On February 17, Flotek Industries Inc. (FTK) announced its agreement with ProFrac Holdings, LLC, for the expansion of its previously-announced contract. Consequently, the stock saw an upsurge in the following trading sessions on Thursday.
During the regular trading session, the stock gained a huge 70.20% at its closing price of $1.35 per share. The day’s volume remained 719% of its 65-day average at 18.89 million shares. FTK stock continued to rise in the after-hours to add a further 14.07% at a volume of 2.92 million shares. Hence, the stock was trading at $1.54 per share in the after-hours on Thursday.
The technology-driven, specialty chemistry and data company, Flotek Industries Inc. has a market capitalization of $63.26 million with 79.75 million shares outstanding. 2022 has so far proved very fruitful for the stock as it has added 19.47% year to date. In the past five days alone FTK increased by 57.43%, while it lost 40.00% last year.
FTK’s Initial Agreement with ProFrac
On February 02, the company announced its long-term agreement with ProFrac Services, LLC for its full portfolio of sustainable chemistry solutions.
According to the contract, FTK was supposed to provide full downhole chemistry solutions for three years. The immediate expected contracted backlog of revenue was over $230 million.
Expansion of the Agreement
On February 17, the company announced an agreement for the expansion of the contract. The new expansion is expected to increase revenue backlog by at least $1 billion after closing and as much as $2.1 billion over the next decade.
Terms of Agreement
- FTK will issue convertible notes to ProFrac with a maturity of one year and amount based on expansion size.
- The company will also grant ProFrac the right for the appointment of two members to its board of directors.
Additionally, the conversion price of the notes is $1.088125 per share before maturity and $0.8705 per share at maturity. Moreover, the transaction would close in Q2 2022 as per certain required conditions.
FTK’s Financial Highlights
In Q3 2021, the company had consolidated revenues of $10.2 million with a decline of 20.1% YOY.
Furthermore, the net income in Q3 2021 was $0.5 million or $0.01 per basic and diluted share. This compares to a loss in the previous quarter.
In addition, the company ended the quarter with cash and cash equivalents of $20.5 million and $4.8 million on PPP loans outstanding. Due to the application for forgiveness for its PPP loans, the current portion of long-term debt has been reduced to $1.3 million as of September 30, 2021.
