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What changed in Flowco Holdings Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Flowco Holdings Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+649 added−587 removedSource: 10-K (2026-02-26) vs 10-K (2025-03-20)

Top changes in Flowco Holdings Inc.'s 2025 10-K

649 paragraphs added · 587 removed · 381 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

94 edited+6 added−21 removed108 unchanged
Biggest changeAdditionally, in May 2024, the FWS listed the Dune Sagebrush Lizard as endangered, the population of which is concentrated in the Permian Basin. The FWS may also designate critical habitat and suitable habitat areas that it believes are necessary for the survival of a threatened or endangered species.
Biggest changeDistrict Court for the Western District of Texas reversed this decision, which removed the endangered designation from the Southern DPS. Additionally, in May 2024, the FWS listed the Dune Sagebrush Lizard as endangered, the population of which is concentrated in the Permian Basin.
The enhanced application of our products and services through real-time monitoring, actionable analytics, automation and remote operations helps our customers maximize the value of our solutions through safe and efficient operations due to their durability and reliability, which is born out through rigorous testing in accordance with stringent performance standards.
The enhanced application of our products and services through real-time monitoring, actionable analytics, automation and remote operations helps our customers maximize the value of our solutions through safe and efficient operations due to their durability and reliability, which is born out of rigorous testing in accordance with stringent performance standards.
Furthermore, unlike the drilling and completions markets, which have been volatile in recent years, the more attractive domestic artificial lift market, which is driven by non-discretionary operating expenditures, has grown significantly as producers increasingly focus on production optimization and artificial lift as an enabler for their unconventional reservoir development and a catalyst for improved output from producing 16 wells, which leads to more durable cash flow generation for our business, even in cyclical market scenarios. • Supply chain integration.
Furthermore, unlike the drilling and completions markets, which have been volatile in recent years, the more attractive domestic artificial lift market, which is driven by non-discretionary operating expenditures, has grown significantly as producers increasingly focus on production optimization and artificial lift as an enabler for their unconventional reservoir development and a catalyst for improved output from producing wells, which leads to more durable cash flow generation for our business, even in cyclical market scenarios. • Supply chain integration.
The trend in environmental regulation has been to place more restrictions and limitations on activities that may affect the environment and thus any changes in environmental laws and 23 regulations or re-interpretation of enforcement policies that result in more stringent and costly waste handling, storage transport, disposal, or remediation requirements could have a material adverse effect on our financial position and results of operations.
The trend in environmental regulation has been to place more restrictions and limitations on activities that may affect the environment and thus any changes in environmental laws and regulations or re-interpretation of enforcement policies that result in more stringent and costly waste handling, storage transport, disposal, or remediation requirements could have a material adverse effect on our financial position and results of operations.
We cannot provide any assurance that the costs and liabilities associated with the future imposition of such remedial obligations upon us would not have a material adverse effect on our operations or financial position. 27 Resource Conservation and Recovery Act RCRA and comparable state statutes regulate the generation, transportation, treatment, storage, disposal, and cleanup of hazardous and non-hazardous wastes.
We cannot provide any assurance that the costs and liabilities associated with the future imposition of such remedial obligations upon us would not have a material adverse effect on our operations or financial position. Resource Conservation and Recovery Act RCRA and comparable state statutes regulate the generation, transportation, treatment, storage, disposal, and cleanup of hazardous and non-hazardous wastes.
Federal and state regulatory agencies can impose administrative, civil, and criminal penalties as well as other enforcement mechanisms for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations. Our artificial lift and production enhancement products and our related services do not generate process wastewaters that are discharged to waters of the U.S.
Federal and state regulatory agencies can impose administrative, civil, and criminal penalties as well as other enforcement mechanisms for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations. Our artificial lift and production enhancement products and our related services do not generate process wastewaters that are discharged to waters of the U.S (“WOTUS”).
Our senior management team has extensive operational, financial and managerial experience in 21 businesses operating across multiple stages of the well lifecycle. We will continue to invest in securing and developing top talent at all organizational levels. Our people are a key component of our mission to continue to deliver innovative efficiency-driven solutions and profitability for our customers.
Our senior management team has extensive operational, financial and managerial experience in businesses operating across multiple stages of the well lifecycle. We will continue to invest in securing and developing top talent at all organizational levels. Our people are a key component of our mission to continue to deliver innovative efficiency-driven solutions and profitability for our customers.
We believe we are uniquely positioned in the market as an attractive option for our stockholders to participate in continued growth in our core business characterized by attractive free cash flow and returns. • Diverse and stable customer base. Our platform serves substantially all of the top U.S. oil and natural gas producers.
We believe we are uniquely positioned in the market as an attractive option for our stockholders to participate in continued growth in our core business characterized by attractive free cash flow and returns. 12 • Diverse and stable customer base. Our platform serves substantially all of the top U.S. oil and natural gas producers.
Many of our products are installed and on location with customers for months or years at a time, leading to abundant data and feedback from 20 customers on product performance, outcomes and improvement opportunities. For example, we pioneered the HPGL technology in 2017 alongside one of our key customers in our conventional gas lift market.
Many of our products are installed and on location with customers for months or years at a time, leading to abundant data and feedback from customers on product performance, outcomes and improvement opportunities. For example, we pioneered the HPGL technology in 2017 alongside one of our key customers in our conventional gas lift market.
Climate change 24 State, national and foreign governments and agencies continue to evaluate, and in some instances adopt, climate-related legislation and other regulatory initiatives that would restrict emissions of greenhouse gases. Changes in environmental requirements related to GHG emissions, climate change, hydraulic fracturing and alternative energy sources may negatively impact demand for our services.
Climate change State, national and foreign governments and agencies continue to evaluate, and in some instances adopt, climate-related legislation and other regulatory initiatives that would restrict emissions of greenhouse gases. Changes in environmental requirements related to GHG emissions, climate change, hydraulic fracturing and alternative energy sources may negatively impact demand for our services.
We believe our customers will continue to adopt automation to drive productivity and efficiency in the coming years. Digital technology has become increasingly important as producers seek to improve reservoir performance and increase oil and natural gas recovery and profitability throughout the well lifecycle. • Extensive and reliable fleet base.
We believe our customers will continue to adopt automation to drive productivity and efficiency in the coming years. Digital technology has also become increasingly important as producers seek to improve reservoir performance and increase oil and natural gas recovery and profitability throughout the well lifecycle. • Extensive and reliable fleet base.
Our production solutions include: 12 • High Pressure Gas Lift . HPGL systems are placed at the wellsite to inject pressurized natural gas into the wellbore. These systems are typically installed when a well is initially brought online and utilized for the first one to two years of the well’s life.
Our production solutions include: • High Pressure Gas Lift . HPGL systems are placed at the wellsite to inject pressurized natural gas into the wellbore. These systems are typically installed when a well is initially brought online and utilized for the first one to two years of the well’s life.
The CWA also requires the development and implementation of spill prevention, control, and countermeasures, including the construction and maintenance of containment berms and similar structures, if required, to help prevent the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture, or leak at such facilities.
The CWA also requires the development and implementation of spill prevention, control, and countermeasures, including the construction and maintenance of containment berms and similar structures, if required, to help prevent the contamination of navigable waters in the event of a petroleum 18 hydrocarbon tank spill, rupture, or leak at such facilities.
We believe our vertically integrated supply chain reduces our rental fleet capital expenditures by capturing manufacturing margin, underpins our industry-leading margins, and coupled with the long useful lives and low maintenance capital requirements of our assets, drives our leading returns and free cash flow profile.
We believe our vertically integrated supply chain reduces our rental fleet capital expenditures by capturing manufacturing margin, underpins our industry-leading margins, and coupled with the long useful lives and low maintenance capital requirements of our assets, drives our strong returns and free cash flow profile.
Since our business depends on the level of activity in the oil and natural gas industry, existing or future laws, regulations, treaties, or international agreements related to GHG emissions and climate change, it may reduce demand for oil and natural gas and could have a negative impact on our business.
Since our business depends on the level of activity in the oil and natural gas industry, existing or future laws, regulations, treaties, or international agreements related to GHG emissions and climate change may reduce demand for oil and natural gas and could have a negative impact on our business.
We strategically target the production phase, as it is the most stable and least capital-intensive phase of the well lifecycle. By targeting products and services in this phase, we have achieved greater 19 durability of revenue, cash flow and through-cycle performance for our business.
We strategically target the production phase, as it is the most stable and least capital-intensive phase of the well lifecycle. By targeting products and services in this phase, we have achieved greater durability of revenue, cash flow and through-cycle performance for our business.
Our VRU systems employ digital applications that provide 14 real-time data monitoring, predictive maintenance analytics and remote control, driving uptime and cash flows for our customers and preserving and maintaining our VRU assets. We offer most of our VRU systems on a contracted basis to our customers.
Our VRU systems employ digital applications that provide real-time data monitoring, predictive maintenance analytics and remote control, driving uptime and cash flows for our customers and preserving and maintaining our VRU assets. We offer most of our VRU systems on a contracted basis to our customers.
As a result, we are seeing 13 increased adoption of our plunger lift solutions and displacement of rod lift. We sell plunger lift systems to our customers both upon initial installation of a plunger lift system and thereafter as these multi-year solutions require routine maintenance and replacement of key components.
As a result, we are seeing increased adoption of our plunger lift solutions and displacement of rod lift. We sell plunger lift systems to our customers both upon initial installation of a plunger lift system and thereafter as these multi-year solutions require routine maintenance and replacement of key components.
To minimize natural gas vapors emissions, we provide vapor recovery systems to capture and monetize natural gas and volatile organic compounds during the separation and storage of oil, natural gas and produced water from operating reservoirs, precluding the need to vent or flare these valuable hydrocarbons.
To minimize emissions, we provide vapor recovery systems to capture and monetize natural gas and volatile organic compounds during the separation and storage of oil, natural gas and produced water from operating reservoirs, precluding the need to vent or flare these valuable hydrocarbons.
As a result, operating expenses associated with production optimization are less discretionary in nature, placing our solutions on 10 a critical path for producers to generate positive returns and maximize the value of their wells.
As a result, operating expenses associated with production optimization are less discretionary in nature, placing our solutions on a critical path for producers to generate positive returns and maximize the value of their wells.
In addition to the property damage, personal injury and other losses from these accidents, the frequency and severity of these incidents may affect our operating costs and insurability and our relationships with customers, employees, regulatory agencies and other parties.
In addition to the property damage, personal injury and other losses from these accidents, the frequency and severity of these incidents may affect our operating costs and insurability and our relationships with customers, employees, 16 regulatory agencies and other parties.
While we generate materials in the course of our operations that may be regulated as hazardous substances, we have not received notification that we may be potentially responsible for cleanup costs under CERCLA at any site.
While we 19 generate materials in the course of our operations that may be regulated as hazardous substances, we have not received notification that we may be potentially responsible for cleanup costs under CERCLA at any site.
We believe that the demand for our products and services is more stable than the demand for drilling and completion related services, and this demand has resulted in a more durable, recurring cash flows for our products and services compared to many other oilfield services.
We believe that the demand for our products and services is more stable than the demand for drilling and completion related services, and this demand has resulted in more durable, recurring cash flows for our products and services compared to many other oilfield services.
While many of our customers initially sought to employ VRUs due to environmental and decarbonization goals, they now leverage VRUs as an economic driver to monetize fugitive emissions with high value gas vapors.
While many of our customers initially sought to employ VRUs due to environmental and decarbonization goals, they now leverage VRUs as an economic driver to monetize fugitive emissions with high value vapors.
We believe our product offerings within each of these categories hold leading market positions due to their superior performance, industry-leading reliability and high return on investment for our customers.
We believe our product offerings within each of these categories hold strong market positions due to their superior performance, industry-leading reliability and high return on investment for our customers.
Our leading fleet mechanical availability across the breadth of our installed equipment further differentiates us as the preferred partner for many of our customers due to the significant costs of failure and downtime for those systems.
Our fleet mechanical availability across the breadth of our installed equipment further differentiates us as the preferred partner for many of our customers due to the significant costs of failure and downtime for those systems.
Accordingly, our insurance policies may not be sufficient to 22 adequately insulate us from a claim that exceeds policy limits or against every circumstance or hazard to which we could be subject.
Accordingly, our insurance policies may not be sufficient to adequately insulate us from a claim that exceeds policy limits or against every circumstance or hazard to which we could be subject.
The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of CERCLA, and similar state statutes require that we organize and, as 28 necessary, disclose information about hazardous materials used or produced in our operations to various federal, state, and local agencies, as well as to employees.
The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of CERCLA, and 20 similar state statutes require that we organize and, as necessary, disclose information about hazardous materials used or produced in our operations to various federal, state, and local agencies, as well as to employees.
Our focus on our financial strength and flexibility through preserving a prudent balance sheet also enables us to take advantage of strategic acquisition opportunities. 18 Our Sustainable Leadership and Business Strategies We intend to achieve our primary business objectives by successfully executing them on the following strategies: • Pursue continued growth.
Our focus on our financial strength and flexibility through preserving a prudent balance sheet also enables us to take advantage of strategic acquisition opportunities. 13 Our Sustainable Leadership and Business Strategies We intend to achieve our primary business objectives by successfully executing them on the following strategies: • Pursue continued growth.
Over the life of the well, we work closely with our customers to modify both the surface and downhole equipment to optimize the value of the well as conditions change. This process of technical consultation and provision of new services and products continues throughout the life of the well, which may span a decade or more. • Plunger Lift .
Over the life of the well, we work closely with our customers to modify both the surface and downhole equipment to optimize the value of the well as conditions change. This process of technical consultation and provision of new services and products continues throughout the life of the well, which may span a decade or more.
Due to recent and emerging regulatory requirements aimed at reducing fugitive methane emissions across oil and natural gas operations from numerous federal and state-level entities, operating expenses associated with our methane abatement solutions have become increasingly required and therefore non-discretionary in nature.
Due to recent and emerging regulatory requirements aimed at reducing fugitive emissions across oil and natural gas operations from numerous federal and state-level entities, operating expenses associated with our solutions have become increasingly required and therefore non-discretionary in nature.
We believe that our ability to integrate our services and facilitate cost-effective and operationally seamless transitions of our solutions during the long producing lives of wells distinguishes Flowco from our competitors, positions us as a preferred partner for our customers. • Stable cash flows.
We believe that our ability to integrate our services and facilitate cost-effective and operationally seamless transitions of our solutions during the long production lives of wells distinguishes Flowco from our competitors and positions us as a preferred partner for our customers. • Stable cash flows.
Demand for these solutions was initially driven by safety benefits, but accelerated as producers became more aware of the value of monetizing captured vapors, leading to high return on investment outcomes for our customers.
Demand for these solutions, particularly VRUs, was initially driven by safety benefits, but accelerated as producers became more aware of the value of monetizing captured vapors, leading to high return on investment outcomes for our customers.
These innovative and proprietary methane abatement solutions extend across each of our core technologies and can be used on their own as well as in conjunction with our other products and services.
These innovative and proprietary solutions extend across each of our core technologies and can be used on their own as well as in conjunction with our other products and services.
Emerging Growth Company We are an emerging growth company (“EGC”) as defined in Section 2(a)(19) of the Exchange Act, modified by the Jumpstart Our Business Startup Act of 2012 (the “JOBS Act”).
Emerging Growth Company We are an emerging growth company (“EGC”) as defined in Section 2(a)(19) of the Exchange Act, modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
All safety 29 incidents are investigated and reviewed by supervisors. Finally, we track our Total Recordable Incident Rate (TRIR) as an indicator of workplace safety. Training and Development – Our success relies on the skills, experience and dedication of our employees. We provide both in-person and online training to our employees.
All safety incidents are investigated and reviewed by supervisors. Finally, we track our Total Recordable Incident Rate (“TRIR”) as an indicator of workplace safety. Training and Development – Our success relies on the skills, experience and dedication of our employees. We provide both in-person and online training to our employees.
We currently serve a significant portion of the addressed HPGL market and intend to uphold our market leading position as we continue to grow into the largely unaddressed TAM. Oil and natural gas producers are also increasingly motivated to capture previously vented natural gas vapors through the use of our VRUs, due to both economic and regulatory incentives.
We currently serve a significant portion of the addressed HPGL market and intend to uphold our market position as we continue to grow into the largely unaddressed TAM. Oil and natural gas producers are also increasingly motivated to capture previously vented methane and other hydrocarbon vapors through the use of our VRUs, due to both economic and regulatory incentives.
We are not currently responsible for any remedial activities at any properties we use; however, there always is the possibility that our future use of those properties may result in spills or releases of petroleum hydrocarbons, wastes, or other regulated substances into the environment that may cause us to become subject to remediation costs and liabilities under CERCLA, the Resource Conservation and Recovery Act or other environmental laws.
We are not currently responsible for any remedial activities at any properties we use; however, there always is the possibility that our future use of those properties may result in spills or releases of petroleum hydrocarbons, wastes, or other regulated substances into the environment that may cause us to become subject to remediation costs and liabilities under CERCLA, the RCRA or other environmental laws.
Conventional gas lift is typically installed after HPGL and utilized in the mid- to late-stage of a well’s producing life. We are the only company capable of providing a comprehensive, customized conventional gas lift system since we provide both surface gas lift systems and high-precision downhole valves, mandrels and gauges.
Conventional gas lift is typically installed after HPGL or ESP and utilized in the mid- to late-stage of a well’s producing life. We are capable of providing a comprehensive, customized conventional gas lift system since we provide both surface gas lift systems and high-precision downhole valves, mandrels and gauges.
We manufacture, rent, sell and service VRU systems that capture fugitive natural gas vapors through a specialized system stationed on a well pad or in proximity to any methane emissions-prone component in the natural gas and unconventional oil value chains.
We manufacture, rent, sell and service VRU systems that capture fugitive methane and other hydrocarbon vapors, including NGLs, through a specialized system stationed on a well pad or in proximity to any emissions-prone component in the natural gas and unconventional oil value chains.
Item 1. B usiness Overview We are incorporated under the laws of the state of Delaware, and our common stock is listed on the New York Stock Exchange (“NYSE”) under the trading symbol “FLOC.” Our operations are located in the United States (US). Our corporate headquarters are located at 1300 Post Oak Blvd., Suite 450, Houston, Texas 77056.
Item 1. B usiness Overview We are incorporated under the laws of the state of Delaware, and our common stock is listed on the New York Stock Exchange (“NYSE”) under the trading symbol “FLOC.” Our operations are located in the U.S. Our corporate headquarters are located at 1300 Post Oak Blvd., Suite 450, Houston, Texas 77056.
We have registered patents with respect to certain of our products, which, once issued, provide 20 years of protection as counted from the patent’s filing date. We have also registered or applied to register certain of our trademarks in the United States and several other countries.
We have registered patents with respect to certain of our products, which, once issued, provide 20 years of protection as counted from the patent’s filing date. We have also registered or applied to register certain of our trademarks in the U.S. and several other countries.
We are also well-positioned to achieve growth in our methane abatement solutions as industries beyond oil and natural gas producers, such as the midstream, refining and downstream industries and adjacent emissions-prone industries such as waste, ammonia and agriculture, seek to address their emissions challenges across their value chains. • Leverage our vertically integrated supply chain to continuously innovate.
We are well-positioned to achieve growth in our emissions management and monetization solutions as industries beyond oil and natural gas producers, such as the midstream, refining and downstream industries and adjacent emissions-prone industries such as waste, ammonia and agriculture, seek to address their emissions challenges across their value chains. • Leverage our vertically integrated supply chain to continuously innovate.
While our technology offerings individually provide considerable value for our customers on their own, we believe our broad scope of production optimization, artificial lift and methane abatement solutions and our ability to provide seamless service transition across the decades-long lifecycle of a well drives retention and supports long-term partnerships with our customers.
While our technology offerings individually provide considerable value for our customers on their own, we believe our broad scope of production optimization, artificial lift and emissions management and monetization solutions and our ability to provide seamless service transition across the decades-long lifecycle of a well drives retention and supports long-term partnerships with our customers.
Our commitment to superior returns, reinforced by our management team’s meaningful ownership in the business, is reflected in our industry-leading returns. We intend to maintain our pursuit of maximizing total stockholder return through a comprehensive capital allocation strategy, including organic growth, mergers and acquisitions (“M&A”) and dividends.
Our commitment to superior returns, reinforced by our management team’s meaningful ownership in the business, is reflected in our historical industry-leading returns. We intend to maintain our pursuit of maximizing total stockholder return through a comprehensive capital allocation strategy, including organic growth, mergers and acquisitions (“M&A”) and dividends. We consider capital allocation decisions through the lens of enhancing stockholder returns.
We believe that the following strengths differentiate us from our peers and position us well to execute on our strategy: • Market leadership. We are a leading production optimization, artificial lift and methane abatement solutions provider to producers in every major onshore U.S. oil and natural gas producing region.
We believe that the following strengths differentiate us from our peers and position us well to execute on our strategy: • Market leadership. We are a leading production optimization, artificial lift and emissions management and monetization solutions provider to producers in every major onshore U.S. oil and natural gas producing region.
We are a leading provider of production optimization, artificial lift and methane abatement solutions for the oil and natural gas industry. Our products and services include a full range of equipment and technology solutions that enable our customers to efficiently and cost-effectively maximize the profitability and economic lifespan of the production phase of their operations.
We are a leading provider of production optimization, artificial lift and emissions management and monetization solutions for the oil and natural gas industry. Our products and services include a full range of equipment and technology solutions that enable our customers to efficiently and cost-effectively maximize the profitability and economic lifespan of the production phase of their operations.
Access to liquidity and conservative leverage has supported our growth through prior industry cycles by allowing us to invest in our human capital and our continuous pursuit of improvement to our production optimization, artificial lift and methane abatement solutions, while also ensuring our high service quality standards are maintained.
Access to liquidity and conservative leverage has supported our growth through prior industry cycles by allowing us to invest in our human capital and our continuous pursuit of improvement to our production optimization, artificial lift and emissions management and monetization solutions, while also ensuring our high service quality standards are maintained.
As of December 31, 2024, we had a fleet of over 4,300 active systems enabling consistent revenue generation. We also sell other products and services that help our customers optimize the value of their assets.
As of December 31, 2025, we had a fleet of over 4,600 active systems enabling consistent revenue generation. We also sell other products and services that help our customers optimize the value of their assets.
Our vapor recovery systems and methane 15 abatement solutions allow for the safe capture and monetization of high value natural gas that would otherwise be vented or flared, providing a meaningful uplift to our customers’ gas production stream cash flows. In addition, these systems assist our customers to meet tightening emissions regulations and their decarbonization goals.
Our vapor recovery systems and emissions management and monetization solutions allow for the safe capture and monetization of high value hydrocarbons that would otherwise be vented or flared, providing a meaningful uplift to our customers’ gas production stream of cash flows. In addition, these systems assist our customers to meet tightening emissions regulations and their decarbonization goals.
We expect to grow our presence in the U.S. by capitalizing on important trends in the oil and natural gas industry that play to our strengths. Gas lift, including HPGL, is seeing increasing adoption as oil and natural gas producers are increasingly concerned about the reliability of their artificial lift systems.
We expect to grow our presence in the U.S. by capitalizing on important trends in the oil and natural gas industry that play to our strengths. Gas lift, including HPGL, is seeing increasing adoption as oil and natural gas producers focus on the reliability of their artificial lift systems.
We have made continuous improvements to our plunger lift system design that maximizes efficient and economical production for our customers’ wells, positioning our plunger lift solutions as an attractive option for wells in more mature stages of production and which are displacing rod lift for many applications.
We have made continuous improvements to our plunger lift system design that 11 maximizes efficient and economical production for our customers’ wells. As a result, our plunger lift solutions are an attractive option for wells in more mature stages of production and are displacing rod lift for many applications.
In addition to addressing the growing demand for methane abatement solutions from the oil and natural gas industry, we intend to expand and adapt our portfolio of proprietary emissions solutions to scale our value proposition to customers downstream of the wellsite, such as the midstream and refining industries, as well as adjacent high-emission industries such as waste, ammonia and agriculture. • Thrive to constantly attract and retain best-in-class personnel.
In addition to addressing the growing demand for emissions management and monetization solutions from the oil and natural gas industry, we intend to expand and adapt our portfolio of proprietary emissions solutions to scale our value proposition to customers 15 downstream of the wellsite, such as the midstream and refining industries, as well as adjacent high-emission industries such as waste, ammonia and agriculture. • Strive to constantly attract and retain best-in-class personnel.
We expect the demand for production optimization, artificial lift and methane abatement solutions to continue to rise, and many of our customers are currently utilizing Flowco products in one or more but not all of our product categories.
We expect the demand for production optimization, artificial lift and emissions management and monetization solutions to continue to rise, and many of our customers are currently utilizing Flowco products in one or more, but not all, of our product categories.
Our Competitive Strengths and Competitions Our objective is to create value for our stockholders by serving as the leading provider of production optimization, artificial lift and methane abatement solutions that help our customers maximize production and profit at the wellhead through a comprehensive offering of proprietary products and services.
Our Competitive Strengths Our objective is to create value for our stockholders by serving as the leading provider of production optimization, artificial lift and emissions management and monetization solutions that help our customers maximize production and profit at the wellhead through a comprehensive offering of proprietary products and services.
We continually seek opportunities to enhance our partnerships with customers by innovating and developing methane abatement solutions that help them to optimize the profitability of their production operations, by monetizing their fugitive gas emissions while also supporting their compliance with recent and emerging regulatory requirements.
We continually seek opportunities to enhance our partnerships with customers by innovating and developing emissions management and monetization solutions that help them to optimize the profitability of their production operations, by monetizing their fugitive methane and other hydrocarbon emissions while also supporting their compliance with recent and emerging regulatory requirements.
By capturing these fugitive emissions, our VRUs and other methane abatement solutions allow for monetization of the resulting incremental natural gas volumes and enable our customers to meet their decarbonization goals and comply with regulatory requirements.
By capturing these emissions, our VRUs and other methane abatement solutions allow for monetization of the resulting incremental methane and other hydrocarbon volumes and 8 enable our customers to meet their decarbonization goals and comply with regulatory requirements.
To that end, we are reducing the use of pneumatic devices and improving cylinder packing materials to reduce our emissions of nitrogen oxide, carbon monoxide, carbon dioxide, and VOCs.
To that end, we are reducing the use of pneumatic devices and improving cylinder packing materials to reduce our emissions of nitrogen oxide, carbon monoxide, carbon dioxide, and volatile organic compounds.
We also own a significant portfolio of patents, trademarks, licenses and other intellectual property that underpins our suite of innovative solutions. Furthermore, we have an active pipeline of new differentiated technologies across various stages of development that will add value for the customer through optimized production while helping them decarbonize their operations.
We also own a significant portfolio of patents, trademarks, licenses and other intellectual property that underpins our suite of innovative solutions. Furthermore, we have an active pipeline of new differentiated technologies across various stages of development that we believe will add value for the customer through optimized production.
Our products and services also integrate proprietary digital technologies that allow for remote monitoring and other enhanced uses of our equipment. Our VRUs and other methane abatement solutions capture fugitive emissions of methane and other hydrocarbons that are heavier than methane—such as ethane, propane, and butane, which is a natural by-product of oil production.
Our products and services also integrate proprietary digital technologies that allow for remote monitoring and other enhanced uses of our equipment. Our VRUs and other methane abatement solutions capture fugitive emissions of methane and other hydrocarbons, including natural gas liquids (“NGLs”), such as ethane, propane, and butane, which are a natural by-product of oil production.
The information contained on our website does not constitute part of this Annual Report. We will provide electronic or paper copies of our filings free of charge upon request. Address request to investor.relations@flowco-inc.com. 31
The information contained on our website does not constitute part of this Annual Report. We will provide electronic or paper copies of our filings free of charge upon request. Address request to investor.relations@flowco-inc.com . The information found on our website is not incorporated into this annual report. 22
As of December 31, 2024, we had approximately 1,283 full-time employees located throughout the United States. None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have had no labor-related work stoppages. Employee Safety – The safety of our employees is critical to our operations and continued success.
As of December 31, 2025, we had approximately 1,281 full-time employees located throughout the U.S. None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have had no labor-related work stoppages. Employee Safety – The safety of our employees is critical to our operations and continued success.
Fish and Wildlife Service (the “FWS”) listed two Distinct Population Segments (“DPS”) of the Lesser Prairie Chicken under the ESA. The Southern DPS, the habitat of which includes portions of the southwestern Texas panhandle, was listed as endangered.
Fish and Wildlife Service (the “FWS”) listed two Distinct Population Segments (“DPS”) of the Lesser Prairie Chicken under the ESA. The Southern DPS, the habitat of which includes portions of the southwestern Texas panhandle, was listed as endangered, however, in August 2025, the U.S.
For additional details, see “ Risk Factors - Risk Factors Related to Our Business and Industry ,” which is incorporated by reference in this Item 1 section of the Annual Report. Regulatory, Environmental and Safety Matters We are subject to stringent federal, state, and local governmental laws and regulations pertaining to protection of the environment and occupational safety and health.
For additional details, see “ Item 1A. Risk Factors - Risk Factors Related to Our Business and Industry ,” in this Annual Report. Regulatory, Environmental and Safety Matters We are subject to stringent federal, state, and local governmental laws and regulations pertaining to protection of the environment and occupational safety and health.
Any potential acquisitions will focus on providing complementary solutions or capabilities that offer a strong strategic or synergistic fit and that will enable us to generate accretive value to our customers without impairing our profitability, cash flow profile or balance sheet strength.
We plan to focus on potential acquisitions that provide complementary solutions or capabilities with a strong strategic or synergistic fit and that will enable us to generate accretive value to our customers without impairing our profitability, cash flow profile or balance sheet strength.
We are a pure play production optimization, artificial lift and methane abatement solutions provider to the largest oil and natural gas producers in the U.S.
We are a pure play production optimization, artificial lift and emissions management and monetization solutions provider to the largest oil and natural gas producers in the U.S.
We provide systems applicable to wells from initial production through their natural decline to late-life production, as well as digital technologies that enable the optimization of our systems’ performance and uptime.
We provide systems applicable to wells from initial production through their natural decline to late-life production, as well as digital technologies that enable the optimization of our systems’ performance and uptime. Our customers may use multiple production solutions offerings throughout the life of the well.
Environmental Protection Agency (“EPA”) has published regulations under the CAA to control emissions of hazardous air pollutants from existing stationary reciprocal internal combustion engines, also known as Quad Z regulations. The NYSE rule requires us to undertake certain expenditures and activities, including emissions control equipment on certain compressor engines and generators.
For example, the U.S. Environmental Protection Agency (“EPA”) has published regulations under the CAA to control emissions of hazardous air pollutants from existing stationary reciprocal internal combustion engines, also known as Quad Z regulations. These regulations may require us to undertake certain expenditures and activities, including emissions control equipment on certain compressor engines and generators.
Also, as a result of this consolidation, producers will increasingly gravitate toward full-cycle, comprehensive solutions, such as those that we offer. Our revenue generation is well diversified across a wide range of customers.
Also, as a result of this consolidation, we believe producers will increasingly gravitate toward full-cycle, comprehensive solutions, such as those that we offer. Our revenues are currently diversified across a wide range of customers.
Furthermore, when compared with ESPs, gas lift systems are generally more tolerant of high temperatures and pressures, better suited for handling sand and other solids, more resilient to changing well conditions and easier to maintain.
Furthermore, gas lift systems are generally more tolerant of high temperatures and pressures, better suited for handling sand and other solids, more resilient to changing well conditions and easier to maintain in certain drilling environments.
These developments could further accelerate the transition of the U.S. economy away from the use of 25 fossil fuels towards lower- or zero-carbon emissions alternatives, which could reduce demand for our products and services and negatively impact our business.
Any commitments or requirements that could accelerate the transition of the U.S. economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives could reduce demand for our products and services and negatively impact our business.
The periodic release of pressure lifts produced liquids to surface, enabling the production of both oil and natural gas. Plunger lift systems are typically installed on wells that have already been producing for multiple years.
These systems first allow the well’s natural pressure to build and then release the pressure into production equipment at surface, then repeat the cycle. The periodic release of pressure lifts produced liquids to surface, enabling the production of both oil and natural gas. Plunger lift systems are typically installed on wells that have already been producing for multiple years.
Marketed under our ZTECH4 brand name, these include Sentry, our bolt-on emissions reduction technology that can be retrofitted to compressor packages; and Vault, our natural gas recycling system that reduces the need to flare or vent methane during maintenance. In all cases, our methane abatement technologies enable the operator to monetize valuable methane and to meet their decarbonization goals.
Marketed under our ZTECH4 brand name, these include Sentry, our bolt-on emissions reduction technology that can be retrofitted to compressor packages; and Vault, our natural gas recycling system that reduces the need to flare or vent methane during maintenance.
Our predecessor has an impressive and well-documented history of returning cash to investors through distributions while maintaining low leverage. We currently intend to pay a dividend from available funds and future earnings on our Class A common stock. • Focus on customers’ needs.
Prior to our IPO, our private company predecessor also successfully executed on a practice of returning cash to investors through distributions while maintaining low leverage. We currently intend to pay a dividend from available funds and future earnings on our Class A common stock. • Focus on customers’ needs.
Our differentiated products and services have driven superior returns for our customers due to their performance and reliability and have facilitated high retention and low churn with our diversified customer base.
Our differentiated products and services have driven superior returns for our customers due to their performance and reliability and have facilitated high retention and low churn with our diversified customer base. We have strong and lasting relationships with our key customers, and we have successfully partnered with our customers to bring new solutions to market.
We believe our HPGL systems can deliver the same, or better, production rates when compared to electrical submersible pump (“ESP”) systems, which are commonly used for the initial phase of a well’s production.
We believe our HPGL systems can deliver production rates comparable to those achieved with electric submersible pump (“ESP”) systems, which are commonly used for the initial phase of a well’s production.
We also provide ancillary and complementary products and services, as well as develop and sell related digital solutions in connection with these technologies. Our natural gas technologies include: • Vapor Recovery .
Our capabilities help customers improve the profitability of their wells as well as their compliance with emissions-related regulatory requirements. We also provide ancillary and complementary 10 products and services, as well as develop and sell related digital solutions in connection with these technologies. Our natural gas technologies include: • Vapor Recovery .
Safe Drinking Water Act A significant portion of our customers’ oil and natural gas production is developed from unconventional sources that require hydraulic fracturing as part of the completion process. 26 Legislation to amend the SDWA to repeal the exemption for hydraulic fracturing from the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have been proposed from time to time and the U.S.
Legislation to amend the SDWA to repeal the exemption for hydraulic fracturing from the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have been proposed from time to time and the U.S.
Each capital allocation decision will be viewed through the lens of enhancing stockholder returns. In addition to our organic growth strategy, we intend to opportunistically pursue inorganic growth through disciplined sourcing and evaluation of M&A opportunities.
In addition to our organic growth strategy, we intend to opportunistically pursue inorganic growth through disciplined sourcing and evaluation of M&A opportunities.
We hold a leading position in the rapidly growing VRU market, which is driven by both economic and environmental benefits, and we have helped drive adoption of our methane abatement solutions with our customers. 11 Our Asset Footprints We have an operating presence in every major onshore oil and natural gas producing region in the U.S. and have cultivated deep and longstanding customer relationships with leading oil and natural gas producers in each region, including supermajors and large independent producers.
Our Asset Footprints We have an operating presence in every major onshore oil and natural gas producing region in the U.S. and have cultivated deep and longstanding customer relationships with leading oil and natural gas producers in each region, including supermajors and large independent producers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and Class A common stock price. • We are subject to risks relating to existing international operations and expansion into new geographical markets. 32 Risk Factors Related to Financial Condition and Markets • Investor sentiment towards climate change, fossil fuels and other Environmental, Social and Governance (“ESG”) matters could adversely affect our access to and cost of capital and stock price. • Our Credit Agreement imposes restrictions that limit our operating flexibility, and such facility may not be available if financial covenants are violated or if an event of default occurs. • Our indebtedness could adversely affect our financial condition and operating flexibility.
Biggest changeIf we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and Class A common stock price. • We are subject to risks relating to existing international operations and expansion into new geographical markets.
The level of production-related operating expenditures is directly affected by trends in crude oil and natural gas prices, which are influenced by numerous factors affecting the supply and demand for oil and natural gas, including: • worldwide economic activity, including potential disruption to global trade; • supplies of, and demand for, oil and natural gas both domestically and globally; • the level of exploration and production activity; • the industry cost of, and access to, capital; • environmental regulation; • domestic and global political and economic uncertainty, socio-political unrest and instability, terrorism or hostilities; • U.S. federal, state and foreign government policies and regulations regarding current and future exploration and development of oil and natural gas; • the ability and/or desire of the Organization of the Petroleum Exporting Countries (“OPEC”) and other major international producers (collectively, with OPEC, “OPEC+”) to set and maintain production levels and influence pricing; • the cost of exploring and producing oil and natural gas; • the availability, expiration date and price of onshore and offshore leases; • the discovery rate of new oil and natural gas reserves in onshore and offshore areas; • the success of drilling for oil and natural gas in unconventional resource plays such as shale formations; • the depletion rate of existing oil and natural gas wells in productions; • takeaway capacity within oil and natural gas producing basins; • alternative investments in onshore exploration and production opportunities; • shifts in business and personal travel with increased adoption of remote work arrangements; • health pandemics and epidemics; 34 • exceptional weather conditions, including severe weather events in the U.S.
The level of production-related operating expenditures is directly affected by trends in crude oil and natural gas prices, which are influenced by numerous factors affecting the supply and demand for oil and natural gas, including: • worldwide economic activity, including potential disruption to global trade; • supplies of, and demand for, oil and natural gas both domestically and globally; • the level of exploration and production activity; • the industry cost of, and access to, capital; • environmental regulation; • domestic and global political and economic uncertainty, socio-political unrest and instability, terrorism or hostilities; • U.S. federal, state and foreign government policies and regulations regarding current and future exploration and development of oil and natural gas; • the ability and/or desire of the Organization of the Petroleum Exporting Countries (“OPEC”) and other major international producers (collectively, with OPEC, “OPEC+”) to set and maintain production levels and influence pricing; • the cost of exploring and producing oil and natural gas; • the availability, expiration date and price of onshore and offshore leases; • the discovery rate of new oil and natural gas reserves in onshore and offshore areas; • the success of drilling for oil and natural gas in unconventional resource plays such as shale formations; • the depletion rate of existing oil and natural gas wells in productions; • takeaway capacity within oil and natural gas producing basins; • alternative investments in onshore exploration and production opportunities; • shifts in business and personal travel with increased adoption of remote work arrangements; • health pandemics and epidemics; • exceptional weather conditions, including severe weather events in the U.S.
These provisions provide for, among other things: • a classified Board of Directors with staggered three-year terms; • the ability of our Board of Directors to issue one or more series of preferred stock without stockholder approval; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings and actions by stockholders through a written consent; • prohibit cumulative voting in the election of directors; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least a majority of the voting power represented by our then-outstanding common stock entitled to vote generally in the election of directors; and 62 • that certain provisions of amended and restated certificate of incorporation may be amended only by the affirmative vote of at least 66-2/3% of the voting power represented by our then-outstanding common stock.
These provisions provide for, among other things: • a classified Board of Directors with staggered three-year terms; • the ability of our Board of Directors to issue one or more series of preferred stock without stockholder approval; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings and actions by stockholders through a written consent; • prohibit cumulative voting in the election of directors; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least a majority of the voting power represented by our then-outstanding common stock entitled to vote generally in the election of directors; and • that certain provisions of amended and restated certificate of incorporation may be amended only by the affirmative vote of at least 66-2/3% of the voting power represented by our then-outstanding common stock.
For example, our operations and the operations of our customers are subject to numerous and complex laws, regulations and policies that, among other things: may regulate the management and disposal of hazardous and non-hazardous wastes; may require acquisition of environmental permits related to our operations; may restrict the types, quantities and concentrations of various materials that can be released into the environment; may limit or prohibit operational activities in certain ecologically sensitive and other protected areas; may regulate specific health and safety criteria addressing worker protection; may require compliance with operational and equipment standards; may impose testing, reporting and record-keeping requirements; and may require remedial measures to mitigate pollution from former and ongoing operations.
For example, our operations and the operations of our customers are subject to numerous and complex laws, regulations and policies that, among other things: may regulate the management and 35 disposal of hazardous and non-hazardous wastes; may require acquisition of environmental permits related to our operations; may restrict the types, quantities and concentrations of various materials that can be released into the environment; may limit or prohibit operational activities in certain ecologically sensitive and other protected areas; may regulate specific health and safety criteria addressing worker protection; may require compliance with operational and equipment standards; may impose testing, reporting and record-keeping requirements; and may require remedial measures to mitigate pollution from former and ongoing operations.
As a result of (i) potential differences in the amount of net taxable income allocable to us and to Flowco LLC’s other stockholders, (ii) the lower tax rate applicable to corporations as opposed to individuals, and (iii) certain tax benefits that we anticipate from (a) future purchases or redemptions of LLC interests from the Continuing 53 Equity Owners, (b) payments under the Tax Receivable Agreement and (c) any acquisition of interests in Flowco LLC from other stockholders in connection with the consummation of the Transactions, these tax distributions may be in amounts that exceed our tax liabilities.
As a result of (i) potential differences in the amount of net taxable income allocable to us and to Flowco LLC’s other stockholders, (ii) the lower tax rate applicable to corporations as opposed to individuals, and (iii) certain tax benefits that we anticipate from (a) future purchases or redemptions of LLC interests from the Continuing Equity Owners, (b) payments under the Tax Receivable Agreement and (c) any acquisition of interests in Flowco LLC from other stockholders in connection with the consummation of the Transactions, these tax distributions may be in amounts that exceed our tax liabilities.
By renouncing our interest and expectancy in any business opportunity that may be from time to time presented to any member of a GEC or White Deer affiliated entity or any of our directors or officers who is also an employee, partner, member, manager, officer or director of any GEC or White Deer affiliated entity, our business or prospects could be adversely affected if attractive business opportunities are procured by such parties for their own benefit rather than for ours.
By renouncing our interest and expectancy in any business opportunity that may be from time to time presented to any member of a GEC or White Deer affiliated entity or any of our directors or officers who is also an employee, partner, member, manager, officer or director of any 43 GEC or White Deer affiliated entity, our business or prospects could be adversely affected if attractive business opportunities are procured by such parties for their own benefit rather than for ours.
Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer, or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer, or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including 44 those attempts that might result in a premium over the market price for the shares held by our stockholders.
See “ Risk Factors – Risk Factors Related to the IPO and Ownership of Our Class A Common Stock – Our amended and restated certificate of incorporation provides that the doctrine of “corporate opportunity” will not apply with respect to any director or stockholder who is not employed by us or our subsidiaries .” 60 We cannot predict the effect our dual class structure may have on the market price of our Class A common stock.
See “ Risk Factors – Risk Factors Related to the IPO and Ownership of Our Class A Common Stock – Our amended and restated certificate of incorporation provides that the doctrine of “corporate opportunity” will not apply with respect to any director or stockholder who is not employed by us or our subsidiaries .” We cannot predict the effect our dual class structure may have on the market price of our Class A common stock.
If we do not have sufficient funds to pay tax or other liabilities, or to fund our operations (including, if applicable, as a result of an acceleration of our obligations under the Tax Receivable Agreement), we may have to borrow funds, which could materially and adversely affect our liquidity and financial condition, and subject us to various restrictions imposed by any lenders of such funds.
If we do not have sufficient funds to pay tax or other liabilities, or to fund our operations (including, if applicable, as a result of an acceleration of our obligations under the Tax Receivable Agreement), we may have to borrow funds, which could materially and adversely affect our liquidity and financial condition, and subject us to various restrictions imposed by 38 any lenders of such funds.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A common stock, fines, sanctions and other regulatory action and potentially civil litigation. These factors may, therefore, strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A common 48 stock, fines, sanctions and other regulatory action and potentially civil litigation. These factors may, therefore, strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
However, a significant further decline in the industry could continue to impact demand for our products and services and could have a material adverse effect on our business, results of operations, financial condition and cash flows, and could result in asset impairments, including an impairment of the carrying value of our goodwill, along with other accounting charges.
However, a significant further decline in the industry could continue to impact demand for our products and services and could have a material adverse effect on our business, results of operations, financial condition and cash flows, and could 25 result in asset impairments, including an impairment of the carrying value of our goodwill, along with other accounting charges.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with fossil fuel energy-related assets could lead to increased negative investor sentiment toward us, our customers and our industry and to the diversion of 45 investments to other industries, which could have a negative impact on our access to and costs of capital.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with fossil fuel energy-related assets could lead to increased negative investor sentiment toward us, our customers and our industry and to the diversion of investments to other industries, which could have a negative impact on our access to and costs of capital.
To the extent that we are unable to make timely payments under the Tax Receivable Agreement for any 54 reason, the unpaid amounts will be deferred and will accrue interest until paid by us, provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement resulting in the acceleration of payments due under the Tax Receivable Agreement.
To the extent that we are unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid by us, provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement resulting in the acceleration of payments due under the Tax Receivable Agreement.
However, there can be no assurance 44 that we will be able to find suitable opportunities to purchase or acquire such capabilities on acceptable terms. If we are unsuccessful in our acquisition efforts, our revenue growth could be adversely affected. In addition, we face the risk that a completed acquisition may underperform relative to expectations.
However, there can be no assurance that we will be able to find suitable opportunities to purchase or acquire such capabilities on acceptable terms. If we are unsuccessful in our acquisition efforts, our revenue growth could be adversely affected. In addition, we face the risk that a completed acquisition may underperform relative to expectations.
Our international operations and global expansion strategy are subject to general risks related to such operations, including: • political, social and economic instability and disruptions; • export controls, economic sanctions, embargoes or trade restrictions; • the imposition of duties and tariffs and other trade barriers; • limitations on ownership and on repatriation or dividend of earnings; • transportation delays and interruptions; • labor unrest and current and changing regulatory environments; • increased compliance costs, including costs associated with disclosure requirements and related due diligence; • difficulties in staffing and managing multi-national operations; • limitations on our ability to enforce legal rights and remedies; • access to or control of networks and confidential information due to local government controls and vulnerability of local networks to cyber risks; and 42 • fluctuations in foreign currency exchange rates.
Our international operations and global expansion strategy are subject to general risks related to such operations, including: • political, social and economic instability and disruptions; • export controls, economic sanctions, embargoes or trade restrictions; • the imposition of duties and tariffs and other trade barriers; 30 • limitations on ownership and on repatriation or dividend of earnings; • transportation delays and interruptions; • labor unrest and current and changing regulatory environments; • increased compliance costs, including costs associated with disclosure requirements and related due diligence; • difficulties in staffing and managing multi-national operations; • limitations on our ability to enforce legal rights and remedies; • access to or control of networks and confidential information due to local government controls and vulnerability of local networks to cyber risks; and • fluctuations in foreign currency exchange rates.
These conditions could have a material adverse effect on our business, financial condition and results of operations. We could lose customers or generate lower revenue, operating profits and cash flows if there are significant increases in the cost of raw materials or if we are unable to obtain raw materials.
These conditions could have a material adverse effect on our business, financial condition and results of operations. 26 We could lose customers or generate lower revenue, operating profits and cash flows if there are significant increases in the cost of raw materials or if we are unable to obtain raw materials.
In addition, public health threats, severe influenza and other highly communicable viruses or diseases could limit access to vendors and their facilities, or the ability to transport raw materials from our vendors, which would adversely affect our ability to obtain necessary raw materials for certain of our products or increase 36 the costs of such materials.
In addition, public health threats, severe influenza and other highly communicable viruses or diseases could limit access to vendors and their facilities, or the ability to transport raw materials from our vendors, which would adversely affect our ability to obtain necessary raw materials for certain of our products or increase the costs of such materials.
If we are unable to repay borrowings with respect to our Credit Agreement when due, our lenders could proceed against the guarantees of our material domestic subsidiaries. If any indebtedness under our Credit Agreement is accelerated, we can provide no assurance that our assets would be sufficient to repay such indebtedness in full.
If we are unable to repay borrowings with respect to our Credit Agreement when due, our lenders could proceed against the guarantees of our material 33 domestic subsidiaries. If any indebtedness under our Credit Agreement is accelerated, we can provide no assurance that our assets would be sufficient to repay such indebtedness in full.
Such developments, which could increase costs for our customers, could negatively impact demand for our products and services. In addition, heightened political, regulatory and public scrutiny, including lawsuits, could expose us or our customers to increased legal and regulatory proceedings, which could be time-consuming, costly or result in substantial legal liability or significant 48 reputational harm.
Such developments, which could increase costs for our customers, could negatively impact demand for our products and services. In addition, heightened political, regulatory and public scrutiny, including lawsuits, could expose us or our customers to increased legal and regulatory proceedings, which could be time-consuming, costly or result in substantial legal liability or significant reputational harm.
These factors could potentially have an adverse impact on our business, results of operations, financial condition and cash flows. Risk Factors Related to Financial Condition and Markets Investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our access to and cost of capital and stock price.
These factors could potentially have an adverse impact on our business, results of operations, financial condition and cash flows. 32 Risk Factors Related to Financial Condition and Markets Investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our access to and cost of capital and stock price.
Any of these laws and regulations could result in claims, fines or expenditures that could be material to our business, results of operations, financial condition and cash flows. 49 Environmental laws, regulations and policies, and the interpretation and enforcement thereof, frequently change, and have tended to become more stringent over time.
Any of these laws and regulations could result in claims, fines or expenditures that could be material to our business, results of operations, financial condition and cash flows. Environmental laws, regulations and policies, and the interpretation and enforcement thereof, frequently change, and have tended to become more stringent over time.
These rules and regulations require, among other things, that we 66 establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
These customers are also affected by prolonged changes in economic and industry conditions such as geopolitical unrest and instability, volatility in oil and natural gas prices as a result of associated changes in demand for such commodities, and continuing inflationary pressures, including increased interest rates and cost of credit.
These customers are also affected by prolonged changes in economic and industry conditions such as geopolitical unrest and instability, volatility in oil and natural gas prices as a result of associated changes in demand for such commodities, and continuing inflationary pressures, including 28 increased interest rates and cost of credit.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could materially and adversely affect our results of operations, cash flows, and financial condition.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including 29 premium increases or the imposition of large deductible or co-insurance requirements, could materially and adversely affect our results of operations, cash flows, and financial condition.
We may accumulate cash in those geographies, but we may be limited in our ability to convert our profits into U.S. dollars, repatriate the profits from those countries or reinvest those earnings to fund operations in other countries. Significant 46 changes in currency exchange rates could negatively affect our results of operations.
We may accumulate cash in those geographies, but we may be limited in our ability to convert our profits into U.S. dollars, repatriate the profits from those countries or reinvest those earnings to fund operations in other countries. Significant changes in currency exchange rates could negatively affect our results of operations.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. We and Flowco LLC intend to conduct our operations so that we are not considered an investment company. As the sole managing member of Flowco LLC, we control and operate Flowco LLC.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. 42 We and Flowco LLC intend to conduct our operations so that we are not considered an investment company. As the sole managing member of Flowco LLC, we control and operate Flowco LLC.
The doctrine of corporate opportunity generally provides that a corporate fiduciary may not develop an opportunity using corporate resources, acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to the present or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that 65 opportunity is first presented to the corporation and the corporation chooses not to pursue that opportunity.
The doctrine of corporate opportunity generally provides that a corporate fiduciary may not develop an opportunity using corporate resources, acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to the present or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented to the corporation and the corporation chooses not to pursue that opportunity.
As a result, our success is dependent upon our ability to develop or acquire new products and services on a cost-effective basis, to introduce them into the marketplace in a timely manner, and to protect and maintain critical intellectual property assets related to these developments.
As a result, our success is dependent upon our ability to develop or acquire new products and services on a cost-effective basis, to introduce them into the marketplace in a timely manner, and to protect and maintain critical 27 intellectual property assets related to these developments.
We also manufacture and sell hardware and software to provide monitoring, controls and optimization of customer critical assets in oil and natural gas production and distribution. In addition, certain of our customer 39 offerings include digital components, such as remote monitoring of certain customer operations. We also provide services to maintain these systems.
We also manufacture and sell hardware and software to provide monitoring, controls and optimization of customer critical assets in oil and natural gas production and distribution. In addition, certain of our customer offerings include digital components, such as remote monitoring of certain customer operations. We also provide services to maintain these systems.
However, because we must pay taxes, amounts ultimately distributed as dividends to holders of our Class A common stock are expected to be less on a per share basis than the amounts distributed by Flowco LLC to such Continuing Equity Owners on a per unit basis.
However, because we must pay taxes, amounts ultimately distributed as dividends to holders of our Class A common stock are expected to be less on a per share basis than the amounts distributed by Flowco LLC to such 40 Continuing Equity Owners on a per unit basis.
In addition, any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of our 41 securities and harm to our reputation and financial condition, or diversion of financial and management resources from the operation of our business.
In addition, any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of our securities and harm to our reputation and financial condition, or diversion of financial and management resources from the operation of our business.
In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of 56 control.
In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.
Although Flowco LLC is not currently subject to any debt instruments or other agreements that would restrict its ability to make distributions to us, the 52 terms of our Credit Agreement and other outstanding indebtedness restrict the ability of our subsidiaries to pay dividends to Flowco LLC.
Although Flowco LLC is not currently subject to any debt instruments or other agreements that would restrict its ability to make distributions to us, the terms of our Credit Agreement and other outstanding indebtedness restrict the ability of our subsidiaries to pay dividends to Flowco LLC.
If we are unable to access the capital and credit markets on favorable terms or at all, it could adversely affect our business, financial condition, results of operations and cash flows. 47 Risk Factors Related to Legal and Regulatory Environments Federal, state and local legislative and regulatory initiatives relating to oil and natural gas development and the potential for related litigation could result in increased costs and additional operating restrictions or delays for our customers, which could reduce demand for our products.
If we are unable to access the capital and credit markets on favorable terms or at all, it could adversely affect our business, financial condition, results of operations and cash flows. 34 Risk Factors Related to Legal and Regulatory Environments Federal, state and local legislative and regulatory initiatives relating to oil and natural gas development and the potential for related litigation could result in increased costs and additional operating restrictions or delays for our customers, which could reduce demand for our products.
These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our Audit Committee or other board committees, or as our executive 67 officers.
These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our Audit Committee or other board committees, or as our executive officers.
You may not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements. • Our ability to pay regular cash dividends on our Class A common stock may be limited. 33 Risks Factors Related to Our Business and Industry Trends in crude oil and natural gas prices may affect production-related activities and production-related operating expenditures by our customers, and therefore the demand for, and profitability of, our products and services.
You may not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements. • Our ability to pay regular cash dividends on our Class A common stock may be limited. 24 Risks Factors Related to Our Business and Industry Trends in crude oil and natural gas prices may affect production-related activities and production-related operating expenditures by our customers, and therefore the demand for, and profitability of, our products and services.
Difficulties or delays in research, development or production of new products and technologies, or failure to gain customer acceptance of new products and technologies, may significantly reduce future revenue and materially and adversely affect our 37 competitive position.
Difficulties or delays in research, development or production of new products and technologies, or failure to gain customer acceptance of new products and technologies, may significantly reduce future revenue and materially and adversely affect our competitive position.
The directors 59 such Continuing Equity Owners elect have the authority to incur additional debt, issue or repurchase stock, declare dividends and make other decisions that could be detrimental to stockholders.
The directors such Continuing Equity Owners elect have the authority to incur additional debt, issue or repurchase stock, declare dividends and make other decisions that could be detrimental to stockholders.
If we are unsuccessful in our efforts to attract and retain sufficient qualified personnel on terms acceptable to us, or do so at rates necessary to maintain our liquidity and competitive position, our business, results of operations, financial condition, cash flows, and market share could be adversely affected. 43 The inability to protect or obtain patent and other intellectual property rights could adversely affect our revenue, operating profits and cash flows.
If we are unsuccessful in our efforts to attract and retain sufficient qualified personnel on terms acceptable to us, or do so at rates necessary to maintain our liquidity and competitive position, our business, results of operations, financial condition, cash flows, and market share could be adversely affected. 31 The inability to protect or obtain patent and other intellectual property rights could adversely affect our revenue, operating profits and cash flows.
As a result, the acquisition of one or more of our primary customers may have a significant adverse 38 impact on our business, results of operations, financial condition and cash flows.
As a result, the acquisition of one or more of our primary customers may have a significant adverse impact on our business, results of operations, financial condition and cash flows.
Any such issuance of additional securities in the future may result in additional dilution to you, or may adversely impact the price of our Class A common stock. 69
Any such issuance of additional securities in the future may result in additional dilution to you, or may adversely impact the price of our Class A common stock.
While we strive to maintain high ethical standards and robust internal controls, we cannot provide assurance that our internal controls, training and compliance systems will always protect us from acts committed by our employees, agents or business partners that would violate such U.S. or international laws or 50 regulations.
While we strive to maintain high ethical standards and robust internal controls, we cannot provide assurance that our internal 36 controls, training and compliance systems will always protect us from acts committed by our employees, agents or business partners that would violate such U.S. or international laws or regulations.
Tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows. Our material input costs are adversely affected by tariffs imposed by the U.S. government on products imported into the United States and by trade restrictions imposed on business dealings with particular entities and/or individuals.
Tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows. Our material input costs are adversely affected by tariffs imposed by the U.S. government on products imported into the U.S. and by trade restrictions imposed on business dealings with particular entities and/or individuals.
The payments under the Tax Receivable Agreement are not conditioned upon continued ownership of us by the exchanging Continuing Equity Owners.
The payments under the Tax Receivable 39 Agreement are not conditioned upon continued ownership of us by the exchanging Continuing Equity Owners.
Our amended and restated certificate of incorporation provides (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our amended and restated certificate of incorporation provides (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former 46 director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the U.S. shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Market for Registrant’s Common 64 Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Dividends ” for more detail.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Dividends ” for more detail.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the U.S shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.
Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices may preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock may be adversely affected.
The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies.” As defined in the JOBS Act, a public company whose initial public offering of common equity securities occurs after December 8, 2011, and whose annual net revenues are less than $1.235 billion will, in general, qualify as an “emerging growth company” until the earliest of: • the last day of its fiscal year following the fifth anniversary of the date of its initial public offering of common equity securities; • the last day of its fiscal year in which it has annual gross revenue of $1.235 billion or more; • the date on which it has, during the previous three-year period, issued more than $1.0 billion in nonconvertible debt; and • the date on which it is deemed to be a “large accelerated filer,” which will occur at such time as the company (i) has an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of its most recently completed second fiscal quarter, (ii) has been required to file annual and quarterly reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, for a period of at least 12 months, and (iii) has filed at least one annual report pursuant to the Exchange Act. 63 Under this definition, we are an “emerging growth company” upon completion of the IPO and could remain an “emerging growth company” until as late as the fifth anniversary of the completion of the IPO.
The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies.” As defined in the JOBS Act, a public company whose initial public offering of common equity securities occurs after December 8, 2011, and whose annual net revenues are less than $1.235 billion will, in general, qualify as an “emerging growth company” until the earliest of: • the last day of its fiscal year following the fifth anniversary of the date of its initial public offering of common equity securities; • the last day of its fiscal year in which it has annual gross revenue of $1.235 billion or more; • the date on which it has, during the previous three-year period, issued more than $1.0 billion in nonconvertible debt; and • the date on which it is deemed to be a “large accelerated filer,” which will occur at such time as the company (i) has an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of its most recently completed second fiscal quarter, (ii) has been required to file annual and quarterly reports under the Securities Exchange Act of 1934, as amended, or the 45 Exchange Act, for a period of at least 12 months, and (iii) has filed at least one annual report pursuant to the Exchange Act.
Increasing attention to climate change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG initiatives and disclosures, and consumer demand for alternative forms of energy may result in increased costs, including, but not limited to, increased costs related to compliance, stakeholder engagement, contracting and insurance, reduced demand for our products, reduced profits, increased investigations and litigation, and negative impacts on the price of our common units and access to capital markets.
Increasing attention to climate change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG initiatives and disclosures, and consumer demand for alternative forms of energy may result in increased costs, including, but not limited to, increased costs related to compliance, stakeholder engagement, contracting and insurance, reduced demand for our products, reduced profits, increased investigations and litigation, and negative impacts on the price of our shares of Class A common stock and access to capital markets.
Any such violations of law or improper actions could subject us to civil or criminal investigations in the United States or other jurisdictions, could lead to substantial civil or criminal, monetary and non-monetary penalties and related stockholder lawsuits, could lead to increased costs of compliance and could damage our reputation, business, results of operations, financial condition and cash flows.
Any such violations of law or improper actions could subject us to civil or criminal investigations in the U.S. or other jurisdictions, could lead to substantial civil or criminal, monetary and non-monetary penalties and related stockholder lawsuits, could lead to increased costs of compliance and could damage our reputation, business, results of operations, financial condition and cash flows.
Some of the factors impacting our customers’ operating and capital spending may include: • oil and natural gas prices, as described above; • the inability of our customers to access capital on economically advantageous terms, which may be impacted by, among other things, interest rate fluctuations, global market and economic conditions, or a decrease of investors’ interest in hydrocarbon producers due to environmental and sustainability initiatives; • changes in customers’ capital allocation, including (i) allocation to alternate suppliers or an increased allocation to the production of renewable energy or other sustainability efforts, leading to less focus on oil and natural gas production growth and (ii) allocation to other production-enhancing activities for existing wells; • restrictions on our customers’ ability to get their produced oil and natural gas to market due to infrastructure limitations; • consolidation of our customers; • customer personnel changes; and • adverse developments in the business or operations of our customers, including write-downs of oil and natural gas reserves and borrowing base reductions under customers’ credit facilities. 35 Our operations could be adversely affected by global market and economic conditions in ways we may not be able to predict or control.
Some of the factors impacting our customers’ operating and capital spending may include: • oil and natural gas prices, as described above; • the inability of our customers to access capital on economically advantageous terms, which may be impacted by, among other things, interest rate fluctuations, global market and economic conditions, or a decrease of investors’ interest in hydrocarbon producers due to environmental and sustainability initiatives; • changes in customers’ capital allocation, including (i) allocation to alternate suppliers or an increased allocation to the production of renewable energy or other sustainability efforts, leading to less focus on oil and natural gas production growth and (ii) allocation to other production-enhancing activities for existing wells; • restrictions on our customers’ ability to get their produced oil and natural gas to market due to infrastructure limitations; • consolidation of our customers; • customer personnel changes; and • adverse developments in the business or operations of our customers, including write-downs of oil and natural gas reserves and borrowing base reductions under customers’ credit facilities.
An expansion or escalation of the Russian-Ukraine or Middle East conflicts or an economic slowdown or recession in the United States or in any other country that significantly affects the supply of or demand for oil or natural gas could negatively impact our operations and therefore adversely affect our results.
An expansion or escalation of the Russian-Ukraine or Middle East conflicts or an economic slowdown or recession in the U.S. or in any other country that significantly affects the supply of or demand for oil or natural gas could negatively impact our operations and therefore adversely affect our results.
Risk Factor Summary Risks Factors Related to Our Business and Industry • Trends in crude oil and natural gas prices may affect production-related activities and production-related operating expenditures by our customers, and therefore the demand for, and profitability of, our products and services. • Decreased expenditures by our customers can adversely impact our customers’ demand for our products and services and our revenue. • Our operations could be adversely affected by global market and economic conditions in ways we may not be able to predict or control. • We could lose customers or generate lower revenue, operating profits and cash flows if there are significant increases in the cost of raw materials or if we are unable to obtain raw materials. • If we are unable to develop new products and technologies, our competitive position may be impaired, which could materially and adversely affect our sales and market share. • Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation. • The loss of one or more significant customers could have an adverse impact on our financial results. • Changes in our customer and product mix could cause our profit margin to fluctuate. • Our failure to successfully integrate the businesses of Estis, FPS and Flogistix from the 2024 Business Combination may adversely affect the value of our Class A common stock. • We identified material weaknesses in our internal control over financial reporting.
Risk Factor Summary Risks Factors Related to Our Business and Industry • Trends in crude oil and natural gas prices may affect production-related activities and production-related operating expenditures by our customers, and therefore the demand for, and profitability of, our products and services. • Decreased expenditures by our customers can adversely impact our customers’ demand for our products and services and our revenue. • Our operations could be adversely affected by global market and economic conditions in ways we may not be able to predict or control. • We could lose customers or generate lower revenue, operating profits and cash flows if there are significant increases in the cost of raw materials or if we are unable to obtain raw materials. • If we are unable to develop new products and technologies, our competitive position may be impaired, which could materially and adversely affect our sales and market share. • Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation. • The loss of one or more significant customers could have an adverse impact on our financial results. • Changes in our customer and product mix could cause our profit margin to fluctuate. • We have identified material weaknesses in our internal control over financial reporting.
Under the Tax Receivable Agreement, we are required to make cash payments to the TRA Participants 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) Flowco Holdings ’ allocable share of existing tax basis acquired in connection with the Transactions and increases to such allocable share of existing tax basis; (ii) Flowco Holdings ’ utilization of certain tax attributes of the Blocker Companies (including the Blocker Companies’ allocable share of existing tax basis); (iii) the increases in our share of the tax basis of assets of Flowco LLC resulting from (a) the purchase of LLC Interests directly from Flowco LLC in connection with the IPO, (b) any future redemptions or exchanges of LLC Interests from the Continuing Equity Owners as described under “ Part III, item 13.
Under the Tax Receivable Agreement, we are required to make cash payments to the TRA Participants 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) Flowco Holdings ’ allocable share of existing tax basis acquired in connection with the Transactions and increases to such allocable share of existing tax basis; (ii) Flowco Holdings ’ utilization of certain tax attributes of the Blocker Companies (including the Blocker Companies’ allocable share of existing tax basis); (iii) the increases in our share of the tax basis of assets of Flowco LLC resulting from (a) the purchase of LLC Interests directly from Flowco LLC in connection with the IPO, (b) any future redemptions or exchanges of LLC Interests from the Continuing Equity Owners and (c) certain distributions (or deemed distributions) by Flowco LLC; and (iv) certain other tax benefits arising from payments under the Tax Receivable Agreement.
There has been significant growth in opposition to oil and natural gas development both in the United States and globally. This opposition is focused on attempting to limit or stop hydrocarbon development in certain areas.
There has been significant growth in opposition to oil and natural gas development both in the U.S. and globally. This opposition is focused on attempting to limit or stop hydrocarbon development in certain areas.
Certain Relationship and Related Transactions, and Director Independence .” We intend, as its managing member, to cause Flowco LLC to make cash distributions to the holders of LLC Interests in an amount sufficient to (i) fund all or part of their tax obligations in respect of taxable income allocated to them and (ii) cover our operating expenses, including payments under the Tax Receivable Agreement.
We intend, as its managing member, to cause Flowco LLC to make cash distributions to the holders of LLC Interests in an amount sufficient to (i) fund all or part of their tax obligations in respect of taxable income allocated to them and (ii) cover our operating expenses, including payments under the Tax Receivable Agreement.
Under such announced policies, the dual class structure of our stock would make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to track those indices would not invest in our Class A common stock.
The dual-class structure of our common stock may make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices would not invest in our Class A common stock.
We entered into the Tax Receivable Agreement with Flowco LLC and each of the TRA Participants in connection with the completion of the IPO and the Transactions, which provides for the payment by us to the TRA Participants of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of: (i) Flowco’s allocable share of existing tax basis acquired in connection with the Transactions and increases to such allocable share of existing tax basis; (ii) Flowco Holdings’s utilization of certain tax attributes of the Blocker Companies (including the Blocker Companies’ allocable share of existing tax basis); (iii) the increases in our share of the tax basis of assets of Flowco LLC resulting from (a) the purchase of LLC Interests directly from Flowco LLC in connection with the IPO, (b) any future redemptions or exchanges 55 of LLC Interests from the Continuing Equity Owners as described under “ Certain Relationships and Related Party Transactions - Flowco LLC Agreement - Flowco LLC Agreement in Effect Upon Consummation of the Transactions - Common Unit Redemption Right ” and (c) certain distributions (or deemed distributions) by Flowco LLC; and (iv) certain other tax benefits arising from payments under the Tax Receivable Agreement.
We entered into the Tax Receivable Agreement with Flowco LLC and each of the TRA Participants in connection with the completion of the IPO and the Transactions, which provides for the payment by us to the TRA Participants of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of: (i) Flowco’s allocable share of existing tax basis acquired in connection with the Transactions and increases to such allocable share of existing tax basis; (ii) Flowco Holdings’s utilization of certain tax attributes of the Blocker Companies (including the Blocker Companies’ allocable share of existing tax basis); (iii) the increases in our share of the tax basis of assets of Flowco LLC resulting from (a) the purchase of LLC Interests directly from Flowco LLC in connection with the IPO, (b) any future redemptions or exchanges of LLC Interests from the Continuing Equity Owners as described under “ Certain Relationships and Related Party Transactions - Flowco LLC Agreement - Flowco LLC Agreement in Effect Upon Consummation of the Transactions — Common Unit Redemption Right ” in our Annual Report on Form 10-K for 2024 (and equivalent section in our Definitive Proxy Statement for our 2026 Annual Meeting of Shareholders to be incorporated by reference herein) and (c) certain distributions (or deemed distributions) by Flowco LLC; and (iv) certain other tax benefits arising from payments under the Tax Receivable Agreement.
See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.” Although we will retain 15% of the amount of such tax benefits, this and other aspects of our organizational structure may adversely impact the future trading market for the Class A common stock. Additionally, we are a holding company and have no material assets other than our ownership of LLC Interests.
Although we will retain 15% of the amount of such tax benefits, this and other aspects of our organizational structure may adversely impact the future trading market for the Class A common stock. Additionally, we are a holding company and have no material assets other than our ownership of LLC Interests.
Therefore, any return on investment in our Class A common stock is solely dependent upon the appreciation of the price of our Class A common stock on the open market, which may not occur. See “ Part II. Item 5.
Therefore, any return on investment in our Class A common stock will likely depend primarily upon the appreciation of the price of our Class A common stock on the open market, which may not occur. See “ Part II. Item 5.
In addition to tax expenses, we will also incur expenses related to our operations, including payments under the Tax Receivable Agreement, which we expect could be significant. See “ Part III, Item 13.
In addition to tax expenses, we will also incur expenses related to our operations, including payments under the Tax Receivable Agreement, which we expect could be significant.
For more information, see “ Certain Relationships and Related Party Transactions—Stockholders Agreement. ” Further, our amended and restated certificate of incorporation, which became effective upon the consummation of the Transactions, provides that the doctrine of “corporate opportunity” does not apply with respect to any director or stockholder who is not employed by us or any of our subsidiaries.
Further, our amended and restated certificate of incorporation, which became effective upon the consummation of the Transactions, provides that the doctrine of “corporate opportunity” does not apply with respect to any director or stockholder who is not employed by us or any of our subsidiaries.
These policies are relatively new, and it is unclear what effect, if any, they will have on the valuations of publicly-traded companies excluded from such indices, but it is possible they may depress valuations, compared to similar companies that are included.
In addition, it is unclear what effect, if any, such policies will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to similar companies that are included.
As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our shares of Class A common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them.
The market price of our shares of Class A common stock could drop significantly if we or the holders of these shares sell them or are perceived by the market as intending to sell them.
GEC and White Deer control, in the aggregate, approximately 57.9% of the voting power represented by all our outstanding classes of stock, and individually control approximately 41.9% and 16.0%, respectively, of the voting power represented by all our outstanding classes of stock.
GEC and White Deer control, in the aggregate, approximately 58.5% of the voting power represented by all our outstanding classes of stock, and individually control approximately 42.3% and 16.2%, respectively, of the voting power represented by all our outstanding classes of stock.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Dividends .” Under the Flowco LLC Agreement, we intend to cause Flowco LLC, from time to time, to make distributions in cash to its members (including us) in amounts that may cover the taxes imposed on their allocable share of taxable income of Flowco LLC.
Under the Flowco LLC Agreement, we intend to cause Flowco LLC, from time to time, to make distributions in cash to its members (including us) in amounts that may cover the taxes imposed on their allocable share of taxable income of Flowco LLC.
See “ Part III, Item 13. Certain Relationship and Related Transactions, and Director Independence .” 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.
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.
Additionally, any fluctuation in the credit rating of us or our subsidiaries may impact our ability to access debt markets in the future or increase our cost of future debt, which could have a material adverse effect on our operations and financial condition, which in return may adversely affect the trading price of shares of our Class A common stock.
If one or more of these analysts stops covering us or fails to publish reports on us regularly, we could lose visibility in the market, which, in turn, could cause our stock price or trading volume to decline. 47 Additionally, any fluctuation in the credit rating of us or our subsidiaries may impact our ability to access debt markets in the future or increase our cost of future debt, which could have a material adverse effect on our operations and financial condition, which in return may adversely affect the trading price of shares of our Class A common stock.
Any Class A common stock that we issue under the Equity Plan or other equity incentive plans that we may adopt in the future would dilute the percentage ownership held by the investors who purchase Class A common stock in the IPO.
Any Class A common stock that we issue under the Equity Plan or other equity incentive plans that we may adopt in the future would dilute the percentage ownership held by the investors in our Class A common stock. In the future, we may also issue securities in connection with investments, acquisitions or capital raising activities.
As described above, we could potentially qualify as an “emerging growth company” until as late as the fifth anniversary of the completion of the IPO. We expect to incur costs related to implementing an internal audit and compliance function in the upcoming years to further improve our internal control environment.
As described above, we could potentially qualify as an “emerging growth company” until as late as the fifth anniversary of the completion of the IPO. Prior to and following our IPO in 2025, we incurred costs to implement and improve our internal audit and compliance function.
As such, we qualify for, and intend to rely on, exemptions from certain corporate governance requirements, including the requirements to have a majority of independent directors on our Board of Directors, an entirely independent nominating and corporate governance committee, an entirely independent compensation committee or to perform annual performance evaluations of the nominating and corporate governance and compensation committees. 61 The corporate governance requirements and, specifically, the independence standards are intended to ensure directors who are considered independent are free of any conflicting interest that could influence their actions as directors.
As such, we qualify for, and intend to rely on, exemptions from certain corporate governance requirements, including the requirements to have a majority of independent directors on our Board of Directors, an entirely independent nominating and corporate governance committee, an entirely independent compensation committee or to perform annual performance evaluations of the nominating and corporate governance and compensation committees.
Upon consummation of the Transactions, we had a total of 25,721,620 outstanding shares of Class A common stock, of which the 20,470,000 shares of Class A common stock sold in the IPO are freely tradable without restriction or further registration under the Securities Act, other than shares held by our affiliates.
As of February 26, 2026, we had a total of 29,647,189 outstanding shares of Class A common stock, of which 20,470,000 shares of outstanding Class A common stock are freely tradable without restriction or further registration under the Securities Act, other than shares held by our affiliates.
If Flowco LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for us and for Flowco LLC, including as a result of the inability to file a consolidated U.S. federal income tax return with Flowco LLC. 58 If we were deemed to be an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act, including as a result of our ownership of Flowco LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act, including as a result of our ownership of Flowco LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.
See “Description of Capital Stock” section included in the Final Prospectus. The JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC.
The JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC. We cannot be certain if this reduced disclosure will make our Class A common stock less attractive to investors.
We cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A common stock, in adverse publicity, or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices.
We cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A common stock, adverse publicity or other adverse consequences.
As a result, payments could be made under the Tax Receivable Agreement significantly in excess of any actual cash tax savings that we realize in respect of the tax attributes with respect to a TRA Participant that are the subject of the Tax Receivable Agreement. 57 Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.
As a result, payments could be made under the Tax Receivable 41 Agreement significantly in excess of any actual cash tax savings that we realize in respect of the tax attributes with respect to a TRA Participant that are the subject of the Tax Receivable Agreement.
See “ Underwriting (Conflicts of Interest) ” in our Final Prospectus. In addition, we have reserved shares of Class A common stock equal to approximately 6.6% of the total number of outstanding LLC Interests following the IPO for issuance under the Equity Plan (as defined below in this Annual Report).
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities We have reserved shares of Class A common stock equal to approximately 6.6% of the total number of outstanding LLC Interests following the IPO for issuance under the Equity Plan (as defined below in this Annual Report).
In addition, we have made investments in certain countries, and we may in the future invest in other countries, which may carry high levels of currency, political, compliance, or economic risk.
In addition, we have made investments in certain countries, and we may in the future invest in other countries, which may carry high levels of currency, political, compliance, or economic risk. While these risks or the impact of these risks are difficult to predict, any one or more of them could adversely affect our business, results of operations and reputation.
Our tax returns are subject to audit and taxing authorities could challenge our operating structure, taxable presence, application of treaty benefits or transfer pricing policies. If changes in statutory tax rates or laws or audits result in assessments different from amounts estimated, then our business, results of operations, financial condition and cash flows may be adversely affected.
If changes in statutory tax rates or laws or audits result in assessments different from amounts estimated, then our business, results of operations, financial condition and cash flows may be adversely affected. In addition, changes in tax laws could have an adverse effect on our customers, resulting in lower demand for our products and services.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Pr operties We primarily lease technical customer support offices and manufacturing facilities, research and technology centers, and administrative facilities in various locations in the U.S.
Biggest changeItem 2. Pr operties We primarily lease technical customer support offices and manufacturing facilities, research and technology centers, and administrative facilities in various locations in the U.S. As of December 31, 2025, our corporate headquarters consisted of leased office space located at 1300 Post Oak Blvd., Suite 450, Houston, Texas 77056, and 6529 & 6533 N.
The remainder of our property consists primarily of service equipment, vapor recovery, manufacturing and field support assets. For further information regarding our properties related to our business, see Item 1- Business - “Our Asset Footprints .” 73
Classen Blvd., Oklahoma City, Oklahoma, 73116. The remainder of our property consists primarily of service equipment, vapor recovery, manufacturing and field support assets. For further information regarding our properties related to our business, see Item 1- Business - “Our Asset Footprints .”
Removed
As of December 31, 2024, our headquarters in Houston, Texas consisted of 6,750 square feet of leased space located at 1300 Post Oak Blvd., Suite 450, Houston, Texas 77056, and 13,685 square feet of leased space located at 6529 & 6533 N. Classen Blvd., Oklahoma City, Oklahoma, 73116.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe do not believe that any existing claims or proceedings will have a material effect on our business, consolidated financial condition or results of operations. 74 Item 4. Mi ne Safety Disclosures None. 75 PART II
Biggest changeWe do not believe that any existing claims or proceedings will have a material effect on our business, consolidated financial condition or results of operations. Item 4. Mi ne Safety Disclosures None. 51 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+11 added−4 removed3 unchanged
Biggest changeUse of Proceeds from the IPO The net proceeds from our IPO were approximately $461.8 million and were used to purchase 20,470,000 newly issued LLC Interests directly from Flowco LLC at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount.
Biggest changeUse of Proceeds from the IPO The net proceeds from our IPO were approximately $461.8 million and were used to purchase 20,470,000 newly issued LLC Interests directly from Flowco LLC at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount. 52 Flowco LLC used the net proceeds from its sale to us of newly issued LLC Interests as follows: (i) to redeem approximately $20.9 million of Flowco LLC Interests from certain non-affiliate holders; and (ii) with respect to the remainder, to repay $440.0 million of indebtedness under our Credit Agreement.
Our Board of Directors may take into account general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our 76 stockholders or by our subsidiaries to us, and such other factors as our Board of Directors may deem relevant.
Our Board of Directors may take into account general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our Board of Directors may deem relevant.
Item 5. Market for Re gistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock On January 16, 2025, our Class A common stock began trading on the New York Stock Exchange under the ticker symbol “FLOC”. Prior to that time, there was no public market for our Class A common stock.
Item 5. Market for Re gistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Class A common stock began trading on the New York Stock Exchange under the ticker symbol “FLOC” on January 16, 2025. Prior to that date, there was no public market for our Class A common stock.
There is no established public trading market for our Class B common stock. Shareholders Information As of March 19, 2025, we had six registered holders of our Class A common stock and 58 registered holders of our Class B common stock. Recent Sales of Unregistered Securities None.
As of December 31, 2025, there is no established public trading market for our Class B common stock. Shareholders Information As of February 26, 2026, we had 11 registered holders of our Class A common stock and 35 registered holders of our Class B common stock. Recent Sales of Unregistered Securities None.
Incentive awards generally may be issued to officers, key employees, consultants, and directors and include the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units. For more information concerning common stock issuances with respect to the Equity Plan, refer to “ Item 12.
Incentive awards generally may be issued to officers, key employees, consultants, and directors and include the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units.
Removed
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Securities for Issuance under Equity Compensation Plans .” Dividends We currently intend to pay a dividend from available funds and future earnings on our Class A common stock.
Added
Dividends We have paid a regular quarterly cash dividend on our Class A common stock as approved by our Board of Directors since May 2025.
Removed
In turn, Flowco LLC used the net proceeds from its sale to us of newly issued LLC Interests as follows: (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.
Added
Dividends are not paid to our Class B common stockholders; however, a corresponding distribution up to the same amount per share as our Class A common stockholders is paid to unit holders of Flowco LLC for any dividends declared on our Class A common stock. We have paid quarterly dividends uninterrupted since initiation of the cash dividend program.
Removed
Flowco LLC may also use a portion of the net proceeds to acquire or invest in businesses, products, services, or technologies; however, there are no agreements or commitments for any material acquisitions or investments at the time of when this Annual Report was issued.
Added
We currently intend to continue paying the quarterly dividend at the current levels while retaining the balance of future earnings, if any, to finance the growth of our business or repurchase of our Class A common stock. Additionally, we continue to anticipate paying the quarterly dividend from available funds and future earnings on our Class A common stock.
Removed
Further, there has been no material change in the expected use of the net proceeds from our IPO as described under the heading “Use of Proceeds” in our Final Prospectus. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 77 It em 6. [Reserved] 78
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Our Class A common stock repurchase activities under the approved Share Repurchase Program by our Board of Directors for the year ended December 31, 2025, were as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in millions) (3) (a) (b) (c) (d) July 1, 2025 through July 31, 2025 — $ — — $ 50 August 1, 2025 through August 31, 2025 499,824 $ 15.88 499,824 $ 42 September 1, 2025 through September 30, 2025 453,405 $ 15.54 453,405 $ 35 Total 953,229 $ 15.72 953,229 ____________________________ (1) In June 2025, our Board of Directors authorized a share repurchase program (the “Share Repurchase Program”) to purchase up to $50 million, excluding excise taxes, of our outstanding Class A common stock at our discretion and has no fixed termination date.
Added
These shares were repurchased in open-market transactions. As of December 31, 2025, all repurchased shares to date have been retired. (2) The weighted average price paid per share does not include the cost of commissions and excise taxes.
Added
(3) On September 26, 2025, we entered into a 10b5-1 Repurchase Plan Agreement (the “Repurchase Plan Agreement”), providing for the repurchase of up to the daily volume limit permitted under Rule 10b-18 of the Securities Exchange Act of 1934.
Added
The Repurchase Plan Agreement is set to commence on November 6, 2025 and shall expire on the earliest of close of business on February 6, 2026 or the completion of all purchases contemplated by the Repurchase Plan Agreement. The Repurchase Plan Agreement has a maximum authorized amount of $15.0 million.
Added
As of December 31, 2025, no repurchase has been made under the Repurchase Plan Agreement. Management did not renew the Repurchase Plan Agreement upon its expiration on February 6, 2026.
Added
Performance Graph The following performance graph shall not be deemed soliciting material or to be filed with the SEC for purposes of Section 18 of the Exchange Act, nor shall such information be incorporated by reference into any of our other filings under the Exchange Act or the Securities Act.
Added
The graph below compares the cumulative total shareholder return on our common stock to the S&P 500 Index, the S&P Oil & Gas Equipment & Services Index and the PHLX Oil Service Index.
Added
The total shareholder return assumes $100 was invested on market close on January 15, 2025, in Flowco Holdings Inc., the S&P 500 Index, the S&P Oil 53 and Gas Equipment Select Industry Index and the PHLX Oil Service Index. It also assumes reinvestment of all dividends. It em 6. [Reserved] 54

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

62 edited+79 added−64 removed54 unchanged
Biggest changeThe $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.
Biggest changeThe increase in net cash used in financing activities was primarily attributable to (i) $416.7 million net cash proceeds from new financing cash activities in 2025 related to $461.8 million in IPO proceeds, $20.9 million payments to acquire the LLC Interests from the Continuing Equity Owners, $15.0 million in share repurchases, $6.7 million dividend payments to Class A common stockholders and $2.5 million of payments related to offering costs for the IPO; (ii) offset by $430.6 million change in net cash used related to $818.7 million of payments on long-term debt, $7.5 million payments related to finance lease obligations, $186.9 million of proceeds from long-term debt, $202.0 million decrease in distributions to the Continuing Equity Owners and $6.7 million decrease in payments for debt financing.
Prior to June 20, 2024, all operating results reflect only Estis as predecessor to the Merging Entities: Year Ended December 31, 2024 2023 Change ($) Change (%) Revenues Rentals $ 276,687 $ 168,801 $ 107,886 64 % Sales 258,591 74,522 184,069 247 % Total revenues 535,278 243,323 291,955 120 % Operating expenses Cost of rentals (exclusive of depreciation and amortization disclosed separately below) 74,494 42,179 32,315 77 % Cost of sales (exclusive of depreciation and amortization disclosed separately below) 189,930 62,599 127,331 203 % Selling, general and administrative expenses 62,453 15,219 47,234 310 % Depreciation and amortization 90,862 43,822 47,040 107 % Loss on sale of equipment 797 1,170 (373 ) -32 % Income from operations 116,742 78,334 38,408 49 % Other expenses Interest expense (32,345 ) (18,956 ) (13,389 ) 71 % Loss on debt extinguishment (221 ) — (221 ) 100% Other expenses (2,756 ) (910 ) (1,846 ) 203 % Total other expenses (35,322 ) (19,866 ) (15,456 ) 78 % Income before provision for income taxes 81,420 58,468 22,952 39 % Provision for income taxes (1,171 ) (379 ) (792 ) 209 % Net income $ 80,249 $ 58,089 $ 22,160 38 % Revenue – Rentals .
Prior to June 20, 2024, all operating results reflect only Estis as predecessor to the Merging Entities: For the Year Ended December 31, 2024 2023 Change ($) Change (%) Revenues Rentals $ 276,687 $ 168,801 $ 107,886 64 % Sales 258,591 74,522 184,069 247 % Total revenues 535,278 243,323 291,955 120 % Operating expenses Cost of rentals (exclusive of depreciation and amortization disclosed separately below) 74,494 42,179 32,315 77 % Cost of sales (exclusive of depreciation and amortization disclosed separately below) 189,930 62,599 127,331 203 % Selling, general and administrative expenses 62,453 15,219 47,234 310 % Depreciation and amortization 90,862 43,822 47,040 107 % Loss on sale of equipment 797 1,170 (373 ) -32 % Income from operations 116,742 78,334 38,408 49 % Other expenses Interest expense (32,345 ) (18,956 ) (13,389 ) 71 % Loss on debt extinguishment (221 ) — (221 ) 100% Other income (expenses) (2,756 ) (910 ) (1,846 ) 203 % Total other expenses (35,322 ) (19,866 ) (15,456 ) 78 % Income before provision for income taxes 81,420 58,468 22,952 39 % Income tax provision (1,171 ) (379 ) (792 ) 209 % Net income $ 80,249 $ 58,089 $ 22,160 38 % Revenue—Rentals.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private 96 companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
Dividends 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.
Dividends 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 65 operations, projections, liquidity, earnings, legal requirements, and restrictions in the agreements governing our indebtedness.
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 87 segment as depreciation and amortization within the Natural Gas Technologies remained consistent year-over-year. Loss on sale of equipment .
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. Loss on sale of equipment.
The assumptions made in performing these valuations include, but are not limited to, discount rate, future revenues 93 and operating costs, projections of capital costs, royalty rate, and other assumptions believed to be consistent with those used by principal market participants.
The assumptions made in performing these valuations include, but are not limited to, discount rate, future revenues and operating costs, projections of capital costs, royalty rate, and other assumptions believed to be consistent with those used by principal market participants.
Thus, of the increase in rental revenue related to the Production Solutions segment, 2.4% is attributable to an increase in average active systems, and 11.3% is due to an increase in average monthly price. 86 Revenue – Sales .
Thus, of the increase in rental revenue related to the Production Solutions segment, 2.4% is attributable to an increase in average active systems, and 11.3% is due to an increase in average monthly price. Revenue—Sales.
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.
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.
Typically, our write-offs approximate $1 million each year due to factors that include historical usage, estimated product demand, technological developments and current market conditions. We believe our inventory valuation reserve is adequate to properly value excess and obsolete inventory as of December 31, 2024 and 2023.
Typically, our write-offs approximate $1 million each year due to factors that include historical usage, estimated product demand, technological developments and current market conditions. We believe our inventory valuation reserve is adequate to properly value excess and obsolete inventory as of December 31, 2025 and 2024.
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.
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.
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.
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.
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.
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.
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.
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.
Impairment losses are recognized in the period in which the impairment occurs and represent the excess of the asset carrying value over its fair value estimated using future discounted net cash flows. No impairment was recorded for the years ended December 31, 2024, 2023 and 2022.
Impairment losses are recognized in the period in which the impairment occurs and represent the excess of the asset carrying value over its fair value estimated using future discounted net cash flows. No impairment was recorded for the years ended December 31, 2025, 2024 and 2023.
Consistent with the manner in which our chief operating decision maker evaluates performance and allocate resources, our operations are conducted, managed and presented within the following two reportable segments: • Production Solutions: segment is comprised of our artificial lift operations, digital solutions and methane abatement technologies; and • Natural Gas Technologies: segment is comprised of our vapor recovery and natural gas systems operations.
Consistent with the manner in which our chief operating decision maker evaluates performance and allocate resources, our operations are conducted, managed and presented within the following two reportable segments: • Production Solutions: segment is comprised of our artificial lift operations, including digital solutions; and • Natural Gas Technologies: segment is comprised of our vapor recovery and natural gas systems operations.
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.
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.
Recent Accounting Pronouncements For a discussion of new accounting pronouncements recently adopted and not yet adopted, see the notes to the audited consolidated financial statements included elsewhere in this Annual Report. 97
Recent Accounting Pronouncements For a discussion of new accounting pronouncements recently adopted and not yet adopted, see the notes to the audited consolidated financial statements included elsewhere in this Annual Report. 69
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.
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.
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.
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.
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.
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.
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 81 shorter-cycle oil field service businesses.
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.
Due to the change in focus of sales to third parties rather than our Production Solutions segment, third 89 party sales volume of natural gas systems increased 111% year-over-year while pricing remained flat. All intercompany revenues have been eliminated in consolidation. Cost of Rentals.
Due to the change in focus of sales to third parties rather than our Production Solutions 62 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. Cost of Rentals.
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.
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%.
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 84 interest owners.
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.
We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “will,” “would,” and similar expressions to identify forward-looking statements. Background and Business Overview We are a leading provider of production optimization, artificial lift and methane abatement solutions for the oil and natural gas industry.
We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “will,” “would,” and similar expressions to identify forward-looking statements. Company Overview We are a leading provider of production optimization, artificial lift and emissions management and monetization solutions for the oil and natural gas industry.
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. Loss on debt extinguishments .
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. Loss on debt extinguishments.
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. Interest expense .
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. Interest expense.
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.
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.
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.
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. Properties in this Annual Report.
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. 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.
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. 63 Provision for income taxes .
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. Other expense .
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. Other income (expense).
Subsequent to the IPO, we are taxed as a corporation under the Internal Revenue Code and subject to U.S. federal income taxes (currently at a statutory rate of 21% of pretax earnings, as adjusted by the Internal Revenue Code), as well as state income taxes, for our interest ownership in Flowco LLC. • 2025 Equity and Incentive Plan .
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. • Noncontrolling Interests.
As such, no impairment expense was recorded for the year ended December 31, 2024. Impairment of Long-Lived Assets Long-lived assets, including property, plant, and equipment, and other finite-lived identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Impairment of Long-Lived Assets Long-lived assets, including property, plant, and equipment, and other finite-lived identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
This increase was primarily attributable to $28.6 million of costs related to Flogistix as part of the 2024 Business Combination within the Natural Gas Technologies segment. Cost of Sales . Sales cost was $189.9 million for the year ended December 31, 2024, an increase of $127.3 million, or 203%, from $62.6 million for the year ended December 31, 2023.
Rental cost was $74.5 million for the year ended December 31, 2024, an increase of $32.3 million, or 77%, from $42.2 million for the year ended December 31, 2023. This increase was primarily attributable to $28.6 million of costs related to Flogistix as part of the 2024 Business Combination within the Natural Gas Technologies segment. Cost of Sales.
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.
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.
All intercompany revenues have been eliminated in consolidation. Cost of Rentals. Rental cost was $74.5 million for the year ended December 31 2024, an increase of $32.3 million, or 77%, from $42.2 million for the year ended December 31, 2023.
All intercompany revenues have been eliminated in consolidation. 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.
Useful lives of property, plant and equipment and intangible assets 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.
Useful lives of property, plant and equipment and intangible assets 68 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 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.
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. • Income Taxes .
While we believe that our estimates of current value are reasonable, if actual results differ from the estimates and judgments used including such items as future cash flows and the volatility inherent in markets which we serve, impairment charges against the carrying value of those assets could be required in the future. 94 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.
While we believe that our estimates of current value are reasonable, if actual results differ from the estimates and judgments used including such items as future cash flows and the volatility inherent in markets which we serve, impairment charges against the carrying value of those assets could be required in the future.
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.
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.
Net cash used in investing activities was $94.4 million and $42.7 million for the years ended December 31, 2024 and 2023, respectively.
Net cash used in investing activities was $199.8 million and $94.4 million for the years ended December 31, 2025 and 2024, respectively, an increase of $105.4 million.
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 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. We currently have two operating segments: (i) Production Solutions; and (ii) Natural Gas Technologies.
The noncontrolling interests will only impact future financial statements presentations and not the financial statements included in this Annual Report. Predecessor Consolidated Results of Operations The historical consolidated financial information included in the following tables and discussions present the historical financial information of our Predecessor.
The noncontrolling interests only impact financial statements presentations as of December 31, 2025 and for the year ended December 31, 2025. Results of Operations The consolidated financial information included in the following tables and discussions present the historical financial information of our operations.
Provision for income taxes for the years ended December 31, 2024 and 2023, are entirely associated with Texas margin tax, as an LLC.
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.
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.
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.
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 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, 57 investor relations expenses, Tax Receivable Agreement administration expenses and registrar and transfer agent fees. • Corporate Reorganization .
Prior to June 20, 2024, all cash flow activity reflects only our predecessor Estis.
Cash Flow Analysis The following table presents our summary cash flows for the periods presented. Prior to June 20, 2024, all cash flow activity reflects only our predecessor Estis.
The performance of our operating segments is primarily evaluated based on revenue and segment profit or loss with respect to such segments, in addition to other measures. 85 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table sets forth certain selected financial results for the periods indicated (in thousands).
The performance of our operating segments is primarily evaluated based on revenue and segment profit or loss with respect to such segments, in addition to other measures. 58 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Prior to June 20, 2024, all operating results reflect only Estis as predecessor to the Merging Entities.
Therefore, these corporate headquarters and certain functional departments do not qualify as an operating segment and have been included within corporate and other, which is also not considered a reportable segment. Corporate and other includes (i) corporate and overhead costs, and (ii) capitalized costs related to IPO and debt issuance and does not include any immaterial and aggregated operating segments.
Our corporate headquarters and certain functional departments do not earn revenues but incur costs which do not constitute business activities. Therefore, these corporate headquarters and certain functional departments do not qualify as an operating segment and have been included within corporate and other, which is also not considered a reportable segment.
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.
The sales of our VRU sales experienced a modest increase year-over-year due to a shift in purchasing patterns from our operators. 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.
However, any significant changes to the factors mentioned above could lead our estimate to change. Goodwill and long-lived assets We evaluate goodwill for impairment annually on December 31, unless events or changes in circumstances indicate an impairment may have occurred before that time.
If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future. Goodwill and long-lived assets We evaluate goodwill for impairment annually on December 31, unless events or changes in circumstances indicate an impairment may have occurred before that time.
Recent Developments IPO 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. 2024 Business Combination and Subsequent Transactions 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”).
Recent Developments IPO 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.
Year Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 179,383 $ 81,862 $ 66,564 Net cash (used in) investing activities $ (94,433 ) $ (42,673 ) $ (106,930 ) Net cash provided by (used in) financing activities $ (80,335 ) $ (39,189 ) $ 40,366 Operating activities .
For the Year Ended December 31, 2025 2024 Net cash provided by operating activities $ 294,370 $ 179,383 Net cash used in investing activities $ (199,752 ) $ (94,433 ) Net cash used in financing activities $ (94,711 ) $ (80,335 ) Operating activities .
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. Interest expense.
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. Interest expense .
Sources of Liquidity and Indebtedness 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.
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.
The approximately $52.7 million 92 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. Net cash used in investing activities was $42.7 million in 2023 compared to $106.9 million in 2022.
This increase was primarily due to an increase of $64.8 million of cash paid in asset acquisitions, an increase of $36.8 million in capital expenditures, and the absence of $3.1 million of cash acquired in 2024 from the 2024 Business Combination. 66 Financing activities.
Prior to the repayment of a portion of the Credit Agreement in conjunction with the IPO, the outstanding borrowings 91 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.
As of December 31, 2025, we had $167.8 million outstanding borrowings and $557.2 million available borrowing capacity under our Credit Agreement. As of February 20, 2026, we had $142.0 million outstanding borrowings and $579.6 million available borrowing capacity under our Credit Agreement.
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. Loss on sale of equipment.
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.
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.
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.
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.
Net cash provided by operating activities was $294.4 million and $179.4 million for the years ended December 31, 2025 and 2024, respectively, an increase of approximately $115.0 million. Operating cash flows increased primarily due to higher earnings as a direct result from additional business operations from FPS and Flogistix as it relates to the 2024 Business Combination.
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 83 realize or are deemed to realize in certain circumstances as a result of certain increases in tax basis and imputed interest.
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.
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.
This increase in rental revenue was driven primarily by two factors as follows: • 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.
Removed
Properties in this Annual Report. 79 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 .
Added
Debt Repayments 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.
Removed
Trends and Outlook Macroeconomic Conditions and Commodity Prices 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.
Added
The repayment substantially lowered our outstanding debt and interest expense in 2025 and enhanced our liquidity and capital structure. Share Repurchase Program 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.
Removed
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.
Added
The Repurchase Program is intended to provide the Company with 55 flexibility to return capital to shareholders and to opportunistically repurchase shares when management believes such repurchases represent an attractive use of capital.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
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.
Added
The Repurchase Program may be modified, suspended, or discontinued at any time at the discretion of our Board of Directors. 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.
Removed
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.
Added
We expect to fund any repurchases from available cash on hand and cash generated from operations. Asset Acquisition 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.
Removed
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.
Added
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.
Removed
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. Longer term, the U.S.
Added
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

132 edited+156 added−97 removed65 unchanged
Biggest change(2) Comprised primarily of expenses not allocated to our reportable segments. 141 Flowco MergeCo LLC Notes to Consolidated Financial Statements Year Ended December 31, 2023 Production Solutions Natural Gas Technologies Total Revenues from external customers $ 168,801 $ 74,522 $ 243,323 Intersegment revenues — 36,758 36,758 Total revenues 168,801 111,280 280,081 Elimination of intersegment revenue (36,758 ) Total consolidated revenues 243,323 Less: Cost of revenues from external customers (1) 42,179 62,599 104,778 Intersegment cost of revenue — 36,758 36,758 Total cost of revenues 42,179 99,357 141,536 Elimination of intersegment cost of revenue (36,758 ) Total consolidated cost of revenue 104,778 Selling, general and administrative expenses (1) 11,792 3,427 15,219 Depreciation and amortization (1) 42,773 1,049 43,822 Loss on sale of equipment 1,169 1 1,170 Segment profit $ 70,888 $ 7,446 $ 78,334 Corporate expenses — Total operating income 78,334 Interest expense (18,956 ) Other expense (910 ) Income before provision for income taxes $ 58,468 Year Ended December 31, 2022 Production Solutions Natural Gas Technologies Total Revenues from external customers $ 120,237 $ 28,372 $ 148,609 Intersegment revenues — 99,945 99,945 Total revenues 120,237 128,317 248,554 Elimination of intersegment revenue (99,945 ) Total consolidated revenues 148,609 Less: Cost of revenues from external customers (1) 33,214 22,261 55,475 Intersegment cost of revenue — 99,945 99,945 Total cost of revenues 33,214 122,206 155,420 Elimination of intersegment cost of revenue (99,945 ) Total consolidated cost of revenue 55,475 Selling, general and administrative expenses (1) 11,075 3,098 14,173 Depreciation and amortization (1) 35,275 931 36,206 Loss on sale of equipment 55 (4 ) 51 Segment profit $ 40,618 $ 2,086 $ 42,704 Corporate expenses — Total operating income 42,704 Interest expense (9,284 ) Other expense (408 ) Income before provision for income taxes $ 33,012 ____________________________ (1) Represents the significant expense categories and amounts for each reportable operating segment that are regularly provided to the chief operating decision maker. 142 Flowco MergeCo LLC Notes to Consolidated Financial Statements The following table sets forth certain selected financial information for our operating segments for the periods presented (in thousands): As of December 31, 2024 2023 Segment capital expenditures: Production Solutions $ 51,207 $ 39,035 Natural Gas Technologies 36,793 1,144 Total segment capital expenditures 88,000 40,179 Corporate and other 2,494 3,335 Total capital expenditures $ 90,494 $ 43,514 Segment assets: Production Solutions $ 886,372 $ 340,198 Natural Gas Technologies 730,459 56,276 Total segment assets 1,616,831 396,474 Eliminations (41,639 ) (4,386 ) Corporate and other (1) 13,757 — Total assets $ 1,588,949 $ 392,088 ____________________________ (1) Corporate costs incurred without revenues do not constitute business activities and therefore, do not meet the criteria of an operating segment.
Biggest changeYear Ended December 31, 2023 Production Solutions Natural Gas Technologies Total Revenues from external customers $ 168,801 $ 74,522 $ 243,323 Intersegment revenues — 36,758 36,758 Total revenues 168,801 111,280 280,081 Elimination of intersegment revenue ( 36,758 ) Total consolidated revenues 243,323 Less: Cost of revenues from external customers (1) 42,179 62,599 104,778 Intersegment cost of revenue — 36,758 36,758 Total cost of revenues 42,179 99,357 141,536 Elimination of intersegment cost of revenue ( 36,758 ) Total consolidated cost of revenue 104,778 Selling, general and administrative expenses (1) 11,792 3,427 15,219 Depreciation and amortization (1) 42,773 1,049 43,822 (Gain) loss on sale of equipment 1,169 1 1,170 Segment profit $ 70,888 $ 7,446 78,334 Corporate expenses (2) — Total operating income 78,334 Interest expense ( 18,956 ) Other expense ( 910 ) Income before provision for income taxes $ 58,468 ____________________________ (1) Represents the significant expense categories and amounts for each reportable operating segment that are regularly provided to the chief operating decision maker.
Our rental contract terms range from month-to-month up to 48 months and are typically billed at a fixed monthly rate while the equipment is in use by the customer. Payment for rentals is typically collected within 15-60 days. Monthly agreements are generally cancellable with 30-day notice by the customer.
Our rental contract terms range from month-to-month up to 48 months and are typically billed at a fixed monthly rate while the equipment is in use by the customer. Payment for rentals is typically collected within 15 to 60 days. Monthly agreements are generally cancellable with 30-day notice by the customer.
The length of time between the completion notification and product delivery typically ranges from 2-14 days. • Oil & gas products and parts . As it relates to the sale of oil & gas products, the Company has a single performance obligation associated with these contracts – the manufacture and sale of the contracted good to the customer.
The length of time between the completion notification and product delivery typically ranges from 2 to 14 days. • Oil & gas products and parts . As it relates to the sale of oil & gas products, the Company has a single performance obligation associated with these contracts – the manufacture and sale of the contracted good to the customer.
The transaction price (i.e., the amount that the Company has the right to under the terms of the sales contract with the customer) is the standalone sales price of each individual good and is typically settled within 30-45 days of the satisfaction of the performance obligation.
The transaction price (i.e., the amount that the Company has the right to under the terms of the sales contract with the customer) is the standalone sales price of each individual good and is typically settled within 30 to 45 days of the satisfaction of the performance obligation.
Payment for sales is typically collected within 15-70 days. • Maintenance and repair services . The Company performs maintenance and repair services for gas lift systems, plunger lift systems, and plunger assisted gas lift systems as well as services related to downhole fluid recovery, spooling, capillary, downhole tool installation and removal and other related activities.
Payment for sales is typically collected within 15 to 70 days. • Maintenance and repair services . The Company performs maintenance and repair services for gas lift systems, plunger lift systems, and plunger assisted gas lift systems as well as services related to downhole fluid recovery, spooling, capillary, downhole tool installation and removal and other related activities.
The Company's intangible assets include customer relationships, developed technology and trade name assets which are amortized using the straight-line method over their respective estimated useful lives below: Trade Names 10 years Customer Relationships 7-14 years Non-compete agreement 3 years Patent 20 years Developed Technology 10-20 years The Company reviews intangible assets subject to amortization at the relevant asset group level for impairment when circumstances indicate that the carrying amount of an intangible asset is not recoverable and its carrying value exceeds its fair value.
The Company's intangible assets include customer relationships, developed technology and trade name assets which are amortized using the straight-line method over their respective estimated useful lives below: Trade Names 10 years Customer Relationships 3 - 14 years Non-compete agreement 3 years Patent 20 years Developed Technology 10 - 20 years The Company reviews intangible assets subject to amortization at the relevant asset group level for impairment when circumstances indicate that the carrying amount of an intangible asset is not recoverable and its carrying value exceeds its fair value.
The CODM reviews segment profit or loss as the measure of profitability, which is presented on a reportable segment level for purposes of allocating resources and evaluating operating and financial performance. In addition to segment profit or loss, the CODM also reviews Adjusted EBITDA, a non-GAAP measure defined as adjusted earnings before income taxes, depreciation and amortization.
The CODM reviews segment profit or loss as the measure of profitability, which is presented on a reportable segment level for purposes of allocating resources and evaluating operating and financial performance. In addition to segment profit or loss, the CODM also reviews Adjusted EBITDA, a non-US GAAP measure defined as adjusted earnings before income taxes, depreciation and amortization.
Many contracts include a requirement for customers to ensure a small percentage of the asset or pay a premium if they elect not to insure the asset. Sales Revenue The Company accounts for sales revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), and all subsequent amendments issued thereafter.
Many contracts include a requirement for customers to insure a small percentage of the asset or pay a premium if they elect not to insure the asset. Sales Revenue The Company accounts for sales revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), and all subsequent amendments issued thereafter.
The CODM evaluates operating performance and decides how to allocate resources based on segment profit or loss, which is equivalent to segment income from operations, as well as Adjusted EBITDA, a non-GAAP measure defined as adjusted earnings before income taxes, depreciation and amortization.
The CODM evaluates operating performance and decides how to allocate resources based on segment profit or loss, which is equivalent to segment income from operations, as well as Adjusted EBITDA, a non-GAAP measure defined as adjusted earnings before interest, income taxes, depreciation and amortization.
Simultaneously with the IPO, Flowco Holdings acquired the LLC Interests held by certain of the existing indirect owners of the Company in exchange for 5,251,620 shares of its Class A common stock.
Simultaneously with the IPO, the Company acquired the LLC Interests held by certain of the existing indirect owners of Flowco LLC in exchange for 5,251,620 shares of its Class A common stock.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
We believe it is unlikely that salaries and wages will decrease to the levels experienced in prior years. 98 Ite m 8. Financial Statements and Supplementary Data The following Consolidated Financial Statements are filed as part of this Annual Report: Flowco Holdings Inc.
We believe it is unlikely that salaries and wages will decrease to the levels experienced in prior years. 70 Ite m 8. Financial Statements and Supplementary Data The following Consolidated Financial Statements are filed as part of this Annual Report: Flowco Holdings Inc.
Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.
Recently Adopted Accounting Standards In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.
Certain subsidiaries of the Company transfer any excess cash to pay down the senior secured revolving credit facility (the “Revolving Credit Facility”), which is then drawn on for cash on an as needed basis. As of December 31, 2024 and 2023, the Company had no cash designated as restricted cash.
Certain subsidiaries of the Company transfer any excess cash to pay down the senior secured revolving credit facility (the “Revolving Credit Facility”), which is then drawn on for cash on an as needed basis. As of December 31, 2025 and 2024 , the Company had no cash designated as restricted cash.
Simultaneously with the IPO, Flowco Holdings amended and restated its certificate of incorporation to, among other things, provide: (i) for Class A common stock, with each share of its Class A common stock entitling its holder to one vote per share on all matters presented to our stockholders generally; and (ii) for Class B common stock, with each share of our Class B common stock entitling its holder to one vote per share on all matters presented to our stockholders generally, any shares of our Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees.
Simultaneously with the IPO, the Company amended and restated its certificate of incorporation to, among other things, provide: (i) for Class A common stock, with each share of its Class A common stock entitling its holder to one vote per share on all matters presented to our stockholders generally; and (ii) for Class B common stock, with each share of our Class B common stock entitling its holder to one vote per share on all matters presented to our stockholders generally, any shares of our Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees.
The accompanying consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial position as of December 31, 2024 and 2023, and results of operations for the years ended December 31, 2024, 2023 and 2022, and cash flows for the years ended December 31, 2024, 2023 and 2022.
The accompanying consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial position as of December 31, 2025 and 2024, and results of operations for the years ended December 31, 2025, 2024 and 2023, and cash flows for the years ended December 31, 2025, 2024 and 2023.
One customer in the Natural Gas Technologies segment accounted for approximately 11%, 17% and 10% of total consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively. No customer in the Production Solutions segment accounted for at least 10% of total consolidated revenues for the years ended December 31, 2024, 2023 and 2022.
One customer in the Natural Gas Technologies segment accounted for approximately 11 % and 17 % of total consolidated revenues for the years ended December 31, 2024 and 2023, respectively. No customer in the Production Solutions segment accounted for at least 10% of total consolidated revenues for the years ended December 31, 2025, 2024 and 2023.
Note 13 - Commitments and Contingencies The Company is, and from time to time may be, subject to various claims and legal proceedings which arise in the ordinary course of business.
Note 14 - Commitments and Contingencies The Company is, and from time to time may be, subject to various claims and legal proceedings which arise in the ordinary course of business.
After giving effect to the use of proceeds in the IPO, Flowco Holdings issued 64,823,042 shares of Class B common stock to the Continuing Equity Owners, which is equal to the number of LLC Interests held by such Continuing Equity Owners, for nominal consideration.
After giving effect to the use of proceeds in the IPO, the Company issued 64,823,042 shares of Class B common stock to the Continuing Equity Owners, which is equal to the number of LLC Interests held by such Continuing Equity Owners, for nominal consideration.
ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payment made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
Notes to Consolidated Financial Statements ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payment made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
In 2022, the United States experienced the highest inflation in decades primarily due to supply-chain issues, a shortage of labor and a higher demand for goods and services. The most noticeable adverse impact to our business was increased costs associated with materials, personnel expenses, consumables and vehicle-related costs. Most of our costs moderated in 2023 except for wages.
In 2022, the U.S. experienced the highest inflation in decades primarily due to supply-chain issues, a shortage of labor and a higher demand for goods and services. The most noticeable adverse impact to our business was increased costs associated with materials, personnel expenses, consumables and vehicle-related costs. Most of our costs moderated in 2023 except for wages.
In addition, specific accounts are written off against the allowance when management determines the account is uncollectible. The balance of allowance for credit losses amounted to $1.2 million and $1.3 million as of December 31, 2024 and 2023, respectively.
In addition, specific accounts are written off against the allowance when management determines the account is uncollectible. The balance of allowance for credit losses amounted to $ 1.1 million and $ 1.2 million as of December 31, 2025 and 2024, respectively.
Intangible Assets Other Than Goodwill Intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Subsequent expenditures for intangible assets are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate.
Notes to Consolidated Financial Statements Intangible Assets Other Than Goodwill Intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Subsequent expenditures for intangible assets are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate.
(“Flowco Member”) and Flogistix Holdings, LLC (“Flogistix Member”) (parent company of Flogistix, LP (“Flogistix”)) (Estis Member, Flowco Member and Flogistix Member collectively, the “Members”), pursuant to which, the Members contributed 100% of the direct equity interests of Estis Intermediate Holdings, LLC (“Estis Intermediate”), Flowco Productions LLC (“Flowco Productions”) and Flogistix Intermediate Holdings, LLC (“Flogistix Intermediate”) to the Company in exchange for Series A Units of the Company proportionate to the value of the contributed entities (the “2024 Business Combination”).
(“Flowco Member”) and Flogistix Holdings, LLC (“Flogistix Member”) (parent company of Flogistix, LP (“Flogistix”)) (Estis Member, Flowco Member and Flogistix Member collectively, the “Members”), pursuant to which, the Members contributed 100 % of the direct equity interests of Estis Intermediate Holdings, LLC (“Estis Intermediate”), Flowco Productions LLC (“Flowco Productions”) and Flogistix Intermediate Holdings, LLC (“Flogistix Intermediate”, collectively with Estis Intermediate and Flowco Productions, referred to as the “Merging Entities”) to the Company in exchange for Series A Units of the Company proportionate to the value of the contributed entities (the “2024 Business Combination”).
The Company has also determined the carrying value of the long-term debt approximates its fair value given its variable rate and indirect indexation to the Company’s credit risk. See Note 2 - Business Combinations for information regarding the estimated fair value of goodwill.
Notes to Consolidated Financial Statements The Company has also determined the carrying value of the long-term debt approximates its fair value given its variable rate and indirect indexation to the Company’s credit risk. See Note 2 – Business Combinations for information regarding the estimated fair value of goodwill.
Such corrections did not result in any change in the aggregate number of LLC Interests issued and outstanding, or the combined number of shares of Class A common stock and Class B common stock issued and outstanding. The foregoing outstanding shares and LLC Interests give effect to the corrections set forth in the Omnibus Agreement.
Such corrections did not result in any change in the aggregate number of LLC Interests issued and outstanding, or the combined number of shares of Class A common stock and Class B common stock issued and outstanding. The foregoing outstanding shares and LLC Interests give effect to the corrections set forth in the Omnibus Agreement. 78 Flowco Holdings Inc.
The Company determines if an arrangement is a lease at inception of the arrangement and classifies it as an operating lease or finance lease. A right-of-use (“ROU”) asset (the right to use the leased item) and a financial liability to make lease payments are recognized at inception of the lease.
The Company determines if an arrangement is a lease at inception of the arrangement and classifies it as an operating lease or finance lease. A right-of-use (“ROU”) asset (the right to use the leased item) and a financial liability to make lease payments are recognized at inception of the lease. 87 Flowco Holdings Inc.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Net Sales and net income of Flogistix in the historical consolidated statements of operations for the period from June 20, 2024 to December 31, 2024 were $125.7 million and $18.4 million, respectively.
Net Sales and net income of Flogistix in the historical consolidated statements of operations for the period from June 20, 2024 to December 31, 2024 were $ 125.7 million and $ 18.4 million , respectively. Net Sales and net income of Flowco 93 Flowco Holdings Inc.
Goodwill is recognized as the excess of consideration over the net assets acquired of Flowco Productions and Flogistix and represents the value derived from the assembled workforce, established processes, and expected future market growth.
Goodwill was recognized as the excess of consideration over the net assets acquired of Flowco Productions and Flogistix and represented the value derived from the assembled workforce, established processes, and expected future market growth.
As of December 31, 2024, the Company had $635.9 million in borrowings outstanding under the Revolving Credit Facility at the Term SOFR rate of 4.65% and applicable margin of 1.75%.
As of December 31, 2024, the Company had $ 635.9 million in borrowings outstanding under the Revolving Credit Facility at the Term SOFR rate of 4.65 % and applicable margin of 1.75 % , for an all-in rate of 6.40 % .
As a result, Flowco Holdings became a holding company and the sole manager of Flowco LLC, with no material assets other than 100% of the voting membership interest in Flowco LLC.
As a result, the Company became a holding company and the sole managing member of Flowco LLC, with no material assets other than 100 % of the voting membership interest in Flowco LLC.
In the fourth quarter ended December 31, 2024, the Company identified an adjustment to the fair value of the acquired intangible assets resulting in a decrease 126 Flowco MergeCo LLC Notes to Consolidated Financial Statements to the fair value of goodwill of $17.8 million and $3.0 million for Flogistix and Flowco Productions, respectively, with a corresponding increase to the intangible assets related to the respective entities.
In the fourth quarter ended December 31, 2024, the Company identified an adjustment to the fair value of the acquired intangible assets resulting in a decrease to the fair value of goodwill of $ 17.8 million and $ 3.0 million for Flogistix and Flowco Productions, respectively, with a corresponding increase to the intangible assets related to the respective entities.
The Company identifies reportable operating segments based on management’s structure, the customer’s application of its products and services offered by each and the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among segments.
The Company identifies reportable operating segments based on management’s structure, the customer’s application of its products and services offered by each and the financial data utilized by the Company’s Chief Executive Officer, as the CODM, to assess segment performance and allocate resources among segments.
Year Ended December 31, 2024 2023 Pro forma net sales $ 733,259 $ 665,311 Pro forma net income $ 103,999 $ 122,177 128 Flowco MergeCo LLC Notes to Consolidated Financial Statements Other Business Combination On October 25, 2024, the Company completed the acquisition of 100% of the equity interests in an oilfield services company located in Midland, Texas, for a total purchase price of $7.0 million.
Year Ended December 31, 2024 2023 Pro forma net sales $ 733,259 $ 665,311 Pro forma net income $ 103,999 $ 122,177 Other Business Combination On October 25, 2024, the Company completed the acquisition of 100 % of the equity interests in an oilfield services company located in Midland, Texas, for a total purchase price of $ 7.0 million.
Depreciation expenses during 2024, 2023 and 2022 were approximately $67.5 million, $40.2 million and $32.4 million, respectively. Note 5 – Leases The Company has operating leases related to office space and manufacturing facilities. The Company has finance leases related to vehicles, tractors, and trailers.
Depreciation expenses during 2025, 2024 and 2023 were approximately $ 101.0 million , $ 67.5 million and $ 40.2 million , respectively. Note 5 – Leases The Company has operating leases related to office space and manufacturing facilities. The Company has finance leases related to vehicles, tractors, and trailers.
During the years ended December 31, 2024, 2023 and 2022, the Company recorded charges of $1.8 million, $2.5 million and $0.3 million respectively, to write down slow moving inventory, perform cost adjustments and physical adjustments. These charges are included within cost of sales in the accompanying consolidated statements of operations.
During the years ended December 31, 2025 and 2024 and 2023, the Company recorded charges of $ 1.8 million , $ 1.8 million and $ 2.5 million respectively, to write down slow moving inventory, perform cost adjustments and physical adjustments. These charges are included within cost of sales in the accompanying consolidated statements of operations. 86 Flowco Holdings Inc.
The Company concluded that there were no indicators evident or other circumstances present that these assets were not recoverable and accordingly, no impairment charges of long-lived assets were recognized in 2024, 2023 or 2022. Internally Developed Software Certain direct development costs associated with internally developed software are capitalized.
The Company concluded that there were no indicators evident or other circumstances present that these assets were not recoverable and accordingly, no impairment charges of long-lived assets were recognized during the years ended December 31, 2025, 2024 and 2023 . Internally Developed Software Certain direct development costs associated with internally developed software are capitalized.
Subsequent to the IPO, Flowco Holdings used the net proceeds from the IPO to purchase 20,470,000 newly issued LLC Interests for approximately $461.8 million directly from Flowco LLC at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount. 103 Flowco Holdings Inc.
Notes to Consolidated Financial Statements Subsequent to the IPO, the Company used the net proceeds from the IPO to purchase 20,470,000 newly issued LLC Interests for approximately $ 461.8 million directly from Flowco LLC at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount.
Rental 112 Flowco MergeCo LLC Notes to Consolidated Financial Statements revenue is recognized on a straight-line basis over the term of the rental and is included in rental revenue in the consolidated statements of operations. The Company’s rental agreements generally include lease and non-lease components where the timing and pattern of transfer are the same.
Rental revenue is recognized on a straight-line basis over the term of the rental and is included in rental revenue in the consolidated statements of operations. The Company’s rental agreements generally include lease and non-lease components where the timing and pattern of transfer are the same.
Vendor Concentration No vendor in the Natural Gas Technologies segment accounted for at least 10% of purchases for the year ended December 31, 2024. Two vendors in the Natural Gas Technologies segment accounted for approximately 32% and 22% of purchases for the years ended December 31, 2023 and 2022, respectively.
Vendor Concentration No vendor in the Natural Gas Technologies segment accounted for at least 10% of purchases for the years ended December 31, 2025 or 2024 . Two vendors in the Natural Gas Technologies segment accounted for approximately 32 % of purchases for the year ended December 31, 2023.
For more discussion, see Note 11 – Share-based compensation . Fair Value Measurements The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. A three-tiered hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value.
Fair Value Measurements The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. A three-tiered hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value.
Subsequent to capitalization, internally developed software is amortized over its estimated useful life through depreciation and amortization on the statement of operations. Impairment charges are taken as a result of circumstances that indicate that the carrying values of the assets are not fully recoverable.
Subsequent to capitalization, internally developed software is amortized over its estimated useful life through depreciation and amortization on the statement of operations. Impairment charges are taken as a result of circumstances that indicate that the carrying values of the assets are not fully recoverable. Leases The Company accounts for leases in accordance with ASC 842.
The Company is currently evaluating the impact of ASU 2024-01 on its consolidated financial statements and related disclosures. 124 Flowco MergeCo LLC Notes to Consolidated Financial Statements In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses .
As such, the Company is currently evaluating the impact of ASU 2024-01 on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses .
The CODM uses the segment profit or loss for each segment predominantly in the annual budget and forecasting process. The CODM considers quarter-to-quarter variances on a sequential basis when making decisions about the allocation of operating and capital resources to each segment.
The CODM uses the segment profit or loss for each segment predominantly in the annual budget and forecasting process. The CODM considers quarter-to-quarter variances on a sequential basis when making decisions about the allocation of operating and capital resources to each 108 Flowco Holdings Inc. Notes to Consolidated Financial Statements segment.
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Note 14 – Fair Value Measurements The Company has assessed that the fair value of cash and cash equivalents, accounts receivable, accounts payable, and other current liabilities, approximates their carrying amounts largely due to the short-term nature of these accounts.
The Company has assessed that the fair value of cash and cash equivalents, accounts receivable, accounts payable, and other current liabilities, approximates their carrying amounts largely due to the short-term nature of these accounts. 107 Flowco Holdings Inc.
The following table presents the consideration transferred and preliminary fair value of Flogistix assets acquired and liabilities assumed in accordance with ASC 805 (in thousands): Cash and cash equivalents $ 193 Accounts receivable - trade, net 18,104 Inventory 82,378 Prepaid expenses and other current assets 2,551 Property, plant and equipment 357,443 Intangible assets 110,290 Finance lease right-of-use assets 8,629 Operating lease right-of-use assets 9,763 Other assets 358 Accounts payable - Trade (18,143 ) Accrued expenses (9,495 ) Current portion of finance lease obligations (2,356 ) Current portion of operating lease obligations (3,579 ) Deferred revenue (4,085 ) Operating lease obligations, net of current portion (6,172 ) Finance lease obligations, net of current portion (6,506 ) Long-term debt (205,933 ) Identifiable net assets acquired 333,440 Goodwill 66,325 Total consideration transferred $ 399,765 The following table presents the consideration transferred and preliminary fair value of Flowco Productions assets acquired and liabilities assumed in accordance with ASC 805 (in thousands): Cash and cash equivalents $ 2,895 Accounts receivable - trade, net 42,999 Inventory 61,194 Prepaid expenses and other current assets 1,565 Property, plant and equipment 28,608 Intangible assets 194,000 Finance lease right-of-use assets 6,102 Operating lease right-of-use assets 5,151 Other assets 300 Accounts payable - Trade (11,119 ) Accrued expenses (15,534 ) Current portion of finance lease obligations (3,225 ) Current portion of operating lease obligations (2,179 ) Operating lease obligations, net of current portion (2,972 ) Finance lease obligations, net of current portion (2,877 ) Long-term debt (29,930 ) Identifiable net assets acquired 274,978 Goodwill 179,885 Total consideration transferred $ 454,863 127 Flowco MergeCo LLC Notes to Consolidated Financial Statements Identifiable intangible assets and their amortization periods are estimated as follows (in thousands): Cost Basis Useful Life (years) Flogistix Trade name $ 16,650 10 Developed Technology 47,450 20 Customer relationships 46,190 14 $ 110,290 FPS Trade name $ 39,000 10 Developed Technology 39,000 10 Customer relationships 116,000 9 $ 194,000 $66.3 million of Flogistix goodwill was recognized within the Natural Gas Technology segment and $179.9 million of Flowco Productions goodwill was recognized within the Productions Solutions segment in the consolidated balance sheet.
Notes to Consolidated Financial Statements The following table presents the consideration transferred and fair value of Flowco Productions assets acquired and liabilities assumed in accordance with ASC 805 (in thousands): Cash and cash equivalents $ 2,895 Accounts receivable - trade, net 42,999 Inventory 61,194 Prepaid expenses and other current assets 1,565 Property, plant and equipment 28,608 Intangible assets 194,000 Finance lease right-of-use assets 6,102 Operating lease right-of-use assets 5,151 Other assets 300 Accounts payable - Trade ( 11,119 ) Accrued expenses ( 15,534 ) Current portion of finance lease obligations ( 3,225 ) Current portion of operating lease obligations ( 2,179 ) Operating lease obligations, net of current portion ( 2,972 ) Finance lease obligations, net of current portion ( 2,877 ) Long-term debt ( 29,930 ) Identifiable net assets acquired 274,978 Goodwill 179,885 Total consideration transferred $ 454,863 Identifiable intangible assets and their amortization periods were estimated as follows (in thousands): Cost Basis Useful Life (years) Flogistix Trade name $ 16,650 10 Developed Technology 47,450 20 Customer relationships 46,190 14 $ 110,290 FPS Trade name $ 39,000 10 Developed Technology 39,000 10 Customer relationships 116,000 9 $ 194,000 $ 66.3 million of Flogistix goodwill was recognized within the Natural Gas Technology segment and $ 179.9 million of Flowco Productions goodwill was recognized within the Productions Solutions segment in the consolidated balance sheet.
Management believes these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements. Actual results could differ from those estimates. Basic and Diluted Earnings per Unit (“EPU”) Basic EPU is calculated by dividing net income attributable to unitholders by the weighted average number of units of common units outstanding during the period.
Management believes these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements. Actual results could differ from those estimates. Earnings per Share Basic earnings per share is computed by dividing net earnings attributable to the Company by the weighted average number of common shares/units outstanding during the period.
Property, Plant and Equipment Property, plant and equipment, net are stated at cost. Depreciation of property, plant and equipment is provided over the estimated useful lives of the respective assets or groups of assets, primarily using the straight-line method.
Notes to Consolidated Financial Statements Property, Plant and Equipment, Net Property, plant and equipment, net are stated at cost, net of accumulated depreciation. Depreciation of property, plant and equipment is provided over the estimated useful lives of the respective assets or groups of assets, using the straight-line method.
Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. As of December 31, 2024, we had $635.9 million borrowings outstanding under the Credit Agreement at a weighted-average interest rate of 6.4%.
Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. As of December 31, 2025, we had $167.8 million in borrowings outstanding under the Credit Agreement at a weighted-average interest rate of 5.72%.
The Corporation was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and related transactions in order to continue the business of Flowco MergeCo LLC (“Flowco LLC”) as a publicly traded entity.
(the “Company”) was incorporated as a Delaware corporation on July 25, 2024 (Date of Formation) for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and related transactions in order to continue the business of Flowco MergeCo LLC (“Flowco LLC”) as a publicly traded entity.
The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, including specific accounts, related aging, and on historical collection experience 117 Flowco MergeCo LLC Notes to Consolidated Financial Statements based on the invoice due date.
The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, including specific accounts, related aging, and on historical collection experience based on the invoice due date.
The principles in ASC 606 are applied using a five-step model that includes (1) identifying the contract(s) with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract, and (5) recognizing revenue when (or as) the performance obligations are satisfied.
The principles in ASC 606 are applied using a five-step model that includes (1) identifying the contract(s) with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract, and (5) 82 Flowco Holdings Inc.
Additionally, the Company considers the income tax effect from any 121 Flowco MergeCo LLC Notes to Consolidated Financial Statements tax-deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment charge. The Company assessed qualitative factors described above and concluded that there was no impairment of goodwill in 2024, 2023 or 2022.
Additionally, the Company considers the income tax effect from any tax-deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment charge. The Company assessed qualitative factors described above and concluded that there was no impairment of goodwill in 2025, 2024 or 2023 . 88 Flowco Holdings Inc.
Revenues and earnings related to this acquisition are included within the consolidated statements of operations since the acquisition date and are not considered to be material for separate disclosure.
Revenues and earnings related to this acquisition are included within the consolidated statements of operations since the acquisition date and are not considered to be material for separate disclosure. Supplemental pro forma revenue and 94 Flowco Holdings Inc.
The following table summarizes the change in the accounts receivable allowance for credit losses for the periods presented (in thousands): As of December 31, 2024 2023 Accounts receivable allowance for credit losses, beginning of period $ 1,259 $ 949 Acquired from 2024 Business Combination 377 — Write-offs (1,269 ) (72 ) Expense 802 382 Accounts receivable allowance for credit losses, end of period $ 1,169 $ 1,259 The following table provides information about accounts receivable and contract liabilities from contracts with customers (in thousands): As of December 31, 2024 2023 Accounts receivable, net $ 120,353 $ 44,399 Contract liabilities $ 8,002 $ 1,515 Contract liabilities represent consideration received or consideration which is unconditionally due from customers prior to transferring goods or services to the customer under the terms of the contract and is included within deferred revenue in the accompanying consolidated balance sheets.
Notes to Consolidated Financial Statements Year Ended December 31, 2025 2024 Accounts receivable allowance for credit losses, beginning of period $ 1,169 $ 1,259 Acquired from 2024 Business Combination — 377 Write-offs ( 1,401 ) ( 1,269 ) Expense 1,311 802 Accounts receivable allowance for credit losses, end of period $ 1,079 $ 1,169 The following table provides information about accounts receivable and contract liabilities from contracts with customers (in thousands): As of December 31, 2025 2024 Accounts receivable, net $ 100,465 $ 120,353 Deferred revenue $ 7,376 $ 8,002 Contract liabilities represent consideration received or consideration which is unconditionally due from customers prior to transferring goods or services to the customer under the terms of the contract and is included within deferred revenue in the accompanying consolidated balance sheets.
The guidance is effective for fiscal year beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this standard did not have a material effect on the Company's consolidated financial statements, other than the newly required disclosures.
This update is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard did not have a material effect on the Co mpany's consolidated financial statements, other than the newly required disclosures.
The RSU awards to non-employee directors vest in twelve equal installments on each of the first twelve quarterly anniversaries following the grant date of the award, subject to such non-employee director continuing in service through such date.
Each RSU represents a contingent right to receive one share of Class A Common Stock. The RSU awards to non-employee directors vest in twelve equal installments on each of the first twelve quarterly anniversaries following the grant date of the award, subject to such non-employee director continuing in service through such date.
The purchase price and assessment of the fair value of the assets acquired were as follows (in thousands): Property, plant and equipment $ 2,363 Intangible assets 3,928 Earnout liability (548 ) Identifiable net assets acquired 5,743 Goodwill 1,257 Total consideration transferred $ 7,000 Property, plant and equipment recognized in the above acquisition are primarily related to vehicles and trailers.
Property, plant and equipment $ 2,363 Intangible assets 3,928 Earnout liability ( 548 ) Identifiable net assets acquired 5,743 Goodwill 1,257 Total consideration transferred $ 7,000 Property, plant and equipment recognized in the above acquisition are primarily related to vehicles and trailers. The net book value was assumed to be the fair value for these acquired property, plant and equipment.
Disposals to right-of-use assets during 2024 were approximately $0.7 million. There was no disposal of right-of-use assets during 2023. The weighted average lessee’s incremental borrowing rate applied to the operating and finance lease liabilities on December 31, 2024 was 7% and 8%, respectively.
Disposals to finance right-of-use assets during 2025 and 2024 were approximately $ 5.1 million and $ 0.1 million , respectively. The weighted average lessee’s incremental borrowing rate applied to the operating and finance lease liabilities on December 31, 2025 was 6.6 % and 6.9 % , respectively.
Inventory is valued at the lower of cost or net realizable value. Production Solutions inventory is measured using the first in, first out (FIFO) costing method and average costing method. Natural Gas Technologies inventory is measured using the average costing method, which is based on historical purchases at an individual item level.
Production Solutions inventory is measured using the first in, first out (“FIFO”) costing method and average costing method. Natural Gas Technologies inventory is measured using the average costing method, which is based on historical purchases at an individual item level.
Net Sales and net income of Flowco Productions in the historical consolidated statements of operations for the period from June 20, 2024 to December 31, 2024 were $135.5 million and $4.6 million, respectively.
Notes to Consolidated Financial Statements Productions in the historical consolidated statements of operations for the period from June 20, 2024 to December 31, 2024 were $ 135.5 million and $ 4.6 million, res pectively.
The weighted average lessee's incremental borrowing rate applied to the operating and finance lease liabilities on December 31, 2023 was 10.0% and 10.0%, respectively. The weighted average remaining lease term for operating and finance lease on December 31, 2024 was 3.77 years and 2.10 years, respectively.
The weighted average lessee's incremental borrowing rate applied to the operating and finance lease liabilities on December 31, 2024 was 6.7 % and 8.0 % , respectively. The weighted average remaining lease term for operating and finance lease on December 31, 2025 was 2.80 years and 2.68 years, respectively.
The Company operates and manages its business units in the following two operating and reporting segments: • Production Solutions : relates to rentals, sales and services related to high pressure gas lift, conventional gas lift and plunger lift; including other digital solutions and methane abatement technologies. • Natural Gas Technologies : relates to the design and manufacturing for the rental, sales and servicing of vapor recovery and natural gas systems. 111 Flowco MergeCo LLC Notes to Consolidated Financial Statements For more information regarding segment reporting, see Note 15 - Segment Information .
The Company operates and manages its business units in the following two operating and reporting segments: • Production Solutions : relates to rentals, sales and services related to high pressure gas lift, conventional gas lift and plunger lift, including other digital solutions and technologies. • Natural Gas Technologies : relates to the design and manufacturing for the rental, sales and servicing of vapor recovery and natural gas systems.
Disaggregation of Revenue The following table presents our third-party revenue from contracts with customers by reportable segment (see Note 15 – Segment Information ) and disaggregated by major product and service lines, timing of revenue recognition, and geographical markets for the year ended December 31, 2024 (in thousands): Segments Production Solutions Natural Gas Technologies Other and Eliminations Total Major Product/Service Lines Surface Equipment (1) $ 192,328 $ — $ — $ 192,328 Downhole Components 135,477 — — 135,477 Vapor Recovery (1) — 125,735 — 125,735 Natural Gas Systems — 120,901 (39,163 ) 81,738 Total $ 327,805 $ 246,636 $ (39,163 ) $ 535,278 Timing of Revenue Recognition Goods transferred at a point in time $ 135,477 $ 162,277 $ (39,163 ) $ 258,591 Services transferred over time 192,328 84,359 — 276,687 Total $ 327,805 $ 246,636 $ (39,163 ) $ 535,278 Geographical Markets United States $ 319,270 $ 246,266 $ (39,163 ) $ 526,373 International 8,535 370 — 8,905 Total $ 327,805 $ 246,636 $ (39,163 ) $ 535,278 (1) All of revenue for these service lines are recognized in accordance with ASC 842 as described within the Revenue Recognition section above. 115 Flowco MergeCo LLC Notes to Consolidated Financial Statements The following table presents our third-party revenue from contracts with customers by reportable segment (see Note 15 – Segment Information ) and disaggregated by major product and service lines, timing of revenue recognition, and geographical markets for the year ended December 31, 2023 (in thousands): Segments Production Solutions Natural Gas Technologies Other and Eliminations Total Major Product/Service Lines Surface Equipment (1) $ 168,801 $ — $ — $ 168,801 Natural Gas Systems — 111,280 (36,758 ) 74,522 Total $ 168,801 $ 111,280 $ (36,758 ) $ 243,323 Timing of Revenue Recognition Goods transferred at a point in time $ — $ 111,280 $ (36,758 ) $ 74,522 Services transferred over time 168,801 - — 168,801 Total $ 168,801 $ 111,280 $ (36,758 ) $ 243,323 Geographical Markets United States $ 168,801 $ 111,280 $ (36,758 ) $ 243,323 International — — — — Total $ 168,801 $ 111,280 $ (36,758 ) $ 243,323 (1) All of revenue for these service lines are recognized in accordance with ASC 842 as described within the Revenue Recognition section above.
Year ended December 31, 2024 Segments Production Solutions Natural Gas Technologies Other and Eliminations Total Major Product/Service Lines Surface Equipment (1) $ 192,328 $ — $ — $ 192,328 Downhole Components 135,477 — — 135,477 Vapor Recovery (1) — 125,735 — 125,735 Natural Gas Systems — 120,901 ( 39,163 ) 81,738 Total $ 327,805 $ 246,636 $ ( 39,163 ) $ 535,278 Timing of Revenue Recognition Goods transferred at a point in time $ 135,477 $ 162,277 $ ( 39,163 ) $ 258,591 Services transferred over time 192,328 84,359 — 276,687 Total $ 327,805 $ 246,636 $ ( 39,163 ) $ 535,278 Geographical Markets United States $ 319,270 $ 246,266 $ ( 39,163 ) $ 526,373 International 8,535 370 — 8,905 Total $ 327,805 $ 246,636 $ ( 39,163 ) $ 535,278 ____________________________ (1) All revenue for these service lines are recognized in accordance with ASC 842 as described within the Revenue Recognition section above.
Since the period between sale of the product and receipt of payment is not expected to exceed one year, we have elected not to 113 Flowco MergeCo LLC Notes to Consolidated Financial Statements calculate or disclose a financing component for our customer contracts. We do not incur any material costs of obtaining contracts.
Payment for sales revenue is typically collected within 15 to 70 days. Since the period between sale of the product and receipt of payment is not expected to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts. We do not incur any material costs of obtaining contracts.
Amounts recognized in the consolidated balance sheet The consolidated balance sheets consist of the following amounts relating to operating and finance leases (in thousands): As of December 31, 2024 2023 Operating right-of-use assets Real property $ 19,480 $ 4,424 $ 19,480 $ 4,424 Operating lease liabilities Current $ 6,809 $ 640 Non-current 12,739 3,784 $ 19,548 $ 4,424 As of December 31, 2024 2023 Finance right-of-use assets Vehicles $ 21,871 $ 3,391 $ 21,871 $ 3,391 Finance lease liabilities Current $ 7,837 $ 1,737 Non-current 13,389 1,654 $ 21,226 $ 3,391 Additions to right-of-use assets during 2024 and 2023 were approximately $13.9 million and $6.7 million, respectively.
Amounts recognized in the consolidated balance sheet The consolidated balance sheets consist of the following amounts relating to operating and finance leases (in thousands): As of December 31, 2025 2024 Operating right-of-use assets Real property $ 17,556 $ 19,480 $ 17,556 $ 19,480 Operating lease liabilities Current $ 8,004 $ 6,809 Non-current 9,783 12,739 $ 17,787 $ 19,548 As of December 31, 2025 2024 Finance right-of-use assets Vehicles $ 25,861 $ 21,871 $ 25,861 $ 21,871 Finance lease liabilities Current $ 12,895 $ 7,837 Non-current 10,862 13,389 $ 23,757 $ 21,226 Additions to operating right-of-use assets during 2025 and 2024 were approximately $ 5.3 million and $ 5.5 million , respectively.
The results of operations are included in the accompanying consolidated statements of operations from the date of the acquisition. Under the acquisition method of accounting, the assets and liabilities have been recorded at their respective estimated fair values as of the date of closing and reported into the accompanying consolidated balance sheets.
Under the acquisition method of accounting, the assets and liabilities have been recorded at their respective estimated fair values as of the date of closing and reported into the 91 Flowco Holdings Inc. Notes to Consolidated Financial Statements accompanying consolidated balance sheets.
The basis for determining the fair value of these intangible assets is the estimated future net cash flows expected to be generated from the acquired agreements and customer relationships.
Identifiable intangible assets recognized in the above acquisition are primarily related to oilfield services contracts, non-compete agreements and customer relationships. The basis for determining the fair value of these intangible assets is the estimated future net cash flows expected to be generated from the acquired agreements and customer relationships.
Estimated future amortization expense as of December 31, 2024 for each of the next five years and thereafter is as follows (in thousands): 2025 $ 31,254 2026 31,254 2027 31,140 2028 30,374 2029 29,419 Thereafter 149,081 $ 302,522 Note 7 – Accrued Liabilities Accrued liabilities as of December 31, 2024 and 2023, are summarized as follows (in thousands): As of December 31, 2024 2023 Accrued payroll and employee expenses $ 17,102 $ 3,011 Accrued taxes 7,284 3,070 Customer deposits 530 - Accrued interest 3,557 782 Accrued IPO costs 1,687 — Other accrued liabilities 3,669 528 Total accrued expenses $ 33,829 $ 7,391 Accrued taxes consist of amounts owed for obligations under sales & use tax arrangements, property taxes and applicable state income taxes.
Estimated future amortization expense as of December 31, 2025 for each of the next five years and thereafter is as follows (in thousands): 2026 $ 32,036 2027 31,922 2028 30,450 2029 29,432 2030 28,431 Thereafter 121,166 $ 273,437 Note 7 – Accrued Liabilities Accrued liabilities as of December 31, 2025 and 2024, are summarized as follows (in thousands): As of December 31, 2025 2024 Accrued payroll and employee expenses $ 20,167 $ 17,102 Accrued taxes 1,916 7,284 Customer deposits 480 530 Accrued interest 1,598 3,557 Accrued IPO costs — 1,687 Other accrued liabilities 2,748 3,669 Total accrued expenses $ 26,909 $ 33,829 Accrued taxes consist of amounts owed for obligations under sales & use tax arrangements, property taxes and applicable state income taxes.
The below tables contain revenues and certain expenses regularly presented to the CODM in order to make decisions regarding the Company's business, including resource allocation and 140 Flowco MergeCo LLC Notes to Consolidated Financial Statements performance assessments, as well as the current focus in compliance with ASC 280, Segment Reporting , for the periods presented (in thousands): Year Ended December 31, 2024 Production Solutions Natural Gas Technologies Total Revenues from external customers $ 327,805 $ 207,473 $ 535,278 Intersegment revenues — 39,163 39,163 Total revenues 327,805 246,636 574,441 Elimination of intersegment revenue (39,163 ) Total consolidated revenues 535,278 Less: Cost of revenues from external customers (1) 140,672 123,752 264,424 Intersegment cost of revenue — 39,163 39,163 Total cost of revenues 140,672 162,915 303,587 Elimination of intersegment cost of revenue (39,163 ) Total consolidated cost of revenue 264,424 Selling, general and administrative expenses (1) 37,867 20,942 58,809 Depreciation and amortization (1) 61,475 29,387 90,862 Loss on sale of equipment 784 13 797 Segment profit $ 87,007 $ 33,379 $ 120,386 Corporate expenses (2) (3,644 ) Total operating income 116,742 Interest expense (32,345 ) Loss on debt extinguishment (221 ) Other expense (2,756 ) Income before provision for income taxes $ 81,420 ____________________________ (1) Represents the significant expense categories and amounts for each reportable operating segment that are regularly provided to the chief operating decision maker.
Year Ended December 31, 2024 Production Solutions Natural Gas Technologies Total Revenues from external customers $ 327,805 $ 207,473 $ 535,278 Intersegment revenues — 39,163 39,163 Total revenues 327,805 246,636 574,441 Elimination of intersegment revenue ( 39,163 ) Total consolidated revenues 535,278 Less: Cost of revenues from external customers (1) 140,672 123,752 264,424 Intersegment cost of revenue — 39,163 39,163 Total cost of revenues 140,672 162,915 303,587 Elimination of intersegment cost of revenue ( 39,163 ) Total consolidated cost of revenue 264,424 Selling, general and administrative expenses (1) 37,867 20,942 58,809 Depreciation and amortization (1) 61,475 29,387 90,862 (Gain) loss on sale of equipment 784 13 797 Segment profit $ 87,007 $ 33,379 120,386 Corporate expenses (2) ( 3,644 ) Total operating income 116,742 Interest expense ( 32,345 ) Loss on debt extinguishment ( 221 ) Other expense ( 2,756 ) Income before provision for income taxes $ 81,420 ____________________________ 109 Flowco Holdings Inc.
These rental contracts are accounted for as operating leases under the authoritative guidance for leases (“ASC 842”) and rental revenue is recognized as income is earned over the term of the rental agreement.
The following are descriptions of its principal revenue generating activities. Rental Revenue Rental revenue is earned from the lease of rental production equipment, consisting principally of compressors. These rental contracts are accounted for as operating leases under the authoritative guidance for leases (“ASC 842”) and rental revenue is recognized as income is earned over the term of the rental agreement.
In connection with the transaction, (i) Estis Member contributed substantially all of its net assets (including membership interests in Estis) to Estis Intermediate immediately prior to the consummation of the 2024 Business Combination and the contribution of the membership interests of Estis Intermediate to the Company, (ii) Flowco Member also contributed substantially all of its net 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 the Company, and (iii) Flogistix Member also contributed substantially all of its net assets (including the equity interests in Flogistix GP, LLC and Flogistix) to Flogistix Intermediate immediately prior to the consummation of the 2024 Business Combination and the contribution of the membership interests of Flogistix Intermediate to the Company. 110 Flowco MergeCo LLC Notes to Consolidated Financial Statements The 2024 Business Combination was accounted for in accordance with ASC 805, Business Combinations , and Estis has been identified as the accounting acquirer and Flowco and Flogistix the acquirees.
In connection with the transaction, (i) Estis Member contributed substantially all of its net assets (including membership interests in Estis) to Estis Intermediate immediately prior to the consummation of the 2024 Business Combination and the contribution of the membership interests of Estis Intermediate to the Company, (ii) Flowco Member also contributed substantially all of its net 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 the Company, and (iii) Flogistix Member also contributed substantially all of its net assets (including the equity interests in Flogistix GP, LLC and Flogistix) to Flogistix Intermediate immediately prior to the consummation of the 2024 Business Combination and the contribution of the membership interests of Flogistix Intermediate to the Company.
Additionally, Estis has been identified as the predecessor and as such, these financial statements reflect only the Estis historical financial information for any period prior to June 20, 2024. All financial information as of and subsequent to June 20, 2024, reflects that of Estis, Flowco, and Flogistix, as well as changes in the capital structure and operations of the Company.
Additionally, Estis Intermediate has been identified as the predecessor and as such, these financial statements reflect only the historical financial information of Estis Intermediate for any period prior to June 20, 2024.
The estimated useful lives of major asset categories are as follows: Buildings 40 years Compressor and related equipment 10-15 years Machinery and equipment 3-15 years Furniture, fixtures and office equipment 3-7 years Software 3-5 years Vehicles 5 years Land Unlimited Leasehold improvements Lesser of useful life or lease term When assets are retired or otherwise disposed of, the cost and the applicable accumulated depreciation is removed from the respective accounts and the resulting gain or loss is reflected in earnings. 119 Flowco MergeCo LLC Notes to Consolidated Financial Statements Impairment of Long-Lived Assets Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
The estimated useful lives of major asset categories are as follows: Buildings 40 years Compressor and related equipment 10 - 15 years Machinery and equipment 3 - 15 years Furniture, fixtures and office equipment 3 - 7 years Software 3 - 5 years Vehicles 5 years Land Unlimited Leasehold improvements Lesser of useful life or lease term When assets are retired or otherwise disposed of, the cost and the applicable accumulated depreciation is removed from the respective accounts and the resulting gain or loss is reflected in earnings.
The Company does not have any components of other comprehensive income within its consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements. Segment Information The Company operates in two operating and reporting segments.
The Company does not have any components of other comprehensive income within its consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements. Principles of Consolidation 80 Flowco Holdings Inc.
From time to time, the cash balance in the Company’s bank accounts may exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”).
The carrying values of cash and cash equivalents approximate their fair values due to the short-term nature of these instruments. From time to time, the cash balance in the Company’s bank accounts may exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”).
ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024 and December 15, 2025 for all other entities. ASU 2023-09 may be applied prospectively or retrospectively, and allows for early adoption.
ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024 and December 15, 2025 for all other entities, including EGC companies that elected to use the extended transition period . ASU 2023-09 may be applied prospectively or retrospectively, and allows for early adoption. The Company adopted ASU 2023-09 on 90 Flowco Holdings Inc.
The transaction price for services (i.e., the amount that the Company has the right to under the terms of the service contract with the customer) is the standalone price of each service completed and 114 Flowco MergeCo LLC Notes to Consolidated Financial Statements charged to the customer.
The transaction price for services (i.e., the amount that the Company has the right to under the terms of the service contract with the customer) is the standalone price of each service completed and charged to the customer. The transaction price is typically settled within 30 to 45 days of the satisfaction of the performance obligation.

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