FTK - Earnings call transcript Q1 2018 | Flotek Industries, Inc.

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Operator

Good morning, and welcome to the Flotek Industries Incorporated First Quarter 2018 Earnings Conference Call. [Operator Instructions]. This conference is being recorded. At this time, I would like to turn the conference over to Matt Marietta, Flotek's Executive Vice President of Finance and Corporate Development. Mr. begin. may you Marietta,

Matthew Marietta

good behalf and team. the morning you, of on Flotek Thank

Officer; Executive me Chisholm, of our Rich team. Executive Accounting John morning Operations Walton, Josh Chairman, Chief Joining other are leadership Chief as Flotek's well this members our President Vice and President as and our and Head Snively, of Officer;

is Flotek website. the earnings release press on was Our distributed available yesterday afternoon and

website. a In addition, replay and today's on available webcast, call will our is be being

discuss to forward-looking discussed forward-looking actual matters means These are identifying but John over Securities metrics. uncertainties of risks XX-K identify Form These from statements call not filings, provided views, would like made we statements. exclusive risks differ remind our such statements begin of remarks, may I Section could of impact some with to release words an expectations XXA their and With comments Exchange comments Before events and our during cause the the believes, performance. XXXX anticipates, that reconciliations forward-looking including the results and within that please variations on future of or Section in such that, our Flotek's other statements. are turn XXE to the call, and Act may Exchange Securities to this of non-GAAP involve Flotek's the of formal to participants forward-looking intended press Also, are XXXX about potential Securities Act such expressions or estimates management as and of and our the U.S. I'll refer Commission. plans, of meaning in constitute Chisholm. as earnings Words similar expects, reflecting applicable our statutes

John Chisholm

overview. by headquarters our update who thank then review, you followed outlook. in financial call for some here for and provide And Thank Houston, Center operational Innovation hosted an provide a on from will you, Josh and introductory then today's I'll remarks Texas. Matt our Rich with financial will Global Research begin Matt, joining an improvements and all

thoughts first company. prices for Finally, your effort at the for thank persistence period with challenging I'd for oil taking Flotek a but employees multi-year stakeholders and all their our evolving I'll Crude closing during questions. their high. end this to are before like the

the However, effects did quarter, to a We a of immune of the sand sequential has industry energy on events. phase reported month-over-month discipline. were we entered the supply, bottlenecks capital logistic the see companies during into revenue quarter. weather, In have numerous first and and not those improvement

below However, internal current run remains our targets. rate our

more for flow. new and has progression. call what more in intro the is more and drivers the will and or So shortages basin companies is stages challenges still early supplied truck of products, are what continue we sand cash become continuing By of workers disaggregate to decouple Chemistry persist. some sources being will finding time the as the new operating of frontier unconventional technology in

This driven models. supply is within in pushed operators distribution decoupling evidenced by chemicals. sand and completions, have years as diesel, as markets creating the now and they to Just drilling trend chain now ago, decouple friction legacy

sustained clients the market are has solutions production model business also past less prescribe our chemistry this been Our positioning improved many times, cash through as initial than in ideally uplift. accelerating suited pumped chemistry for for flow we shifting what in while and

run our can which technical an we on control what example to is rate. compromising operations continue our SG&A total control, chemistry can of later on in Josh streamlining call. delivering clients our impactful our innovation, which while on what the elaborate will focused We An be to not experience we is and

creating a is $XX annualized structural efficient organization. million a than cost changes representing effective quarter, reduction. down These more This year-over-year, are SG&A and our XX% more

consistently to a The at multi-decade again, both execute the due to stability continues extremely market well but experience purchasing ECT current citrus our which high segment. tight, helps segment our provides for the operations of positioned volatility is segments. level, we are CICT counterbalance of in that Our Florida strategies, in the

and that to continue invest We Flavors our and will domestically products with growth will have opportunities in our markets reflect expenditures capital in Fragrances, both and new internationally. confidence and

is as from continue state becoming of Although directly a just the financial connected steady to a being us needs to turn supplier will provide I'll meet over Walton financial to of position requests and to strong Rich predicting review our timing a it enable we activity of evolve our key challenging, chemistry value-creating clients' to partners. now our information. and

Richar Walton

its filed period Exchange with XX-Q the and the Flotek Commission afternoon. yesterday U.S. March John. you, XXXX Securities for ended quarterly Thank Form XX,

quarter, the of to million quarterly million total million decreased the quarterly period a and sequential $XX XX.X% $XX.X period, of we reported or XX.X% compared declined revenue sequential For prior Chemistry the year down XX.X%. prior $XX a revenue or Energy million compared on was On basis, in with $XX.X year a XX.X%. revenue basis. decrease

to Our period X.X% revenue quarterly the Consumer compared Industrial and sequential Chemistry increased year and basis. XX% prior increased segment on a

XXXX, first operations a loss from of the we of reported For $X.X quarter million.

negative and and For a segment general and in the segment. quarter The XX.X% XX.X% for Industrial were expense year was positive compared $X.X or operating a period. million $X.X the administrative Consumer was Chemistry X.X% the Corporate the XX.X%. consolidated in the Energy prior decrease of segment quarter, to operating a million, negative margin a margins Chemistry

in was compared initiatives. selling Segment quarter XX% was percentage of $X a to administrative Noncash expense Our $X.X prior and $X.X revenue. revenue to during quarter million, the continued million of first of Segment a corporate administrative period. as quarter. decrease of selling for and our as first quarter million we the year XXXX was G&A during compensation first first XX.X% the was progress cost-reduction or percentage of the a the expense as XX.X% XXXX

in the $X.X period year same For the from ago. million expense quarter, was research down $X.X and development a million,

XX, income XX, of differ changes the operations of of quarter the on working increase quarter a million continuing the facility. fully $X.X and XX, For representing first net undrawn X%. first of share to availability and was Tax the $XX.X XXXX, or was at revenue end XX, of income $X.X million fund borrowing accounts net under $XX net of XX, interpretations revolving operating amounts of the benefit Act needs of recorded million fund approximately to March company in per in of receivable the guidance loss recorded for company of of from $XX.X XXXX. million under in the operations $XX.X an to in and At $X.X days. quarter increased from revolving reported may March million impact XXXX. accounts inventories regulatory of cash X.X% No $XX.X the receivable had totaled of At XXXX, negative $XX.X XX XX, changes the credit million. continuing XXXX XXXX, million, The first representing XX, of ultimate March At of a XXXX million the March by the is $X.X there per our This million because XXXX, legislation. $X.X diluted basis. additional XXXX. receivable At compares December of of on The $X.XX first an basis. tax at was doubtful XX, December balance. XXXX, during fully Debt income million diluted share flow at days a quarter. first At compared XXXX, March loss capital the for million At to quarter were XXXX, a million $X.XX the reported accounts credit compared allowance of Flotek March facility quarter $XX.X from to our

our full Form of results. million. our turn expenditures And first During to quarter now. I Matt were the provides to are call some the executing XXXX, first disclosures address XX-Q initiatives financial of quarter we now capital that over will $X.X The of XXXX

Matthew Marietta

you, first and We tirelessly performance so. believe quarter are can I like Thank to the and ECT level at first do a of in to our we execute in should reiterate XXXX. disappointment segment working Rich. our higher would

of core remains the place the on into our we focus of what initiative, SG&A controlling aggressively tenets put in One XXXX. which we on can late

quarter on relative benchmark. of to targets third buckets X Our XXXX quarter conference out fourth third key we our a year, in last series -- laid call quarter our

committed have declined executive they Since to salaries, than more reducing at least we incentives then, period. from First, XX%. and that benefits XX% by

absolute by basis. Secondly, on down expense per an accounts a and and were per-employee XX% to XX% person or targeted since on XX% declined has be basis more

have eliminated in goal reduction category. from, fees, of including beating our by contract we professional a XX% variety labor, XX% that Finally,

XX% decreased below our of embracing by and our has not make this employees possible, identify further have of continue a internal to our our upon areas SG&A yielded target. for targeted fronts first without $XX.X more quarter on these We targets business XXXX, approach look been I the strategy thank year-over-year we to but going will will slash-and-burn than and where be our initiative improvements, XX% was to the to has than that and To results. clear, sacrificing more forward. million want executing In a it. maintain this growth controls, and cash exceeded

a into maintain discipline this going streamlined perspective will efficient have of and an We level more from organization forward. spending Flotek SG&A

quarter of flexibility. long-standing constant our our continue supportive within covenants financial and to were have are the lenders relationship. to liquidity first a with and we that and will and ensure protect work and We proactive discussions compliance very in financial in We our

possible, to performance. This sales outstanding, where and, to focusing our are in inventory our improve ways on turnover our payables. We day cash improvements also includes

financial turnover should days. annually able under on DSOs those we greater within, guidance and than X.Xx metrics, to operate KPI will some inventory we an are provide While targets not XX that ratio be

plan CapEx segment, $X $XX Additionally, million shifts challenges of rapid we faced. to for lowered to ECT to our we have and guidance It difficult a $XX in from have remains million, dynamics operational to currently offer top XXXX line number $XX million. market our given million

that allocating on are and believe sales from over to this strategy teams show resources We progress marketing time. and strengthen will front teamwork different cross-department our

the we provide in do our for of from guidance at PCM, faced. will patience a have With shareholders, position challenges given Management, activities, of we be We stronger or expansion ask to a later we Prescriptive Chemistry the date. believe multitude our

quarter the right confident to ECT organization, for a be As would overcome we will to we keep the And first. for improvement expectation way. But these as we it moderate That be progress do that it the are that done will may now, show while is categorize it said, to very not obstacles. in grounded. fair believe segment our immediate, second we relative an expectations

CICT press perform we as yesterday in stated planned. continues segment to our As our afternoon, release have

both single-digit we low increase basis mid-teen revenues quarter, in year-over-year a a percent margin. expect and and second the targeting For sequential on EBITDA are a

to continue foresee marketing a even we our SG&A we as improvements update process sales costs resources and now and reductions make, do who provide organization operations. to cost to turn our effort I'll the focuses Given our into significant sales and on and Josh, the increase call not more substantially an strategies. will our

Joshua Snively

thereby to of of our off specify In following impacted equipment in results. their system Matt. result XXXX, operators you, ability energy These their first as a tight negatively well completions. the to limited in cold causing sand in Thank soft activity got icy slow availability of the their consumables business preferred remained frac December frac limiting which prioritize a start our roads, of delivery weather chemistries. our first Overall, quarter schedules a designs, to and very completion and over quarter, dynamics and the fluid their January

levels However, as increased period. throughout gradually our activity progressed, the quarter the

Our best-in-class business our field for to from delivering evolve our chemistries traditional chemistry a manufacturing manufacturing to developing, and continued the to clients. operation

is QC the field customized are the increasing We is and -- meet activities. demand PCM, aligned on-site or fluid to with our analysis, application QA assets in To Our provide with partners delivery fluid, PCM operators. Management, full-fluid systems needs. Prescriptive in clients' field adding for adjustments currently we that offering, geologic our real-time reservoir, scale optimized and us personnel platform prescribe better line provide growing chemistry Chemistry as better aligning conduct for and will

efficiencies. complete are well further with crews mobile will these chemists to our fluid To Monahans. tanks capabilities evolving a requiring for tanks field in added chemistry facility our lab to This base. long diagnostics. interest and support additional in as our trailer and to X in and solutions blending our of efforts, Optimizing operations and our customer the in real-time drivers market expanded Our channel the time align system run, market and our shift to number we and will modest, Marlow the broaden will deliveries only field continue field better improve Waller will but, provide as required take

PCM forward, for we demand see grow. to our look we platform continuing As

to of team our proactively research and clients. the listening innovations Additionally, is our needs

chemistries ultimate returns systems We that new fluid operations. of we chemistry our are goal developing release for to our months, our collaboratively earlier of customized the to challenges To and address year growth contribute of range their this three us that highlighted in improving believe geologic introduction CATXXX. with Max price MicroSolv, and and we press will solutions enable StimLube These wider end, points. products RheoFlo a in clients' coming cash the

continue In chemistries, provide to new addition products these outperform and the differentiated superior to market value. our legacy

of we and to innings and still improving new acidizing line various potential finding product for are our In we technology. the oil needs. believe We in recovery waterflooding, injection wells, from market early chemical flagship applications improved our production for CnF are enhanced to short,

and greater as strategy marketing evolve continues market disruption. sales Our to drives the

continues initiated our to direct communication expand interactions, customer were designed quarter opportunities. during expand incentives organization commercial and and sales client to the our new Our broaden

Our CICT business high executed during level at the quarter. a

our We well continue to as for terpene strong experience as flavor our citrus chemistries natural molecules. demand

online came our our January, ability diversification column molecule distillation and debottlenecking in potential. new enhancing creation long-term Our

continues supply Asia products be in grapefruit as demand high. remain short a is presence promising to Our in and

greening remain meet inventory internal our we to citrus well on continues a positioned to and concern, demand. external While be

season. crop yesterday boxes, watch be inventory boxes closely will will as We next that our from million we season XXX levels million learned last Brazil's down XXX for

we crop, with foresight pleased the had Given management. Hurricane supply this Irma current the impact Irma's of our are new chain on revelation and

have. being to out, continue market Looking as into to do more, flavors other the We're expand need the pulled and specifically grapefruit as lemon we the we citrus cultivar other we to see for demands respond of varietals, and to well opportunities options will meet clients.

across and which our We are to ECT continue focused practices. efficiencies we segments, on operational both best CICT improving and share integrate

that on-site We client our improve have will implemented and new field delivery IT management. billings solutions inventory

expanding We a in better reflect for more with These team our should smarter and Houston fulfillment organization operations are make faster client and communication. response internal in information. our to also client allow decisions efforts

the we quarter, pleased progress our with are and to the not level. cash performance are EBITDA We managing date. the business controls we and we flow are our pleased but Again, made cost at with for have

deliver pace keep listening our that and clients, cadence competition at our to will are a We cannot we with.

performance ability technologies, will to go concluding back delivery Our I'll our service to but have clients to With that, at broader deeper to we our our we operationally, made and all, -- remarks. chemistry portfolio, turn field plan. proven result to more engage a field progress on delivery offer have further level in it John success. In execute

John Chisholm

Thanks, Josh. Appreciate the effort.

would questions, like to add concluding Before I some we thoughts. take

to both flow market operators being by clients' Chemistry in while companies. continue recognize and anticipate positioned, Industries grow our well Prescriptive are what their the been values. value Despite expected disrupted and remains platform Our operationally, the Management the traditional as financially issues in products our enhancing have is technology for to and that evolving decades operating we Flotek have cash faced needs we quarter, asset first as channels

discrete leading simply become a in accelerating alike This showing have efforts X and/or companies to our with resulted that technical our involved case elevate XXX marketing In beyond value and that released We performance. awareness chemicals. clients' we operators selling we to production our for alone, explore increased continued over reservoir our ability demonstration additional this service technical economic cash clients. study to of wells, ways expand connected quarter is positively of studies influence the flow partnership to and can

Flotek these the full prescribed And year call, providing this that and call, As last weather I chemistry. that on of we XXXX on focused discussed volatility. dynamics positioned we XXX% are custom with is shifting the noted has first our have periods during to

highest-return We downturns transformation now this I've meaningfully years time of our wells, is days, of industry, weeks in core We have that have many that always, agree seen can I've a my position plan, has to improvement Matt in that I all the to sound so never supply impacted that In discussed, financial a been the the the drilling side of from it side. model drilling question. that the capital we happening of in or shareholders' lost was flexible you increasing that But disruptiveness efficiency in this. a on and and positioned majority during level operators, the and part is years track. now. now the our invest for as areas. for down without can, industry early business without ago our a expanding the complete to flipped and to you have And cost cost self-source about or ingredients that we the where they combine ratio X desire the and and what well company chain When are of, to stages a completion functionality with that is drill disruptive of XX-plus with

was We and industry us I all that the remain believe and weeks so outcome are starts to asked a a people. I replied will optimistic leadership faced, challenges of just mission. it would evolves. and provide I a organization we on from value despite share as the in I how ago. story for are confident we the They has the all with the our like couple quick

that Beyond our Flotek value role. you thank how downturn of a our clients support play reflect a their worst and particular, segment few, of able into has call just perspective questions. put hurricanes, With would how like will and into name are patience. and employees, the you and impactful past that, the called that for technology will stakeholders to shareholders, closing, the people, I and operator, continued an the we if transforming greening citrus humbly and scrutiny back and chemistry just weathering step now ever, question and open to In be take in to minute about optimistic to this is such third-party

Operator

Instructions]. [Operator

question comes from line first of Johnson Venturatos Our from the Rice. Georg

Georg Venturatos

a AFEs of about MicroSolv that generally but applications well those line within talked maybe and or could we've -- guys cost John, and some products quickly we that about appreciate improvement just on you of I And X expectation? new think particular. how visibility, in expectations? But I there XQ, And of see quarter probably talked operators focused the channels addressing those for how speaking, controls. you out top mention new as quarter-over-quarter, start to maybe to expect lack impact much to are a look just and moderate that you have embedded

John Chisholm

I'm over to of specifically, products Sure. kind talk you won't that will we with he's going turn of in sales And general really a dialed give the Josh. and flavor. to while group kind

Joshua Snively

the at a products, on introduction. of to X on you're months really, product a looking Georg, minimum new typical X

and of that So take the just really guidance and think it you. of of time, provided Matt basis the does that's caution April. released I to the on was some in MicroSolv

will toward pick CAT. the true to and product say Max and We'll effects then of expect in for as QX I see would StimLube same end the as volumes -- the holds we that the up that well of So as quarter. RheoFlo pumping, start the QX. move we we forward

introduce Most companies So new when do it takes testing. test like to time chemistries. those They chemistry. compatibility you

line But it performance very feel initiatives long-term brings about diversification specific results and want a to cost as way of clients meet well what before criteria. trial. purchases. to see the they have we the commit as in to They of their good field typically do to that You the

Georg Venturatos

give-and-take, highest perspective, mix helpful. from on front, there's same then, right, obviously a CnF -- we the should But that's guess, I margin. vein, And in margin Okay, some that shift there pretty well. MicroSolv's out competitive margins how in kind we anticipate like shaking just into that should just mean, sounds I just generally overall 'XX, progress as speaking? we ECT it as of

Joshua Snively

little price lot at asking are carry do what you service points. the services. for adding look might bit you The lower margins we different than as Those forward be a what see components traditional to products of and of themselves we're when our operators PCM, the those CnFs. think I the Yes, will us growth in industry a going of ECT

about be activities that on So how as product little up formulations, you and bit feel the But combine service those margins the costs those with good we and gross the EBITDA line. leaner point. margin a we're from line might the managing

Georg Venturatos

capital makes here, guys Obviously, hit. sheet you wanted leverage inventory but hit in saw you balance I Okay, maintain the buildup and on QX sense. to the working side. modest the

You half the in mentioned the some of inventory year. buys further first

And anticipate, put the talk maybe on Just you see revolver. could in that. wanted lenders, early terms expansion conversations to with of at a least potential the what about on also then you if magnitude in

John Chisholm

a then I'll but take quite of chain. timing some question our has the Yes, we're today, can to maybe we don't firm is update in for have that with inventory part We what time. and being supply second a the say communicating very let there speak Josh from relationship proactive been purchase This lender.

concern to do nature. relationship don't some are eliminate that that to or our future on or the we from facility And expect things borrowings here. to we anticipate need of any I of We the increase continue. size things there probably covenants can

what to expect on the release working of I seasonal back maybe of year half Last and the inventory. let the funding to our you substantially a the purchases you've elaborate timing saw due this sources. that year. think the be factors And the the is I'll sheet year, capital Josh in of don't on balance seen accounts. I largely the different of inventory of

Joshua Snively

overall QX, was good our their short back Yes, year. a off very such of from deliveries of us Brazil given the as our as certainly into issues crop Florida in year, moderate in shift really inventory which given and move good They've, South their end coming season. crop positioned is led start that the I for in, XXX that Georg, to those for came in the we and million prior next in a the forward. mentioned finished start the had inventory as We into box very script, largely QX America we coming with build. we But this and had The just to in well has turn that is Central crop, Those move should that QX America, increasing market news supply QX. should dynamics. inventory see forward

Operator

[Operator Instructions].

comes John line Barrow, of Hanley. the Harloe from question with next Our

John Harloe

different has talk We're the analysis need I our seem a It noticed through. on replacing there's more Okay. requirement would in the the Lewis directors. by that almost of it outlook And read the age One I couple is side. we particularly management portfolio like, is board becoming I'm this and to the maybe curious, at is things X, ESG in shrunk, is had help. on by terms proxy. a to point, clients. of maybe a X and Glass that I what down want

John Chisholm

emphasis get level Sure. a back maybe release. to board independent guide But up And will. skill with would will it we you ago focus and different sets that. on That the the expert governance independent about on to help are a month we talked an if that a add process on governance, an board that hired was

So that will change shortly.

John Harloe

mid-year? completed we that is quickly? process -- will I Are it talking about be mean, that that

John Chisholm

Yes, we would that. expect

John Harloe

Okay.

year-over-year talked curious I about haven't have today's things the we is was been call. and comparisons about the some what Canada, China in we've thing would past in the of Second in talked sequential Argentina. conference

John Chisholm

overall the activity. year-over-year So due just is Canada in somewhat to down

before, look down Canada from to in your through But last through We've the actually multinational first which again, is certainly most slightly. is was down the lot there is weeks. half slightly. and talk Canada down even like second that over, build initiatives the don't it of what because an we're answer think of companies will And the China, couple year of or the up But that once directly, part it's got awful of is next well. is as the Argentina year. happen overall, about question will year, we breakup think the slightly. service the I about year

that is the we about overall the And kind the As it revenue, our XX% rest international. we I that Hopefully, Canada to of through of international think of year. helps. be expect consider way

Operator

I'll received Capital. this the question. corrected. be line of We from appears This Chisholm, stand Aria -- current comes presentation there to you a time, back once to again And return question questions. Cole I Mr. that continue just further from Cole no the to

Aria Cole

is question This for John. a

are it's you channel Chemistry question little in getting Can substantially had Halliburton, a And what the some oil impression distribution purchases and service you embellishment. is clarify asking the maybe Regarding companies, a in E&Ps. reason, for names, we route the -- you. that business have their of Energy the some you with for with terms the just segment, direct activities happening Schlumberger, more doing a to know Flotek may down I'm I'm as disruption? go through

understand, what specifically just in the direct trying firms and various I'm is service ways, get impression So I'm that for are if with just at through to look happening Because service maybe that the changes you're understand reasons. if terms channels, of these oil I the other why business you the your so, to channels? business oil case. losing in trying

John Chisholm

if operators now in over chemistry structure. the Josh of towards way last the part of decouple first the then in, cost But question. and let needed. sure, and take frontier will can of and changing as and I'll is dynamic the talk It's sand. we come tried may chime more I to there I'll chime It's in. about have back through that started good throughout a evolved the that's their But Josh that, with for kind diesel. moving call. Yes, control It

Joshua Snively

some marketplace marketplace from rather than specific in seeing is Yes, channels, names that's control certainly happen. operators spend horsepower there and that those a their at specific operators of to in QX, happens. was flexibility When over thinking the good more less the make look there question with question. sand wanting we for that Obviously, and issues, how or what the take we're relevant to a shift the

operators As well aligns market, asking whether are is operators. fact our market. whether to to forward, a multiple chemistries, and operators The it best-in-class work is it's to The to channels a knowledge of channels whether we a cross-link a very with that variety happy chemistries marketplace. yield having a through system performance from the it's interest we're by for price recognized look of as system, slick going point, these water are increase, for the we the

see there. they do are. The service we what a market occurring channels shift So are

of provide, to for and as market We and for seeing forward will us to it channels. better provide to help recoveries which is our their can more enhance who is their value operators businesses. we're flow in chemistries a what are of today, look the multitude asking cash create continue we we the what But

John Chisholm

add not anything. I'm can I sure

Aria Cole

And just clarify. to

If you in what you other the revenue revenue, way would want at might the to channel that ECT the look service channel, it? any million categorize direct you middle of oil is percentage of $XX and categorize

Joshua Snively

can be company, system. it operator we break actually a company design book. -- than think it service may with and the be little books way for when we're a rather operator them down show I and there's up through Or But sell -- service full try may reasons. One, a that engaged company helping their on it on couple system may confusing of you the service be buying. fluid may a direct that a

you So a could as it In XX-XX there number. a general, little a bit use noisy. gets probably split general

John Chisholm

value the number today higher Maybe perspective, who's of those substantially terms to operators. however, making that from is decisions in elaborate, with a

decision operator actual operator our chemicals And is chemistry event, the purchase force an provider solutions. to the direct that cases, our meaningfully higher weighted service in will in or in today. that -- So, many to behind

Aria Cole

being in Yes. made by terms Would making of XX% think you it's XX%, operator? the decision

John Chisholm

the bad want to I take to exact a number exact say We because hard very guess But somewhere that between measure range place number. not at. is to an it's I'd don't give

Aria Cole

right. most All the number because able I higher to forward. way revenues more asked of going that you've would channel the been just terms the and thinking start in of is, your disruptions, work the encouraging can building you be it through

John Chisholm

of always XX%. than virtually that the that XXXX. is it's was It trajectory channels very you since far involved those answer companies Maybe are into service a There and there today, to number this are good execution, the somewhere to focused in the way try there time, to us to getting And how in well that -- weeds, high-quality not the And offered. will companies to has operators higher, At with was meaningfully range of multiple question be too tend point their less on are to in the nothing. into that this get work speak market. and tiers to very chemistry market.

Operator

a you. We have question Hocky the of David Thank Instructions]. Sachs from from line [Operator now Capital.

David Sachs

to a expand as the Maybe last question. way on

a talk your your rates directly well little terms serving of a the retention could XX bit with can in accounts about concentration If clients little customer base as accounts. with if on bit your or top X customer you expand you're you top as

John Chisholm

want on transparency level give market. understanding people in will Yes. We'll compete a also give this we book a to that that you. Josh for the of don't open complete try to that

caller they in, diesel we moved previous the thinking that the step with delivery share talk as at if on it's key be Matt I of this into evolving. X.X all folks, Josh? highest process. percentage momentum. are sand want it's disaggregation and this chemistry, in you, takeaway the address But mentioned, look to some you think, and disaggregation and last think percentage the the we that. from the clarity back unmistakable. prepared from that to gaining you has this of the process. purchasing, them it goes providers a service not and the operators comments, nascent may higher heard of This others provide guiding is directly your on moving mentioned is that stages this, the we'll retention directly And into and to of to the is sand, mile the still although where It's operator. give how I specific how questions, see years you've could about try to It's coming We a ago,

Joshua Snively

base. client John. is obviously, our turnover in thanks, David, Yes, there a

new the different has customer customers But the same have gone resembled PCM in same past. to historical at We a look a group is seeing going to time. base time, of The different than of customer clients lot the some that we're what routes the different Flotek adding at base chemistries. completely are

concentration be So when down a issues, it to in to less expect future. concentration do comes concern we the of the

evolving our that client always through portfolio. through side going PCM as or chemistries base model evolving to As an forward. we to the whether are the going the sell be on that a chemistry is Whether going ends operator, direct our we have billing company customer broader up service that's base we the

about broader mentioned creating chemistry clients the look think opening enhancing expanding, you and as remarks. thing as you is another more to forward base, client the in that's line need a So we

David Sachs

some And to substantially theory, eliminate more consumer, the type surcharge. other should it in directly with make competitive if you a Would then of surfactants? pumping you're selling that,

Joshua Snively

we're assets that to The a charge, real place. and have service how chemistries But services companies be how pumping what they're their their Pumping the of out have just bill to different charge to there. for the The in asking our Surfactants to going pay like to point I are your of marketplace for. paying for, operators class question. figure going is out think, going are to the chemistries. they're are transparency for figure of charges

see else in it's that's pumping or get pumping whether we sand fees. charges, the going expect chemical whether that's we whether a They're a to charges have marketplace, But horsepower speak. that's fees to or So seen pumping us would as developed selling that's surfactant. whether starting somebody charge, being -- more And reasonable. it's we to more fee,

a will we want us. if and surfactants, needs want our you when be us to ability those themselves. a clients But compare to to can to come in that the certainly is of different that And operator and service lower by have range. That portfolio identify chemistry. that broaden So when the they surfactant, need is a class driven

David Sachs

been be Flotek products, And competitive advantage? last with this or a X give that transparent going for year really that you're environment, collecting with huge in the representing your shouldn't the to more data which you've

Joshua Snively

is our certainly And operator, Well, does having transition. like value for with yes, a the chemistries their them we the just a wells a marketplace to competitive complex. position. think produce to from the better it It take provide from But that targets, proposition value that to not is hit direct we pricing complex. time financial we relationship the marketplace. real help of is can but have proposition we standpoint, The

John Chisholm

And within They that same That's the that client to optimize variable adds maybe different to what expand maximize on formation, that. operators with and well. to geology accommodate we That's say in we're base We fluid same the to value we it geology differ. see can of interval, fluid capability reservoir. the an a systems are to operators to call variances offer the where the may system. reservoir but industry. who our our even have And aligned performance we provide may the the geologic

David Sachs

of are product? or Or circumvent And providing to the more fees, going another if resistance to a you kind your to buyers independents? the larger as this large service evaluating solution either charging way circumvent is excessive companies you're to them, there historic would pumping be that of

Joshua Snively

chemistry the think do the people they're chemistries focus channel providing and with need going to to can regardless to that. those they the is those their let to the we do plays, needs pumping along on get market. understanding And the us their Yes. channels like that be guys But we at with independents, of integrateds, of to best-in-class to best to the all achieve in our client market, will horsepower fees. end and We the objectives that come day, standpoint pure of they're service the we from whether whether a

John Chisholm

responding Yes, look different of demands maybe this to operators. to the way is a we're the at

our Our maximizing where is of the That's performance on cash their interest improving focus and flow. wells their is aligned.

David Sachs

the increases increases you're XX% cash studies supports data in with and the that value XX% like It greater flow or significant present to presenting test net XXX-well seems sets flows.

economic very, very equation seems the compelling. So

message hopefully, forward. So dynamic market and move and that quickly fairly evolves resonates can shift this we

Joshua Snively

with agree David. We you, XXX%

John Chisholm

Yes, that activity, That's quarter we slope you we're thanks value increase very into challenge and we proposition. for has in disruptions having with of here acknowledging add I been, with operators why sand then the challenging. was do and have. supply the the freezing equation, anomalous long-term events the agree the think, the conversations and the first that. The and But

David Sachs

and is with out I and that quickly. the just Maybe will theory, independent helpful just well some noise think in the it but some suppliers sort at operators are be client on staying here whether your with it the their if looking maybe next at there companies, retention anonymous, chemistry would call just service top information fairly the itself share be can to rates. for

John Chisholm

and competitive out suggestion, We no, how are nice doesn't in certainly a listeners figure position, That's that represent appreciate our Yes. that are we suggestion. to and nice but way diminish that. we a

David Sachs

it's just that I going you're in other your what value to actually realize think competitive not enhance position as them. providing. there's unique operators to It's

John Chisholm

that. We appreciate

Operator

now back presentation Thank Chisholm. Please return the I'll to you. Mr. speaker, our continue.

John Chisholm

time. Look for came Sure. appreciate period forward those persistence through. We'd this us of to everyone everyone's And interest, staying in again evolving we to questions thank that soon. to again, through their with you like talking

Operator

sir. that thank ask a Thank so you again. disconnect great today. conference once conclude participation call and for does your gentlemen, Ladies for and We please you you day. that much, Thank you the your Have lines.

Flotek Industries (FTK) 10 May 182018 Q1 Earnings call transcript