Superior Drilling Products, Inc.

Greetings and welcome to Superior Drilling Products, Inc. First Quarter 2021 Financial Results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Palowski, Investor Relations for Superior Drilling. Thank you. You may begin.

Thanks, Doug, and hello, everyone. We certainly appreciate your time today and your interest in Superior Drilling products. On the call with me are Troy Meyer, our chairman and CEO, and Chris Cashin, our chief financial officer. Troy and Chris will go through prepared remarks discussing our first quarter of fiscal 2021 and talk a little bit about the conditions in the market today. Then we will open the call for questions. You should have a copy of the financial results that we released before the market this morning and should also have the slides that will accompany our conversation. You can find both of those documents on our website at sdpi.com. If you would turn to slide two, I will point out that we may make some forward-looking statements during the formal discussion as well as during the Q&A session today. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties are provided in the earnings release, the slides, and other documents filed by the company with Securities and Exchange Commission. All of these documents can be found on our website or at sec.gov. I want to also point out that during today's call, we will discuss some non-GAAP financial measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP with comparable GAAP measures in the tables accompanying the earnings release as well as in the slide deck. So with that, if you would turn to slide three, you'll see Troy's name, and he will begin. Troy?

Thanks, Deb. Thanks, everybody, for joining us. Q1 was a solid quarter for us. We had a strong improvement over the fourth quarter of last year. This was driven in the strength of the U.S. market. You're all aware of the steady increase in rig count that we've been seeing. I believe so far in this Q we've been averaging about 19 rigs per month increase. So that's been wonderful. When we look at the tools that that are being ordered. We started seeing an increase in orders in late December for new tools, and that's followed through all the way up until today. We're still receiving new tool orders, and those tools are being put to work. They're going in the hole. They're being run, coming back to us, being repaired, and we see this. We see this in the other tool revenue that we'll talk about, but you also see it in the in the warranties that we have when these tools go in the hole. We think that when we look at the market, it's not just because of the market improvement that we're seeing this big increase in demand for our tools, but we also believe that the operators that are out there and the ones that were left from this horrible downturn that we had, they're the efficient ones they're the ones that that realize the value of this tool and it's uh they're seeing the value and and and it shows you know you see it in reduced rig time you see it in improved efficiencies the drilling efficiencies when you have a smoother wellbore makes a big difference tripping times are reduced and casing goes to bottom so it's it's a The tool does a good job for people and we're seeing that and they're recognizing that. We're also seeing a big uptick in our contracted services. You know, this is clearly a result of the rig count improving. But when you look at the relationship that we have with Baker Hughes, that really shows right there when you start to see the amount of repairs that are units that are going through our facility not just bits but associated drilling tools as well that we do for them. We're also seeing a high demand on new products through our manufacturing. We're making a lot of new drilling tools right now for Baker Hughes and that relationship is getting stronger every day. We value that relationship and we know that they really rely on us to, when the rig count turns like it has, we can respond quickly. And they need us there to help them respond to this demand. So this has been a good uptick in all areas of our business. And like I say, we're doing more for them all the time, and we're going to try to lean on them a little more and see if we can get something in place that allows this work to continue to flow to us and improve the amount of units that we've got going through our shop. When we look at our international business, we're a little frustrated with what's going on there. It's lagging behind the recovery, but it also lags behind on the downturn. But what we're frustrated with mainly is the travel restrictions that we have going on over there. When you look at Kuwait and Oman and only the nationals are getting in and out of the country, it puts a little bit of a burden on us to get our tech team in there and get face to face with our customers and show them the values that they're getting. But it hasn't slowed us down. We're still We're still making phone calls and sending out presentations and we've got a new structure around our international development. We've put new management in that team and we believe that they're focused very, very well. We look at some of the things that we've been able to get into place. We now have contract with Halliburton in Iraq for the tool. And not just Halliburton looking to run the tool in Iraq. We've got Schlumberger looking to run the tool. We've got Weatherford looking to run the tool. And we now have tools on their way to Iraq that we're looking forward to some good performance of our product there. We've got opportunities in Oman. We have some opportunities in the UAE that we started to get into the UAE really well last year and then We were tripped up by some registration papers that we've got to get finalized and get done, and we're looking to hopefully be through that whole process sometime in Q3, Q4, have all that done and get that back ticking again. We're working with the Servcos, as you all know, to build a strong relationship. They see the value of the tool. It helps them with their projects. services when they go out there to drill a well the drilling ream is a benefit to them getting their products in and out of the hole saving their BHA of a lot of wear and tear and you know preventing helping to prevent you know some stuck in the hole so we've got a good team together there we've brought on Jeff and he's doing a great job there focusing our team on again what we've Some of you call it the 80-20 rule, and we call it smart. It's just he's doing a wonderful job there. With that in mind, I'm going to go ahead and turn it over to Chris and let him talk about the financials. But, again, I just wanted to say thanks, and I also want to say thanks to our team here at Superior. We've got a great team, and we're very proud of them, and they've responded very well to this uptick in business. and been with us through the, you know, the horrible downturn that this pandemic caused, and we're looking forward to this new uptick and watching how this team performs. Chris?