Superior Drilling Products, Inc.

Greetings and welcome to Superior Drilling Products, Inc. First Quarter 2022 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 the 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.

Thank you, Doug, and welcome everyone to our first quarter 2022 earnings call. We certainly appreciate your time today and your interest in Superior Drilling Products, Inc. Joining me on the call are Troy Meyer, our Chairman and Chief Executive Officer, and Chris Cashin, our Chief Financial Officer. You should have a copy of the financial results that were released before the market this morning, as well as the slides that will accompany our conversation today. If you do not, these documents can be found on our website at sdpi.com. On that deck, if you'll turn to slide two, I'll point out that we may make some forward-looking statements during the formal discussion as well as during the Q&A session. 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. These documents can be found on our website or at sec.gov. I want to also point out that during today's call, we'll 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 will turn to slide three, I will turn it over to Troy to begin. Troy?

Thanks, Deb. And thanks, everybody, for joining us this first quarter of 2022. Welcome you all here. First of all, I'd like to start off, you know, as we look at slide three and we talk about the results of the strong execution that drives our enhanced results. One of the things that, you know, we've been developing in our processes is we get, let's just start with looking at the manufacturing side of our business and how we've enhanced that and what we've identified as more opportunity. You know, we make a lot of high-end parts for some Servco's that in the past we've made these parts and then we've done our quality check on them and boxed them up and shipped them off. And what we're doing now is our customers are understanding that, hey, not only can you make these products as far as the machining of these products, but you also have the skill set to finish these products. So Why don't you just go ahead and turnkey the process? And that's what we've been pushing. We pushed that all last year to our customers as far as saying, hey, look, we make these. You know that we can make you a good quality part, but let us finish that part. And that's a big important piece as we go forward and we see these turnkey opportunities. So whether it's the blades, the bits, the easy case, the reaming shoes, everything that we do, it has to be finished somewhere. And we have that expertise to do it. And if we don't have a skill set that would complete that process to get it done, we have hired and developed and trained for that skill set. So keep that in mind as we go forward and throughout this year and beyond, you know, the opportunities that we're looking to develop. You know, we've talked about the picking up a new machining centers and a new what we call turnkey product line adoption. That center now that we've spent, that we paid a million one for, we now have in place. This is creating a lot of excitement with not just our customer base but within our team itself because we know everywhere we're looking now, we identify more opportunities. So this turnkey process is going to be exciting for us as we go throughout the year. This machining center that we've put in place, it'll be – we have it installed. We are – finishing the setup of the machine, the leveling of the machine, and we'll be having it up and operational here within the next few weeks. And that's a true fabrication cell, start to finish from a raw piece of steel to a finished product will all be developed in this cell. And this is going to be the blueprint to go forward and just repeat again and again and again. So we're very excited about that process. So that's just in the machining side of our business, the fabrication side of our business. But keep in mind, these parts that we machine now go over and go into the side of our business that we call the refurb side, where we do the hard facing, we do the brazing, and we do the finishing of these products. So we look at it now when we machine things. a new product in one facility, we pass it over to the next facility that finishes that product up, and there's a tremendous opportunity there as we go forward. The Drill and Ring product line is still out there, still penetrating the market, and it's performing very well. We're getting more and more demand on an international marketplace. We're looking for those channel partners. internationally that can penetrate the markets. Still a phenomenal tool. It works extremely well, and the operators see the value of that, and that shows with the product line and the new orders that come in for that. PDC refurbishment, that's the legacy business. There's tremendous opportunity there. When we look at the expansion of that, specific product that we do or or a procedure that we perform for our customers we have now condensed some operations into one of our facilities and we look at the buildings numbered one through five but but we've condensed building one and four so that we can now we've opened up a whole new building for additional work from additional customers. And we're looking forward to going out there and getting those customers and fulfilling, you know, that demand that we see out there. We get a lot of requests for it. When you look at the, as we go down the road of saying, you know, do we have the right people? Do we have the right team in place? I want you to know that the things that we talked about in third and fourth quarter of last year and the things that we were doing and the people that we were hiring and the systems that we were putting into place are really now starting to show. And it's, it's, it's, it's really out there. When you look at our QMS processes, it's the whole, the whole company, the whole team is now involved in that. And it, and it's really starting to show some good processes and, and controls. We, We brought on a world-class HS&E manager that's going to direct our efforts in the HS&E process. We have some of the barriers that we hit as we were trying to penetrate the Mideast market with the drilling ring was the HS&E portion of this ISO 14001. You know, there was countries that were running our tools and they were running very well, but we got shut down because we did not have that portion of the qualification in place. And we now have that individual in place and he's building a team, he's building the process and the controls, and I think you'll all be very happy with what you see there. One of the things to keep in mind as well is, you know, when we went through The 2020 and the 2021, you know, it was the biggest downturn in our industry's history. And when you look at the turnover rate with amongst our employees, amongst our team members, in July of 2021, we had hit a peak of a turnover of 6.7%. Today, I'm proud to say we're down to 3.3%. And that's with an economy very strong here in Utah. It's with a, in Vernal, we are, you know, an oil and gas community. And it's building and it's building strong. And we're able to retain these employees, our team members, because of the processes and controls and the ownership that they have in this company and what they're doing. And it's going to really, really reflect as we go forward throughout this year. You're going to see what these systems are and the managers, what they're doing. You're all going to be, you're going to like what you see. So we're very excited about, you know, when you look at the 70% year-over-year revenue growth, we're very excited about that. And I think you should be too. And I'm going to turn it over to Chris to talk in details, and then I'll come back and talk about the outlook and opportunities. Chris?