Flotek Acquires Innovative Mobile Power Generation Assets and Secures Multi-Year Lease Providing $160 Million Revenue Backlog and Immediate Earnings Accretion

Rhea-AI Summary

Flotek has acquired power generation assets from ProFrac GDM for $105 million, marking a strategic expansion into the mobile power generation sector. The deal includes a six-year dry lease agreement providing $160 million in revenue backlog.

Key transaction details:

• Purchase includes digitally enhanced mobile natural gas conditioning and distribution units
• 22 assets will begin service immediately, with 8 more units planned for late 2025
• Expected to generate $14 million in rental revenue for 2025
• Annual revenue projected at $27.4 million starting 2026

The $105 million purchase is funded through:

• $17.6 million offset from 2024 order shortfall payments
• $40.2 million in equity via warrant for 6 million Flotek shares
• $40 million secured promissory note at 10% interest

This acquisition leverages Flotek's measurement technology for remote power generation applications, expanding their Data Analytics segment with a projected 60% revenue increase compared to 2024.

Positive

• $160 million revenue backlog secured through multi-year lease agreement
• Immediate earnings accretion expected from the acquisition
• $27.4 million annual revenue expected from 2026, exceeding current total adjusted EBITDA
• 60% increase in Data Analytics segment revenue compared to 2024
• Expansion into growing mobile power generation sector with 30 total units
• Diversification of revenue streams beyond oil and gas sector
• High-margin rental revenue of $14 million expected in 2025

Negative

• $105 million acquisition cost creating significant debt burden
• Additional shareholder dilution through 6 million share warrant issuance
• $40 million secured promissory note with 10% annual interest rate
• Dependency on ProFrac as main customer for lease agreement
• Requires shareholder approval for warrant conversion by July 2025

Insights

Financial Analyst

Flotek's $105M acquisition creates substantial new revenue stream while expanding into growth market with promising margin profile.

This $105 million acquisition represents a strategic pivot for Flotek, establishing an immediate foothold in the high-growth mobile power generation sector. The transaction structure reveals a carefully balanced approach to financing, using a blend of equity ($40.2 million via warrants for 6 million shares), debt ($40 million secured note at 10% interest), and creative utilization of existing payment obligations ($17.6 million offset from order shortfall payments).

The financial impact appears substantial relative to Flotek's current operations. The lease agreement is projected to generate $14 million in high-margin rental revenue during 2025, representing a 60% increase in Data Analytics segment revenue compared to 2024. More impressively, beginning in 2026, the annual revenue under this agreement is expected to reach $27.4 million with segment operating income projected to exceed Flotek's entire 2024 adjusted EBITDA.

This transaction transforms Flotek's revenue profile by significantly increasing the proportion of recurring, high-margin income - typically valued more favorably by markets than transactional revenue. The fixed-rate structure of the lease (for the first five years) provides revenue predictability while the immediate deployment of 22 assets ensures near-term income recognition with additional upside from 8 more units later in 2025.

For ProFrac, the transaction provides enhanced "financial flexibility" while maintaining access to the assets through the lease arrangement, suggesting a mutually beneficial structure that strengthens an already established business relationship between the companies.

Energy Technology Analyst

Flotek leverages measurement expertise into power generation, creating turnkey gas conditioning solutions for multiple industries beyond oil and gas.

This acquisition provides Flotek with sophisticated mobile natural gas conditioning and distribution technology featuring integrated real-time monitoring capabilities. These digital assets enable precise gas quality assurance for remote power applications - a critical requirement where consistent fuel quality directly impacts operational reliability and equipment longevity.

The technical synergy between Flotek's existing measurement expertise and these assets creates a comprehensive solution addressing key challenges in remote power generation. By conditioning natural gas and providing real-time quality verification, the technology helps optimize dual-fuel operations while ensuring regulatory compliance through accurate custody transfer measurements.

Strategically, this represents implementation of Flotek's "Measure More" initiative, extending their measurement technology beyond traditional oilfield applications into broader industrial settings. The technology has applications across diverse markets utilizing behind-the-meter power generation, significantly expanding Flotek's addressable market.

The immediate deployment of 22 operational units with 8 more planned later in 2025 indicates commercial readiness. The structured six-year lease arrangement provides Flotek with stable revenue while they develop additional markets for this technology platform. This technology acquisition creates a scalable foundation for offering new products and services to customers in this rapidly growing market segment.

HOUSTON, April 28, 2025 /PRNewswire/ -- Flotek Industries, Inc. ("Flotek") (NYSE: FTK) and ProFrac Holding Corp. (NASDAQ: ACDC) ("ProFrac") today jointly announced Flotek's acquisition of power generation assets and related intellectual property (the "Acquired Assets") from ProFrac GDM, LLC ("ProFrac GDM"), a subsidiary of ProFrac, for $105 million. Flotek concurrently entered into an agreement for a six-year dry lease of the Acquired Assets with ProFrac GDM (the "Lease Agreement").

The Acquired Assets include digitally enhanced mobile natural gas conditioning and distribution units providing real-time gas monitoring and dual fuel optimization for remote, behind-the-meter power generation with applications across multiple markets. With this acquisition, Flotek offers a turnkey solution, leveraging its real-time measurement technology to treat and optimize fuels used in remote power generation applications. The Lease Agreement provides for fixed rates during the first five years, and prevailing market rates during the sixth year. Twenty-two assets will be placed into rental service immediately and 8 additional units are expected to be added throughout the second half of 2025.

Ryan Ezell, Flotek's Chief Executive Officer, said, "We are pleased to announce these transformative agreements, providing us with an entry point to the rapidly growing mobile power generation sector. Our innovative, real-time measurement technologies are integrated into the Acquired Assets, safeguarding critical power generation fleets and measuring fuels for custody transfer. Importantly, we believe these transactions provide stable cash flow attributable to our high-growth Data Analytics segment and will be accretive to our shareholders while honoring our commitment to maintaining a low leverage profile."

"These transactions represent an evolutionary step forward in our business relationship with Flotek," said Matt Wilks, Executive Chairman of ProFrac. "By leveraging cutting-edge intellectual property, these asset integrity management solutions provide industry-leading gas quality assurance capabilities to customers while providing a platform for future growth as we partner with Flotek to explore applications of this technology across other industry verticals. Importantly, these transactions strengthen our financial flexibility and our ability to optimally manage our purchase obligations under the Chemicals Supply Agreement in place with Flotek."

Highlights:

• Expansion of Data Analytics Segment into Mobile Power Generation: The acquisition leverages Flotek's proprietary technology to provide a turnkey solution for not only the oil and gas sector but also for diversified end-markets utilizing behind-the-meter power generation solutions, consistent with Flotek's "Measure More" strategy.
• Rapid Growth of Data Analytics Segment: The Lease Agreement is expected to deliver approximately $14 million in high-margin rental revenue to Flotek during 2025, representing a 60% increase in segment revenue, as compared to 2024. Beginning in 2026, annual revenue under the Lease Agreement is expected to total $27.4 million generating segment operating income estimated to exceed Flotek's total adjusted EBITDA⁽¹⁾ in 2024.
• Sales Growth Opportunity: The acquisition and expansion into remote power generation provides a scalable platform to offer new products and services to additional customers in this fast-growing market.

Financing Overview

Consideration for the transactions totals $105 million comprised of the following (and as described more fully in Flotek's April 28, 2025 Form 8-K filing with the Securities and Exchange Commission):

• $17.6 million funded by offsetting $17.6 million from the 2024 order shortfall payments (the "OSP") due from ProFrac Services, LLC;
• $40.2 million of equity, issued to ProFrac in the form of a warrant to purchase 6 million Flotek shares, valued on a 10-day volume weighted average price of the company's stock as of close of market on April 16, 2025. Flotek plans to have a special shareholder meeting to approve the issuance of the shares to convert the warrant before the end of July 2025;
• $40 million secured promissory note with a five-year term, bearing interest at an annual rate of 10%; and
• The balance of the consideration will be satisfied by offsetting future potential OSP against the purchase price.

The transactions were approved by a Special Committee of the Board of Directors of Flotek consisting solely of independent directors. Lazard acted as exclusive financial advisor and King & Spalding acted as exclusive legal advisor to the Special Committee. Piper Sandler acted as exclusive financial advisor and Brown Rudnick acted as exclusive legal advisor to ProFrac.

(1)	A non-GAAP financial measure.  See Flotek's reconciliation of this metric to the most comparable GAAP measure in Flotek's Current Report on Form 8-K with respect to Flotek's full year 2024 earnings announcement, filed with the Securities and Exchange Commission on March 10, 2025.

Conference Call Details

Flotek plans to discuss the transactions in more detail in connection with its earnings conference call on Wednesday, May 7, 2025, at 9:00 a.m. CST (10:00 a.m. EST).

Participants may access the call through Flotek's website at www.flotekind.com under "News and Events" within the Investor Relations section, by telephone toll free at 1-800-836-8184 (international toll: 1-646-357-8785), or by using the following link to access the audience view of the webcast at https://app.webinar.net/KGZnYV43MXw approximately five minutes prior to the start of the call. Following the conclusion of the conference call, a recording of the call will be available on Flotek's website.

About Flotek Industries, Inc.

Flotek Industries, Inc. is a leading chemistry and data technology company focused on servicing the Energy industry. The company's top tier technologies leverage real-time data to deliver innovative solutions to maximize customer returns. Flotek has an intellectual property portfolio of over 130 patents, 20+ years of field and laboratory data, and a global presence in more than 59 countries.

Flotek has established collaborative partnerships focused on sustainable and optimized chemistry and data solutions, aiming to reduce the environmental impact of energy on land, air, water and people.

Flotek is based in Houston, Texas and its common shares are traded on the New York Stock Exchange under the ticker symbol "FTK." For additional information, please visit www.flotekind.com.

About ProFrac Holding Corp.

ProFrac Holding Corp. is a technology-focused, vertically integrated and innovation-driven energy services holding company providing hydraulic fracturing, proppant production, related completion services and complementary products and services to leading upstream oil and natural gas companies engaged in the exploration and production ("E&P") of North American unconventional oil and natural gas resources. ProFrac operates through three business segments: Stimulation Services, Proppant Production and Manufacturing, in addition to Other Business Activities. For more information, please visit ProFrac's website at www.PFHoldingsCorp.com.

Forward-Looking Statements

Certain statements set forth in this press release constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). These forward-looking statements include, without limitation, statements regarding Flotek's and ProFrac's business, financial condition, results of operations and prospects, as well as statements regarding expected timing and anticipated benefits of the transactions described herein to each Flotek and ProFrac. Words such as will, continue, expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this press release. Although forward-looking statements in this press release reflect the good faith judgment of the companies' management, such statements can only be based on facts and factors currently known to such management. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Such risks include, without limitation, risks relating to each Flotek and ProFrac achieving the anticipated benefits of the transactions described herein. Further information about the risks and uncertainties that may impact Flotek and/or ProFrac are set forth in their respective most recent filings with the Securities and Exchange Commission on Form 10-K (including, without limitation, in the "Risk Factors" section thereof), and in Flotek's and/or ProFrac's other SEC filings and publicly available documents. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Flotek and ProFrac neither jointly nor individually undertake any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this press release.

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SOURCE Flotek Industries, Inc.

FAQ

How much revenue will Flotek (FTK) generate from the ProFrac power generation lease agreement?

Flotek will generate $14 million in rental revenue in 2025 and $27.4 million annually starting in 2026 from the six-year lease agreement with ProFrac GDM.

What assets did Flotek (FTK) acquire from ProFrac for $105 million in April 2025?

Flotek acquired mobile power generation assets and intellectual property, including digitally enhanced natural gas conditioning and distribution units with real-time monitoring capabilities for remote power generation.

How is Flotek (FTK) financing the $105 million power generation asset purchase?

Flotek is financing the purchase through $17.6 million in offset payments, $40.2 million in equity warrants for 6 million shares, a $40 million secured promissory note, and future offset payments.

What is the impact of the ProFrac power deal on Flotek's (FTK) Data Analytics segment?

The deal will increase Flotek's Data Analytics segment revenue by 60% compared to 2024, with 2026 segment operating income expected to exceed Flotek's total adjusted EBITDA from 2024.

How many power generation units will Flotek (FTK) lease to ProFrac in 2025?

Flotek will immediately lease 22 power generation units to ProFrac, with 8 additional units planned to be added in the second half of 2025, totaling 30 units.