |
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(702 |
) |
Net income |
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34,273 |
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27,352 |
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$ |
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20,646 |
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88,670 |
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$ |
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57,913 |
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Net income attributable to redeemable |
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21,756 |
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21,881 |
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64,510 |
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Net income attributable to Flowco |
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$ |
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12,517 |
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$ |
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5,471 |
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$ |
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24,160 |
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Earnings per share (1): |
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Basic |
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$ |
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0.46 |
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$ |
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0.21 |
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$ |
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0.92 |
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Diluted |
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$ |
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0.32 |
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$ |
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0.21 |
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$ |
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0.82 |
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Weighted average shares outstanding (1): |
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Basic |
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27,445,906 |
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25,728,144 |
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26,338,938 |
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Diluted |
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90,661,805 |
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26,195,643 |
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90,890,091 |
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Flowco Holdings Inc.
Condensed Consolidated Balance Sheets
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As of |
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September 30, |
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December 31, |
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(in thousands except share and per share amounts) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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7,235 |
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$ |
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4,615 |
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Accounts receivable, net of allowances for credit losses of $1,870 |
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118,970 |
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120,353 |
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Inventory |
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159,290 |
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151,179 |
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Prepaid expenses and other current assets |
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7,668 |
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9,982 |
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Total current assets |
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293,163 |
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286,129 |
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Property, plant and equipment, net |
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801,139 |
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702,616 |
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Operating lease right-of-use assets |
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16,343 |
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19,480 |
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Finance lease right-of-use assets |
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27,365 |
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21,871 |
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Intangible assets, net |
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281,310 |
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|
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302,522 |
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Goodwill |
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|
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249,692 |
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|
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|
249,692 |
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Deferred tax asset |
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|
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11,507 |
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|
— |
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Other assets |
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|
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5,716 |
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|
|
|
6,639 |
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Total assets |
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$ |
|
1,686,235 |
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$ |
|
1,588,949 |
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Liabilities, redeemable non-controlling interests and stockholders'/members' equity |
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Current liabilities: |
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Accounts payable |
|
$ |
|
32,329 |
|
|
$ |
|
31,321 |
|
Accrued expenses |
|
|
|
35,597 |
|
|
|
|
33,829 |
|
Current portion of operating lease obligations |
|
|
|
7,256 |
|
|
|
|
6,809 |
|
Current portion of finance lease obligations |
|
|
|
13,214 |
|
|
|
|
7,837 |
|
Deferred revenue |
|
|
|
12,538 |
|
|
|
|
8,002 |
|
Total current liabilities |
|
|
|
100,934 |
|
|
|
|
87,798 |
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
||
Long-term debt, net |
|
|
|
222,628 |
|
|
|
|
635,916 |
|
Tax receivable agreement liability |
|
|
|
19,791 |
|
|
|
|
— |
|
Operating lease obligations, net of current portion |
|
|
|
9,453 |
|
|
|
|
12,739 |
|
Finance lease obligations, net of current portion |
|
|
|
12,135 |
|
|
|
|
13,389 |
|
Total long-term liabilities |
|
|
|
264,007 |
|
|
|
|
662,044 |
|
Total liabilities |
|
|
|
364,941 |
|
|
|
|
749,842 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
||
Redeemable non-controlling interests |
|
|
|
950,336 |
|
|
|
|
— |
|
Members' equity: |
|
|
|
|
|
|
|
|
||
Members' equity |
|
|
|
— |
|
|
|
|
839,107 |
|
Total members' equity |
|
|
|
— |
|
|
|
|
839,107 |
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
||
Class A common stock, $0.0001 par value – 300,000,000 shares authorized; 28,255,895 shares issued and outstanding as of September 30, 2025; no such shares authorized, issued or outstanding as of December 31, 2024. |
|
|
|
3 |
|
|
|
|
— |
|
Class B common stock, $0.0001 par value – 150,000,000 shares authorized; 61,391,236 shares issued and outstanding as of September 30, 2025; no such shares authorized, issued or outstanding as of December 31, 2024. |
|
|
|
6 |
|
|
|
|
— |
|
Additional paid-in capital |
|
|
|
55,539 |
|
|
|
|
— |
|
Retained earnings |
|
|
|
315,410 |
|
|
|
|
— |
|
Total stockholders' equity to Flowco Holdings Inc. |
|
|
|
370,958 |
|
|
|
|
— |
|
Total liabilities, redeemable non-controlling interests and members'/stockholders' equity |
|
$ |
|
1,686,235 |
|
|
$ |
|
1,588,949 |
|
Flowco Holdings Inc.
Condensed Consolidated Statements of Cash Flows
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|||||||||
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
||||||
|
|
(in thousands) |
|
||||||||||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
34,273 |
|
|
$ |
|
88,670 |
|
|
$ |
|
57,913 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
38,953 |
|
|
|
|
106,237 |
|
|
|
|
56,502 |
|
Provision for inventory obsolescence |
|
|
|
362 |
|
|
|
|
1,636 |
|
|
|
|
1,283 |
|
Amortization of operating right-of-use assets |
|
|
|
2,616 |
|
|
|
|
6,627 |
|
|
|
|
2,294 |
|
Amortization of deferred financing costs |
|
|
|
338 |
|
|
|
|
1,012 |
|
|
|
|
395 |
|
Loss on sale of equipment |
|
|
|
232 |
|
|
|
|
255 |
|
|
|
|
727 |
|
Loss on debt extinguishment |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
221 |
|
Gain on lease termination |
|
|
|
(528 |
) |
|
|
|
(791 |
) |
|
|
|
(353 |
) |
Stock-based compensation |
|
|
|
1,479 |
|
|
|
|
9,470 |
|
|
|
|
509 |
|
Provision for deferred income taxes |
|
|
|
(2,208 |
) |
|
|
|
(780 |
) |
|
|
|
— |
|
Allowance for credit losses |
|
|
|
610 |
|
|
|
|
1,551 |
|
|
|
|
(383 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Accounts receivable |
|
|
|
3,188 |
|
|
|
|
(168 |
) |
|
|
|
(4,426 |
) |
Inventory |
|
|
|
(8,634 |
) |
|
|
|
(9,575 |
) |
|
|
|
6,212 |
|
Prepaid expenses and other current assets |
|
|
|
1,700 |
|
|
|
|
2,314 |
|
|
|
|
518 |
|
Other assets and liabilities |
|
|
|
(8 |
) |
|
|
|
(74 |
) |
|
|
|
(2,566 |
) |
Accounts payable - trade |
|
|
|
(1,006 |
) |
|
|
|
1,008 |
|
|
|
|
(3,265 |
) |
Accrued expenses |
|
|
|
7,054 |
|
|
|
|
359 |
|
|
|
|
2,304 |
|
Deferred revenue |
|
|
|
6,615 |
|
|
|
|
4,536 |
|
|
|
|
1,971 |
|
Operating lease liabilities |
|
|
|
(2,826 |
) |
|
|
|
(6,417 |
) |
|
|
|
(2,259 |
) |
Finance lease liabilities |
|
|
|
257 |
|
|
|
|
1,324 |
|
|
|
|
(389 |
) |
Net cash provided by operating activities |
|
|
|
82,467 |
|
|
|
|
207,194 |
|
|
|
|
117,208 |
|
Cash flows used in investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Asset acquisition |
|
|
|
(71,813 |
) |
|
|
|
(71,813 |
) |
|
|
|
— |
|
Additions to property, plant and equipment |
|
|
|
(39,663 |
) |
|
|
|
(103,283 |
) |
|
|
|
(62,087 |
) |
Payment of contingent consideration related to a business combination |
|
|
|
(548 |
) |
|
|
|
(548 |
) |
|
|
|
— |
|
Proceeds from sale of property, plant and equipment |
|
|
|
164 |
|
|
|
|
434 |
|
|
|
|
160 |
|
Net cash acquired in 2024 Business Combination |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
3,088 |
|
Payment for capitalized patent costs |
|
|
|
(339 |
) |
|
|
|
(434 |
) |
|
|
|
(64 |
) |
Net cash used in investing activities |
|
|
|
(112,199 |
) |
|
|
|
(175,644 |
) |
|
|
|
(58,903 |
) |
Cash flows used in financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Issuance of Class A common stock in IPO, net of underwriting discount |
|
|
|
— |
|
|
|
|
461,803 |
|
|
|
|
— |
|
Payment of offering costs |
|
|
|
— |
|
|
|
|
(2,458 |
) |
|
|
|
— |
|
Repurchase of Class A common stock |
|
|
|
(15,000 |
) |
|
|
|
(15,000 |
) |
|
|
|
— |
|
Payments on long-term debt |
|
|
|
(166,788 |
) |
|
|
|
(906,785 |
) |
|
|
|
(164,385 |
) |
Proceeds from long-term debt |
|
|
|
222,366 |
|
|
|
|
493,497 |
|
|
|
|
267,633 |
|
Payments on finance lease obligations |
|
|
|
(5,383 |
) |
|
|
|
(11,046 |
) |
|
|
|
(3,008 |
) |
Proceeds on finance lease terminations |
|
|
|
36 |
|
|
|
|
349 |
|
|
|
|
507 |
|
Purchase of LLC Interests from Continuing Equity Owners |
|
|
|
— |
|
|
|
|
(20,876 |
) |
|
|
|
— |
|
Payment of debt issuance costs |
|
|
|
— |
|
|
|
|
(13 |
) |
|
|
|
(5,424 |
) |
Payment of dividend equivalent units |
|
|
|
(10 |
) |
|
|
|
(10 |
) |
|
|
|
— |
|
Payment of tax withheld on stock-based compensation |
|
|
|
(296 |
) |
|
|
|
(296 |
) |
|
|
|
— |
|
Distributions to members of Flowco LLC |
|
|
|
(4,911 |
) |
|
|
|
(23,703 |
) |
|
|
|
(130,504 |
) |
Dividends paid to Flowco Holdings Inc. shareholders |
|
|
|
(2,334 |
) |
|
|
|
(4,392 |
) |
|
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
|
27,680 |
|
|
|
|
(28,930 |
) |
|
|
|
(35,181 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
|
(2,052 |
) |
|
|
|
2,620 |
|
|
|
|
23,124 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Beginning of period |
|
|
|
9,287 |
|
|
|
|
4,615 |
|
|
|
|
— |
|
End of period |
|
$ |
|
7,235 |
|
|
$ |
|
7,235 |
|
|
$ |
|
23,124 |
|
Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company uses non-GAAP financial measures, such as Adjusted Net Income, EBITDA, Adjusted EBITDA and Free Cash Flow, as well as Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin, in this press release to supplement financial information presented in accordance with GAAP. We believe that excluding certain items from our GAAP results provides management additional insight on the consolidated financial performance from period to period to project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our management and investors with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons. There are limitations to the use of the non-GAAP financial measures presented in this press release. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. Similarly, Free Cash Flow does not represent our residual cash flow for discretionary expenditures, since the calculation of this measure does not reflect certain debt service requirements or certain other non-discretionary expenditures. Non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The Company urges investors to review the reconciliation and not to rely on any single financial measure to evaluate our business.
Adjusted Net Income
Adjusted Net Income is a non-GAAP measure that we define as net income (loss) adjusted to eliminate the impact of (i) transaction-related expenses, (ii) share-based compensation, (iii) loss on the sale of equipment, (iv) loss on debt payments and (v) changes to the value of our inventory. Adjusted Net Income is a supplemental non-GAAP financial measure used by management, our stockholders and others to provide visibility on the profitability and financial strength of the Company by excluding certain expenses related to non-recurring Company transactions.
Reconciliation from net income to Adjusted Net Income is set forth as follows:
|
|
Three Months Ended |
|
||||||||||||
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
||||||
|
|
(in thousands) |
|
||||||||||||
Net income |
|
$ |
|
34,273 |
|
|
$ |
|
27,352 |
|
|
$ |
|
20,646 |
|
Transaction related expenses (1) |
|
|
|
— |
|
|
|
|
6 |
|
|
|
|
1,833 |
|
Share-based compensation expense (2) |
|
|
|
1,479 |
|
|
|
|
1,670 |
|
|
|
|
356 |
|
Non-recurring charges (3) |
|
|
|
1,317 |
|
|
|
|
3,902 |
|
|
|
|
— |
|
Loss on sale of equipment |
|
|
|
232 |
|
|
|
|
68 |
|
|
|
|
72 |
|
Loss on debt extinguishment |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
221 |
|
Inventory valuation adjustments (4) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
8,051 |
|
Adjusted Net Income |
|
$ |
|
37,301 |
|
|
$ |
|
32,998 |
|
|
$ |
|
31,179 |
|
Adjusted EBITDA and Adjusted EBITDA margin
We define EBITDA as net income, adjusted to exclude interest expense, provision for income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude (i) share-based compensation expense, (ii) business combination-related expenses and (iii) other non-cash and non-recurring expenses.
EBITDA and Adjusted EBITDA are key performance indicators we use in evaluating our operating performance and in making financial, operating and planning decisions. In particular, the exclusion of certain expenses in calculating EBITDA and Adjusted EBITDA provides additional visibility on operating performance across reporting periods by removing the effect of non-cash and/or non-recurring expenses. Accordingly, we believe that this measure provides useful information to our stockholders and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Reconciliation from net income to EBITDA and Adjusted EBITDA are set forth as follows:
|
|
Three Months Ended |
|
||||||||||||
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
||||||
|
|
(in thousands) |
|
||||||||||||
Net income |
|
$ |
|
34,273 |
|
|
$ |
|
27,352 |
|
|
$ |
|
20,646 |
|
Interest expense |
|
|
|
2,757 |
|
|
|
|
6,445 |
|
|
|
|
11,861 |
|
Provision for income taxes (1) |
|
|
|
(2,208 |
) |
|
|
|
3,880 |
|
|
|
|
396 |
|
Depreciation and amortization |
|
|
|
38,953 |
|
|
|
|
33,165 |
|
|
|
|
30,581 |
|
EBITDA |
|
|
|
73,775 |
|
|
|
|
70,842 |
|
|
|
|
63,484 |
|
Transaction related expenses (2) |
|
|
|
— |
|
|
|
|
6 |
|
|
|
|
1,833 |
|
Share-based compensation expense (3) |
|
|
|
1,479 |
|
|
|
|
1,670 |
|
|
|
|
356 |
|
Non-recurring charges (4) |
|
|
|
1,317 |
|
|
|
|
3,902 |
|
|
|
|
— |
|
Loss on sale of equipment |
|
|
|
232 |
|
|
|
|
68 |
|
|
|
|
72 |
|
Loss on debt extinguishment |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
221 |
|
Inventory valuation adjustments (5) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
8,051 |
|
Adjusted EBITDA |
|
$ |
|
76,803 |
|
|
$ |
|
76,488 |
|
|
$ |
|
74,017 |
|
Adjusted Segment EBITDA and Adjusted Segment EBITDA Margin
In addition to business segment profit or loss, our management also evaluates Adjusted Segment EBITDA, which is presented on a business unit level for purposes of allocating resources and evaluating operating and financial
performance. As discussed above, the Company operates and manages its business units in the following two operating and reporting segments:
We define Adjusted Segment EBITDA as segment net income, as adjusted in the same manner as defined for EBITDA and Adjusted EBITDA above. Reconciliation from segment net income, which includes direct segment costs but excludes corporate costs not directly related to either segment, to Adjusted Segment EBITDA is set forth as follows:
|
|
Three Months Ended |
|
||||||||||||
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
||||||
|
|
(in thousands) |
|
||||||||||||
Production Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
31,734 |
|
|
$ |
|
32,676 |
|
|
$ |
|
13,845 |
|
Interest expense |
|
|
|
(1,651 |
) |
|
|
|
2,302 |
|
|
|
|
6,690 |
|
Provision for income taxes |
|
|
|
— |
|
|
|
|
53 |
|
|
|
|
250 |
|
Depreciation and amortization |
|
|
|
23,577 |
|
|
|
|
18,192 |
|
|
|
|
17,364 |
|
EBITDA |
|
|
|
53,660 |
|
|
|
|
53,223 |
|
|
|
|
38,149 |
|
Transaction related expenses (1) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1,533 |
|
Share-based compensation expense (2) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
218 |
|
Non-recurring charges (3) |
|
|
|
1,317 |
|
|
|
|
— |
|
|
|
|
— |
|
(Gain) loss on sale of equipment |
|
|
|
283 |
|
|
|
|
120 |
|
|
|
|
88 |
|
Loss on debt extinguishment |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
221 |
|
Inventory valuation adjustments (4) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
7,212 |
|
Adjusted Segment EBITDA |
|
|
|
55,260 |
|
|
|
|
53,343 |
|
|
|
|
47,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Natural Gas Technologies |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
9,774 |
|
|
$ |
|
11,229 |
|
|
$ |
|
7,538 |
|
Interest expense |
|
|
|
224 |
|
|
|
|
224 |
|
|
|
|
4,434 |
|
Provision for income taxes |
|
|
|
1 |
|
|
|
|
29 |
|
|
|
|
146 |
|
Depreciation and amortization |
|
|
|
15,369 |
|
|
|
|
14,967 |
|
|
|
|
13,217 |
|
EBITDA |
|
|
|
25,368 |
|
|
|
|
26,449 |
|
|
|
|
25,335 |
|
Transaction related expenses (1) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
300 |
|
Share-based compensation expense (2) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
138 |
|
Non-recurring charges (3) |
|
|
|
— |
|
|
|
|
1,000 |
|
|
|
|
— |
|
(Gain) loss on sale of equipment |
|
|
|
(51 |
) |
|
|
|
(52 |
) |
|
|
|
(16 |
) |
Inventory valuation adjustments (4) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
839 |
|
Adjusted Segment EBITDA |
|
|
|
25,317 |
|
|
|
|
27,397 |
|
|
|
|
26,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
(7,235 |
) |
|
$ |
|
(16,553 |
) |
|
$ |
|
(737 |
) |
Interest expense |
|
|
|
4,184 |
|
|
|
|
3,919 |
|
|
|
|
737 |
|
Provision for income taxes |
|
|
|
(2,209 |
) |
|
|
|
3,798 |
|
|
|
|
— |
|
Depreciation and amortization |
|
|
|
7 |
|
|
|
|
6 |
|
|
|
|
— |
|
EBITDA |
|
|
|
(5,253 |
) |
|
|
|
(8,830 |
) |
|
|
|
— |
|
Transaction related expenses (1) |
|
|
|
— |
|
|
|
|
6 |
|
|
|
|
— |
|
Share-based compensation expense (2) |
|
|
|
1,479 |
|
|
|
|
1,670 |
|
|
|
|
— |
|
Non-recurring charges (3) |
|
|
|
— |
|
|
|
|
2,902 |
|
|
|
|
— |
|
(Gain) loss on sale of equipment |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
Inventory valuation adjustments (4) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
Adjusted Segment EBITDA |
|
|
|
(3,774 |
) |
|
|
|
(4,252 |
) |
|
|
|
— |
|
Total Adjusted EBITDA |
|
$ |
|
76,803 |
|
|
$ |
|
76,488 |
|
|
$ |
|
74,017 |
|
Free Cash Flow
Free Cash Flow is a non-GAAP measure that we define as cash flow provided by operating activities less additions to property, plant and equipment (which includes both maintenance and growth capital expenditures, but excludes asset acquisitions of a business, and excludes other business acquisitions and equity investments). Management believes this information is important to provide because it is used by management to evaluate the Company’s operational performance and trends between periods and to manage our business. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s results of ongoing operations. Free Cash Flow is not intended to replace GAAP financial measures. A reconciliation of net cash provided by operating activities to Free Cash Flow, as well as Free Cash Flow (Deficit) after Asset Acquisition, is set forth as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|||||||||
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
||||||
|
|
(in thousands) |
|
||||||||||||
Net cash provided by operating activities |
|
$ |
|
82,467 |
|
|
$ |
|
207,194 |
|
|
$ |
|
117,208 |
|
Additions to property, plant and equipment |
|
|
|
(39,663 |
) |
|
|
|
(103,283 |
) |
|
|
|
(62,087 |
) |
Free Cash Flow |
|
|
|
42,804 |
|
|
|
|
103,911 |
|
|
|
|
55,121 |
|
Asset acquisition |
|
|
|
(71,813 |
) |
|
|
|
(71,813 |
) |
|
|
|
— |
|
Free Cash Flow (Deficit) after Asset Acquisition |
|
$ |
|
(29,009 |
) |
|
$ |
|
32,098 |
|
|
$ |
|
55,121 |
|