FLOTEK INDUSTRIES INC/CN/
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
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Item 4. Mine Safety Disclosures
Note 11 —Income Taxes
The income tax provision differed from the amounts computed by applying the U.S. federal income tax rate of 21% to income before income tax for the reasons set forth below (dollars in thousands):
| Three months ended June 30, | ||||
|---|---|---|---|---|
| 2026 · 2025 | ||||
| U.S. federal statutory tax rate | $2,841 | 21.0% | $375 | 21.0% |
| State income taxes, net of federal benefit | 277 | 2.1% | 17 | 1.0% |
| Foreign tax effects | (430) | (3.2)% | (176) | (9.9)% |
| Effect of cross-border tax laws | 727 | 5.4% | 169 | 9.5% |
| Change in valuation allowance | — | —% | (218) | (12.2)% |
| Nontaxable or nondeductible items | ||||
| Stock-based awards | (48) | (0.4)% | (188) | (10.5)% |
| Executive compensation limit | 186 | 1.4% | 4 | 0.2% |
| Other | 28 | 0.2% | 34 | 1.9% |
| Income tax expense and effective rate | $3,581 | 26.5% | $17 | 1.0% |
| Six months ended June 30, | ||||
|---|---|---|---|---|
| 2026 · 2025 | ||||
| U.S. federal statutory tax rate | $4,159 | 21.0% | $1,518 | 21.0% |
| State income taxes, net of federal benefit | 432 | 2.2% | 81 | 1.1% |
| Foreign tax effects | (397) | (2.0)% | (266) | (3.7)% |
| Effect of cross-border tax laws | 829 | 4.2% | 267 | 3.7% |
| Change in valuation allowance | — | —% | (1,401) | (19.4)% |
| Nontaxable or nondeductible items | ||||
| Stock-based awards | (205) | (1.0)% | (190) | (2.6)% |
| Executive compensation limit | 320 | 1.6% | 8 | 0.1% |
| Other | 52 | 0.2% | 64 | 0.9% |
| Income tax expense and effective rate | $5,190 | 26.2% | $81 | 1.1% |
As of June 30, 2026, the Company had U.S. net operating loss carryforwards (“NOLs”) of $180.0 million, including $33.6 million expiring in various amounts from 2029 through 2037, which can offset 100% of taxable income, and $146.4 million that has an indefinite carryforward period, which can offset 80% of taxable income per year. Additionally, the Company has an estimated $75.2 million in certain state NOL carryforwards and $3.2 million in tax credit carryforwards.
As a result of the ownership change experienced in 2023, the Company’s ability to use NOLs to reduce taxable income is generally limited by Section 382 of the Internal Revenue Code of 1986 to an annual amount of $3.5 million plus net unrealized built in gain of $24.5 million. The Company’s use of NOLs arising after the date of the ownership change are not impacted by the Section 382 limitation. NOLs that exceed the Section 382 limitation in any year continue to be allowed as carryforwards until they expire and can be used to offset taxable income for years within the carryover period subject to the limitation in each year. If the Company does not generate a sufficient level of taxable income prior to the expiration of the pre-2018 NOL carryforward periods, then the ability to apply those NOLs as offsets to future taxable income is lost. Based on an analysis of the Section 382 limitation, the Company estimates that all carryforwards with the exception of $0.9 million of the state NOL carryforwards and $3.2 million of the tax credit carryforwards will be available for utilization if there is sufficient taxable income in subsequent periods. Although the ownership change will significantly limit the ability of the Company to utilize the pre-change net operating losses and credits, the Company does not expect a significant impact to its financial statements.
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