Flotek Industries Inc (FTK) 2023 Q4 法說會逐字稿

All participants are now muted. Welcome to the Flotek Industries fourth quarter and year-end 2023 earnings conference call. (Operator Instructions)

所有參與者現已靜音。歡迎參加 Flotek Industries 第四季和 2023 年底收益電話會議。（操作員說明）

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.

另請注意，本次通話錄音時間為 2024 年 3 月 13 日星期三。我想將會議交給 Flotek 財務總監 Mike Critelli。請繼續，先生。

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.

謝謝大家，大家早安。我們感謝您參加 Flotek 第四季和 2023 年全年財報電話會議。今天和我一起參加電話會議的是執行長瑞安‧埃澤爾 (Ryan Ezell)；和財務長邦德·克萊門特。在今天的電話會議上，我們將首先提供有關我們第四季度和 2023 年全年業務和業績的準備好的評論。

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. It can be found on the Investor Relations section of our website.

隨後，我們將開放電話詢問您對 Flotek 昨天下午發布的第四季度和 2023 年全年收益新聞稿的疑問。我們也發布了更新的公司簡報。我們將在今天的電話會議中參考。您可以在我們網站的投資者關係部分找到它。

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.

此外，今天的電話會議正在進行網路直播，電話會議結束後將在我們的網站上提供重播。請注意，今天的電話會議中有關對未來事件的預測或期望的評論均為前瞻性陳述。

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.

前瞻性陳述受到許多風險和不確定性的影響，其中許多風險和不確定性超出了我們的控制範圍。這些風險和不確定性可能導致實際結果與我們目前的預期有重大差異。我們建議聽眾查看我們的收益報告以及我們向美國證券交易委員會提交的文件中討論的風險因素。此外，請參閱收益新聞稿和公司簡報中提供的調整表，因為管理層可能會在本次電話會議上討論非 GAAP 指標。

With that, I will turn the call over to our CEO, Ryan Ezell.

接下來，我會將電話轉給我們的執行長瑞安·埃澤爾 (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 restore profitability in all key financial metrics. Enhanced our liquidity has strengthened our leadership team through the execution of our corporate strategy, utilizing chemistry as the common value creation platform.

謝謝你，麥克，早安。我們感謝大家對 Flotek 的興趣並今天加入我們。當我們討論第四季度和 2023 年全年的營運和財務表現。我對我們的業績非常滿意，因為 2023 年確實是轉型的一年，我們在所有關鍵財務指標上恢復了獲利能力。我們的流動性增強，透過執行我們的企業策略，利用化學作為共同的價值創造平台，增強了我們的領導團隊。

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 analytics solutions. Both carry an undeniable value proposition that maximize our customers' value chain while generating a meaningful return on investment for our shareholders.

對技術的不懈關注。我們始終處於創新和多學科進步的前沿，透過我們差異化的化學和數據分析解決方案繼續擴大市場份額。兩者都具有不可否認的價值主張，可以最大化我們客戶的價值鏈，同時為我們的股東帶來有意義的投資回報。

With that in mind, I'd like to turn to slide 7 and touch on our key highlights for 2023 that Bond will discuss in detail in just a moment.

考慮到這一點，我想轉向幻燈片 7，談談我們 2023 年的主要亮點，邦德稍後將詳細討論這些亮點。

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 of improvement in full year 2023, marking our best year in nearly a decade.

我們的所有關鍵獲利指標（包括毛利、調整後毛利和調整後EBITDA）均實現了強勁的同比增長，其中2023 年第四季度調整後EBITDA 代表2023 年全年連續第10 個季度改善，標誌著我們表現最好的一年在近十年的時間。

The total company revenue was up 38% compared to 2022 as we executed the largest volume of products sold in the company's history. Chemistry revenues from external customers grew each quarter during the year, and we're up over 21% compared to 2022. As a result of our rapidly expanding customer base and the continued adoption of our Prescriptive Chemistry Management business model.

與 2022 年相比，公司總收入成長了 38%，因為我們銷售了公司歷史上最大的產品量。來自外部客戶的化學收入在這一年中每個季度都在增長，與 2022 年相比增長了 21% 以上。由於我們的客戶群迅速擴大以及我們的處方化學管理業務模式的持續採用。

Our customized engineering approach, combined with our proprietary complex Nanofluid technologies, continues to deliver wells that outperform adjacent competitor wells in all basis. 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.

我們的客製化工程方法與我們專有的複雜奈米流體技術相結合，繼續提供在所有基礎上都優於鄰近競爭對手油井的油井。與 2022 年相比，2023 年我們的數據分析收入強勁成長了 47%。自 2022 年以來，該細分市場基於訂閱的收入成長了 250%，這支持了我們向數據即服務業務模式發展的策略。

These subscription-based services have had a 95% annualized retention rate. We also expanded our global footprint with a successful commercial launch of our slick water 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.

這些基於訂閱的服務的年保留率為 95%。我們也透過在沙烏地阿拉伯王國成功商業推出滑水流體系統來擴大我們的全球足跡，並在阿​​布達比建立了一個新實體，以促進國際市場份額的多元化成長和利潤率擴張。

We also recently announced the addition of Amy Blakely as the newest member of our senior leadership team as our Senior Vice President General Counsel. Two will be an asset to the organization as she brings extensive sector experience, as always at a pivotal time as we look to capitalize on both organic and inorganic growth opportunities.

我們最近也宣布任命艾米·布萊克利 (Amy Blakely) 為我們高級領導團隊的最新成員，擔任我們的高級副總裁總法律顧問。兩人將成為該組織的財富，因為她帶來了豐富的行業經驗，一如既往，在我們尋求利用有機和無機成長機會的關鍵時刻。

Most importantly, all of these achievements were accomplished with zero recordable and lost time incidents in the field of operations, thus extending the current strip to over 753 days without a recordable incident. I'd 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.

最重要的是，所有這些成就都是在作戰領域實現零可記錄事件和損失時間事件的情況下完成的，從而將當前地帶的無可記錄事件時間延長到超過 753 天。我想花時間感謝我們所有的員工，感謝他們對安全和服務品質的承諾，才取得了這些出色的成果。我預計我們將在 2024 年繼續保持這一勢頭。

[They are looking at quarter], a bit more granularity, revenue was slightly down sequentially. This decrease is attributable to the fact that overall market slowdown 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 of 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.

[他們正在關注季度]，粒度更細一些，收入環比略有下降。這一下降的原因是，由於天然氣持續面臨近期定價壓力，今年上游陸上活動整體市場放緩。儘管整體鑽井和完井活動有所下降。鑑於我們圍繞差異化和互補的化學和數據技術執行策略，Flotek 的影響要小得多。為此，我們今年每季的外部化學業務收入都持續成長，第四季又成長了 10%。

More importantly, we saw a 75% increase in our reservoir centric technology sales related to complex data fluids. Furthermore, the chemistry purchase requirements contained in the long term supply agreement with pre-frac were designed to mitigate the volatility of the market and provides some insulation to Flotek operations for maintaining an economies of scale and stability.

更重要的是，我們看到與複雜資料流體相關的以油藏為中心的技術銷售額成長了 75%。此外，與預壓裂的長期供應協議中包含的化學品採購要求旨在減輕市場的波動性，並為 Flotek 營運提供一定的隔離，以保持規模經濟和穩定性。

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 remains strong. The overall expansion of the global economy will continue to create substantial demand for all forms of energy, which will increased service intensity within the sector.

我們預計以油藏為中心的國際化學收入將持續成長，這將有助於在更宏觀的層面上抵消上游完井環境放緩的不利因素，預計未來十年石油和天然氣的需求將擴大，到2045 年還需要進一步的需求。為了維持生產並增加所需的增量供應，需要對短桶週期和長桶週期進行長期投資。儘管大宗商品價格近期波動，但能源相關服務的基本面仍強勁。全球經濟的整體擴張將繼續對各種形式的能源產生大量需求，這將增加該行業的服務強度。

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.

展望 2024 年，我們的努力仍集中在收入成長、市佔率擴大和成本效率提升上，因為我們已做好充分利用國內和國際機會的準備。繼續採用我們的規範性[化學]管理來改善油藏性能。隨著新一代 JP3 測量系統的推出，釋放了重要的上游市場機會，該公司預計數據分析業務將在 2024 年成長 50%。

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.

我們相信，不斷擴大的服務組合使我們能夠提供獨特且卓越的解決方案，以最大限度地提高客戶的價值鏈。與此前景一致，我們相信對我們先進化學和數據解決方案的需求將繼續增加，並將在工業、地熱、農業、太陽能和氫等垂直市場提供新的機會。

And I'll turn the call over to Bond to provide key financial highlights.

我將把電話轉給邦德，以提供關鍵的財務亮點。

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. By [Echo] Ryan's comments on our exceptional results, and I know the entire Flotek team is proud of what has been accomplished, not only 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.

謝謝瑞安，也謝謝大家今天早上加入我們。幾乎從任何衡量標準來看，我們 2023 年的業績都非常出色。我們使公司恢復獲利，所有關鍵財務指標均顯著改善。[Echo] Ryan 對我們卓越成果的評論，我知道整個 Flotek 團隊都為所取得的成就感到自豪，不僅是 2023 年，而且是過去兩年。Flotek 的扭虧為盈執行已經建立了比一年前更強大的財務狀況，我們預計在 2024 年將繼續保持這一勢頭。

Evidencing this improvement and 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. Plus run through a handful of key financial items for the fourth quarter and full year 2023, I will be referring to slides in the presentation we posted to the website yesterday. Slide 7, highlights our accomplishments and the strong financial growth we delivered across the business. Headlined by 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.

為了證明這項改善和財務狀況，我很高興地報告，我們的 2023 年 10-K 備案將確認我們的審計師在 2022 年審計中提出的持續經營疑慮已得到解決。此外，我們預計在 2023 年 10-K 中報告，我們已經修正了去年 10-K 中揭露的內部控制缺陷。再加上 2023 年第四季和全年的一些關鍵財務項目，我將參考我們昨天發佈到網站上的簡報中的幻燈片。投影片 7 重點介紹了我們的成就以及我們在整個業務領域實現的強勁財務成長。我們業績的主要表現是，年度營收年增 5,200 萬美元，毛利年增 3,100 萬美元，調整後 EBITDA 較去年同期成長 2,800 萬美元。

As it relates to adjusted EBITDA, we reported another quarterly improvement during the fourth quarter that represents 2.5 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.

由於與調整後 EBITDA 相關，我們在第四季度報告了另一個季度改善，這代表該指標連續 2.5 年改善。更重要的是，正如 Ryan 早些時候提到的，2023 年全年調整後 EBITDA 為正，這是自 2017 年以來首次。

Turning to the income statement. As shown on slide 8, 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 fourth quarter of 2023 to the first quarter of 2023, revenue from external customers increased by 100%.

轉向損益表。如投影片 8 所示，自 2021 年以來，我們的收入實現了持續成長，2023 年化學和數據分析部門的收入均實現成長。儘管下半年北美土地竣工活動減少，但 2023 年全年收入仍較 2022 年成長 38%。年內，我們來自外部客戶的化學收入成長了 21%。不過，更令人印象深刻的是，將 2023 年第四季與 2023 年第一季相比，來自外部客戶的營收成長了 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.

除了成功發展化學業務外，我們還從數據分析領域實現了強勁增長，與 JP3 相關的收入比 2022 年增長了 47%，自 2021 年以來增長了近 90%。

Turning to slide 9. Fourth-quarter gross profit increased for the fourth consecutive quarter as we continued 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.

轉到投影片 9。由於我們持續提高業務供應鏈各個方面的效率，第四季毛利連續第四個季度成長。第四季毛利成長至 900 萬美元以上，而 2022 年同期毛虧損為 200 萬美元。我們報告 2023 年全年毛利為 2,400 萬美元，而去年毛虧損為 700 萬美元。由於該公司受益於全年實施的眾多成本改進。

Moving to slide 10. Adjusted EBITDA, 17% sequential improvement from the third quarter of 2023. As that metric totaled $4 million, as noted earlier, the 10th consecutive quarter of improvement, a streak that goes back to the second quarter of 2021.

轉到投影片 10。調整後 EBITDA，較 2023 年第三季季增 17%。如前所述，該指標總計達到 400 萬美元，這是連續 10 個季度實現成長，這一趨勢可以追溯到 2021 年第二季。

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.

SG&A 方面，第四季總計 660 萬美元，而去年第四季為 620 萬美元。2023 年全年銷售、管理及行政費用總額為 2,790 萬美元，而 2022 年全年為 2,710 萬美元。以收入百分比計算，2023 年的銷售、管理及行政費用較 2022 年下降了 500 個基點。值得注意的是，2022 年第四季和全年資料包括與應計獎金沖銷相關的 190 萬美元信貸。排除該信貸帶來的好處，23 年第四季和 23 年全年，SG&A 較 2022 年分別下降 18% 和 4%。

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 do not expect this type of volatility in our earnings going forward.

說到利潤，我們報告 2023 年第四季的淨利潤為 210 萬美元，而 2022 年第四季的淨虧損為 1900 萬美元。2023 年全年淨利為 2,470 萬美元，而 2022 年淨虧損為 4,230 萬美元。2023 年的淨利潤確實包括可轉換票據公允價值計量帶來的 3,000 萬美元非現金收益。這些票據於 2023 年到期。因此，我們預期未來獲利不會出現這種波動。

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 from.

談到資產負債表，10 月份，我們宣布 ABL 下的信貸可用性從 1,000 萬美元增加到 1,380 萬美元。截至年底，我們根據 ABL 提取了 750 萬美元，截至週一，我們提取的金額不到 100 萬美元。

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, but 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.

最後，我們計劃在 5 月的第一季業績中提供 2024 年指引。這與去年的流程是一致的。我們也發布了 2023 年第一季業績指引，但目前尚未提供正式指引。我們確實預計 2024 年每季調整後的 EBITDA 都會出現正值，這將導致該指標又一年強勁成長。

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.

最後，Flotek 繼續推動強勁、可重複的業績，專注於獲利能力。我們預計 2024 年營收將進一步成長，我們將繼續密切注意抓住一切機會降低成本，特別是 SG&A。

I'll now turn the call back over to Ryan for closing comments.

我現在將把電話轉回瑞安以徵求結束意見。

Turning to slide 17. We are 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.

轉到投影片 17。我們對 2024 年感到非常興奮，因為我們在化學和數據分析領域都擁有巨大的成長潛力。我們相信 Flotek 代表著當今極具吸引力的投資機會。我們 2023 年的業績實現了盈利，並且作為可持續化學和數據解決方案的首選合作夥伴，我們將繼續保持持續增長的地位。

I'm proud of the progress of a 2023, and I'm confident in our ability to execute going forward. We appreciate all of 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.

我對 2023 年的進展感到自豪，並對我們未來的執行能力充滿信心。我們感謝所有利害關係人的持續支持，希望您能分享我們對 Flotek 未來的興奮，我們期待報告進一步的進展。

Operator, we are now ready to take questions.

接線員，我們現在準備好回答問題。

(Operator Instructions)

（操作員說明）

Don Crist, Johnson Rice.

唐克里斯特、約翰遜賴斯。

Morning, gentlemen, [how are you all day?]

早安，先生們，【你這一天過得怎麼樣？

Morning, Don.

早安，唐。

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

我想談談JP3。顯然，您在簡報和新聞稿中都使用了大量語言。但是對於那些[試點]項目，您能否給我們一個預計的時間表，說明其中一些項目何時能夠實現以及我們何時可以預期收入增加，我知道您強調了同比 50%，但是當我們可以安排與這些事件相關的時間軸時。

Yeah, Dan, this is Ryan. When I look at it right now, the big gating factor that is bringing the the newer generation sensor alliance 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 these applications to come in line in H2 2024, and continue out to 2025 and beyond of driving a lot of that. And when you look at the application of the Quad B acquired C from the EPA or the flare gas and also some of the potential kit chain of custody measurements. A lot of those things are going to drive some unique opportunities for us. It opens up a $700 million-plus market. And [at that time] when we look at it in terms of the upstream markets.

是的，丹，這是瑞安。當我現在看到它時，一個重要的控制因素是將新一代感測器聯盟帶入商業應用，我們預計這將在上半年結束時實現。因此，我們將考慮在 2024 年下半年開始增加這些應用程式的部分收入，並持續到 2025 年及以後，以推動大部分收入的成長。當您查看從 EPA 獲取的 Quad B 的應用或火炬氣以及一些潛在的套件監管鏈測量時。其中很多事情將為我們帶來一些獨特的機會。它打開了一個價值超過 7 億美元的市場。[當時]當我們從上游市場的角度來看。

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

好的。更進一步，假設，你知道，在這裡抓住汽車的保險槓，你在感測器方​​面擁有什麼樣的製造能力來滿足潛在的需求。

Yeah, that's a great question. And I think for us, that's what we're most excited about. You know, where our capabilities now will be moving out to a probably about a 12 X improvement in manufacturing velocity. In terms of you look at what we would have traditionally moved and call you last year, we can move that less than a month now with the improved manufacturing.

是的，這是一個很好的問題。我認為對我們來說，這就是我們最興奮的事情。您知道，我們現在的能力可能會提高製造速度約 12 倍。就你而言，看看去年我們傳統上會移動並打電話給你的東西，隨著製造的改進，我們現在可以在不到一個月的時間內移動它。

So we've already got some preordered. We invested some capital upfront to go ahead and front-load these units, particularly some that we'll be using in the upstream piece, which will be on a Data as a Service model for us and would have made those capital investments up for us. 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.

所以我們已經預訂了一些。我們預先投資了一些資本來繼續並預先加載這些單元，特別是我們將在上游部分使用的一些單元，這將為我們提供數據即服務模型，並且可以為我們彌補這些資本投資。因此，我們非常興奮並相信這種製造改進以及分析儀性能的改進將為公司帶來巨大好處。

Okay. We are just one further for me, in Saudi, the opportunity on the slick water side, obviously you just introduced that there. But given their shift towards gas drilling and more kind of traditional shale drilling versus what they have done in the past, what kind of opportunity set do you think that kind of offers you as you kind of move through '24 and they get more comfortable with the technology.

好的。對我來說，在沙特，我們只是另一個機會，是滑水的機會，顯然你剛剛在那裡介紹了這一點。但考慮到他們轉向天然氣鑽探和更傳統的頁岩鑽探（與他們過去所做的相比），你認為這會為你提供什麼樣的機會，因為你會在24 年中度過，而且他們會更適應技術。

So holistically for us, you know, we've always had that presence in the international market, but I'd say it represented a not a material component of our overall revenue. But as part of our strategy of building what we call a 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 Ramco and then also we did 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, Saudi will be material to what we do on the international side of the business, it will help significantly.

因此，從整體上來說，我們在國際市場上一直佔有一席之地，但我想說，這並不代表我們整體收入的重要組成部分。但作為我們建立全循環化學品銷售策略的一部分，在國際市場擁有多元化業務對我們來說非常重要，這是我們對測試的投資，該測試花了大約18 個月的時間才獲得Ramco 的批准，然後我們也去了阿布達比。當你觀察那裡的系統時，即使在保守的基礎上，它所產生的影響也可能使我們的國際收入規模增加一倍。因此，我仍然認為，當你看看我們在那裡看到的活動時，沙烏地阿拉伯將對我們在國際業務方面所做的工作發揮重要作用，它將有很大幫助。

I appreciate the color. I'll back in queue.

我很欣賞它的顏色。我會回到隊列。

Thank you.

謝謝。

Jeff Robertson, Water Tower research.

傑夫·羅伯遜，水塔研究。

Thank you. Good morning, Ryan on the JP3, can you talk about the margins that you could realize with the Data as a Service uptake on that business?

謝謝。早安，JP3 的 Ryan，您能談談透過該業務的數據即服務的採用可以實現的利潤嗎？

And then secondly, when you're working with landowner groups on Alec 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?

其次，當您與 Alec 的土地所有者團體就生產分配進行合作時，如何讓土地所有者團體和生產者達成共識，決定 JP3 是最佳的衡量解決方案？

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 years. And what I will say is we model over onto the Data as a Service business, it does give us a 15% improvement compared to the capital sale model over a three-year time period and the return on that. So it will evolve 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, so that is a unique applications because there are thousands of wells where for this type of work, we've done an extensive amount of analysis on that.

所以那裡有一些事情。首先來看看保證金概況，我們尚未完全揭露 JP3 年的保證金概況。我要說的是，我們對數據即服務業務進行了建模，與資本銷售模型相比，在三年的時間內，它確實為我們帶來了 15% 的改進以及回報。因此，它不僅會為我們帶來經常性收入，而且會提高該部門的整體獲利能力。當您查看我們在監管鏈上所做的工作時，您會發現這是一個獨特的應用程序，因為有數千口井需要進行此類工作，我們對此進行了大量分析。

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 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 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 then begin this data every ten seconds.

因此，我們實際上正在與相當多的人合作，特別是如果您獲得一些信任，其中的一些法律組成部分實際上負責處理版稅等。作為監管鏈的一部分，這些是主要目標之一。我們的獨特之處還在於，我們與德克薩斯鐵路委員會、土地管理局和美國環保局等不同管理機構合作，圍繞我們如何管理這一問題進行合作，因為毫無疑問，當你看看他們現在如何衡量品質時，他們是使用每六到九個月採集一次的複合樣本，然後每十秒開始收集一次資料。

So it will make a significant change in the way the royalties are allocated, how payments work. So I think, you know, there will be a little bit of movement about how this goes on in particular, be it the gathering points. And with the various trusts, I think to do a lot of royalty allocations is where the first impact that we'll see will be.

因此，它將對特許權使用費的分配方式和付款方式產生重大變化。所以我認為，你知道，關於事情的具體進展，無論是聚集點，都會有一些變化。對於各種信託，我認為進行大量的特許權使用費分配是我們將看到的第一個影響。

Yeah, Jeff, I'll just 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 purchaser, first purchasers interpret the data that we're sharing and how they reconcile those two between an instantaneous continuous measurement point in terms of evaluating BTU quality versus like Ryan said, you know, 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.

是的，傑夫，我會快速添加一些內容。我認為運營商和礦主顯然會在這一點上保持一致。然後我認為衝突將發生在收集者或購買者（第一個購買者）如何解釋我們正在共享的數據以及他們如何在評估 BTU 質量方面在瞬時連續測量點之間協調這兩者而像Ryan 所說的那樣，你知道，每30 天、60 天、90 天一個樣本點，無論情況如何，他們如何協調這兩者，以確保所有利益相關者都按照其產品價值的準確金額獲得報酬。

That they have a midstream gather 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?

他們擁有中游收集，可以更準確地了解 BTU 內容的走向和方向，這難道不會使他們的處理方式更有效率嗎？

100%. And you combine that with what our transmix capabilities are it's even better from that aspect.

100%。如果將其與我們的混音功能相結合，從這方面來看會更好。

Ryan. On chemistry, you've obviously had the program 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 a any kind of a strategic alliance and maybe just a basin-centered alliance with any of the pressure pumpers?

瑞安.在化學方面，顯然，當您考慮外部化學時，您已經簽訂了計劃協議一段時間了，您是否正在尋找機會將其從交易業務轉變為更多的任何類型的戰略聯盟，以及也許只是與任何壓力幫浦建立以盆地為中心的聯盟？

[You know]. That's another good point. It is part of our overall strategy is around that collaborative intimacy with these customers. So as we began to really diversify diversify our revenue stack. I would say we have a 50-50 split between service companies and E&P operators.

[你知道]。這是另一個優點。我們整體策略的一部分是圍繞著與這些客戶的密切合作。因此，當我們開始真正實現收入來源多元化時。我想說，服務公司和勘探與生產運營商之間的比例是 50:50。

But to your point, those relationships with E&P operators becomes extremely important, when we look at our Prescriptive Chemistry Management and the what we call the external or transactional revenue stream because we do build long-term partnerships and what we're starting to see is they're becoming much stickier and performance because they are starting to realize the gains or the return investment in chemistry. And you go out and look at a lot of the public space with particularly some E&P operators. They are talking about chemistry being able to unlock additional barrels out of a reservoir on the other different type curves.

但就您而言，當我們審視我們的規範化學管理以及我​​們所說的外部或交易收入流時，與勘探與生產運營商的關係變得極其重要，因為我們確實建立了長期合作夥伴關係，而我們開始看到的是他們變得更加黏性和績效，因為他們開始意識到化學投資的利益或回報。你出去看看很多公共空間，特別是一些勘探與生產運營商。他們正在談論化學能夠在其他不同類型的曲線上從儲層中解鎖額外的桶。

So we play an essential component in that and not only bring a sustainable green technology, but also that dramatically improves reservoir performance. And so what they see is it gives us a great opportunity for less volatile and longer-standing relationships with E&P operators.

因此，我們在其中發揮著重要作用，不僅帶來了可持續的綠色技術，而且還顯著改善了油藏性能。因此，他們認為這為我們提供了一個絕佳的機會，可以與勘探與生產營運商建立更穩定、更長期的關係。

Then lastly, Ryan, do you [ultimately] you think your chemistry solutions in terms of well performance as companies drill longer laterals does that help the kind of chemistry solutions that Flotek provides in terms of driving demand, which can improve performance?

最後，Ryan，您[最終]認為，隨著公司鑽探更長的支管，您的化學解決方案在油井性能方面是否有助於 Flotek 在推動需求方面提供的化學解決方案，從而提高性能？

Well I think it all in unlock of huge opportunity because part of drilling these longer laterals, we look at well spacing. We look at overall fluids desire, for me to how they drill down the actual completion and they do all those things become extremely important even when they look at the world well more clean before they do the actual frac. So the further up the chain we get involved with our chemistry, we can match the clay control, the corrosion inhibition. The proper surfactant technology is very solid at 80 [clay employees] the multiplication.

嗯，我認為這一切都釋放了巨大的機會，因為在鑽探這些較長的支管時，我們會考慮井距。我們專注於整體流體需求，對我來說，他們如何深入實際完井，他們所做的所有這些事情都變得極其重要，即使他們在進行實際壓裂之前更清楚地看待世界。因此，我們在化學方面的參與越深入，我們就可以匹配粘土控制和腐蝕抑制。適當的界面活性劑技術在 80 個[黏土員工]的乘法下非常可靠。

So I think is 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 of doing that. And that's where I really think it opens up additional opportunity for us.

所以我認為這對我來說是一個巨大的機會，當你陷入更困難的境地時，商品化的化學方法就變得不可行。您確實必須考慮如何客製化這種化學溶液。Flotek 是這方面最好的公司。我確實認為這為我們提供了更多機會。

Thank you.

謝謝。

Thanks, gentlemen.

謝謝，先生們。

(Operator Instructions)

（操作員說明）

Eric Swergold, Firestorm Capital.

埃里克·斯沃戈爾德（Eric Swergold），Firestorm Capital。

Hi, good morning, gentlemen, and congratulations on navigating through a very difficult time with ProFrac. Can 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.

大家早安，先生們，恭喜您與 ProFrac 一起度過了非常困難的時期。您能否多談談您遠離 ProFrac 的業務以及目前存在哪些限制因素，因為您在化學方面在遠離 ProFrac 的情況下發展業務方面做得非常出色，目前哪些因素阻礙了您或者這實際上只是您可以在多少客戶面前吸引多少銷售人員的問題？謝謝。

[Morning, Eric]. 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 exited the year. We see it sitting at 45%. And we've seen growth in the Chemistry segment of the business every quarter throughout the year. More importantly, Q1 to Q4 is almost 200% growth and so for us, we're continuing to push in that terms of market share gain. I think that is a 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 that I believe the sales growth, I think we're going to continue to see it.

[早安，艾瑞克]。我認為第一，如果我們以第一季非 ProFrac 相關收入的百分比來衡量，我們的佔比分別為 24%、25%。當我們結束這一年。我們看到它佔 45%。我們看到化學業務全年每季都在成長。更重要的是，第一季到第四季幾乎成長了 200%，因此對我們來說，我們將繼續推動市場份額的成長。我認為這通常是一個稍微長一點的銷售週期，因為它涉及很多增值技術。我們實際上開始看到這種情況繼續增長。我們看到了複雜的情況，我相信銷售成長，我認為我們將繼續看到它。

I don't feel that it is -- it's not necessarily always create that this continuity piece there, but there's a multitude of advantages of what we do all 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 as significantly as we expect that 50% growth and 2024 as well. I don't think that is much of holding back. When you look at it right now, you're going to see probably a flat to down frankly, the activity in North America land.

我不認為它是——它不一定總是在那裡創造這個連續性部分，但我們所做的所有事務性部分有很多優點。我認為這一數字將持續成長到 2024 年。然後我認為 JP3 將繼續做出重大貢獻，正如我們預期的 50% 成長，到 2024 年也是如此。我不認為有什麼阻礙。當你現在看它時，坦白說，你會看到北美陸地的活動可能從持平到下降。

And what you're starting to see is the remergence of we call like Tier one customers where you see a sustained plans that are long throughout the EU and massive customers that we're pursuing right now to really get our chemistry in there to show the impact of some of these major bases. So we're actually really excited about this opportunity to meet these headwinds, offer great opportunities for good teams to navigate that wind appropriately, and it really picked up some market share.

你開始看到的是我們所說的一級客戶的重新出現，你會看到在整個歐盟範圍內長期存在的持續計劃以及我們現在正在尋求的大量客戶，以真正讓我們的化學反應在那裡展示其中一些主要基地的影響。因此，我們實際上對這個應對這些逆風的機會感到非常興奮，為優秀的團隊提供了很好的機會來適當地駕馭這種風，並且它確實獲得了一些市場份額。

Thank you.

謝謝。

Jeff Robertson, Water Tower Research.

傑夫·羅伯遜，水塔研究。

Thanks. Just to follow up Bond, with the material weakness eliminated from the 10-K and the expectation positive adjusted EBITDA throughout 2024. Is 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?

謝謝。只是為了跟進 Bond，10-K 中的實質弱點已經消除，並且 2024 年預期調整後的 EBITDA 為正值。這是更好的財務狀況和更好的流動性嗎？當您審視眼前的商機時，這是否會促進您與客戶和潛在合作夥伴之間的 Flotek 商業討論？

So really, without a doubt, I mean, maybe 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 it's more important. We're certainly glad to have put both of them behind us, but having the going concern behind us and having our auditors agree that to 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 of suppliers and customers.

所以，毫無疑問，我的意思是，也許與人們交談後，你就可以在公開文件中找到持續經營的語言。我認為這會造成一些焦慮。因此，我認為擁有這些材料——持續經營更重要。我們當然很高興將他們倆拋在腦後，但將持續經營放在我們身後，並讓我們的審計師同意公司的財務前景比去年這個時候穩定得多，這肯定是一個好處，因為我們協商供應商和客戶的回扣和各種項目。

Thank you. Thanks for taking my follow-up.

謝謝。感謝您接受我的跟進。

(Operator Instructions)

（操作員說明）

Richard Rudgley, Glenbrook.

理查德·魯德利，格倫布魯克。

Hi, guys. Just a quick question really given how strong your EBITDA is and your strategies playing out and you're obviously protecting 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 at offshore, maybe before today about 20% plus and so your below book I just wondered if you'd consider or have been considering at least a modest stock buyback? Thank you.

嗨，大家好。只是一個簡單的問題，考慮到您的 EBITDA 有多強以及您的策略正在發揮作用，而且正如我所聽到的，您顯然在保護樂觀情緒。顯然，與此同時，該股票在市場上確實沒有升值，我的意思是，它在離岸市場下跌，也許在今天之前下跌了20% 以上，所以你下面的書我只是想知道你是否會考慮或有是否正在考慮至少進行適度的股票回購？謝謝。

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 the last 12 months. You could argue 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 shareholders at this point in time, probably not a bad 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 buyback shares.

謝謝你的提問，理查德。不，現在不行。我的意思是，當你看看我們在公司所做的事情時，至少在過去 12 個月裡。你可能會說，過去 24 個月實際上是為了穩定業務並使其走上盈利之路。正如我們所說，我們感覺我們已經渡過了難關，當然在這方面。但由於它涉及回購股票或其他項目以在此時向股東返還現金，就公司而言可能不是一個糟糕的成熟週期，當然我們希望在短期內實現這一點。但當我們今天坐在這裡時，我們沒有任何回購股票的計劃。

Okay, understood. Thank you.

好的，明白了。謝謝。

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

謝謝。埃澤爾先生，目前看來我們沒有其他問題了。請繼續，先生。

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 PM Pacific time, and we've joined ball bonding hosting one-on-one meetings with investors during the conference. We look forward to seeing you at the conference next week. And thanks again, for joining us today.

好的。我想提醒您，Flotek 將於下週參加在加州達納角麗思卡爾頓酒店舉行的第 36 屆 ROTH 年度會議。我將參加太平洋時間 3 月 18 日星期一下午 1 點舉行的油田服務小組討論，我們在會議期間與投資者舉行了一對一會議。我們期待在下週的會議上見到您。再次感謝您今天加入我們。

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 and have a good day.

謝謝你，先生。女士們、先生們，今天的電話會議到此結束。再次感謝您的出席，此時，我們懇請您掛斷電話，祝您有美好的一天。