0000928054-25-000079
SEC filingRevenue grew 31% YoY to $113.7M, driven by CT segment and PWRtek rental income, partially offset by $4.2M acquisition costs.
For the six months ended June 30, 2025, consolidated revenue rose 31% to $113.7 million compared to $86.5 million in the prior-year period. Growth was driven by increased sales volumes in the Chemistry Technologies (CT) segment, higher related-party activity under the ProFrac Agreement, and $3.2 million in new PWRtek rental revenue within Data Analytics (DA). This was partially offset by a $1.8 million decrease in accrued contract shortfall fees. Gross profit increased 49.3% to $26.9 million, with gross margin expanding from 20.8% to 23.6%, reflecting improved cost leverage on higher volumes. Operating income more than doubled to $8.2 million (7.2% margin) from $4.3 million (5.0% margin), despite $4.2 million in one-time asset acquisition expenses related to the PWRtek Transactions. Net income rose to $7.1 million from $3.5 million, with net margin contracting slightly due to higher interest expense on the new PWRtek Note.
The CT segment remained the primary earnings driver, with total revenue increasing 27% to $105.2 million and operating income growing 38% to $16.9 million, yielding a 16.1% margin. External customer revenue surged 59% on strong demand, while related-party revenue rose 11% driven by higher activity partially offset by lower contract shortfall accruals. The DA segment saw revenue more than double to $8.6 million, fueled by $3.2 million in PWRtek rental income and a 52% increase in external unit sales. However, segment operating loss widened to $2.0 million from $0.8 million due to $4.2 million in acquisition costs and higher materials costs, partly offset by rental income.
Management expects stable demand for CT chemistry through 2025, supported by customer commitments and potential growth from higher natural gas exports and international expansion in the Middle East and Argentina. The PWRtek lease agreement is anticipated to materially enhance DA segment results, with lease revenue from 22 operating units recognized since April 28, 2025, and eight units under construction expected to begin contributing by early 2026. The company does not expect minimum purchase requirements under the ProFrac Agreement to be met in 2025, and future contract shortfall fees will be offset against residual payables and the PWRtek Note. Liquidity remains adequate, with $5.0 million cash and $7.3 million available under the ABL facility as of July 31, 2025.
As of June 30, 2025, the company held cash and cash equivalents of $5.0 million, up modestly from $4.4 million at year-end 2024. Total debt stood at $44.6 million, consisting of $5.1 million drawn on the asset-based loan and $39.5 million net of deferred financing costs on the related-party PWRtek Note. The ABL provides up to $20 million of credit availability, with $9.2 million available as of period end. Shareholders' equity decreased sharply from $113.9 million to $71.9 million, driven by the $92.4 million excess of consideration over the historical book value of assets acquired in the PWRtek transaction, which was recorded as a reduction to additional paid-in capital.
The Notes disclose significant future income streams and contractual obligations. The PWRtek Lease Agreement guarantees minimum rental income of $128.8 million over its remaining term, with $37.6 million expected within one year and $91.7 million thereafter. Additionally, the company holds $66.1 million of net contract assets, representing the unamortized portion of consideration received from the ProFrac Agreement, with estimated amortization of $2.8 million for the remainder of 2025 and $59.0 million from 2026 through 2032. Deferred revenue, short-term, was $0.9 million.
No share buybacks or dividends were reported. The primary capital allocation event was the PWRtek asset acquisition, involving $107.5 million in total consideration, including a $40.0 million related-party note and a $42.7 million warrant. The company repaid $0.1 million of long-term debt in the first half of 2025. Capital expenditures, excluding the PWRtek acquisition, were $1.3 million, largely funded by operating cash flow.
Segment-level data shows Chemistry Technologies with $105.2 million in revenue and $16.9 million in operating income for the first half of 2025. Data Analytics generated $8.6 million in revenue, including $3.2 million from the new Lease Agreement, but recorded an operating loss of $2.0 million due to $4.2 million in asset acquisition expenses. The company remains heavily concentrated with related-party revenue from ProFrac Services, which represented 56.4% of total revenue in the six-month period.
Operating cash flow (CFO) of $2.8 million in the first half of 2025 was significantly lower than net income of $7.1 million, indicating that cash conversion lagged profitability. This divergence was driven by large working capital outflows, particularly accounts receivable ($5.1M) and related party receivables ($2.5M), partly offset by inventory reductions ($1.4M) and non-cash adjustments like stock compensation ($1.1M) and depreciation ($0.6M). Capital expenditures (capex) increased to $1.3 million from $0.2 million in the prior year, reflecting higher investment in fixed assets. While the company does not disclose free cash flow explicitly, implied free cash flow (CFO minus capex) was $1.5 million, compared to $0.6 million in H1 2024. Financing activities used $0.7 million, primarily due to net repayments on the asset-based loan and debt issuance costs. No share repurchases or dividends were reported. Overall, the cash flow statement shows improved operating cash generation but highlights the need to manage working capital more efficiently to align with net income growth.