Good morning. I'm Veronica Relea , Partner at Baker Botts in our New York office. I am here to present Dr. Ryan Ezell from Flotek Industries. He has a career spanning more than 20 years in the energy industry, currently a CEO of Flotek Industries. Now in his third year in such a role, he's been at the company for about six years, serving in many roles. Prior to joining Flotek for over a decade, Dr. Ezell held various leadership roles at Halliburton. He has a PhD in polymer science, and he's also a published scientist and an author on more than 26 patents. Please join me in welcoming Dr. Ryan Ezell.
Good morning. It's a pleasure to be here this week at Intercom. I personally would like to thank each of you for attending our brief session here on Flotek . Now, you know, Flotek, for those of you who are familiar, is a technology-driven organization. It's focused on innovative chemistry and data solutions to drive value for our customers and shareholders. We believe that this convergence of chemistry and data will lead to the evolution and future landscape for the energy infrastructure sector. We want to be at the forefront of delivering these solutions in real-time data. I would say this month marks my sixth anniversary of being here at Flotek . Leading this transformation has been quite the journey over the past six years. We started back in 2021, laying out a three, five, and 10-year strategic plan for the improvement of the organization that consisted of two phases.
The first was the reparation and improvement of our core chemistry business and its growth to grow market share. The second was the development and growth of a real-time data analytics segment, which we believe will drive the value creation for the business going forward. We're proud to report here today that both of those pieces of strategies are going very well. When we look at it today, we are sitting at 11 consecutive quarters of adjusted EBITDA improvement, showing the execution of this strategy. Along the way, we believe that we've secured multiple long-term chemistry and data supply agreements that continue to drive high margin backlog revenue growth. We've done all this with record-established HSC and service quality fundamentals within the industry.
One of the particular locations that we have is going on 10 years without lost time incidents or recordable incidents in the field of operations, which is phenomenal to see. In addition, this being my sixth anniversary at Flotek , this is also our third year anniversary presenting here at Intercom. I'm really pleased to present our overall improved performance over those years, as you now start to see improvements in all financial metrics, including gross profit, revenue, adjusted EBITDA, and net cash flow. More importantly, what we see is the improvement in the value creation for shareholders, as we've seen since 2023 a 230% increase in stock value, which again drives creation for our shareholders going forward. When you look at the first half of 2024 versus the first half of 2025 on the revenue aspect, we're up 31% despite a challenging market.
When you look at adjusted EBITDA, we're up almost 102% year on year. Diving a little more deeper into the quarter, you look at our high margin data analytics segment is continuing to grow and expand, delivering significant profitability and performance. If you've seen a 189% growth in revenue from the data segment, with a significant increase in gross profit, and that represents 24%. On a look forward basis, we believe in 2026 that our data analytics segment, consisting of our real-time measurements, will encompass more than 60% of our adjusted EBITDA on a look forward basis as we look to make this transition from a core innovative chemistry to a real-time chemistry and data monitoring company, which is, you know, from a long-term aspect, drives significant shareholder and value creation. Diving into the numbers a little bit deeper, we improved in every single metric in profitability year on year.
You look at revenue growth, gross profit, net income, adjusted EBITDA, particularly when you look at adjusted EPS, taking into consideration the recent acquisition we had of real-time gas monitoring and gas conditioning assets that's created our section called PWRtek that I'll talk about in a little bit more here in the back half of the presentation. Again, when you look at the sixth consecutive quarter of growth across all metrics, again showing the execution of our strategy and where we're going with the organization. We talk about continuous financial improvement. These 11 consecutive quarters of adjusted EBITDA improvement have again shown how each of that convergence piece of outlaying the landscape of profitability for the organization. This also represents the second year we've given guidance out to the industry where we see total revenue between $200 million and $220 million and adjusted EBITDA between $34 million and $39 million.
When you look at the midpoint of our prior guidance, it's up 600 basis points from 2024 on adjusted EBITDA, and the midpoint would be a $36.5 million improvement higher than where we were last year. Going to more of our strategic approach to the business, in 2021, we were just a core chemistry technology segment that only had about a $2.1 billion adjustable market. With the addition of our data analytics segment and JP3 technologies, we've now opened up potential measurement areas all along the energy infrastructure value chain. We look at power generation, custody transfer, what we see from data center power, what we see at transmix, Reid vapor pressure monitoring. We're also transitioning to our ability to monitor production chemistry in real- time, which will result in successive sales in chemistry technologies as well as water treatment.
Over the periods of time, what you saw was an original $2.1 billion- $2.6 billion market has now expanded to over $15 billion of addressable market for Flotek . In that period, we grew our chemistry business from less than 1% market share to almost 20% market share of chemicals delivered on site. We're continuing to see the significant growth in our data analytics segment. If you were looking at us in the first inning of a long nine-inning baseball game, we have significant runway to continue to grow the business. Diving a little bit more into our strategy, our data analytics segment is the most exciting emerging piece of our business. What started as an acquisition of JP3 Measurement, which is a data analytics company out of Austin, Texas, was focused on capital sales within the midstream to downstream segment.
Since that point, we've transitioned this business to almost 100% of data-as-a-service monitoring, moving over from CapEx sales to long-term recurring revenue models. We've moved the business away from just a pure midstream to a significant growth in the upstream segment. This helped be moved by our presence in the chemistry technologies area. From there, we focus on three major categories around power services, which we look at real-time gas conditioning and gas monitoring. We offer one of the only services in the industry that can do custody transfer level monitoring of gas quality and subsequently treat and blend on location for any power generation type service that uses natural gas or hydrocarbons. We also have a really exciting emerging business around custody transfer that can replace the composite testing and sample testing required to utilize GC.
We can actually look at real-time gas quality at GC level, taking a measurement every five seconds, which will make a significant transition in the business to where you truly understand in real-time gas quality. We've had great success in this long-term pilot program. We've had one running with one of the largest operators here in North America, where those custody transfer units have now transitioned over into long-term data-as-a-service contracts. They are creating significant value, some of them generating up to $50,000 of savings a day in terms of BTU quality measurement and Reid vapor pressure monitoring that we see at various locations. There are quite a bit of exciting areas around custody transfer. The last one in the upstream piece from our data analytics is around our flare monitoring.
We have a unique solution that can actually go to location, plug directly into a flare, no matter high pressure or low pressure, and actually give net heating values and BTU values in real- time, leading to the performance of the flares. What started as a real-time mobile service is now transitioning into actually being built in line with a lot of flaring systems to help optimize production and what they utilize at location for flare optimization. A really exciting piece there. I'm proud to say on that piece that we have our entire flare monitoring fleet currently 100% utilized on recurring contracts all over the U.S., and we're continuing to deploy multiple units per day.
Looking at the impact of the data analytics segment on our business, you can see that over time, as those data-as-a-service transitions take place, you start to see significant improvement in the high margin growth, where traditionally, if we had sold a Verax or an XSPCT unit as a monitoring device just on a capital sale, we would recognize about 40% margin. However, as we've transitioned to the data-as-a-service monitoring, you're now seeing margins exceed 80%. Combined, you start to see the improvement as the second quarter of 2025, gross margins of the segment was 63%. We expect that to continue to improve throughout the back half of the year and as we roll into 2026 and going forward, as we have forecasted significant growth within the data analytics segment in all areas of upstream around power, custody transfer, and our flare opportunities.
What's even more important, and what we've transitioned a lot of the discussions that we have with the investment community is we are now generating recurring revenue backlog from our data-as-a-service components. One of the core ones there was our recent PWRtek long-term contract, which secured almost $160 million in backlog services, along with our new custody transfer and what we're doing in flare opportunities. We're continuing to report and monitor significant growth in data-as-a-service over the next five years, driven by recurring backlog. This adds quite a bit of stability and forecastability towards where we're going to be performing on financials and revenue growth and profitability, which adds some comfort to the cyclical nature of a lot of the energy sector that we've been in in the past, where we're heavily weighted towards the chemistry environment, which typically followed rig activity or frac fleet activity.
This transition is phenomenal for not only the company, but also our stakeholders and long-term customers providing stability. Looking at some of the things in a little bit more detail, we talked about our power services. In April of this year, we acquired 30 power generation assets. We don't mean turbines in this case. What we look at is the gas conditioning units that plug directly into the gas flow lines and detect swings in BTU quality. From there, we have emergency stop devices. If we see a drastic swing that could cause damage to turbines or dual fuel equipment, etc., it can divert this gas. We can blend it down and keep the BTUs level for safe optimization. Along the way, we also secured a six-year contract with these assets that puts them under a 100% utilized dry lease type program as we continue to build that program out.
It'll be the cornerstone of our PWRtek development and growth. We now have, out of the 30 assets, commissioned and have operating 28 of those now. We expect to have all 30 operating by the end of Q4 of 2025. We've also expanded our portfolio. We were granted three more patents last week on some new pieces of equipment. One is called our ESD Smart Skid. It is a scaled-down version of our current ESD unit that's extremely mobile. You can move it on a 20-ft trailer. It has all the same operations as our traditional ESD, but costs about 40% less. It adds some definite economics and operations on the growth. We currently have deployed the new one into the field of operations, and we're on schedule to build quite a few more before the end of the year.
We look to give you a little additional guidance on what that CapEx will be as we report earnings here in Q3. Definitely some exciting pieces of, you know, no one in the industry has yet been able to deliver the combination of custody transfer grade, fuel monitoring, metering, control, and what we look at in terms of sour gases, etc. , flowing and divert entry gas in real- time. This is a transformational step in Flotek 's data-as-a-service and operational service revenue business going forward. I also talked about custody transfer.
What's been exciting about custody transfer is that when we acquired JP3 , that company was actually started with a vision of being able to monitor custody transfers that most, you know, I would say resource owners and even some operators felt that, you know, they weren't ever being fully compensated for the total value of their gas, whether it's the initial 30- 60 days of production, NGLs that are lost, the ability of a GCC typically to undervalue gas by 3%- 5%. What our new units do is they plug directly into production flow lines, whether at the initial wellhead on completion, at a gathering location, etc. , and we can monitor volume, BTU quality, net heating value, gas composition, especiation, everything, taking a measurement accurately once every eight seconds to the full tilt. We've run this apparatus specifically against in-line and auto-sampling gas chromatography.
Over 24 months of straight testing, we've only been able to find a 0.02 variance between BTUs of our XSPCT, Verax units as compared to typical automated gas chromatography. Not only does it give you a robust and cost-effective way to monitor BTU, it can create significant value for reservoir and resource allocation in terms of its overall valuation on initial production. I do believe in the long- term, this represents probably one of the most important segments for Flotek as we start to see multiple areas of this in the industry convert over to utilizing these real-time measurements from our XSPCT units. One of the core things that allowed us to advance forward was we initially, our Verax units were a little bit cost-prohibitive initially to put on location to operate for custody transfer for the number that was required.
We put together a year-long R&D project, and the unit you see here is what we call our new XSPCT unit. We finished commissioning it in Q4 of 2024. It allowed us to have a 70% reduction in cost of the unit, but yet has the same operational capabilities. It has zero moving parts, is extremely robust, and very minimal R&M maintenance for it. It also runs an in-line calibration gas in a cell so that it stays in calibration the full time, which is something very important in terms of making sure that you are maintaining calibration throughout the measurement in these remote locations. Quite exciting technological advancements, all that we've got various intellectual property around for maintaining the XSPCT unit. I'm extremely excited. We've also been able to launch these technologies into various international geographies in Asia as well as the Middle East.
Those projects will be coming online here in the back half of the year and the first part of 2026. We expect significant traction and growth from the core part of around our data analytics and custody transfer business. Now, transitioning to our final segment to discuss is around our chemistry technology segment. As a chemist myself, this is still an exciting part of the portfolio. We believe that, you know, we have brought something to the market that, you know, transitioned where Flotek was 10 years ago. It's all focused around what we call prescriptive chemistry management. For the past 20 years of all the chemical and completions work that we've done here in North American land, we've actually consolidated a database that we utilize core physicochemical properties at whatever well location or geographical location, target zone, reservoir to be completed.
We actually run AI-driven chemometric models to dose and calculate particular chemical packages that we've shown to improve production through publicly available data with our experience and from completing almost 20,000 wells worldwide. What we've seen is this has allowed us to not only, one, have more rapid and accurate chemistry prescription, but it's also allowed us to bring our R&D costs down from an average spend of $12 million a year to about $1.8 million a year, adding cost savings and velocity, which has improved our overall financial performance, but also allowed us to put a bigger scope of work with less people through the R&D labs.
It's pretty exciting because the chemometric models that we use are actually driven by the same chemometric models that we utilize inside JP3 for our modeling that we do in the field, combined with the 60,000 crude samples that we've been able to accumulate from the JP3 modeling. It's really exciting. We also, as part of our chemistry completion package, now offer the XSPCT unit to be left behind at every well location to monitor not only chemicals that go downhole, but also as the production comes online to understand that efficacy within the first 30- 60 days, which is of significant value in the test and trial cases that we've done. It actually has bolted on where you've seen the true convergence between our data analytics segment and the overall performance of our chemistry business.
The execution of our prescriptive chemistry management strategy has paid dividends for us in the long- term. As I mentioned, when we put this strategy in place in 2021, we represented less than 1% of the completion chemistry moved in North American land. As you can see here, we've continued to grow in revenue despite the decreasing rig activity or fleet activity. It's not always just the fleet activity that is the direct indicator. We also track lateral foot completed, intensity, completion design, the amount of water that we're tracking with it. Again, you can still see the trend of performance that we are consistently gaining market share with our differentiated solutions and technologies and our approach. We don't believe that there's one silver bullet type of chemistry.
It's an engineered approach to pick the customized design and the right package to minimize formation damage, effectively carry the property, the displacement that we see, and also the surfactants and other technologies that impede typical producibility. We do nanopore testing. We do real-time microfluidic environments. We do all those things that are put in place to provide transparency on what our chemistry is doing downhole, and combined with our data analytics and measurements on the back end to show that the production comes. It is a very unique solution that continues to gain traction. It's not just gaining traction here in North America. We're seeing that as you start to see the unconventional completions take place in international environments. We've moved in the same PCM services into Latin America, the Middle East, and other operational areas. Really excited about the continued evolution of the chemistry business and its growth.
Even in the back half of this year, we do expect to see continued market share gains as the industry's challenged at the current frac fleet and rig activities. In closing, we truly feel that there's been quite a transformational path here at Flotek over the past six years, and that we are a very compelling investment opportunity as you look at a 230% improvement in share price just in the 10 years that we've been presenting here at Intercom over the past three years. Our data analytics is paving a way for a completely evolved organization to where in 2026, we do expect that more than 60% of our EBITDA profitability will come from the data-as-a-service monitoring from the data analytics segment. We also expect to see continued market share growth within our chemistry technology segment.
We're looking for pathways to expand from not only the completion environment, but also what we do in terms of real-time water treatment, prescriptive chemistry there, and also moving into the more midstream-focused downstream area where we improve flow assurance that are in combination with our current chemical and data measurements that we'll see. This has opened up, as I said, from about a $2.6 billion market to almost a $15 billion addressable market for Flotek going forward. Most importantly is that every quarter we're continuing to see profitability and revenue growth, which is important for shareholders that we're now continuously generating continuous net income, which is something that, as part of this whole transformational journey, was the end goal in creating a unique solution that lays out multiple years of continued growth for the organization.
The final thing is that where I push on with each one of our employees every single day is that safety being that final condition of employment. As we approach on the convergence of these innovative chemical and data solutions, our service quality and safety still separates us apart in the industry as it adds velocity and understanding in terms of what we do with safety and performance for each one of our customers and our stakeholders. With that, we're presenting at a few more of the conferences coming up over the next few years around the power generation, the technical conference here in NYSE, and also the Gateway Conference on the West Coast. I know we'll transition to another room for questions, but again, thank you for your time and appreciate your attention.