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Income Taxes and Tax Receivable Agreement | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes and Tax Receivable Agreement | Note 9 – Income Taxes and Tax Receivable Agreement Income Tax Provision and Rate 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. For the period from January 16, 2025, to December 31, 2025, the Company made federal income tax estimated payments of $5.1 million. The components of the provision for income taxes for the period presented are as follows (in thousands):
|  | Period from January 16, 2025 to December 31, 2025 |
Current |  |  |  |
Federal |  | $ |  | — |
State |  |  |  | 1,607 |
Total current |  |  |  | 1,607 |
Deferred |  |  |  |
Federal |  |  |  | (2,305 | )
State |  |  |  | (144 | )
Total deferred |  |  |  | (2,449 | )
Tax provision (benefit) |  | $ |  | (842 | )
The reconciliation of our effective income tax rates to the U.S. Federal income tax rate for the period presented is as follows (in thousands except for percentages):
|  | Period from January 16, 2025 to December 31, 2025
|  |  | Amount |  |  | Percent
Expected income tax expense (benefit) at statutory rate |  | $ |  | 27,471 |  |  |  | 21.0 |  | %
State and local income taxes, net of federal income tax effect (1): |  |  |  |  |  |  |  |
Texas |  |  |  | 1,607 |  |  |  | 1.2 |  | %
Texas - noncontrolling interest |  |  |  | 236 |  |  |  | 0.2 |  | %
Other, net |  |  |  | (118 | ) |  |  | (0.1 | ) | %
Changes in valuation allowance |  |  |  | (11,211 | ) |  |  | (8.6 | ) | %
Nontaxable or nondeductible items |  |  |  | 363 |  |  |  | 0.3 |  | %
Noncontrolling interest |  |  |  | (19,190 | ) |  |  | (14.7 | ) | %
Effective income tax rate |  | $ |  | (842 | ) |  |  | (0.7 | ) | %
(1) State taxes in Texas made up the majority of the tax effect in this category. As 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. For the period from January 16, 2025, to December 31, 2025, the Company recorded a federal income tax provision of less than $0.1 million, which consist of $1.6 million of Texas margin tax, netted with $2.4 million income tax benefit. As a result, the Company’s effective tax rate was less than 1% for the period from January 16, 2025, to December 31, 2025. Deferred Taxes Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. The carrying value of the net deferred tax assets is based on management’s judgments using certain estimates and assumptions that we will be able to generate sufficient future taxable income in certain tax jurisdictions to realize the benefits of such assets. The components of our net deferred tax assets for the period presented are as follows (in thousands):
|  | As of December 31, 2025 |
Deferred tax assets |  |  |  |
Investment in Partnership |  | $ |  | 14,928 |
Net Operating Loss |  |  |  | 5,678 |
Other |  |  |  | 2 |
Total deferred tax assets |  |  |  | 20,608 |
Valuation Allowance |  |  |  | (3,916 | )
Total net deferred tax assets |  | $ |  | 16,692 |
IPO, the Transactions and Tax Receivable Agreement In connection with the IPO, 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 of $26.1 million and the related valuation allowance of $13.7 million, for a net asset of $12.4 million was recorded as additional paid-in capital in the 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 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 (i) future redemptions funded by the Company or exchanges of Common Units of Flowco LLC for the Company’s Class A common stock, and (ii) the Company’s allocable share of existing tax basis acquired in its IPO and other tax benefits related to entering into the TRA. During the year ended December 31, 2025, the Company acquired an aggregate of 4,260,059 Common Units of Flowco LLC in connection with the redemption of Common Units of Flowco LLC from the Continuing Equity Owners, which resulted in an increase in the tax basis of the Company’s investment in Flowco LLC, subject to the provisions of the TRA. As a result of these exchanges, during the year ended December 31, 2025, the Company recognized an increase to its deferred tax assets (net of valuation allowance) in the amount of $0.4 million, and corresponding TRA liabilities of $8.8 million, representing 85% of the tax benefits due to the Continuing Equity Owners. As of December 31, 2025, the total amount due under the TRA was $22.0 million and the Company has yet to make its first TRA payment.

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