Flotek Industries reported 2021-3Q results (excluding nonrecurring items) that were generally in line with expectations. Flotek reported revenues of $10.2 million, in line with our estimate of $10.1 million. Income from operations was $0.6 million, which was well above our expectations for a loss of $5.6 million. The primary difference was due to a $7.6 million reduction in operating costs stemming from a positive settlement. EPS was $0.01 but would have been ($0.10) absent the settlement, slightly below our ($0.08) projection.Flotek is setting itself up for improved results in 2022. Management has focused on growing and stabilizing topline results. It has expanded its salesforce and put them on incentive-based compensation, signed new distribution agreements, emphasized subscription-based sales, introduced new products geared towards international sales, and held C-suite meetings to highlight the environmental benefits of its products. We believe the company's efforts, combined with an improved energy industry outlook, should translate to higher sales and increased profitability in 2022.Financial Position Looks Adequate but Company May Take Steps to Improve its Balance Sheet. Flotek's cash position has steadily declined the last several quarters due to operating losses and is now $20.6 million. The company has been burning through approximately $5 million/quarter or $20 million/year. The company has taken several steps to reduce cash needs including filing for PPE relief, exiting an unfavorable supply contract, and leasing out warehouse space. That said, we would not be surprised to see Flotek seek external financing to provide an additional cushion until cash flow improves.Rating remains Outperform with a Price Target of $2.50 per share. With financial results being reported near expectations and steps being taken to improve future results, we are reiterating our Outperform rating on the shares of Flotek and our $2.50 price target. Read More >>