| Flotek Industries: Reversing the Flow |
| Distribution | |||
| Written by Eric Slack | |||
| Friday, 29 February 2008 | |||
 After a $7 million loss, Lisa Meier tells us how this oil industry service provider turned things around.
“We often refer to 2003 as our watershed year, where we really cleaned the business up to get ready for growth in 2004,” said Lisa Meier, senior VP and CFO. “Our other divisions were strong but undercapitalized, so we cleaned up everything we could, and in 2004, we managed to improve the other businesses operationally and turn a $2 million profit.”  Lisa Meier, Senior VP and CFO Meier became CFO in 2004 after company profits nosedived. She instantly began charting the company’s course in a different direction. Through a combination of organic growth and strategic acquisitions, Meier and Flotek CEO Jerry Dumas led the company back from the brink. Her efforts were so successful that in 2007, the Houston Business Journal named her Best CFO of the Year for an emerging public company. There were a few key steps the company took over the last few years that led to the dramatic turnaround. In 2005, the company’s stock began trading on the American Stock Exchange, and late last year, Flotek moved to the New York Stock Exchange. In addition, the company acquired 11 different companies since 2002, giving Flotek a wider footprint, expanded expertise, and leading to an anticipated tripling of its R&D efforts in 2008. Meier also pointed to one specific acquisition as crucial to the company’s renewal. “In 2005, we acquired Spidle Sales and Service, and that was critical to our turnaround because it was an asset rich company,” she said. “It allowed us to recapitalize the entire company, set our drilling tool group up for growth, and provided the capital to turn the company around.” Add in a private equity placement worth $20 million as well as Flotek’s effort to secure senior credit facilities, and it is no surprise the market capitalization of Flotek surged from $5 million to more than $400 million between 2004 and 2007. In fact, Flotek stock rose from $0.85 per share in 2004 to more than $40 per share today. (Yes, you read that right.) Unified effort One of the reasons Flotek was able to survive its tough times is the positive, familial culture the company strives to foster. According to Meier, Flotek’s leadership team believes in giving its staff the tools and training needed to be both autonomous and accountable. As a result, Flotek’s people clearly believe in what the company stands for, as it has a low turnover rate and tries to promote from within. With a staff committed to achieving the goals set by leadership, especially during the turnaround phase, Flotek was able build a consensus on spending and eliminate wasteful expenditures. Also, despite the chatter we hear about the oil industry and its careless destruction of the environment, Flotek is a company committed to a kinder, gentler, eco-friendly oil and gas industry. This is demonstrated through products like its proprietary green chemical line, which Meier called the flagship of the chemical group. Two years ago, its specialty chemical operations allowed the company to expand into Holland when one of Flotek’s subsidiaries, CESI Chemical, began operations in the North Sea using its biodegradable product line. Flotek is also committed to improving its internal processes. With so many new companies integrated into its operations during the last few years, Flotek needed to refine some internal systems. This included the implementation of a rental tool management software system (RTMS). With the many acquisitions came a cache of 20,000 tools used in its drilling tool rental business. Keeping track of its assets became more complex, making the RTMS investment a must. “We put the highest emphasis on constant improvement,” Meier said. “As a hypergrowth company you have to do that to stay alive.” As Flotek’s services are fairly diverse, the company understands the need for differing strategies to market and sell its various services. In chemicals and logistics, the company works very closely with pressure pumping service companies because the pumping companies work with the end user. With drilling tools, the business is driven by developing relationships, customer service, and tool availability. Flotek has worked to establish a broad domestic network of sales and service capabilities in this arena, using its acquisitions to establish the tool inventory. Lastly, the lift division is a retail business, so Flotek’s sales force works closely with the end user to provide them the tools they need. In addition, Meier and Dumas spend a great deal of time speaking in front of investor conferences and industry decisionmakers. Much of the industry is centered on creating and maintaining relationships with contacts around the world, something both Dumas and Meier excel at. But even though the company continues to experience a remarkable period of growth, Meier knows her team will have to remain vigilant as the complexities of a changing industry bear down over the next few years. “One key area strategically is international growth, making sure we are following all of the rules and regulations. It is somewhat new territory for us, but that is one of our growth opportunities,” said Meier. “Another key for us is hiring and retaining good people, and our existing employees will be our main recruiters.” |
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American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
