Flowco Q1 Earnings Call Highlights

Key Points

• Flowco said Q1 2026 adjusted EBITDA came in at the high end of guidance, supported by strong rental-platform growth and free cash flow generation. The company produced $52 million in free cash flow and used it to reduce debt while continuing share repurchases and dividends.
• The Valiant acquisition is already boosting results, with management saying integration is going well and synergies are emerging. Flowco still expects Valiant to contribute about $52 million of adjusted EBITDA in 2026, while adding $20 million to $25 million in related capital spending this year.
• Flowco guided for higher second-quarter EBITDA of $93 million to $97 million, reflecting a full quarter of Valiant and continued rental growth. Management also signaled that improving energy-market activity could create stronger demand later in the year, though pricing is expected to remain stable.

Flowco NYSE: FLOC reported first-quarter 2026 adjusted EBITDA at the high end of its guidance range, citing continued growth in its rental platform, free cash flow generation and early benefits from its acquisition of Valiant Artificial Lift Solutions.

President and Chief Executive Officer Joe Bob Edwards said Flowco generated $85.5 million of adjusted EBITDA in the quarter and $52 million of free cash flow. He said the company used that cash flow to reduce debt while continuing to return capital to shareholders through dividends and share repurchases.

“Flowco delivered a solid start to 2026 during the first quarter, generating adjusted EBITDA growth and consistent execution across both operating segments,” Edwards said.

Rental Platform Drives Sequential Growth

Flowco’s total revenue rose 6% sequentially to $209 million, Chief Financial Officer John Byers said. Adjusted EBITDA increased by $2 million from the prior quarter, while adjusted EBITDA margin was 40.8%.

Edwards said rental revenue represented nearly 60% of total revenue during the quarter. Rental revenues increased approximately 9% sequentially, driven by demand for surface equipment, vapor recovery rental solutions and the company’s newly added electric submersible pump, or ESP, offering from the Valiant acquisition.

Within surface equipment, Edwards said Flowco is seeing incremental demand for high-pressure gas lift as operators use the technology to accelerate production. He said vapor recovery units are also seeing broader adoption in pad development as operators capture and monetize gas that otherwise could be vented or flared.

Edwards said the captured vapors include methane and heavier hydrocarbons, which he said can carry significantly higher value than dry gas, particularly given current natural gas liquids pricing.

Production Solutions Segment Gains From Valiant

Byers said first-quarter revenue in Flowco’s Production Solutions segment increased 10% sequentially to $140 million. Adjusted segment EBITDA rose approximately 7% to $61 million, driven by growth in surface equipment and the contribution from Valiant.

Valiant, which Flowco acquired in early March for approximately $200 million in total net consideration, is now reflected in downhole components as the company’s ESP offering. Byers said segment EBITDA margins declined 125 basis points sequentially, primarily due to a shift in revenue mix toward downhole components after the inclusion of Valiant.

Edwards said Valiant performed slightly ahead of expectations in March and that integration is progressing well. He cited early examples of potential synergies, including Valiant’s use of Flowco’s in-house ESP cable installation capabilities and Flowco’s use of data from Valiant’s Optimus well monitoring platform to identify future gas lift candidates as wells mature.

Byers said Flowco remains confident Valiant can generate approximately $52 million of adjusted EBITDA for full-year 2026, consistent with prior expectations. In response to an analyst question, Byers said the company expects approximately $20 million to $25 million of incremental capital expenditures related to Valiant over the 10 months Flowco will own the business this year.

Natural Gas Technology Holds Steady

Flowco’s Natural Gas Technology segment generated first-quarter revenue of $69 million, consistent with the prior quarter, Byers said. Adjusted segment EBITDA was also in line sequentially at approximately $30 million.

The segment benefited from growth in vapor recovery rental revenue and increased sales of natural gas systems, which were offset by a modest decline in vapor recovery unit system sales.

During the question-and-answer portion of the call, Edwards said Flowco is encouraging more vapor recovery rental activity, though some customers still prefer to purchase units for permanent production infrastructure. He said customers value rental flexibility because it allows them to resize units as pads mature.

Capital Returns and Balance Sheet

Flowco invested $26 million of growth capital in the quarter, primarily to expand its rental fleet across surface equipment and vapor recovery. Byers said the company’s annualized adjusted return on capital employed was approximately 18% for the quarter.

Byers said Flowco’s capital outlook for the remainder of 2026 is unchanged from the prior quarter, excluding the incremental Valiant-related capital spending discussed during the call. He said Flowco will continue pacing investment with customer activity and focus on high-return opportunities.

As of May 1, 2026, Flowco had $333 million of borrowings outstanding under its credit facility. With a borrowing base of $722 million, available capacity was approximately $388 million. Byers said leverage remained below 1x on a pro forma basis for the Valiant transaction.

Flowco repurchased 780,000 shares for $16.5 million during the quarter in connection with a secondary offering by selling shareholders. Byers also said Flowco’s average daily trading volume has more than doubled year to date following the secondary offering, and that the company has emerged from controlled company status.

The company’s board approved a 12.5% increase to its cash dividend, raising the first-quarter dividend to $0.09 per share.

Outlook Calls for Higher Second-Quarter EBITDA

Flowco guided for second-quarter 2026 adjusted EBITDA of $93 million to $97 million. Edwards said the outlook reflects a full quarter of Valiant contribution and expected continued growth in surface equipment and vapor recovery rentals.

Edwards also discussed the broader energy market, saying recent geopolitical and military developments in the Middle East have increased focus on energy security. He said customers are not yet showing material activity increases, but some operators with short-cycle opportunities are selectively pursuing high-return investments.

In response to a question from Derek Podhaizer of Piper Sandler, Edwards said larger and more nimble companies are beginning to increase activity, which he described as “green shoots” for Flowco. He said any effect from higher rig activity, frac activity and use of drilled but uncompleted well inventory would likely be more of a second-half phenomenon and could set up a stronger 2027.

Asked about pricing by John Daniel of Daniel Energy Partners, Edwards said Flowco’s production-focused businesses are not as exposed to the pricing swings seen in drilling and completion markets. He said pricing is expected to remain broadly consistent and is not expected to be a major driver in the second half of the year.

Edwards said Flowco remains focused on building its position as a provider of production optimization solutions and will continue evaluating organic and acquisition opportunities to expand its product portfolio.

About Flowco NYSE: FLOC

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. Our principal products and services are organized into two business segments: (i) Production Solutions; and (ii) Natural Gas Technologies.

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