Flowco Holdings Inc. (FLOC.N): 3Q Adjusted EBITDA Beat; Product Mix Driving Margins

FLOC announced 3Q adjusted EBITDA of $104mm, 7%/9% above Citi/LSEG consensus. Revenues of $259mm were 2% below Citi but 6% above consensus as Production Solutions came in above expectations. Adjusted EBITDA margins of 40.2% were above our 36.8% estimate as increasing surface equipment system sales proved a tailwind for Production Solutions. FLOC noted ~$9mm of accelerated rental revenue associated with the release of certain Surface Equipment systems which likely aided results. FLOC also noted early success in cross-selling Valiant products to existing FLOC customers. On Monday, FLOC announced a $150mm increase in share repurchases. Overall, these results were strong and should elicit a positive response, but we look to the call for guidance on 4Q and early 2027 color. We value Flowco at a ~6.5x 2027E EBITDA multiple, balancing its higher-margin, less cyclical cash flow stream and growth potential against a modest free float and limited near-term positive revision potential. Target pri