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Income Taxes and Tax Receivable Agreement
 3 Months Ended
Mar. 31, 2025
Income Tax Disclosure [Abstract]  
IncomeTaxDisclosureTextBlock

Note 11 – Income Taxes and Tax Receivable Agreement

Provision for Income Taxes

The Company is organized as a corporation for income tax purposes and is subject to federal, state and local taxes on its income, which is primarily sourced from its membership interest in Flowco LLC held for any given reporting period. Flowco LLC is a partnership for U.S. federal and state income tax purposes and is considered as a pass-through entity. As such, its net taxable income and related tax credits, if any, are passed through to its members and included in the members' tax returns. The income or losses attributable to the non-controlling interest holders are not included in the Company’s federal or state income tax returns. Consequently, the tax effects of the redeemable non-controlling interests are reflected as a permanent difference in the Company’s effective tax rate reconciliation.

As of March 31, 2025, the Company had net deferred tax assets of $10.2 million, which consists of $9.8 million book and tax basis difference and $0.4 million of net operating loss. For the three months ended March 31, 2025, the Company’s effective tax rate was 8.9%. Significant reconciling items between this effective rate and the U.S. federal statutory tax rate of 21% are primarily related to the absence of taxes on income allocable to redeemable non-controlling interests and additional valuation allowance recorded during the three months ended March 31, 2025.

The Company's income tax provision was $2.6 million for the period from January 16, 2025, to March 31, 2025, which includes $0.4 million of Texas margin tax. As the IPO occurred during the quarter ended March 31, 2025, and the Company had no business transactions or activities prior to the IPO, no income taxes were incurred for the period from January 1, 2025, to January 15, 2025.

IPO, the Transactions and Tax Receivable Agreement

On January 16, 2025, the Company recorded a net deferred tax asset of $12.4 million related to (i) the difference between the book and tax basis of its investment in Flowco LLC of $10.0 million, net of $13.7 million of valuation allowance and (ii) $2.4 million net operating loss obtained from the purchase of 5,251,620 LLC Interests from the Continuing Equity Owners discussed in Note 1 - Nature of Organization and Background, which is expected to be amortized over the useful lives of the underlying assets. The Company established a valuation allowance on its deferred tax assets when it believes it is more likely than not that all or a portion of these deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations.

The initial deferred tax asset and the related valuation allowance were recorded as additional paid-in capital in the Condensed Consolidated Balance Sheets. Additionally, and concurrent with the Transactions, the Company recorded a payable pursuant to the TRA of $12.5 million and a corresponding reduction to additional paid-in capital. The net impact to additional paid-in capital was a reduction of $0.1 million and is presented within the Company’s condensed consolidated statements of stockholders’/members’ equity.

In connection with the IPO and the Transactions, the Company entered into the TRA with the Continuing Equity Owners that provides for the payment by the Company to such the Continuing Equity Owners of 85% of the benefits, that the Company realizes, or is deemed to realize, as a result of the Company’s allocable share of existing tax basis acquired in its IPO and other tax benefits related to entering into the TRA.