Enservco Corporation

Good morning, everyone, and welcome to the NSERVCO 2024 Second Quarter Earnings Call. At this time, all participants have been placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Wes Harris. Sir, the floor is yours.

Well, thank you, Matthew, and good morning, everyone. Welcome to Insurfco's 2024 Second Quarter Earnings Conference Call. Presenting on behalf of the company today are Rich Murphy, our Executive Chairman, and Mark Patterson, our Chief Financial Officer. I would note that matters discussed during this call may include forward-looking statements that are based on management's estimates, projections, and assumptions as of today's date, and are subject to risks and uncertainties disclosed in the company's most recent 10-K and 10-Q, as well as other filings with this SEC. The company's business is subject to certain risks that could cause actual results to differ materially from those anticipated in its forward-looking statements. And Servco assumes no obligation to update forward-looking statements that become untrue because of subsequent events. This conference call also includes references to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measures under GAAP are contained in our earnings release. Finally, a webcast replay of today's call will be available after the call. Instructions for accessing the webcast are available in the earnings release. So with that, we'll turn the call over to Rich. Rich?

Thanks, Wes, and good morning, everyone. We appreciate you joining us for today's call. Consistent with our first quarter success, our second quarter results reflected improved year-over-year performance across the board, including a 39% improvement in our adjusted EBITDA loss. As a reminder, our business has historically been very cold weather dependent, and this seasonal nature has led to the fourth and first quarters each year being the most financially significant in terms of profitability. While we'll let Mark discuss the financial details of the second quarter in his comments, I believe the most significant achievement of the second quarter and to date in the third has been the efforts by our team to reposition the company in the marketplace. All the collective hard work paid off in the last week for the closing of a number of strategic transactions, and I, along with the full board of directors, want to thank everyone for their dedication and support through this extended but critical process. For the past 18 months, we spent considerable effort evaluating and executing several strategic initiatives designed to enhance our financial position and further rationalize our asset base. This included a focus on reducing reliance on our seasonal heating services businesses. In the fourth quarter, 2023, we exited Frack Water Heating in North Dakota, which has been an underperforming market that was negatively impacting profitability. We sold certain equipment and real estate as part of exiting North Dakota. In addition to these efforts, we execute on several opportunities to right size and take costs out of the business. And this carried into 2024. we continue to focus on ways to improve margins and deliver consistent profitability as we focus on improving the pricing environment and getting market share in the basins where we operate. We entered 2024 on better operational and financial footing due to our multifaceted efforts in 2023 to deleverage the balance sheet, as well as improved market share margins. And while our Frack Water Heating Services business benefited from improved seasonal conditions in this year's first quarter that carried into the second quarter, we recognized that additional enhancement to our asset base and financial position was necessary to increase value for our stockholders. We announced in March and recently closed our immediately accretive acquisition of Buckshot Trucking. We view Buckshot as a great step in transitioning the company towards a more consistent cash flow generator that is less seasonal and not as subject to commodity risk. In short, we have welcomed into Insurfco an energy logistics business that generates strong year-round cash flow with significant growth prospects and an expanded customer base. I would note the transition will not require substantial new overhead or capital. Most important, I want to welcome previous owners, Tony Sims and Jim Fate, as well as the rest of the BoxShot team to the Insurfco family. In 2024, we continue to evaluate opportunities to reduce our reliance on seasonally focused businesses. Complemented by the Buckshot acquisition, we recently announced the sale of HeatWave's Colorado-based frack water heating assets, with the net proceeds being used to pay down certain of the company's debt obligations, including a specific focus on a Utica facility. Importantly, following the pay down, we expect to engage with Utica to restructure the remaining facility. To be clear, we are not completely exiting the frack water heating business. The company will continue to provide both frack water heating and hot oil services across the Marcellus Utica Basins, where last year's rapid hot acquisitions bolstered our market share and contributed to significant improvement in operating results in the region. We also recently announced closing on a strategic agreement with Star Equity Holdings, including an exchange of respective equity investments between the companies and a short-term debt financing used to help facilitate the closing of the Buckshot acquisitions. This agreement aligns the company and Star for potential future growth with Star's commitment to a long-term partnership and operational excellence. In addition, it strengthens our leadership and oversight with the addition of Star's CEO and director, Rick Coleman, to insert those four different directors. Last, and certainly not least, was a significant enhancement in our equity position as the Buckshot and Star transactions, along with debt conversions from crossword partners, improve the balance sheet. This provides improvement for the key shareholder equity metrics that's required for Insurfco to regain compliance with the NYSE American listing standards. We look forward to continuing our discussions with NYSE American. So with that, I'm going to have Mark take you through some of the quarterly numbers before I provide a few closing remarks. Mark?