Flotek Industries Inc. (NYSE:FTK) Q3 2019 Earnings Conference Call - Final Transcript

Nov 12, 2019 • 10:00 am ET


Flotek Industries Inc. (NYSE:FTK) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings and welcome to Flotek Industries Third Quarter 2019 Earnings Conference Call.

[Operator Instructions]

It is now my pleasure to introduce Danielle Allen, Senior Vice President, Global Communications and Technology Commercialization for Flotek. Thank you, ma'am. You may begin.

Danielle Allen

Thank you, and good morning, everyone. We appreciate your participation. Joining me on today's call is John Chisholm, Flotek's President and Chief Executive Officer; and Elizabeth Wilkinson, Flotek's Chief Financial Officer. On today's call, John and Elizabeth will provide prepared remarks concerning our business and remarks for the quarter, including our results. In addition, David Nierenberg, Flotek's Chairman of the Board, will provide some closing comments before we open it up for questions.

Yesterday, we released our earnings announcement for the third quarter of 2019, which is available on our website. Today's call is being webcast and a replay will also be available on our website along with our updated corporate presentation. Please note that any comments we make on today's call, regarding projections or our expectations for future events, are forward-looking statements. 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 events to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our Form 10-Q, which will be filed later today with the SEC. Also, please refer to our reconciliations provided in our earnings press release as management may discuss non-GAAP metrics on this call.

Finally, after our prepared remarks, we will answer any questions you may have. And with that, I'll turn it over to John.

John William Chisholm

Thanks, Danielle. We appreciate everyone joining us for today's call. I'm actually in Abu Dhabi at ADIPEC, the largest energy conference in the world. So, Elizabeth will be doing a lot of the coordinating of the call back in Houston.

The third quarter saw another period of decreased drilling and completion activity for U.S. onshore like other oilfield service providers with significant exposure to U.S. land operations. Our top line results and margins were negatively impacted. Also impacting top line results was the recent reorganization of our sales force to further align ourselves with and provide the opportunity for expanded relationships with our clients. This transition was clearly the right thing to do for the business. However, we expect it will be in the next year before we begin to see the full benefit of our efforts, given the longer sales cycle time we predominantly see in our business.

For the fourth quarter, we expect sales to continue to be depressed, primarily due to E&P budget exhaustion and the typical holiday seasonality. Supporting this view was the estimated 5% decrease in U.S. active frac spread hydraulic horsepower count seen during the month of October. Shorter cycles have continued in sometimes, extreme volatility are part of the new normal we operate in today and something we continue to expect to see in the foreseeable future.

As the recent