Flowco NYSE: FLOC highlighted a strong finish to 2025 on its fourth-quarter and full-year earnings call, pointing to continued growth in its rental platform, stable margins, and meaningful free cash flow generation. Management also provided additional detail on its pending acquisition of Valiant Artificial Lift Solutions and shared initial 2026 expectations, including first-quarter Adjusted EBITDA guidance that assumes a partial contribution from the deal.
Fourth-quarter results exceeded expectations
President and CEO Joe Bob Edwards said Flowco delivered a “very strong” fourth quarter, generating $83.5 million of Adjusted EBITDA, which he said exceeded expectations. Edwards added that the company produced $63 million of free cash flow during the quarter and reduced leverage to levels below where it stood prior to its August acquisition of HPGL and VRU assets from Archrock.
Chief Financial Officer Jon Byers said fourth-quarter performance reflected continued growth in the rental fleet and strong sales execution. The company reported adjusted net income of $43 million on revenue of $197 million. Total revenue increased 11% sequentially, driven primarily by higher sales across both segments, with the largest contribution from Natural Gas Technologies, according to Byers.
Flowco posted Adjusted EBITDA margins of 42.4% in the quarter. Byers attributed the margin performance to operating leverage in the rental fleet and the impact of revenue mix as sales rebounded.
Rental platform remained a key driver
Edwards said Flowco’s rental platform continued to build momentum, with rental revenues up about 4% quarter-over-quarter, driven by demand for HPGL and VRU solutions. He emphasized that the rental fleet generates contracted recurring revenue, supporting “durability and visibility” in results, and said the company was already seeing incremental demand early in 2026 activities.
Byers noted that rental revenue surpassed $110 million for the first time in the fourth quarter, with most of that revenue recurring.
In response to a question about the rental-versus-sales mix, Edwards said Flowco has been “consistently investing” in its HPGL and VRU fleets and expects the resulting mix shift to continue in 2026. Management also discussed a recent pattern of growth CapEx around the $100 million-per-year range, with Edwards saying market conditions could influence the exact level but adding that the company sees “no reason to let our foot off the CapEx accelerator” given customer demand and returns.
Segment performance: Production Solutions steady; Natural Gas Technologies surged on sales
Byers said the Production Solutions segment posted fourth-quarter revenue of $127 million, up 1.5% sequentially, while segment Adjusted EBITDA rose 4% to $57 million. Segment Adjusted EBITDA margins expanded 110 basis points, driven by higher surface equipment rental revenue, better-than-expected downhole components sales performance relative to typical seasonality, lower segment-level SG&A, and a more favorable mix.
In Natural Gas Technologies, Byers reported revenue of $70 million, up 36% sequentially, and Adjusted EBITDA of $30 million, up 18.4%. The increase was driven by higher natural gas systems and vapor recovery sales, along with strong vapor recovery rental results. Segment Adjusted EBITDA margin declined 634 basis points, which Byers attributed to mix shifting toward sales—particularly an increase in lower-margin natural gas systems sales.
Capital allocation, corporate costs, and balance sheet updates
Flowco deployed $24 million of capital in the fourth quarter, bringing full-year 2025 CapEx (excluding M&A) to $127 million. Byers said most of that spending went toward expanding surface equipment and vapor recovery rental fleets. He also said annualized adjusted return on capital employed for the quarter was approximately 19%.
Looking ahead, management expects 2026 CapEx (excluding Valiant and other M&A) of approximately $115 million, including maintenance capital, and said that level should support higher free cash flow for the year. Byers said Flowco expects to calibrate investment pace based on demand and market conditions, citing a typical investment lead time of about six months and flexibility stemming from its vertically integrated manufacturing model.
On corporate expenses, Byers said fourth-quarter corporate costs were roughly flat at $3.9 million. For 2026, Flowco expects annual corporate expenses of $18 million to $20 million tied to consolidating corporate functions and completing its build-out of public company capabilities.
Flowco also discussed liquidity as of Feb. 20, 2026. Byers said the company had $142 million of borrowings under its credit facility and a $722 million borrowing base, leaving $580 million of available capacity. On shareholder returns, Byers noted the company declared a quarterly dividend of $0.08 per share on Jan. 30, payable Feb. 25.
Valiant acquisition: terms, timing, and strategy
Management reiterated expectations to close the Valiant Artificial Lift Solutions acquisition in the first week of March, subject to customary regulatory approvals. Flowco said Valiant is a “leading pure-play provider of ESP systems” with an established Permian presence, and the acquisition is intended to broaden Flowco’s artificial lift suite and addressable market.
Byers said the deal totals approximately $200 million in consideration, consisting of about $170 million in cash plus the issuance of roughly 1.5 million shares of Flowco Class A common stock, with the cash funded through the company’s credit facility. He added that the valuation equates to approximately 3.9x projected 2026 Adjusted EBITDA, excluding any revenue or cost synergies.
Flowco expects Valiant to generate approximately $52 million of Adjusted EBITDA in 2026 and said the closing timing would result in roughly 10 months of earnings contribution in 2026. Byers added that pro forma leverage is expected to remain conservative at below one turn, with plans to further delever using free cash flow generation.
In Q&A, Edwards said customer reaction to combining ESP with Flowco’s existing offerings has been “very positive,” arguing the combined portfolio better positions the company to serve customers across the life of the well. He also framed the integration as a revenue synergy opportunity, citing a pathway from early-life ESP usage toward conventional gas lift later in well life, where he said Flowco is a market leader.
2026 outlook and international steps
For the first quarter of 2026, Edwards guided to Adjusted EBITDA of $82 million to $86 million, including roughly one month of contribution from Valiant assuming a closing in early March. He said Flowco expects incremental rental growth in surface equipment and vapor recovery, supported by strong utilization and contracted revenue visibility. Management expects Production Solutions revenue (excluding Valiant) to be generally consistent with fourth-quarter 2025 levels, with Natural Gas Technologies sales activity also similar to the fourth quarter. Corporate expenses are expected to rise modestly in the first quarter.
Edwards also discussed early international initiatives, saying Flowco has signed two partner agreements in the Middle East and Latin America and intends to pursue international growth in a “measured, capital-light manner.” He said the company is “early” in the effort and is aiming to support customers expanding unconventional development capabilities internationally, including national oil companies adopting U.S.-style innovation.
Management also pointed to operational initiatives, including early use of internally developed machine learning capabilities to improve maintenance planning, uptime, and profitability.
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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