Flowco Holdings Inc.
For the period ended Dec 31, 2025. Filed Feb 26, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 26, 2026
FLOC$20.06+5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-20.
0000950170-25-042288
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-26.
0001193125-26-077219
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 125 current paragraphs.
46 unchanged; 27 reworded; 48 added; 39 removed; 3 previous and 4 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (48)
Current report
Company Overview
Current report
Debt Repayments
Current report
On January 17, 2025, we used a portion of the net proceeds from the IPO, after giving effect to the redemption of certain Flowco LLC interests held by non-affiliate holders, to repay $440.0 million of outstanding borrowings under our revolving Credit Agreement. The repayment substantially lowered our outstanding debt and interest expense in 2025 and enhanced our liquidity and capital structure.
Current report
Share Repurchase Program
Current report
On June 11, 2025, our Board of Directors authorized a share repurchase program providing for the repurchase of up to $50 million of our outstanding common stock. The Repurchase Program is intended to provide the Company with flexibility to return capital to shareholders and to opportunistically repurchase shares when management believes such repurchases represent an attractive use of capital. Repurchases under the Repurchase Program may be made from time to time through open market purchases, privately negotiated transactions, or other means permitted under applicable securities laws and regulations. The Repurchase Program does not obligate us to repurchase any specific number of shares, and the timing, volume, and value of any repurchases will depend on a variety of factors, including our share price, trading volume, general market conditions, liquidity considerations, capital allocation priorities, and compliance with corporate and regulatory requirements. The Repurchase Program may be modified, suspended, or discontinued at any time at the discretion of our Board of Directors.
Current report
Management evaluates share repurchases as part of its broader capital allocation strategy, which also considers investment in organic growth initiatives, potential acquisitions, debt repayment, and maintaining adequate liquidity. We expect to fund any repurchases from available cash on hand and cash generated from operations.
Current report
Asset Acquisition
Current report
On August 1, 2025, we completed the acquisition of certain HPGL and VRU systems from Archrock, Inc. for approximately $71 million in cash. The acquisition included 155 HPGL and VRU systems and represents the Company’s first acquisition following the IPO.
Current report
The acquired assets helped expand our artificial lift and vapor recovery capabilities, including the addition of electric motor drive systems, which has enhanced our ability to serve customers focused on electrification initiatives and emissions reduction. This acquisition further has strengthened our position in the Permian Basin and expanded our customer base through the addition of contracted, revenue-generating assets.
Current report
Management believes the acquisition is consistent with the Company’s inorganic growth strategy and capital allocation framework, which prioritizes the acquisition of high-quality production optimization assets at attractive valuations. The acquisition was funded with cash proceeds from borrowings under our $725.0 million five-year senior secured revolving credit facility (“Credit Facility”) and did not materially affect our overall liquidity profile.
Current report
General Trends and Company Outlook
Current report
The Company’s operating results, financial condition, and cash flows are influenced by macroeconomic conditions and trends in commodity prices, particularly crude oil and natural gas. Demand for the Company’s products and services is closely tied to exploration, development, and production activity in the oil and natural gas industry, which in turn is affected by ever changing global economic conditions, energy demand, and commodity price environments.
Current report
Global macroeconomic factors, such as inflationary pressures, interest rate levels, geopolitical developments, and supply chain dynamics, can impact customer spending behavior, capital allocation decisions, and overall industry activity. Periods of elevated inflation may increase the Company’s operating costs, including labor, materials, and transportation, while higher interest rates may affect customers’ access to capital and willingness to invest in new or expanded production. Conversely, improved macroeconomic stability and access to capital can support increased drilling and completion activity, benefiting demand for the Company’s offerings.
Current report
Commodity prices remain a primary driver of customer activity levels. Sustained periods of higher crude oil and natural gas prices generally support increased well completions, production optimization, and investment in artificial lift and surface equipment, which positively affects demand for the Company’s products and services. Conversely, declines or heightened volatility in commodity prices may result in reduced customer spending, project delays, or cancellations, which could adversely impact our revenues and margins. While customers may respond to price fluctuations with varying degrees of sensitivity depending on basin economics, hedging strategies, and balance sheet strength, prolonged periods of low or volatile prices typically lead to reduced industry activity.
Current report
We do not directly engage in commodity price hedging, and therefore our results are indirectly exposed to commodity price movements through changes in our customer behavior and activity levels. Management seeks to mitigate the impact of commodity price volatility through a diversified customer base, exposure to multiple basins, long-term customer relationships, and a focus on products and services that support both new well development and ongoing production.
Current report
We continue to monitor macroeconomic conditions and commodity price trends and evaluates their potential impact on our operations, financial performance, and liquidity. While future commodity prices and economic conditions remain uncertain, we believes our business model and market positioning provide resilience across commodity cycles.
Current report
Results of Operations
Current report
Revenue – Rentals. The primary driver for the increase in average active systems was related to Flogistix’s VRUs that were added to our combined fleet as part of the 2024 Business Combination within the Natural Gas Technologies segment and Estis’ organic growth in its surface equipment rental fleet within the Production Solutions segment. Due to the timing of the 2024 Business Combination, the year ended December 31, 2024 rental revenue include only Flogistix’s operational days of ten days in June 2024 and the six months ended December 31, 2024. Additionally, the average rental rates for VRUs are generally lower than the average rental rates for surface equipment. Accordingly, the weighted average rental rate of the combined fleet during the year ended December 31, 2025 is lower than the weighted average rental rate during the year ended December 31, 2024, which prior to the 2024 Business Combination was made up exclusively of surface equipment fleet.
Current report
Rental revenue was $418.0 million for the year ended December 31, 2025, an increase of $141.3 million, or 51%, from $276.7 million for the year ended December 31, 2024. This increase in rental revenue was driven primarily by two factors as follows:
Current report
Surface equipment fleet size experienced an increase of 102 average active systems per month from 1,434 during the year ended December 31, 2024, to 1,536 average active surface equipment systems per month during the year ended December 31, 2025. Additionally, average rental rate also had a $1,877 increase in average monthly price from $11,195 per unit during the year ended December 31, 2024 to $13,072 per unit during the year ended December 31, 2025. These increases approximate 7% and 17% for fleet size and average rental rate per unit, respectively, and contribute to a total increase in surface equipment rental revenue of $48.3 million, or approximately 25.1%.
Current report
The 2024 Business Combination impact on VRUs – the year ended December 31, 2024 rental revenue only reflect ten operation days in June 2024 and the six months ended December 31, 2024 of Flogistix’s VRU systems with a total of 2,838 average active systems during this time period and an average rental rate of approximately $4,696 per unit during the same period. During the year ended December 31, 2025, Flogistix’s VRU fleet size grew to an average of 3,016 active systems per month and an average rental rate of $4,883 per unit. These increases contribute to a total increase in vapor recovery rental revenue of $92.3 million, or approximately 109.4%, in the periods compared.
Current report
Revenue – Sales. Sales revenue was $341.8 million for the year ended December 31, 2025, an increase of $83.2 million, or 32%, from $258.6 million for the year ended December 31, 2024. This increase in revenue was primarily due to the added revenue streams in the sales revenue category. Approximately $122.4 million increase of downhole components sales, or 90%, and an $8.9 million increase of VRU sales, or 22%, were added to the total sales revenue in the year ended December 31, 2025 resulting from the 2024 Business Combination, partially offset by a decrease of approximately $48.1 million in natural gas systems sales due to a completion of a project for a customer. The sales of our VRU sales experienced a modest increase year-over-year due to a shift in purchasing patterns from our operators.
Current report
Additionally, we sell our natural gas systems through intercompany transactions for further use in the Production Solutions segment in addition to sales to our customers. Approximately $58.6 million of intercompany natural gas system sales to the Production Solutions segment was recognized in the year ended December 31, 2025 as we continued the growth in our Production Solutions segment, an increase of approximately $19.4 million in intercompany revenues from approximately $39.2 million in the year ended December 31, 2024. All intercompany revenues have been eliminated in consolidation.
Current report
Cost of Rentals. Rental cost was $114.3 million for the year ended December 31, 2025, an increase of $39.8 million, or 53%, from $74.5 million for the year ended December 31, 2024. The primary driver of this increase relates to an increase of $29.3 million of costs related to Flogistix’s VRUs as part of the 2024 Business Combination within the Natural Gas Technologies segment that were included for ten operational days in June 2024 and the six months ended December 31, 2024 along with an approximately $10.6 million increase in organic higher equipment maintenance and repair costs within the Production Solutions segment.
Current report
Cost of Sales. Sales cost was $232.2 million for the year ended December 31, 2025, an increase of $42.3 million, or 22%, from $189.9 million for the year ended December 31, 2024. This increase was primarily attributable to an increase of $74.2 million of costs related to Flowco Productions within the Production Solution segment and $6.3 million of costs related to Flogistix within the Natural Gas Technologies segment as part of the 2024 Business Combination, partially offset by reduced sale volumes and less product mix of sold natural gas systems of approximately $38.2 million from a completion of a project for a customer.
Current report
Selling, general and administrative expenses. Selling, general and administrative expenses for the year ended December 31, 2025, were $118.6 million, an increase of $56.1 million, or 90% from $62.5 million for the year ended December 31, 2024. This increase was primarily attributable to the added personnel, marketing, and sales expenses related to the 2024 Business Combination, which consists of $21.4 million, $13.0 million and $21.7 million increases within the Production Solutions, Natural Gas Technologies and Corporate segments, respectively. Included in these increases are: (i) $1.3 million of settlement expenses related to a lawsuit within our Production Solutions segment in September 2025; (ii) a $1.0 million non-recurring charge in June 2025 related to the re-purposing of one of our manufacturing facilities in Pampa, TX, within our Natural Gas Technologies segment; and (iii) $2.9 million of non-recurring charges in June 2025 related to termination benefits and related expenses, which includes one of our executive officers, within our Corporate segment.
Current report
Depreciation and amortization. Depreciation and amortization was $144.8 million for the year ended year ended December 31, 2025, an increase of $53.9 million, or 59%, from $90.9 million for the year ended December 31, 2024. This increase was primarily due to increased depreciation expense on machinery and equipment and increased amortization expense on intangible assets resulting from the 2024 Business Combination and from the additional HPGL and VRU systems acquired from the Archrock acquisition in August 2025.
Current report
Interest expense. Interest expense was $18.9 million for the year ended December 31, 2025 compared to $32.3 million for the year ended December 31, 2024. This decrease in interest expense of $13.4 million, or 41% is primarily due to decreased average borrowings outstanding in the year ended December 31, 2025 compared to the year ended December 31, 2024 resulting largely from the debt repayment in January 2025 of $440.0 million using the proceeds from the IPO, partially offset with the recent debt proceeds of $71.0 million in August 2025 to fund the Archrock acquisition.
Current report
Other income (expenses). Other income was $0.7 million for the year ended December 31, 2025, compared to other expense of $2.8 million for the year ended December 31, 2024, a favorable swing of of $3.5 million. The change was primarily driven by various gains on lease terminations, partially offset by approximately $0.4 million of transactional expenses in the year ended December 31, 2025, and the absence of Estis’ non-operating expenses that were present during the year ended December 31, 2024.
Current report
Income tax benefit (provision). Income tax benefit was $0.8 million for the year ended December 31, 2025, a favorable swing of approximately $2.0 million, or 172%, compared to provision for income taxes of $1.2 million for the year ended December 31, 2024. Provision for income taxes for the year ended December 31, 2024, is entirely associated with Texas margin tax, as it was prior to the IPO and we were not an income tax paying entity for U.S. federal purposes. After the IPO, we became subject to U.S. federal, state, and local income taxes with respect to our allocable share of taxable income of Flowco Holdings at the prevailing corporate tax rates. The $0.8 million million income tax benefit during the year ended December 31, 2025, is comprised of approximately $2.5 million of income tax benefit position due to the exclusion of noncontrolling interest and releases of valuation allowances, is partially offset by $1.6 million Texas margin tax. The $0.4 million increase in Texas margin tax year-over-year was primarily attributable to the 2024 Business Combination.
Current report
As of February 20, 2026, we had $142.0 million outstanding borrowings and $579.6 million available borrowing capacity under our Credit Agreement. The Company plans to use a portion of such availability to pay the cash portion of the purchase price at the closing of the acquisition of Valiant Artificial Lift Solutions, which cash amount is expected to be $170.0 million subject to adjustments in accordance with the purchase agreement.
Current report
On February 4, 2026, we filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”), which was declared effective on February 10, 2026. The Shelf Registration Statement registered both (i) the sale by the Company of up to $500 million of its shares of Class A common stock, preferred stock, rights, warrants or units and (ii) up to 57,530,845 shares of Class A common stock by the selling stockholders named in the Shelf Registration Statement. Such offerings may be made from time to time in one or more offerings.
Current report
Additional Liquidity Requirements
Current report
As a holding company, we have no material assets other than our ownership of LLC Interests in Flowco LLC. As such, we have no independent means of generating revenue. The Flowco LLC Agreement provides for the payment of certain distributions to the Continuing Equity Owners and to us in amounts sufficient to cover the income taxes imposed on the Company with respect to the allocation of taxable income from Flowco LLC as well as to cover our obligations under the TRA and other administrative expenses.
Current report
Regarding the ability of Flowco LLC to make distributions to us, the terms of their financing arrangements under the Credit Facility contain covenants that may restrict Flowco LLC or its subsidiaries from paying such distributions, subject to certain exceptions. Further, Flowco LLC is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Flowco LLC (with certain exceptions), as applicable, exceed the fair value of its assets.
Current report
In addition, under the TRA, we are required to make cash payments to the Continuing Equity Owners equal to 85% of the tax benefits, if any, that we actually realize (or in certain circumstances are 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 TRA. We expect the amount of the cash payments that we will be required to make under the TRA will be significant. The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of redemptions or exchanges by the Continuing Equity Owners, the amount of gain recognized by the Continuing Equity Owners, the amount and timing of the taxable income we generate in the future, and the federal tax rates then applicable. Any payments made by us to the Continuing Equity Owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us.
Current report
Additionally, in the event we declare any cash dividends, we intend to cause Flowco LLC to make distributions to us in amounts sufficient to fund such cash dividends declared by us to our stockholders. Deterioration in the financial condition, earnings, or cash flow of Flowco LLC for any reason could limit or impair their ability to pay such distributions.
Current report
If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. To the extent we are unable to make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the TRA and therefore accelerate payments due under the TRA. In addition, if Flowco LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.
Current report
In May, August, and November 2025, our Board of Directors declared and paid a cash dividend of $0.08 per share payable to holders of Class A common stock of record as of the close of business on May 14, 2025, August 15, 2025, and November 14, 2025 (the “Common Stock Dividend”). In conjunction with the Common Stock Dividend, Flowco LLC declared a distribution on its units of $0.08 per unit to all unitholders of record of Flowco LLC as of the close of business on May 14, 2025, August 15, 2025, and November 14, 2025, respectively. The declaration and payment of future dividends will be at the discretion of our Board of Directors and will depend on future business conditions, financial conditions, results of operations and other factors.
Current report
Common Share Repurchase Program
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Removed paragraphs (39)
Previous report
Background and Business Overview
Previous report
As the closing of our initial public offering (“IPO”) and the resulting concurrent reorganization occurred on January 17, 2025, the accompanying consolidated statements presented herein consisted of the accounts of our predecessor, as discussed below in Recent Developments.
Previous report
Trends and Outlook
Previous report
We monitor macroeconomic conditions and industry-specific drivers and key risk factors affecting our business segments as we formulate our strategic plans and make decisions related to allocating capital and human resources. Our business segments provide products and services to support oil and natural gas production. As a result, we are substantially dependent upon global oil production levels, as well as operating expenditures and new investment activity levels in the oil and natural gas sector. Demand for our products and services is impacted by overall global demand for oil and natural gas, ongoing depletion rates of existing oil and natural gas wells, and our customers’ willingness to invest in the development of new oil and natural gas resources. Our customers determine their operating and capital budgets based on current and expected future crude oil and natural gas prices and expectation of industry cost levels, among other factors. Crude oil and natural gas prices are impacted by supply and demand, which are influenced by geopolitical, macroeconomic, and local events, and have historically been subject to substantial volatility and cyclicality.
Previous report
Following a volatile oil market in 2023, marked by geopolitical turmoil and concerns over production levels of major producing countries, oil prices stabilized in the first half of 2024 as supply risks from ongoing global conflicts eased, inflationary pressures moderated and OPEC+ extended voluntary production cuts.
Previous report
In early 2024, crude oil prices strengthened due to fears that the conflict in the Middle East could spread throughout the region, potentially disrupting critical shipping routes and global oil supply. However, as global oil production remained stable, supply uncertainty dissipated, causing oil prices to decline from April highs. In early June, OPEC+ agreed to extend production cuts of 3.7 million barrels per day until the end of 2025 and prolonged production cuts of 2.2 million barrels per day until the end of September 2024, with a plan to gradually phase out this cut from October 2024 to September 2025. These extensions provided support for oil prices through June. In early August, fears of a U.S. recession put downward pressure on oil prices. As these fears eased and geopolitical tensions in the Middle East rose, oil prices rebounded from six-month lows.
Previous report
Longer term, the U.S. Energy Information Administration (“EIA”) forecasts U.S. crude oil production will continue to grow over the next five years, driven in part by increases in well efficiency, even with the deployment of fewer active drilling rigs, and assuming no new adverse laws or regulations. This growth in U.S. oil production follows approximately 15 years of U.S. unconventional shale development, a period in which spot oil prices fluctuated between approximately $120 per barrel to below $0 per barrel and U.S. onshore active rig count declined from approximately 1,800 rigs to below 600 rigs. During this same period, U.S. oil production grew from 5 million barrels per day to 13 million barrels per day, and the U.S. is currently the largest global producer of oil.
Previous report
While we anticipate continued variability in oil and natural gas prices, we believe commodity prices will remain constructive to incentivize oil producer operational spending, particularly within our key markets. We expect ongoing investment in the U.S. onshore market, driven by population growth, increased per capita energy consumption, energy security concerns, growing importance of U.S. oil and natural gas production, production optimization for decline management, the short-cycle nature of unconventional shale wells and continued investment in exploration and appraisal activity.
Previous report
In recent years, U.S. producers focused on capital discipline have been able to realize operational efficiencies and to increase total U.S. production despite onshore rig count remaining below previous peak levels. Producers are increasingly focused on optimizing production to limit production decline rates and to maximize production in a capital efficient manner. Our services and products provide solutions to meet these industry needs and demands, by maximizing production, minimizing downtime and limiting decline rates at all stages of a well’s lifecycle.
Previous report
On June 24, 2024, Flowco MergeCo LLC (“Flowco LLC”) entered into a contribution agreement with (i) the Estis Member, (ii) the FPS Member and (iii) the Flogistix Member, pursuant to which, Flowco LLC acquired 100% of the membership interests of each of Estis Intermediate, Flowco Productions and Flogistix Intermediate in exchange for Series A Units of Flowco LLC proportionate to the value of the contributed membership interests (the “2024 Business Combination”). In connection with the 2024 Business Combination, the FPS Member also contributed substantially all of its assets to Flowco Productions immediately prior to the consummation of the 2024 Business Combination and the contribution of the membership interests of Flowco Productions to Flowco LLC. The 2024 Business Combination was consummated effective as of June 20, 2024. As a result of the 2024 Business Combination, our Original Equity Owners acquired the following ownership interest in Flowco LLC:
Previous report
GEC Estis Holdings, LLC (i.e., the Estis Member) – 51%;
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Flowco Production Solutions, LLC. (i.e., the FPS Member) – 26%; and
Previous report
Flogistix Holdings, LLC (i.e., the Flogistix Member) – 23%.
Previous report
In August 2024, Flowco LLC contributed all of the equity interest in each of Estis Intermediate, Flowco Productions and Flogistix (collectively, the “Merging Entities”) to another wholly owned subsidiary, Flowco MasterCo LLC, which is the current direct owner of Estis Intermediate, Flowco Productions and Flogistix Intermediate. The purpose of Flowco LLC is to carry on the business activities of each of the contributed entities, including production optimization and related oilfield services business lines.
Previous report
Flowco Holdings Inc. (“Flowco Holdings”) was incorporated in Delaware on July 25, 2024 in connection with the IPO and only engaged, through the last date presented in this Annual Report, in activities in contemplation of the IPO. After giving effect to the IPO, we became a holding company, and our sole material assets consist of its ownership interests in Flowco LLC.
Previous report
As a result of the 2024 Business Combination, Estis was deemed to be the accounting acquirer and Flowco Productions and Flogistix as the acquirees. Additionally, Estis was deemed to be the accounting predecessor for financial reporting purposes and as such, all historical results of operations discussed in this Annual Report, other than the Flowco Holdings December 31, 2024 Balance Sheet, for all periods prior to June 20, 2024, reflect only Estis’ legacy operations, and for the period subsequent to June 20, 2024, are reflective of the combined operations of the Merging Entities (the Merging Entities are also referred to herein as the “Predecessor”).
Previous report
The 2024 Business Combination was accounted for as a business combination using the acquisition method of accounting under ASC 805, Business Combinations (“ASC 805”).
Previous report
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.
Previous report
Predecessor Consolidated Results of Operations
Previous report
The following table presents summary consolidated operating results of our predecessor Estis for the periods indicated:
Previous report
Cost of Rentals. Rental cost of $42.2 million in 2023 increased $9.0 million, or 27%, from $33.2 million in 2022. All rental costs are within the Production Solutions segment. This increase was primarily attributable to an increase of $3.8 million for equipment maintenance and repair expense, $2.5 million of additional personnel expense, and $1.2 million of shop repair and maintenance expense due to the increased fleet count, as well as inflationary costs.
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Cost of Sales. Sales cost of $62.6 million in 2023 increased $40.3 million, or 181%, from $22.3 million in 2022. All sales costs are within the Natural Gas Technologies segment. This increase was primarily attributable to increased sale volumes and mix of products sold.
Previous report
Depreciation and amortization. Depreciation and amortization was $43.8 million for 2023 an increase of $7.6 million, from $36.2 million in 2022. The increase in depreciation expense was primarily due to depreciation on purchases of machinery and equipment of $43.3 million during 2023, as well as a full year of depreciation on $107.0 million of purchases of property, plant and equipment in 2022. The entirety of the change relates to the Production Solutions segment as depreciation and amortization within the Natural Gas Technologies segment remained consistent year-over-year.
Previous report
Selling, general and administrative expenses. Selling, general and administrative expenses for 2023 were $15.2 million, an increase of $1.0 million from $14.2 million for 2022. This increase was primarily attributable to increases in personnel expense and sales and marketing expense. The entirety of the change relates to the Production Solutions segment as the selling, general and administrative expenses within the Natural Gas Technologies segment remained consistent year-over-year.
Previous report
Interest expense. Interest expense was $19.0 million in 2023 compared to interest expense of $9.3 million in 2022. This increase in interest expense of $9.7 million was related to the timing of additional borrowings of $188.4 million, partially offset by the timing of payments of $173.5 million on the revolving credit facility of Estis and its subsidiaries (the “Prior Estis Credit Facility”), as well as increased borrowing costs.
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Other expense. Other expense was $0.9 million in 2023 compared to $0.4 million in 2022, an increase of $0.5 million. The increase was primarily due to an increase in other non-operating expenses.
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Provision for income taxes. Provision for income taxes was $0.4 million for the year ended December 31, 2023, a $0.1 million or approximately 34% increase from the year ended December 31, 2022. The increase is associated with increased operating activities that resulted in increased Texas margin tax expenses.
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Operating activities. Net cash provided by operating activities was $179.4 million in 2024 compared to $81.9 million in 2023, an increase of approximately $97.5 million. Operating cash flows increased primarily due to higher net income of $17.9 million and depreciation and amortization of $46.2 million. In addition, cash outflows associated with working capital increased $10.3 million, largely due to increases in accounts payable and accrued expenses, partially offset by increases in inventory and accounts receivable.
Previous report
Net cash provided by operating activities was $81.9 million in 2023 compared to $66.6 million in 2022. This increase was primarily due to higher net income of $25.4 million and depreciation and amortization of $7.6 million, partially offset by increased cash outflows associated with our working capital of $20.7 million, an increase inventory of $15.9 million and an increase in accounts receivable of $3.1 million.
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Investing activities. Net cash used in investing activities was $94.4 million and $42.7 million for the years ended December 31, 2024 and 2023, respectively. The approximately $52.7 million increase was primarily due to an increase of $46.8 million in purchases of property, plant and equipment and $7 million cash paid for acquisition slightly decreased by $3.1 million net cash acquired from the 2024 Business Combination.
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Net cash used in investing activities was $42.7 million in 2023 compared to $106.9 million in 2022. The change was primarily due to a decrease of $63.4 million in purchases of property, plant and equipment from 2022 when a significant strategic investment was implemented to expand the rental fleet size.
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Financing activities. Net cash used in financing activities was $80.3 million in 2024 compared to net cash used of $39.2 million in 2023. The $26.9 million increase in net cash used in financing activities was primarily related to $125.2 million of payments on long-term debt and increased distributions to members by $178.0 million, partially offset by an increase in proceeds from long-term debt of $274.1 million.
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Financing activities resulted in $39.2 million of net cash used in 2023 compared to $40.4 million of net cash provided in 2022. This favorable change in cash flows from financing activities was primarily related to the absences of $65.7 million of payments on the Prior Estis Credit Facility and $15.5 million distributions to Estis' sole member in 2022, slightly offset by the decrease in year-over-year debt issuance costs of approximately $1.2 million.
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Share-based compensation
Previous report
The Estis Member, as the parent member of Estis prior to the 2024 Business Combination, issued profits interests to certain employees of Estis. FPS Member and Flogistix Member also issued profits interest to certain employees of Flowco Productions and Flogistix. All of the entities account for these awards in accordance with ASC 718, Compensation – Stock Compensation. While the awards are issued by the Estis Member, FPS Member, and Flogistix Member, the costs have been recognized by Estis, Flowco Productions, and Flogistix, respectively.
Previous report
We estimate grant date fair value using the Black-Scholes option-pricing model. The use of a valuation model requires management to make certain assumptions with respect to selected model inputs, such as enterprise value, volatility, risk-free rate, and term. Estis last issued profit interest awards in 2021 which had a grant date fair value of $11.71 per unit. In comparison, the Company first issued profit interest awards in 2019, which had a grant date fair value of $2.00 per unit, or a $9.71 increase in the value per unit. The enterprise value increased by $237 million and the volatility increased by 7.19% between the first and last issuances, which were the primary drivers in the change in value. Flogistix last issued profit interest awards in 2022 and Flowco Productions last issued profit interest awards in 2023. There were no other issuances during the historical financial statement periods presented.
Previous report
The risk-free rate and term are key inputs with a low degree of estimation uncertainty. The key estimates that have a higher degree of estimation uncertainty were the enterprise value and volatility. Enterprise value and volatility are subject to uncertainty given the forward-looking inputs such as future cash flows and expected volatility based on public company peers. The estimate and key assumptions have not changed during the current year as no new units were issued. The volatility in particular is highly sensitive due to the Company’s current stage in its life cycle relative to its public company peers.
Previous report
Total share-based compensation expenses for the year ended December 31, 2024, 2023 and 2022 were $1.0 million, $0.1 million and $0.5 million, respectively. Because the Company has not issued new material units during these years, we do not expect material changes to this estimate.
Previous report
The expected term represents the period that the share-based awards are expected to be outstanding. We determine the expected term using the simplified method as provided by the Securities and Exchange Commission. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the profit units. Since the Members' Equity is not publicly or privately traded, expected volatility is estimated based on the average historical volatility of similar entities with publicly traded shares. The risk-free rate for the expected term of the options is based on the U.S. Treasury yield curve at the date of the grant. Forfeitures are recognized as they occur.
Reworded paragraphs (27)
Previous wording
We are a leading provider of production optimization, artificial lift and methane abatement solutions for the oil and natural gas industry.
Current wording
We are a leading provider of production optimization, artificial lift and emissions management and monetization solutions for the oil and natural gas industry.
Previous wording
Production Solutions: segment is comprised of our artificial lift operations, digital solutions and methane abatement technologies; and
Current wording
Production Solutions: segment is comprised of our artificial lift operations, including digital solutions; and
Previous wording
We have strategically positioned ourselves to provide products and services that 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. As a result of this strategic position, we are able to generate revenues throughout the long producing lives of oil and natural gas wells. Our products and services also integrate proprietary digital technologies that allow for remote monitoring and controls, and other enhanced uses of our equipment. We have an operating presence in every major onshore oil and natural gas producing region in the United States. For a more detailed overview of our business, see Part 1. Item 1. Business and Part 1. Item 2. Propertiesin this Annual Report.
Current wording
We have strategically positioned ourselves to provide products and services that 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. As a result of this strategic position, we are able to generate revenues throughout the long production lives of oil and natural gas wells. Our products and services also integrate proprietary digital technologies that allow for remote monitoring and controls, and other enhanced uses of our equipment. We have an operating presence in every major onshore oil and natural gas producing region in the U.S. For a more detailed overview of our business, see Part 1. Item 1. Business and Part 1. Item 2. Propertiesin this Annual Report.
Previous wording
We consummated our IPO on January 15, 2025, in which we issued and sold 20,470,000 shares of our Class A common stock at a price of $24.00 per share, resulting in gross proceeds to us approximately $491.3 million and net proceeds to us of approximately $461.8 million, after deducting the underwriting discount of approximately $29.5 million.
Current wording
We consummated our initial public offering (“IPO”) on January 15, 2025, in which we issued and sold 20,470,000 shares of our Class A common stock at a price of $24.00 per share, resulting in net proceeds to us of approximately $461.8 million, after deducting the underwriting discount of approximately $29.5 million.
Previous wording
The ongoing heightened tension in the global geopolitical environments, especially the prolonged conflicts in Ukraine and in the Middle East and the continued tension between U.S. and China, continues to create uncertainty not only in the oil and natural gas markets, but also in the financial market and global supply chain. In early 2025, the Trump administration has introduced new and significant trade policies and has imposed or threatened to impose tariffs on imported products with numerous U.S. global trade partners. These aggressive and unpredictable trade policies could create volatility in U.S. stock markets and further disruptions in global supply chain dynamics. We do not know the ultimate severity or duration of these conflicts, but we continue to closely monitor shifts in global trade policies and evaluate their potential impacts on our business, financial condition and results of operations.
Current wording
The ongoing heightened tension in the global geopolitical environments, especially the prolonged conflicts in Ukraine and in the Middle East and the continued tension between U.S. and China, continues to create uncertainty not only in the oil and natural gas markets, but also in the financial market and global supply chain. Commencing in early 2025, the Trump administration introduced new and significant trade policies and imposed or threatened to impose tariffs on imported products with numerous U.S. global trade partners. These aggressive and unpredictable trade policies could create volatility in U.S. stock markets and further disruptions in global supply chain dynamics. We do not know the ultimate severity or duration of these conflicts, but we continue to closely monitor shifts in global trade policies and evaluate their potential impacts on our business, financial condition and results of operations.
Previous wording
As our business is closely aligned with wells production and is typically less directly affected by commodity price, we are not exposed to the volatility often faced in the narrow-focused and shorter-cycle oil field service businesses. We deliver natural gas compression services in connection with domestic natural gas production that primarily occurs in natural gas basins, such as the Appalachian and Barnett, and in crude oil basins where associated natural gas is produced alongside crude oil production, such as San Juan, Anadarko and Permian basins, and Eagle Ford Shale.
Current wording
As our business is closely aligned with well production and is typically less directly affected by commodity price, we are not exposed to the volatility often faced in the narrow-focused and shorter-cycle oil field service businesses. We deliver natural gas compression services in connection with domestic natural gas production that primarily occurs in natural gas basins, such as the Appalachian and Barnett, and in crude oil basins where associated natural gas is produced alongside crude oil production, such as San Juan, Anadarko and Permian basins, and Eagle Ford Shale.
Previous wording
Selling, general and administrative expenses. We expect to incur additional selling, general and administrative expenses as a result of becoming a publicly traded company. These costs include expenses associated with our annual and quarterly reporting, tax preparation expenses, Sarbanes-Oxley (“SOX”) compliance expenses, audit fees, legal fees, directors and officers insurance, investor relations expenses, Tax Receivable Agreement administration expenses and registrar and transfer agent fees. These increases in selling, general and administrative expenses are not reflected in our historical financial statements, other than a portion of these costs incurred in 2024 in contemplation and preparation of the IPO.
Current wording
Selling, general and administrative expenses. During 2025, we incurred additional selling, general and administrative expenses as a result of becoming a publicly traded company. These costs include expenses associated with our annual and quarterly financial reporting with the SEC, tax preparation expenses, Sarbanes-Oxley (“SOX”) compliance expenses, audit fees, legal fees, directors and officers insurance, investor relations expenses, Tax Receivable Agreement administration expenses and registrar and transfer agent fees.
Previous wording
Corporate Reorganization. For periods prior to June 20, 2024, the historical consolidated financial statements presented herein are based on the operations of our accounting predecessor, Estis. For a period subsequent to June 20, 2024, the consolidated financial statements presented are based on the combined operations of the Merging Entities. As a result, the historical consolidated financial information may not provide an accurate indication of what our actual results would have been if the 2024 Business Combination had been completed at the beginning of the earliest period presented. In addition, we entered into a Tax Receivable Agreement with the TRA Participants. This agreement generally provides for the payment by us to the TRA Participants of 85% of the net cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize or are deemed to realize in certain circumstances as a result of certain increases in tax basis and imputed interest. We will retain the benefit of the remaining 15% of such net cash savings. For additional information regarding the Tax Receivable Agreement, see “Part 1. Item 1A. Risk Factors – Risk Factors Related to our Organizational Structure.”
Current wording
Corporate Reorganization. For periods prior to June 20, 2024, the historical consolidated financial statements presented herein are based on the operations of our accounting predecessor, Estis. For periods subsequent to June 20, 2024, the consolidated financial statements presented are based on the combined operations of the Merging Entities. As a result, the historical consolidated financial information may not provide an accurate indication of what our actual results would have been if the 2024 Business Combination had been completed at the beginning of the earliest period presented.
Previous wording
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.
Current wording
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 the comparative prior period in this Annual Report, the prior years’ financial information do not reflect any income tax benefit or expense attributable to us. Subsequent to the IPO, we became a taxable entity and started to be 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.
Previous wording
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.
Current wording
Noncontrolling Interests. As a result of the IPO and a series of related reorganization transactions in connection with the IPO (the “Transactions”), we became the sole managing member of Flowco LLC and consolidate entities in which we have 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 the period after the IPO, the financial position and results of operations include those of Flowco Holdings and we report the noncontrolling interests related to the portion of LLC Interests not owned by us. Additionally, all shares of our Class B common stock are held by noncontrolling interest owners. The noncontrolling interests only impact financial statements presentations as of December 31, 2025 and for the year ended December 31, 2025.
Previous wording
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.
Current wording
The consolidated financial information included in the following tables and discussions present the historical financial information of our operations. 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.
Previous wording
Loss on sale of equipment. Loss on sale of equipment was $0.8 million for the year December 31, 2024, compared to $1.2 million for the year ended December 31, 2023, a decrease of $0.4 million, which is all related to the Production Solutions segment. The decrease is due to a fewer number of unit disposals in 2024 compared to 2023.
Current wording
Loss on sale of equipment. Loss on sale of equipment was $0.7 million for the year ended December 31, 2025, compared to $0.8 million for the year ended December 31, 2024, a decrease of $0.1 million, or 6.9%, due to a fewer number of unit disposals within the Production Solutions segment in 2025 compared to 2024.
Previous wording
Loss on debt extinguishments. Loss on debt extinguishments was $0.2 million for the year ended December 31, 2024, compared to $0.0 million for the year ended December 31, 2023, an increase of $0.2 million, which is related to the Credit Agreement entered into on August 20, 2024, which currently provides for a $725.0 million five-year senior secured revolving credit facility.
Current wording
Loss on debt extinguishments. Loss on debt extinguishments was $0.2 million for the year ended December 31, 2024 with no comparable item for the year ended December 31, 2025, related to the Credit Agreement entered into on August 20, 2024, which currently provides for a $725.0 million five-year senior secured revolving credit facility.
Previous wording
Revenue – Sales. 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.
Current wording
Revenue—Sales. Sales revenue was $258.6 million for the year ended December 31, 2024, an increase of $184.1 million, or 247%, 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.
Previous wording
Selling, general and administrative expenses. Selling, general and administrative expenses for the year ended December 31, 2024, were $62.5 million, an increase of $47.2 million from $15.2 million for the year ended December 31, 2023. This increase was primarily attributable to $21.2 million of costs related to Flowco Productions within the Production Solutions segment, $15.7 million of expenses related to Flogistix within the Natural Gas Technologies segment, and Corporate expenses of $6.0 million as a part of the 2024 Business Combination. The remaining increase of $3.9 million is due to increases in personnel expense and sales and marketing expense at Estis, including the addition of management and employees in connection with our IPO and anticipated public company reporting requirements.
Current wording
Selling, general and administrative expenses. Selling, general and administrative expenses were $62.5 million for the year ended December 31, 2024, an increase of $47.2 million, or 310%, from $15.2 million for the year ended December 31, 2023. This increase was primarily attributable to $21.2 million of costs related to Flowco Productions within the Production Solutions segment, $15.7 million of expenses related to Flogistix within the Natural Gas Technologies segment, and Corporate expenses of $6.0 million as a part of the 2024 Business Combination. The remaining increase of $3.9 million is due to increases in personnel expense and sales and marketing expense at Estis, including the addition of management and employees in connection with our IPO and anticipated public company reporting requirements.
Previous wording
Depreciation and amortization. Depreciation and amortization was $90.9 million for the year ended December 31, 2024, an increase of $47.0 million, from $43.8 million for the year ended December 31, 2023. The increase in depreciation expense was primarily due to $13.2 million related to Flowco Productions within the Production Solutions segment and $27.6 million related to Flogistix within the Natural Gas Technologies segment as part of the 2024 Business Combination. The remainder of the increase in depreciation expense was due to purchases of machinery and equipment in the prior period, which primarily relates to the Production Solutions segment as depreciation and amortization within the Natural Gas Technologies remained consistent year-over-year.
Current wording
Depreciation and amortization. Depreciation and amortization was $90.9 million for the year ended December 31, 2024, an increase of $47.0 million, or 107%, from $43.8 million for the year ended December 31, 2023. The increase in depreciation expense was primarily due to $13.2 million related to Flowco Productions within the Production Solutions segment and $27.6 million related to Flogistix within the Natural Gas Technologies segment as part of the 2024 Business Combination. The remainder of the increase in depreciation expense was due to purchases of machinery and equipment in the prior period, which primarily relates to the Production Solutions segment as depreciation and amortization within the Natural Gas Technologies segment remained consistent year-over-year.
Previous wording
Loss on sale of equipment. Loss on sale of equipment, net was $1.2 million in 2023 compared to $0.1 million in 2022, an increase of $1.1 million, due to a higher number of unit disposals in the Production Solutions segment in the first and fourth quarters of 2023 compared to 2022, which had minimal disposals during the year.
Current wording
Loss on sale of equipment. Loss on sale of equipment, net was $0.8 million for the year ended December 31, 2024 compared to $1.2 million for the year ended December 31, 2023, a decrease of $0.4 million, or 32%, due to fewer unit disposals in the Production Solutions segment in 2024 compared to 2023.
Previous wording
Interest expense. Interest expense was $32.3 million for the year ended December 31, 2024 compared to interest expense of $19.0 million for the year ended December 31, 2023. This increase in interest expense of $13.4 million is due to interest expense related to Flowco Productions and Flogistix as part of the 2024 Business Combination, in addition to the associated interest on increased borrowings under the Credit Agreement for distributions to members.
Current wording
Interest expense. Interest expense was $32.3 million for the year ended December 31, 2024 compared to $19.0 million for the year ended December 31, 2023. This increase in interest expense of $13.4 million, or 71%, was due to interest expense related to Flowco Productions and Flogistix as part of the 2024 Business Combination, as well as the associated interest on increased borrowings under the Credit Agreement for distributions to members.
Previous wording
Other expense. Other expense was $2.8 million for the year ended December 31, 2024, compared to $0.9 million for the year ended December 31, 2023, an increase of $1.8 million. The increase is due to $0.3 million related to Flowco Productions and Flogistix as part of the 2024 Business Combination as well as $2.7 million of transaction costs incurred in connection with the 2024 Business Combination and $0.9 million of professional service fees not determined to be direct and incremental to the registration statement and not part of the core operating costs of the business. These costs were partially offset by $0.5 million of other expenses incurred during the year ended December 31, 2023 that did not recur during the year ended December 31, 2024.
Current wording
Other income (expense). Other income (expense) was $2.8 million for the year ended December 31, 2024 compared to $0.9 million for the year ended December 31, 2023, an increase of $1.8 million, or 203%. The increase is due to $0.3 million related to Flowco Productions and Flogistix as part of the 2024 Business Combination as well as $2.7 million of transaction costs incurred in connection with the 2024 Business Combination and $0.9 million of professional service fees not determined to be direct and incremental to our IPO registration statement and not part of the core operating costs of the business. These costs were partially offset by $0.5 million of other expenses incurred during the year ended December 31, 2023 that did not recur during the year ended December 31, 2024.
Previous wording
Provision for income taxes. Provision for income taxes was $1.2 million for the year ended December 31, 2024, a $0.8 million increase from the year ended December 31, 2023. Provision for income taxes for the years ended December 31, 2024 and 2023, are entirely associated with Texas margin tax, as an LLC. This increase is due to Flowco Productions and Flogistix, as part of the 2024 Business Combination, being included in our financial results for approximately half of 2024.
Current wording
Provision for income taxes. Provision for income taxes was $1.2 million for the year ended December 31, 2024, an increase of $0.8 million or approximately 209% from $0.4 million for the year ended December 31, 2023. Provision for income taxes for the years ended December 31, 2024 and 2023, are entirely associated with Texas margin tax, as an LLC. This increase is due to Flowco Productions and Flogistix, as part of the 2024 Business Combination, being included in our financial results for approximately half of 2024.
Previous wording
In connection with the IPO described above, Flowco LLC used the net proceeds received from us to: (i) redeem approximately $20.9 million of Flowco LLC interests from certain non-affiliate holders and (ii) with respect to the remainder, repay indebtedness under our Credit Agreement.
Current wording
In connection with the IPO described above, Flowco LLC used the net proceeds received from us to: (i) redeem approximately $20.9 million of Flowco LLC interests from certain non-affiliate holders and (ii) with respect to the remainder, repay indebtedness under our Credit Agreement of $440.0 million.
Previous wording
As of December 31, 2024, we had $2.5 million of cash and cash equivalents. We expect that our primary sources of liquidity and capital resources will be cash flows generated by operating activities and borrowings under our Credit Agreement, which has a maturity date of August 20, 2029, that is payable upon maturity. Our interest rate is Term Secured Overnight Finance Rate (“SOFR”) for one month plus 0.1% (“Adjusted REVSOFR30”) plus a contractual applicable margin based on the Company’s calculated leverage ratio, which combined approximates 6.4% per annum at the effective date with interest due monthly. If such rate is below contractual minimums, the interest rate will be calculated based on Adjusted Term SOFR Rate, Adjusted REVSOFR30 Rate or the Adjusted Daily Simple SOFR Rate. Depending upon market conditions and other factors, we may also have the ability to issue additional equity and/or debt, as needed.
Current wording
As of December 31, 2025, we had $4.5 million of cash and cash equivalents. We believe existing cash and cash equivalents and cash flows from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We have historically generated cash and fund our operations primarily from cash flows from operating activities as well as availability under our Credit Agreement. Borrowings under our Credit Agreement have a maturity date of August 20, 2029, in which all principal owed is payable upon maturity. Our interest rate is Term Secured Overnight Finance Rate (“SOFR”) for one month plus 0.1% (“Adjusted REVSOFR30”) plus a contractual applicable margin based on the Company’s calculated leverage ratio, which combined approximates 6.4% per annum at the effective date with interest due monthly. If such rate is below contractual minimums, the interest rate will be calculated based on Adjusted Term SOFR Rate, Adjusted REVSOFR30 Rate or the Adjusted Daily Simple SOFR Rate. Depending upon market conditions and other factors, we may also have the ability to issue additional equity and/or debt, as needed.
Previous wording
Historically, our predecessors’ primary sources of liquidity were cash flows from operations, borrowings under Estis’ legacy credit agreement and equity provided by the Original Equity Owners. Our predecessors’ primary use of capital has been for working capital purposes, to make cash distributions to the Original Equity Owners and repay indebtedness. Prior to the repayment of a portion of the Credit Agreement in conjunction with the IPO, the outstanding borrowings under the Credit Agreement was $635.9 million with $87.6 million of available borrowing capacity on December 31, 2024. As of March 14, 2025, we had $195.7 million outstanding borrowings and $527.7 million available borrowing capacity under our Credit Agreement.
Current wording
Historically, our predecessors’ primary sources of liquidity were cash flows from operations, borrowings under Estis’ legacy credit agreement and equity provided by the Original Equity Owners. Our predecessors’ primary use of capital has been for working capital purposes, to make cash distributions to the Original Equity Owners and repay indebtedness.
Previous wording
Our Board of Directors may elect to declare cash dividends on our Class A common stock, subject to our compliance with applicable law, and depending on, among other things, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements, and restrictions in the agreements governing our indebtedness. We currently intend to pay a dividend from available funds and future earnings on our Class A common stock. If and to the extent our Board of Directors declares cash dividends to our stockholders, we expect the dividend to be paid from cash flows from our operations. The timing, amount and financing of dividends, if any, will be subject to the discretion of our Board of Directors from time to time. As of December 31, 2024, we have yet to declare a cash dividend on our Class A common stock. Distributions to members or partners made by our predecessor entities, including distributions to members funded during 2024 in part by borrowings under our Credit Agreement, should not be viewed as indicative that we expect to pay with respect to our Class A common stock.
Current wording
Our Board of Directors may elect to declare cash dividends on our Class A common stock, subject to our compliance with applicable law, and depending on, among other things, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements, and restrictions in the agreements governing our indebtedness.
Previous wording
No events or circumstances occurred that indicated the fair value of any of our reporting units may be below its carrying amount as of December 31, 2024. As such, no impairment expense was recorded for the year ended December 31, 2024.
Current wording
No events or circumstances occurred that indicated the fair value of any of our reporting units may be below its carrying amount as of December 31, 2025 or 2024. As such, no impairment expense was recorded for the years ended December 31, 2025 and 2024.
Previous wording
Our industry is capital intensive, as property and equipment represented 44.2% of our total assets as of December 31, 2024 and depreciation and amortization represented 21.7% of our total operating costs and expenses in the year ended December 31, 2024. As of December 31, 2023, property and equipment represented 75% of our total assets and depreciation and amortization represented 56% of our total operating costs and expenses prior to the 2024 Business Combination. Our property, plant and equipment and intangible assets with finite useful lives are carried at cost less accumulated depreciation and amortization. For acquired intangible assets, we amortize the cost over their estimated useful lives using either a straight- line or an accelerated method that most accurately reflects the estimated pattern in which the economic benefit of the respective asset is consumed. No provision for salvage value is considered in determining depreciation of our property, plant and equipment. We calculate depreciation and amortization on our assets based on the estimated useful lives that we believe are reasonable. The estimated useful lives are subject to key assumptions such as maintenance and utilization. These estimates may change due to a number of factors such as changes in operating conditions or advances in technology. The estimate has a low degree of estimation uncertainty as there were no changes in the useful lives utilized by management in the periods presented. Maintenance and repairs are charged to expense when incurred. Improvements which extend the life or improve the existing asset are capitalized.
Current wording
Our industry is capital intensive. As of December 31, 2025, property and equipment represented 48.4% of our total assets and depreciation and amortization represented 23.7% of our total operating costs and expenses for the year ended December 31, 2025. As of December 31, 2024, property and equipment represented 44.2% of our total assets and depreciation and amortization represented 21.7% of our total operating costs and expenses for the year ended December 31, 2024. Our property, plant and equipment and intangible assets with finite useful lives are carried at cost less accumulated depreciation and amortization. For acquired intangible assets, we amortize the cost over their estimated useful lives using either a straight-line or an accelerated method that most accurately reflects the estimated pattern in which the economic benefit of the respective asset is consumed. No provision for salvage value is considered in determining depreciation of our property, plant and equipment. We calculate depreciation and amortization on our assets based on the estimated useful lives that we believe are reasonable. The estimated useful lives are subject to key assumptions such as maintenance and utilization. These estimates may change due to a number of factors such as changes in operating conditions or advances in technology. The estimate has a low degree of estimation uncertainty as there were no changes in the useful lives utilized by management in the periods presented. Maintenance and repairs are charged to expense when incurred. Improvements which extend the life or improve the existing asset are capitalized.
Previous wording
We are not currently required to comply with the SEC rules that implement Section 404 of the SOX Act, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we are required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Additionally, our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company”, as defined in the JOBS Act.
Current wording
As a public company, we are required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Additionally, our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company”, as defined in the JOBS Act.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Prior to June 20, 2024, all operating results reflect only Estis as predecessor to the Merging Entities. The following table sets forth certain selected financial results for the periods indicated (in thousands):
Current report — wording carried from elsewhere
Loss on debt extinguishments. Loss on debt extinguishments was $0.2 million for the year ended December 31, 2024, with no comparable item for the year ended December 31, 2023, related to the Credit Agreement entered into on August 20, 2024, which currently provides for a $725.0 million five-year senior secured revolving credit facility.
Current report — wording carried from elsewhere
As of December 31, 2025, we had $167.8 million outstanding borrowings and $557.2 million available borrowing capacity under our Credit Agreement.
Current report — wording carried from elsewhere
See Part I – Item 1A. Risk Factors – Risks Related to our Organizational Structure in this Annual Report.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
2024 Business Combination and Subsequent Transactions
Previous report — wording carried elsewhere
Revenue—Rentals. Rental revenue was $168.8 million for 2023, an increase of $48.6 million, or 40%, from $120.2 million for 2022. All rental revenue is included within the Production Solutions segment. This increase in rental revenue was driven by an increase of 191 average active systems per month from 1,210 during 2022 to 1,401 average active systems per month during 2023; and $2,117 increase in average monthly price from $8,279 per unit during 2022 to $10,043 per unit during 2023. Thus, of the increase in rental revenue, 43% is attributable to an increase in average active systems, and 57% is due to an increase in average monthly price.
Previous report — wording carried elsewhere
Revenue—Sales. Sales revenue was $74.5 million for 2023, an increase of $46.1 million, or 163%, from $28.4 million for 2022. All sales revenue is included within the Natural Gas Technologies segment. This increase in revenue was primarily due to a $45.5 million increase in 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 2022, Natural Gas Technologies segment had $99.9 million intercompany natural gas system sales to the Production Solutions segment as we continued to increase the volume of active systems. 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 111% year-over-year while pricing remained flat. All intercompany revenues have been eliminated in consolidation.