Flotek Industries, Inc.

and welcome to Tech Industry's second quarter 2022 conference call. All participants will be in listen-only mode. Any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference over to Mr. Bernie Golson, Senior Vice President, Corporate Development and Sustainability. Please go ahead, sir.

Thank you and good morning, everyone. We appreciate your participation. Joining me today and participating on the call are John Gibson, Chairman, Chief Executive Officer and President, Ryan Ezell, Chief Operating Officer, Sahem Carson, Interim Chief Financial Officer, James Silas, Senior Vice President of Research and Innovation, and Nick Bigney, General Counsel and Chief Compliance Officer. On today's call, we will first provide prepared remarks concerning our business and results for the quarter. Following that, we will answer any questions you have. We have now released our earnings announcement for our second quarter 2022 results, which is available on our website. In addition, we posted an updated investor presentation that you are welcome to download and refer to during this call. As a reminder, today's call is being webcast and a replay will also be available on our website. Please note that any comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Please refer to our reconciliations provided in our earnings press release as management may discuss non-GAAP metrics on this call. I will now turn it over to John.

Thank you, Bernie. Good morning, everyone, and thank you for joining the discussion of our second quarter results for 2022. We've really been looking forward to reporting our results today as well as providing some color on what's transpired since the end of the quarter. Second quarter marks the first full quarter that Flowtech has operated with the landmark ProFract Supply Agreement, which we described in detail in past months. We're delighted to report that the contract and the transactional business are ramping up as envisioned, resulting in 2.3x sequential revenue growth and 3.2x year-over-year growth. We also have significantly improved our cash position, which our interim CFO, Saham Carson, will describe in more detail in her remarks. As a reminder, our contract with Procrack was effective as of April 1st. It spans 10 years and covers an equivalent volume of our full suite of down-hold chemistries to serve 30 of their frack fleets or 70% of their total frack fleet, whichever is greater. While we are still in the early days of the contract, serving an average of eight fleets in Q2, we remain confident in our ramp-up to the full contract scope over the coming quarters. We also have no reason to expect that our relationship is bounded by the 30 fleet or 70% numbers. As we continue to provide exemplary service, ProFrac has the incentive to maximize chemical deliveries from Flowtech due to the structure of our arrangement. ProFrac recently announced the acquisition of U.S. Well Services, which is expected to close in Q4. As a result, they expect to be operating 44 active frac fleets by the end of 22. Simple math says 70% of 44 is a bit less than 31. However, we fully expect that we can win more of that business as we scale up, and our goal is for Procrac to desire to purchase chemistry from us for its entire fleet. We really want to be a strategic supplier for Procrac. This agreement is proving to be transformational for Flowtech and the industry. As a result of this agreement, ENPs now have a comprehensive, vertically integrated completion solution that reduces emissions and delivers greener chemistries, thereby protecting air, water, land, and people. Over the next decade, we anticipate the agreement should create backlog of more than $2 billion in revenue for Flowtech, including anticipated revenues in excess of $200 million in 2023 for the Procrack contract alone. And this number does not include any of the impact from Profract's announced acquisition of U.S. Well Services. Once that acquisition is complete, we will be able to provide more color on the additional benefit we expect to see from Profract's increased scale. I'll also continue to stress that this contract is non-exclusive, allowing us to add new customers and continue to grow sales volumes to the rest of our energy chemistry customers, which we've successfully done in the first half of 2022. To illustrate the scale of the growth we've achieved, we delivered 19 million pounds of chemistry for the entire year of 2021. In Q2 2022, we delivered a total of 40 million pounds of chemistry, with 9 million pounds of the chemistry to our transactional chemistry customers alone, 9 million pounds being almost half of what we delivered in the full year to transactional customers in a single quarter. Ryan's going to provide more details about our strong top-line growth in his comments. Our July 20th We pre-released our Q2 revenue numbers due to the material sequential increase in the quarter. On that release, we promised revenue in excess of $28 million, and we're pleased to announce that we were able to report revenue of $29.4 million, which again represents 2.3x growth over Q1 and 3.2x growth over Q2 2021. I'm very proud of the team's performance in the quarter in achieving this growth. It took a lot of effort. We have an absolutely phenomenal team and great flawless execution in Q2. The growth we've executed has presented some challenges, and I want to briefly address our adjusted EBITDA and attempt to preempt some questions on that topic during the Q&A. On our Q1 conference call, we emphasized that we expected to experience higher than usual costs in the coming quarters associated with the rapid increase in activity, basically the ramp-up. That statement proved accurate, and we again signaled a higher cost on our July 20th press release. The final result in Q2 was an adjusted EBITDA of negative $7.2 million, which represents a slight deterioration over Q1. Ryan will provide greater detail on expense drivers in his commentary, but in summary, we are confident in our ability to increase fall-through to the bottom line going forward, and we are executing as expected. We remain committed to achieving positive adjusted EBITDA margins. In the investor deck that we recently posted to our website, we include a slide illustrating our steady improvement in adjusted EBITDA margin that has taken place over the previous four quarters. We expect this trend to continue through the second half of 22 and into 2023. Our future success hinges on our ability to maximize success of our customers' customers, which are the oil and gas producers that rely on our products to maximize production while minimizing environmental impact. We sense a change in the market here where a customer focus on minimizing cost is starting to give way to more concern about initial production rates and maximizing ultimate recovery, EUR, and minimizing the odds of reservoir damage caused by careless chemistry. This trend strongly favors our core capabilities and market position, and we are excited to see how much market share we can gain in the coming years as a result. Now I'd like to turn it over to Dr. Ezell, right?