Flotek Industries, Inc.

Greetings, everyone, and welcome to Flowtech Industries' first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. Question and answer session will follow management's prepared remarks. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypads. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Wes Harris, Investor Relations Representative for Flowtech. Thank you. You may begin.

Thank you, Jamie, and good morning, everyone. We appreciate your participation. Joining me today and participating on the call are Harsha V. Agati, Interim Chief Executive Officer, Ryan Ezell, President, and Bon Clement, Chief Financial 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've released our earnings announcement for the first quarter of 2023, which is available on our website. In addition, today's call is being webcast, and a replay will be available on our website shortly following the conclusion of this call. Please note that the comments we make on today's call regarding projections or 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. Also, please refer to the reconciliations provided in our earnings press release as management may discuss non-GAAP metrics on this call. I will now turn it over to Mr. Agati.

Thank you, Wes, and good morning, everyone. We appreciate everyone's interest in joining us today to discuss our first quarter 2023 operational and financial results. I believe the first quarter of 2023 marks a significant turning point for Flowtech. With the unwavering support of our talented and dedicated employees, our new management team has made significant strides in executing our comprehensive plan to continue to capitalize on the many opportunities to drive flow tech to profitability ASAP. This includes right-sizing the company's costs, improving our pricing, enhancing our product mix, and diversifying our customer base to drive flow tech to sustainable profitability. While we still have more work to do to attain profitability, I am extremely proud of what the Flowtech team has accomplished in just a few months. While Ryan and Bond will discuss our operational and financial details in their prepared remarks, I first wanted to provide highlights of why I'm confident we're headed in the right direction. The improvement in first quarter gross margin and adjusted EBITDA materially exceeded our internal expectations for the time period. This included achieving a $3.2 million sequential improvement in adjusted gross profit from the fourth quarter on a nearly identical revenue base. It is clear representation of how our effort to drive operational efficiencies is taking hold as we further execute on opportunities to leverage our economies of scale in purchasing raw materials, improving efficiency in freight costs, and finally, deploying labor just in time to match volumes. We also saw a material improvement in our adjusted EBITDA results as evidenced by growth of 24 percent from fourth quarter on sequentially flat revenue. Similarly to our operational cost reduction efforts, through thoughtful and deliberate actions during the period, we achieved important efficiencies from targeted cost reductions and improved process efficiencies in SG&A related activities. In short, I view the first quarter as an inflection point for gross profit. With support from additional revenue opportunities and more targeted cost reduction initiatives in place, we remain absolutely focused on generating positive adjusted EBITDA during 2023. As we continue to gain cost efficiencies, our efforts now have pivoted to revenue accretion focused on both fronts. First, industry-leading chemistry technologies, and second, data analytics. Both carry an undeniable value proposition as it enhances customer profitability. This, in turn, will generate a healthy return on investment for our investor base. Based on our much improved results in the first quarter and confidence in our plan and its continued successful execution, we are initiating guidance for the first time in five years including full-year 2023 guidance for total revenue of $210 to $230 million and an adjusted gross profit margin of 8 to 10%. The midpoint of our revised guidance represents revenue growth of 62% from 2022. Using the midpoint of the revenue and the gross profit guidance, we would generate an annual gross profit for 2023 of $20 million, which would be nearly a $22 million improvement from last year. This is quite an accomplishment. As always, we appreciate the continued support of our shareholders and look forward to keeping all stakeholders apprised of our continued progress. With that, I will turn it over to Ryan to discuss our operational results. Ryan?