FLOC

Flowco Holdings Inc.

NYSE · INDUSTRIALS · OIL & GAS FIELD MACHINERY & EQUIPMENT

20.01

−0.04 −0.20%

USD · close Oct 30

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MKT CAP —P/E 16.0DIV YIELD 1.25%FCF YIELD —REV TTM $819.5M +7.7%NET INCOME $49.7M −9.0%NET DEBT $279.2M52W 16.02 – 28.09SEC XBRL · TTM TO Invalid Date

How FLOC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Risk Factors – Risk Factors Related to our Organizational Structure.
In general, the TRA Participants expect to receive payments under the Tax Receivable Agreement of 85% of the amount of certain tax benefits, and Flowco Holdings expects to benefit in the form of cash tax savings in amounts equal to 15% of certain tax benefits.
Any payments made by us to the TRA Participants under the Tax Receivable Agreement will reduce cash otherwise arising from such tax savings.
We expect such payments will be substantial.
Prior to the completion of the IPO, we entered into the Tax Receivable Agreement with Flowco LLC and the TRA Participants that provides for the payment by Flowco Holdings to the TRA Participants of 85% of the amount of tax benefits, if any, that Flowco Holdings actually realizes (or in some circumstances is deemed to realize) as a result of (i) Basis Adjustments, (ii) Section 704(c) Allocations, and (iii) certain tax benefits (such as interest deductions) arising from payments made under the Tax Receivable Agreement.
Redemption Rights of Holders of LLC Interests The Continuing Equity Owners may, subject to certain exceptions, from time to time at each of their options require Flowco LLC to redeem all or a portion of their LLC Interests in exchange for, at our election, newly-issued shares of our Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of our Class A common stock for each LLC Interest redeemed, in each case, in accordance with the terms of the Flowco LLC Agreement; provided that, at our election, we may effect a direct exchange by Flowco Holdings of such Class A common stock or such cash, as applicable, for such LLC Interests.
The Continuing Equity Owners may, subject to certain exceptions, exercise such redemption right for as long as their LLC Interests remain outstanding.
Simultaneously with the payment of cash or shares of Class A common stock, as applicable, in connection with a redemption or exchange of LLC Interests pursuant to the terms of the Flowco LLC Agreement, a number of shares of our Class B common stock registered in the name of the redeeming or exchanging Continuing Equity Owner will automatically be transferred to us and will be cancelled for no consideration on a one-for-one basis with the number of LLC Interests redeemed or exchanged.
B usiness Overview We are incorporated under the laws of the state of Delaware, and our common stock is listed on the New York Stock Exchange (“NYSE”) under the trading symbol “FLOC.” Our operations are located in the U.S.
Our corporate headquarters are located at 1300 Post Oak Blvd., Suite 450, Houston, Texas 77056.
We are a leading provider of production optimization, artificial lift and emissions management and monetization solutions for the oil and natural gas industry.
Our products and services include a full range of equipment and technology solutions that enable our customers to efficiently and cost-effectively maximize the profitability and economic lifespan of the production phase of their operations.
Our principal products and services are organized into two business segments: (i) Production Solutions; and (ii) Natural Gas Technologies.
Our core technologies include high pressure gas lift (“HPGL”), conventional gas lift, plunger lift and vapor recovery unit (“VRU”) solutions, all of which are overlaid by our proprietary digital technologies and solutions that enable real-time remote monitoring and control to maximize efficiencies for our products and services.
These products and services, including proprietary technologies such as HPGL, which was pioneered by Estis, hold, in their respective categories, leading positions in growing markets, and are used extensively by the largest oil and natural gas producers primarily in the U.S.
We generate revenues throughout the long production lives of oil and natural gas wells.
As of December 31, 2025, we had a fleet of over 4,600 active systems enabling consistent revenue generation.
We also sell other products and services that help our customers optimize the value of their assets.
We believe that the demand for our products and services is more stable than the demand for drilling and completion related services, and this demand has resulted in more durable, recurring cash flows for our products and services compared to many other oilfield services.
The production phase of a new oil or natural gas well begins when it is brought online.
From this point forward, the rate of production is determined by the geological characteristics of the reservoir from which the well is producing, the design and construction of the wellbore from the reservoir to the surface, and the elapsed time since the well is brought online.
This rate of production typically falls over time as the natural reservoir pressure declines and becomes insufficient to bring oil and natural gas to the surface.
This decline is particularly steep for shale wells found in onshore North American oil and natural gas basins.
Artificial lift and production optimization technologies are essential to counteracting this decline, increasing production rates, and maximizing hydrocarbon recovery, all of which improve the economics of a producing well.
Artificial lift enables the economic production of oil and natural gas from shale wells that would be otherwise uneconomic.
As a result, operating expenses associated with production optimization are less discretionary in nature, placing our solutions on a critical path for producers to generate positive returns and maximize the value of their wells.
Furthermore, the production phase is the most stable and least capital-intensive phase of the well lifecycle, driving consistent revenue, durable earnings and stable through-cycle performance for our business.
Our products are chosen due to their reliability and ability to aid our customers in achieving maximum output and cash flow from their producing wells.
Our products and services also integrate proprietary digital technologies that allow for remote monitoring and other enhanced uses of our equipment.
Our VRUs and other methane abatement solutions capture fugitive emissions of methane and other hydrocarbons, including natural gas liquids (“NGLs”), such as ethane, propane, and butane, which are a natural by-product of oil production.
As oil flows to the surface and is processed at the wellsite, methane and other hydrocarbons, including NGLs, are released as associated gas.
Without capture and management, these associated gas molecules may be released into the atmosphere as fugitive emissions.
In addition, there are numerous potential sources of fugitive emissions throughout the natural gas value chain.
By capturing these emissions, our VRUs and other methane abatement solutions allow for monetization of the resulting incremental methane and other hydrocarbon volumes and enable our customers to meet their decarbonization goals and comply with regulatory requirements.
These innovative and proprietary solutions extend across each of our core technologies and can be used on their own as well as in conjunction with our other products and services.
Demand for these solutions, particularly VRUs, was initially driven by safety benefits, but accelerated as producers became more aware of the value of monetizing captured vapors, leading to high return on investment outcomes for our customers.
Due to recent and emerging regulatory requirements aimed at reducing fugitive emissions across oil and natural gas operations from numerous federal and state-level entities, operating expenses associated with our solutions have become increasingly required and therefore non-discretionary in nature.
We hold a leading position in the VRU market, which is driven by both economic and environmental benefits, and we have helped drive adoption of our solutions aimed at reducing emissions with our customers.
Our Asset Footprints We have an operating presence in every major onshore oil and natural gas producing region in the U.S. and have cultivated deep and longstanding customer relationships with leading oil and natural gas producers in each region, including supermajors and large independent producers.
We are headquartered in Houston, Texas with major service facilities in Midland, Texas; Carlsbad, New Mexico; and Williston, North Dakota.

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Risk Factors – Risk Factors Related to our Organizational Structure .” • Income Taxes .
Our accounting predecessors are a collective limited liability companies that constitute as partnerships for U.S. federal income tax purposes, and therefore are not subject to U.S. federal income taxes and the provisions for income tax calculations thereof.
As the IPO occurred subsequent to the last date presented in this Annual Report, we do not report any income tax benefit or expense attributable to us.
Subsequent to the IPO, we are taxed as a corporation under the Internal Revenue Code and subject to U.S. federal income taxes (currently at a statutory rate of 21% of pretax earnings, as adjusted by the Internal Revenue Code), as well as state income taxes, for our interest ownership in Flowco LLC. • 2025 Equity and Incentive Plan .
To incentivize individuals providing services to us or our affiliates, our Board of Directors adopted an omnibus 2025 Equity and Incentive Plan (the “Equity Plan”) prior to the completion of our IPO.
The Equity Plan provides for the grant, from time to time, at the discretion of our Board of Directors or a committee thereof, of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, other stock awards, substitute awards and performance awards.
Any individual who is our officer or employee or an officer or employee of any of our affiliates, and any other person who provides services to us or our affiliates, including members of our Board of Directors, will be eligible to receive awards under the Equity Plan at the discretion of our Board of Directors.
In connection with the IPO, we granted 665,205 restricted stock unit (“RSU”) awards, which will vest within three years, to certain of our employees, officers, and non-employee directors.
Awards of RSUs to our officers and employees will vest on the third anniversary of the grant date, while awards of RSUs to our non-employee directors will vest pro rata quarterly over three years.
For these awards granted in connection with our IPO, we will recognize equity compensation expenses aggregating up to $6.6 million per year, starting in 2025, over the applicable vesting terms related to these RSU issuances. • Noncontrolling Interests.
As a result of the IPO and a series of related reorganization transactions in connection with the IPO (the “Transactions”), Flowco Holdings became the sole managing member of Flowco LLC and consolidates entities in which it has a controlling financial interest.
Consequently, the financial statements for periods prior to the IPO included in this Annual Report have been adjusted to combine each of the previously separated Merging Entities.
For periods after the completion of our IPO, the financial position and results of operations include those of Flowco Holdings and report the noncontrolling interests related to the portion of LLC Interests not owned by Flowco Holdings.
Additionally, all shares of our Class B common stock are held by noncontrolling interest owners.
The noncontrolling interests will only impact future financial statements presentations and not the financial statements included in this Annual Report.
Predecessor Consolidated Results of Operations The historical consolidated financial information included in the following tables and discussions present the historical financial information of our Predecessor.
Additionally, the discussions relating to significant line items from our consolidated statements of operations are based on available information and represent our analysis of significant changes or events that impact the comparability of reported amounts.
Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items.
The results of operations data in the following tables for the periods presented have been derived from the audited financial statements included elsewhere in this Annual Report.
The discussions related to historical financial information for the year ended December 31, 2023 compared to the year ended December 31, 2022, have been reported previously in the Final Prospectus, under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations, and is also included in this Annual Report.
We currently have two operating segments: (i) Production Solutions and (ii) Natural Gas Technologies.
Our corporate headquarters and certain functional departments do not earn revenues but incur costs which do not constitute business activities.
Therefore, these corporate headquarters and certain functional departments do not qualify as an operating segment and have been included within corporate and other, which is also not considered a reportable segment.
Corporate and other includes (i) corporate and overhead costs, and (ii) capitalized costs related to IPO and debt issuance and does not include any immaterial and aggregated operating segments.
The performance of our operating segments is primarily evaluated based on revenue and segment profit or loss with respect to such segments, in addition to other measures.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table sets forth certain selected financial results for the periods indicated (in thousands).
Prior to June 20, 2024, all operating results reflect only Estis as predecessor to the Merging Entities: Year Ended December 31, 2024 2023 Change ($) Change (%) Revenues Rentals $ 276,687 $ 168,801 $ 107,886 % Sales 258,591 74,522 184,069 % Total revenues 535,278 243,323 291,955 % Operating expenses Cost of rentals (exclusive of depreciation and amortization disclosed separately below) 74,494 42,179 32,315 % Cost of sales (exclusive of depreciation and amortization disclosed separately below) 189,930 62,599 127,331 % Selling, general and administrative expenses 62,453 15,219 47,234 % Depreciation and amortization 90,862 43,822 47,040 % Loss on sale of equipment 1,170 (373 ) -32 % Income from operations 116,742 78,334 38,408 % Other expenses Interest expense (32,345 ) (18,956 ) (13,389 ) % Loss on debt extinguishment (221 ) — (221 ) 100% Other expenses (2,756 ) (910 ) (1,846 ) % Total other expenses (35,322 ) (19,866 ) (15,456 ) % Income before provision for income taxes 81,420 58,468 22,952 % Provision for income taxes (1,171 ) (379 ) (792 ) % Net income $ 80,249 $ 58,089 $ 22,160 % Revenue – Rentals .
Rental revenue was $276.7 million for the year ended December 31, 2024, an increase of $107.9 million, or 64%, from $168.8 million for the year ended December 31, 2023. $84.4 million of increase in rental revenue relates to the Natural Gas Technologies segment from companies acquired in the 2024 Business Combination.
Rental fleet from the Natural Gas Technologies segment had an average of 2,838 active systems and an average monthly price of $4,696 for the year ended December 31, 2024.
The remaining $23.5 million increase in rental revenue relates to the Production Solutions segment, which was driven by an increase of 33 average active systems per month from 1,401 during 2023 to 1,434 average active systems per month during 2024, and a $1,132 increase in average monthly price from $10,043 per unit during 2023 to $11,195 per unit during 2024.
Thus, of the increase in rental revenue related to the Production Solutions segment, 2.4% is attributable to an increase in average active systems, and 11.3% is due to an increase in average monthly price.
Sales revenue was $258.6 million for the year ended December 31, 2024, an increase of $184.1 million, or 274%, from $74.5 million for the year ended December 31, 2023.
This increase in revenue was partially due to $135.5 million of revenue related to Flowco Productions within the Production Solutions segment and $41.4 million of revenue related to Flogistix within the Natural Gas Technologies segment as part of the 2024 Business Combination.
The remainder of the increase was primarily due to an increase of $7.2 million of sales of natural gas systems to third parties.
We sell our natural gas systems through intercompany transactions for further use in the Production Solutions segment as well as sales to our customers.
During 2023, intercompany sales comprised a significant portion of total natural gas system sales as we continued to increase the volume of active systems within Production Solutions segment.
Due to the change in focus of sales to third parties rather than our Production Solutions segment, third party sales volume of natural gas systems increased 10% year-over-year while pricing remained flat.
All intercompany revenues have been eliminated in consolidation.
Rental cost was $74.5 million for the year ended December 31 2024, an increase of $32.3 million, or 77%, from $42.2 million for the year ended December 31, 2023.
This increase was primarily attributable to $28.6 million of costs related to Flogistix as part of the 2024 Business Combination within the Natural Gas Technologies segment.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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