Flowco Holdings Inc. Class A

Good morning. Welcome to FloCo Holding Inc's second quarter 2026 earnings call. Today's call is being recorded. We have allocated one hour for prepared remarks and questions and answers. At this time, I would like to turn the conference over to Andrew Leonpacher, Vice President, Finance, Corporate Development, and Investor Relations at FloCo. Thank you. You may begin.

Andrew Leonpacher, Vice President, Finance, Corporate Development, and Investor Relations at FloCo Good morning, everyone, and thanks for joining us to discuss FloCo's second quarter 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. Reconciliation 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 are 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. Good morning, everybody, and thank you for joining us today. I'll begin today's call with a review of our second quarter performance and key highlights. John will then discuss our financial results, segment performance, capital allocation, and balance sheet in more detail. I'll conclude with our perspective on the current market environment and our outlook for the third quarter. Loco delivered solid results in the second quarter, generating adjusted EBITDA of approximately 94 million, while maintaining our top quartile adjusted EBITDA margins of roughly 40%. Revenue increased 13% quarter over quarter, while adjusted EBITDA grew 10%, reflecting solid execution across the business. These results were supported by better than expected performance from recently acquired Valiant, continued growth in rental revenue across our surface equipment and vapor recovery businesses, and a stronger quarter in Downhole Components product sales. FloCo generated $50 million of free cash flow during the quarter, further enhancing our balance sheet and reinforcing the strength of our business model. 56% of our revenue in the quarter was generated from rental revenue, which provide a high degree of revenue visibility, while our asset-light sales businesses continue to generate attractive returns and strong cash conversion. This balanced model enables us to consistently generate meaningful free cash flow while we invest in FloCo's long-term growth prospects. Overall, I am very pleased with our execution during the quarter. While we experienced the cost headwinds discussed in our mid-quarter update, which John will discuss in greater detail, our team remained focused on the factors within our control. Superior service quality, efficient execution, and delivering the solutions that help operators generate more attractive returns from their existing assets. This disciplined approach enabled us to deliver results within our original expectations. Our second quarter performance reflects the demand for FloCo's production optimization technologies and the critical role they play throughout the productive life of the well. Whether we are enhancing production through our broad artificial lift portfolio, capturing high-value hydrocarbons through our vapor recovery solutions, or providing the surface equipment that enables more efficient production of oil and natural gas, our objective is the same. helping customers optimize production with the right solution for each well every time. As operators continue to prioritize production optimization to drive their performance, we believe our differentiated platform is well positioned to support our customers throughout the lifecycle of the well. Looking ahead, we see opportunities to further leverage our platform and deliver even greater value to our customers. Valiant is an excellent example of this strategy in action. The acquisition of Valiant's ESP capability broadened our production optimization platform while enhancing our ability to better serve customers across the life of the well. By leveraging the operational data generated through platforms like Optimus, Valiant's ESP monitoring and optimization software, we are better positioned to identify customer opportunities earlier and deliver more integrated solutions. We believe this data-driven, collaborative approach is applicable across our platform and will continue to strengthen customer relationships, identify new commercial opportunities, and enhance the value we deliver. In summary, the second quarter demonstrated our ability to deliver profitable growth, generate meaningful free cash flow, and continue executing on our long-term strategy. With that, I'll turn it over to John.