Flotek cuts Q3 revenue view by $5M, consensus $90.9M
Flotek announced impacts for the third quarter related to Hurricanes Harvey and Irma, as well as other client and vendor-related business disruptions. As a result of these storms, some chemical suppliers to the company and the broader industry declared force majeure, which impacted client drilling and completion activity. Additionally, shortages of certain raw materials supplied by third-party vendors further impacted client activity during the third quarter. Together, these events were material, and Flotek estimates third-quarter revenues will be approximately $5M less than previously expected and incremental costs will increase by less than $1M as compared to previous expectations. These issues are expected primarily to impact the Energy Chemistry Technologies segment. Additionally, as reported extensively by the media, the Florida citrus crops have suffered damages related to Hurricane Irma passing over the primary domestic growing region. At this time, early indications are that total crop losses of 40%-50% have occurred, which will impact availability and pricing of domestic citrus oil. Flotek expects these damages to delay raw material price reductions that were initially expected prior to the storm. John Chisholm, Flotek's Chairman, President and CEO commented, "As the supply chains across both segments move towards a degree of normalcy after the devastating storms, we are managing through these temporary, and mostly uncontrollable circumstances. Based on client indications, activity delays are largely expected to be made up for in the fourth quarter."