Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

<ul><li>We expect the steep revenue ramp, which commenced in 2Q22, to continue into 2023 as Flotek continues to expand service to a growing number of ProFrac’s pressure pumping fleets to meet the terms of the 10-year supply agreement signed in February 2022.</li><li>Flotek will supply the greater of 70% of ProFrac’s stimulation chemistry requirements or 30 frac fleets. For its part, ProFrac expects to have up to 49 active fleets by mid-year 2023.</li><li>We have built a 2023 reported revenue estimate of ~$224 million based on supplying an average of 26 ProFrac crews.</li></ul>

We expect the steep revenue ramp, which commenced in 2Q22, to continue into 2023 as Flotek continues to expand service to a growing number of ProFrac’s pressure pumping fleets to meet the terms of the 10-year supply agreement signed in February 2022.Flotek will supply the greater of 70% of ProFrac’s stimulation chemistry requirements or 30 frac fleets. For its part, ProFrac expects to have up to 49 active fleets by mid-year 2023.We have built a 2023 reported revenue estimate of ~$224 million based on supplying an average of 26 ProFrac crews.

Contract Backlog Supports 2023 Revenue Outlook

Flotek Industries

Contract Backlog Supports 2023 Revenue Outlook