Flotek Industries, Inc.

Float Tech International, third quarter of 2023 earnings column. All participants will be in listening mode. If you need 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. Larry Busnardo, investor relations representative. Please go ahead.

Thank you and good morning. We appreciate your participation in Flowtech's third quarter earnings conference call. Joining me on the call today are Ryan Ezell, Chief Executive Officer, 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 open up the call for any questions you have. We issued our earnings announcement for the third quarter of 2023 yesterday afternoon, which is available on the investor relations section of Flowtech's website. We also filed an 8K with an updated corporate presentation that we will be referencing on today's call. This will also be posted to our website this morning. 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 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 and projections. 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 non-GAAP financial metrics may be discussed on this call. With that, I will turn the call over to Ryan Ezell. Ryan?

Thank you, Larry, and good morning. We appreciate everyone's interest in Flowtech and for joining us today as we discuss our third quarter 2023 operational and financial results. I'm extremely pleased with our third quarter results as we continue to demonstrate significant progress in executing our corporate strategy while improving our core business fundamentals. This is highlighted by the first quarter of positive adjusted EBITDA in five years. Our results build upon the strong financial and operational momentum we established this year and reflect meaningful year-over-year improvement in all of our profitability metrics. Flowtech's complementary and unique business segments carry an undeniable value proposition that maximize our customers' asset performance. We will continue to leverage our differentiated technologies in both chemistry and data analytics solution platforms to positively impact our customer's value chain while systematically gaining market share and margin expansion to generate an impactful return on investment for our shareholders. With that in mind, I'd like to turn to slide eight and touch on our third quarter highlights that Bob will discuss in detail in just a moment. During the third quarter, we reported positive adjusted EBITDA and the ninth consecutive quarter of EBITDA improvement. We achieved positive adjusted gross margin for the third consecutive quarter with an associated margin of 22%. In addition, adjusted gross profit through the first nine months is up nearly $20 million from the same period of 2022. Transactional chemistry revenues have grown each quarter in 2023 due to our rapidly expanding customer base. and the continued adoption of our prescriptive chemistry management business model, which exhibited 128% sequential growth in applications of our proprietary complex nanofluids and over 250% growth annually. Our multidisciplinary approach to reservoir-centric technologies has been proven to provide enhanced well productivity while utilizing our chemistry applications on site when all else is being equal. Our data analytics subscription-based revenue was up 81% for the first nine months 2023 versus the prior year. The segment has seen a two times increase in the number of subscription-based services, which supports our segment strategy to evolve at a data as a service business model. These subscription-based services have had a 98% annualized retention rate. Revenues not attributable to Profract totaled 38% during the third quarter. This is a 58% increase from the first quarter of this year, with further improvements expected in the fourth quarter. We strengthened our liquidity through the addition of a $10 million ABL that was upsized to $13.8 million in October. We successfully completed our corporate office move providing analyzed $1 million per year of savings. We expanded our global footprint with a new international entity in Abu Dhabi to facilitate market share growth and margin expansion as we strengthen our in-country value add components while lowering our operational cost base by approximately 30%, which would equate to greater than $1 million in annual savings. Finally, we announced the promotion of three internal team members and one external hire to executive leadership roles. I'd like to congratulate Nathan Snoke on his promotion to Senior Vice President of Global Business Lines, Shane Wise on his promotion to Senior Vice President of Operations, Andrea Berry on her promotion to Vice President of People Operations, in addition to Tom Rettlinger as Vice President of our high-margin data analytics segment. These moves complete the transition of the company's executive leadership team as we have emerged as an employer of choice amongst chemistry and data services landscapes. Not only does the new team bring vastly more technical and operational experience, but when compared to the overhead cost of the previous team, it will save the company approximately half a million dollars per year. These impressive results reflect the positive and impactful changes we have achieved within a short period of time. Most importantly, All of these milestones were achieved with zero recordable and lost time incidents in the field of operations. I'd like to thank all of our employees for their commitment to safety and service quality in achieving these outstanding results. I expect us to continue to build upon this momentum throughout the remainder of the year. And looking at the quarter in a bit more granularity, remedy was slightly down sequentially. This decrease is directly attributable to the overall market slowdown in upstream onshore activity that has been experienced this year. And I'd also like to add an additional color here. The US land rig count is down 19% and total frac fleets are down 12% from the third quarter of 2022. And despite this decline in overall drilling and completion activity, The impact of Flowtech has been much less given the execution of our strategy around our differentiated and complementary chemistry and data technologies. To that end, we have continued to grow our transactional chemistry business revenues every quarter this year, and they were up another 5% in the third quarter, which has clearly mitigated the impact of the broader market slowdown. Furthermore, the chemistry purchase requirements contained in the long-term supply agreement with Profract were designed to mitigate the volatility in the market and provide some insulation to flow tech operations for maintaining economies of scale and stability. On a more macro level, the demand for oil and gas is expected to expand for the next decade with certain requirements needed through 2045. Long-term investments in both short and long cycle barrels will be necessary to maintain production and add the required incremental supply. Consistent with this outlook, we expect continued demand for oilfield services in 2024 and beyond. We believe that the demand for advanced chemistry and data solutions will continue to increase and will provide new opportunities at other market verticals, such as industrial, geothermal, agricultural, solar, and hydrogen. Now, I'll turn the call over to Vaughn to provide key financial highlights.