Flowco Holdings Inc. Class A

Good morning. Welcome to FloCo Holdings Incorporated's fourth quarter full year fiscal 2024 results conference call. Today's call is being recorded, and we have allotted one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Andrew Leon-Packer, Vice President, Finance, Corporate Development, and Investor Relations at FloCo. Thank you, sir, and we now begin.

Good morning, everyone, and thanks for joining us for FloCo's fourth quarter and full year results. Before we begin, we would like to remind you that this conference call may include forward-looking statements. These statements, which are subject to various risks, uncertainties, and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release, as well as our filings with the SEC, which can be found on our website at ir.floco-inc.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial information. We use non-GAAP measures as we believe they more accurately represent the true operational performance and underlying results of our business. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this morning's press release and in our SEC filings. Joining me on the call today is our President and Chief Executive Officer, Joe Bob Edwards, and our Chief Financial Officer, John Byers. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Joe Bob.

Thank you, Andrew, and good morning, everyone. It is my pleasure and an honor to welcome you to our first investor call as a publicly traded company. For the benefit of the group, and in particular all of the investors on the phone with whom we have not met, I'd like to begin the call with a little bit of FloCo history and an overview of our operations and position in the energy market. FloCo was formed in June of 2024 via the merger of three private companies, Estes Compression, Logistics, and FloCo Production Solutions. Each of these three companies was formed over 10 years ago and has built market-leading positions in the production optimization sector of the domestic oilfield service market. Each company has also demonstrated a culture of innovation, a customer-focused approach to problem solving, and an emphasis on investing in strategies that produce consistent high rates of return on investment. This common culture and a shared vision for the future led to the merger and importantly has guided our integration efforts. By far, the easiest part of our integration was choosing a name for the combined company. The name FloCo not only is the name of one of our notable brands, but it also perfectly describes what we do every day. We help our customers flow their oil and gas wells more efficiently and economically. Wellco participates in the production phase of the industry, which is much more stable than either the drilling phase or the fracking phase of the oilfield service market. Our revenues are derived from oil and gas company non-discretionary OPEX rather than their CAPEX. More broadly, our results can be traced to the absolute levels of oil and gas production in the United States, as well as the number of actively producing oil and gas wells themselves. rather than the number of active drilling rigs or frac spreads. We sit at the critical path of operations for our energy company partners. And quite simply, if our equipment is not working properly, our clients' wells do not produce to their optimum level. We are proud to offer a range of solutions that work for the entire lifespan of the well, which in most cases is more than 20 years. Our company is organized and managed through two operating divisions. production solutions, and natural gas technologies. Production solutions includes our artificial lift products, which help oil and gas operators produce their wells after drilling and fracking operations are completed. Our products include a mixture of surface equipment and downhole products, which are designed and installed based on specific well production data. We enjoy market-leading positions in high pressure gas lift or hpgl conventional gas lift and plunger lift applications and we count among our customers some of the largest and most well-capitalized oil and gas companies in the world next our natural gas technologies division provides our market-leading vapor recovery solutions deployed at surface production locations for the entire life of the field Our proprietary equipment and patented technologies provide operators with a safe and highly profitable method of capturing methane vapors that would otherwise be flared or vented to the atmosphere. These vapor recovery solutions provide some of the most impactful environmental benefits to operators while also providing high value economic returns, especially in today's current natural gas price environment. We help our oil company clients capture and sell hydrocarbon molecules that would otherwise be seen as a waste product. Our GAP financials reflect a healthy mix of equipment rentals and product sales. At a high level, our equipment rentals are comprised of short-term and long-term rental contracts on over 4,300 active systems across our fleet and include systems that provide high-pressure gas lift, conventional gas lift and vapor recovery applications. Our equipment sales are comprised of downhole equipment associated with conventional gas lift and plunger lift applications, and to a lesser extent, the sale of certain types of surface equipment packages. We service our diverse customer base with a dedicated workforce of approximately 1270 employees through a network of field service locations located in every major U.S. shale basin. We also have a vertically integrated supply chain based in the United States, which provides a competitive advantage while providing flexibility and stability in periods of geopolitical uncertainty. In 2024, we increased pro forma revenue 10% versus 2023, while U.S. oil production increased 2 to 3%. This growth was achieved almost exclusively on an organic basis. to fund expanded offerings primarily in high-pressure gas lift and vapor recovery, our two fastest-growing business lines. Based on identified customer demand, U.S. production outlook, and current industry activity, we expect 2025 to be another year of profitable growth with a similar level of growth capital deployment compared to last year. More on this from our Chief Financial Officer, John Byers, later in our presentation. Finally, As we optimize and grow our business following the IPO, we will continue to market across our various solutions to our 300 plus customers and look for ways to cross collaborate. Our singular focus on production optimization and an emphasis on continuous technological innovation across our product lines sets us apart from our competition and should lead to increased market share gains over time. So with that, I'll turn the call over to John Byers, our CFO, who will take you through our 2024 results. Following his remarks, I will make a few closing comments and then open the lines for Q&A.