Flotek Industries, Inc.

Good morning, ladies and gentlemen, and welcome to the Flowtech Industries third quarter 2025 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 5th, 2025. I would now like to turn the conference over to Delbert Rose. Please go ahead.

Thank you, and good morning. We're thrilled to have you with us for Flowtech's third quarter 2025 earnings conference call. Today, I'm joined by Ryan Azale, Chief Executive Officer, and Bon Clement, Chief Financial Officer. We will start with a pair of remarks covering our business operations and financial performance. Following that, we will open the floor for questions. Yesterday, we announced our third quarter 2025 results, and an updated earnings presentation, both of which are available on the investor relations section of our website. This call is being webcast with the replay available on our website shortly after its conclusion. Please note that the comments made on today's call may include forward-looking statements, which include our projections or expectations for future events. 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 those projected in forward-looking statements. We advise listeners to review our earnings release and most recent 10-K and 10-Q filings for a more complete description of risk factors that could cause actual results to materially differ from those projected in forward-looking statements. Please refer to the reconciliations provided in the earnings press release and investor presentations as management will be discussing non-GAAP metrics on this call. With that, I will turn the call over to our CEO, Ryan Azell.

Thank you, Delbert, and good morning. We appreciate everyone's interest in FlowTech and for joining us today as we discuss our third quarter of 2025 operational and financial results. In the third quarter, we saw North American operators maintain the cautious posture initiated in the second quarter as they continue to navigate the return of OPEC plus spare capacity and persistent global trade uncertainty. Despite the dynamic geopolitical and macroeconomic challenges that have injected uncertainty within the market, the Flowtech team remains steadfast at the execution of our corporate strategy, driving transformation and delivering our 12th consecutive quarter of adjusted EBITDA improvement. As referenced on slide four, Flowtech extended its track record of transforming the company into a data-as-a-service business model as our industrial pivot continues to gain momentum while expanding the total addressable market for future growth of the company. Furthermore, we increased market share in both of our complementary business segments with an unwavering commitment to service quality and value creation for our customers and shareholders through the convergence of innovative data and chemistry solutions. With that, I'd like to touch on some key highlights for the quarter, referenced on slide 7, that Bon will discuss later in the call. Total revenue during the quarter rose 13% versus third quarter 2024, highlighted by a 232% increase in data analytics revenue, which is our strongest quarter ever, and a 43% increase in external chemistry revenue. Gross profit climbed 95% versus third quarter 2024, with third quarter 2025 gross profit margin rising to 32%. Net income totaled $20.4 million, while adjusted EBITDA was up 142% versus third quarter 2024 and up more than 20% sequentially. On October 29, 2025, Flowtech announced that the XSPECT analyzer was the first optical spectrometer to comply with oil and gas custody transfer standards known as EPA 2172, further empowering our ability to build high-margin revenue backlog in a data analytics segment. Finally, we increased our 2025 total revenue and adjusted EBITDA guidance ranges by 6% and 3%, respectively. Above all, these milestones were achieved with zero lost time incidents in the field of operations. I also want to spotlight our differentiated prescriptive chemistry management service team, which has remarkably maintained over 3,500 days with no OSHA recordables or lost time incidences. You combine that with the recent achievements at MTI, and the third quarter of 2025 saw Flowtech achieve its lowest EMR score in company history. I'd like to thank all of our employees for their hard work and commitment to safety and service quality in achieving these outstanding results. Now turning to the larger picture for the energy and infrastructure sector shown on slide nine, we share the vantage point that the fundamentals for hydrocarbon demand will continue to grow over the long term. Substantial investment will be required to maintain current production levels much less to increase production sustainably to meet expanding requirements of power and demand driven by AI, data centers, and industrial reshoring, combined with the reliability issues of an aging transmission infrastructure. As our legacy pressure pumping customers diversify into the power generation business to capitalize on this demand opportunity, Flowtech is poised to support them and emerging customers with products and services to help protect their investment in power generation equipment. With multi-year waiting lists for turbines and reciprocating engines, protecting these capital-intensive investments is critical, along with enabling reliability standards that exceed the greater than 99% uptime requirements. With this outlook in mind and referencing slide 10, I've never been more invigorated about Flowtech's future as we strengthen our position as a technology leader spearheading innovation, and delivering tailored data and chemistry solutions that meet our customers' specific needs. We are committed to shaping the industry's digitalized future by leveraging chemistry as the common value creation platform. Now, let's dive into the details referencing side 11 of the earnings investor deck. Today, I want to spotlight the remarkable progress in our data analytics segment, which saw service revenues increase 625%. in Q3 2025 versus Q3 2024, elevating gross profit to 71% in Q3 2025 versus 44% in the same quarter a year ago. This transformational growth in data-driven service revenue is empowered by three upstream technology applications, power services, digital valuation, and flare monitoring. all of which are fueling significant advancements for our organization while generating recurring revenue backlog. The first is our transformative power services, which has evolved from a novel analytical approach into a transformative solution for the energy infrastructure sector that we call PowerTech. What began as advanced analytics has grown into a comprehensive end-to-end fuel management platform, redefining performance standards and operations within the sector. Looking at slide 12, at the heart of Powertech is our Varex analyzer, which goes beyond data collection to deliver custody transfer grade measurements. It provides precise BTU methane number and volume reporting for royalties, invoicing, and performance guarantees. Complementing this is our patented ESD trailers, actively remove liquids and contaminants, conditioning high BTU hydrocarbon feeds to meet exact turbine or engine performance specifications. Because every site and grid condition are unique, we have integrated Coriolis metering, automated CNG blending, and seamless backup connections, allowing operators to switch fuels or go off-grid with a single button, resolving major constraints to the development of data center and grid power infrastructure. But PowerTech is more than just technology. It's about control. Operators interact effortlessly through an on-trailer HMI or a unified web portal that is accessible on desktop, tablet, or smartphone. Our cloud-based portal enables the monitoring of live BTU trends, H2S alerts, Coriolis flow meter readings, and automated CNG blend controls combined with custom alarm thresholds to automatically isolate all spec hydrocarbon feeds and protect high-value turbines or engines from catastrophic damage thus minimizing downtime and operational risk while enhancing safety. All data flows securely through our patented edge-to-cloud pipeline, ensuring zero manual intervention, end-to-end encryption, full audit trails, and compliant custody transfer record keeping. Finally, our over 35 data analytics patents position Flowtech as a leader across the natural gas value chain. When considering our capabilities for advanced fuel blending, zero emissions analytics, custody transfer grade flow cell measurements, wireless ESD actuation, and secure edge-to-cloud data transmission, we deliver unmatched monitoring, control, and safety for field gas operations. In April of 2025, we acquired 30 patented real-time gas monitoring and dual fuel optimization assets. We are proud to report that the integration of these assets has gone seamlessly and all units are in service as of today, which is ahead of our original schedule. Let's transition to slide 13, where we'll dive into our second upstream application, digital valuation. This groundbreaking use case sets a new standard in the oil and gas industry, delivering unprecedented transparency and minimizing enterprise risk for producing wells like never before through a real-time digital twinning of the custody transfer processes. By monitoring hydrocarbon quality and composition in real time, we have unlocked a new market for the industry and for Flowtech. On October 29, 2025, Flowtech reported a historic milestone in natural gas measurement. The X-Spec spectrometer became the first optical instrument to achieve the stringent reproducibility and repeatability requirements of the oil and gas industry standard for custody transfer, GPA 2172, and API 14.5. The EXPECT measurement unit is designed to enable more accurate volume and compositional data, thereby delivering greater transparency for royalty owners, operators, and mystery companies than traditional methods. We believe the EXPECT speed, accuracy, durability, and qualification under the rigorous measurement standards outlined in GPA 2172 will provide a significant advantage in discussions with prospective customers as we aggressively expand its manufacture and field deployment. Let's move to our third upstream application, the VeriCal Flare Monitoring Solution. We continue to see operational demand in the third quarter of 2025 as we navigate the rapidly changing regulatory landscape by partnering with operators and flare developers to deliver value that goes beyond just compliance. It unlocks new efficiencies and environmental benefits to our clients. It's clear that our transformational strategy to grow the data analytics segment through upstream applications is gaining traction. But what is most important is what it means for our stakeholders and investors. Our DAS-driven strategy ensures predictable recurring revenue and cash flow, delivering stability and long-term value. Our proprietary data technology is a superior measurement accuracy, enable velocity and decision control that establish a high barrier to entry. secure client loyalty, and support our value-based service model. In long time, our margin subscriptions position Flowtech for sustained growth and margin expansion, driving significant shareholder value over time. And lastly, our chemistry technology segment continues to deliver robust performance, driven by the differentiation of our prescriptive chemistry management services and our expanding international presence. Slide 17 underscores the resilient performance of our chemistry segment with 54% growth in external chemistry revenues and 21% increase in total chemistry revenues, where three months ended in 2025 versus nine months ended in 2024. Despite a 24% decline in active frag fleets during the same period, While we anticipate potential commodity price volatility the remainder of 2025, we do see indicators for cautious optimism in 2026. This presents a strategic opportunity to expand our market share by accelerating the adoption of our prescriptive chemistry management solutions and enhancing asset value for our customers. It's evident that our chemistry team has executed our strategy flawlessly, despite the near- to medium-term headwinds. While uncertainties around near-term activity levels persist due to macro factors that could affect the completion chemistry market, we remain focused on defying these challenges, delivering differentiated chemistry and data services to provide our customers with industry-leading returns on their investment. We're confident that our expanding suite of services positions us to deliver superior solutions to a variety of our industry's most challenging problems while maximizing our customers' value chains. Now I'll turn the call over to Bob to provide key financial highlights.