Flowco Holdings Inc. Reports Strong Earnings and Strategic Growth

Flowco Holdings Inc Class A ((FLOC)) has held its Q4 earnings call. Read on for the main highlights of the call.

Flowco Holdings Inc. Reports Strong Earnings Amid Strategic Growth and Challenges

Flowco Holdings Inc.’s recent earnings call conveyed a positive sentiment, highlighting robust organic revenue growth and the successful execution of strategic initiatives. The company celebrated milestones such as its IPO and debt reduction efforts, while also addressing challenges in its Natural Gas Technologies segment and the increased costs associated with operating as a public company. Despite these hurdles, Flowco remains optimistic about its future growth and market positioning.

Pro Forma Revenue Growth

Flowco Holdings Inc. achieved a commendable 10% increase in pro forma revenue for 2024 compared to 2023, significantly outpacing the modest 2% to 3% growth in U.S. oil production. This impressive growth underscores the company’s ability to capitalize on market opportunities and execute its strategic plans effectively.

Strong Adjusted EBITDA Performance

The company reported a fourth-quarter consolidated adjusted EBITDA of $73.8 million, reflecting strong execution across its business segments. Margins improved by 50 basis points, demonstrating Flowco’s operational efficiency and its focus on enhancing profitability.

Successful IPO and Debt Reduction

In January 2025, Flowco successfully executed an IPO, utilizing the proceeds to reduce its borrowings. This strategic move lowered the revolving credit facility debt to $195.7 million, with an impressive availability of $527.7 million, strengthening the company’s financial position.

Growth in Production Solutions Segment

The Production Solutions segment reported a revenue of $113.3 million in Q4, with an adjusted segment EBITDA of $49.9 million. These figures represent increases of 1.5% and 5.2% respectively from the previous quarter, highlighting the segment’s growth and contribution to the company’s overall performance.

Revenue Decrease in Natural Gas Technologies

Flowco’s Natural Gas Technologies segment experienced a revenue decrease of 6.5% to $72.7 million in Q4, attributed to the completion of a large customer project. This decline presents a challenge that the company is actively addressing to stabilize and grow this segment.

Costs Associated with Public Company Infrastructure

The transition to a public company incurred $3.9 million in costs during the fourth quarter. These expenses are part of Flowco’s efforts to establish a robust public company infrastructure, which is crucial for its long-term success and compliance.

Potential Tax Rate Increase

Following its IPO, Flowco will become a federal and state income taxpayer, with an anticipated blended tax rate in the low to mid-20% range. This change is a significant consideration for the company’s financial planning moving forward.

Forward-Looking Guidance

Flowco Holdings Inc. provided financial guidance for 2024 and 2025, reporting a fourth-quarter adjusted net income of $28.8 million on revenues of $186 million. Despite a slight revenue decline of 1.8% quarter-over-quarter, the company maintained stable adjusted EBITDA at $73.8 million, with margins improving. Flowco projects a 10% pro forma revenue growth for 2024 and plans to maintain a similar level of capital investment into 2025, focusing on their rental fleet with targeted returns exceeding 20%. They also anticipate a first-quarter 2025 adjusted EBITDA between $74 million and $78 million and are considering initiating a sustainable dividend.

In summary, Flowco Holdings Inc.’s earnings call was marked by a positive outlook, driven by strong revenue growth and strategic financial management. The company successfully navigated challenges while positioning itself for future success. Key takeaways include the impressive pro forma revenue growth, robust adjusted EBITDA performance, and strategic debt reduction efforts. As Flowco continues to execute its strategic initiatives, it remains well-positioned for sustained growth and market leadership.