Flotek Industries, Inc.

Good morning, ladies and gentlemen, and welcome to Flowtech Industries' fourth quarter and full year 2025 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press door zero for operator assistance at any time. I would now like to turn the conference call over to Mike Critelli, Director of Finance and Investor Relations. Please go ahead.

Thank you, and good morning. We're thrilled to have you with us for Float Tech's fourth quarter and full year 2025 earnings conference call. Today, I'm joined by Ryan Ezell, Chief Executive Officer, and Bon Clement, Chief Financial Officer. We'll begin with prepared remarks on our operations and financial performance, followed by Q&A. Yesterday, we released our Q4 and full-year 2025 results, along with an updated investor presentation, both available on the investor relations section of our website. This call is being webcast with a replay available shortly after. 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 presentation, as management will be discussing non-GAAP metrics on this call. With that, I will turn the call over to our CEO, Ryan Ezell. Thank you, Mike.

Good morning, everyone. We appreciate your interest in FlowTech and your participation today as we review our Q4 and full year 2025 operational and financial results. In the fourth 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 volatility. Despite the dynamic geopolitical and macroeconomic challenges that have injected uncertainty within the market, the Flowtech team remains steadfast in the execution of our corporate strategies driving transformation and delivering our third consecutive year of significant gross profit and adjusted EBITDA improvement. Through the powerful convergence of innovative real-time data and chemistry solutions, as shown on slide three, Flowtech has laid the foundation for a data-driven growth trajectory built on diverse recurring revenue, high-margin services, and proprietary technologies that create value for our customers and improve returns for our shareholders. Transitioning to 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 delivered standout performance throughout 2025, resulting in increased market share in both of our complementary business segments. Data analytics grew exponentially while chemistry outpaced the market in a challenging environment through an unwavering commitment to safety, service quality, innovation, and total value creation. With that, I'd like to touch on some key highlights for the quarter, referenced on slide seven, that Bob will discuss later in the call. Q4 and full year 2025 saw the highest quarterly and annual revenues since 2017. The data analytics segment achieved its highest ever quarterly and annual revenue in company history. Our gross profit climbed 24% versus the fourth quarter of 2024 and 52% as compared to full year 2024. The data analytics gross profit accounted for 48% of the total company gross profit during the fourth quarter of 2025 as compared to only 8% in the quarter a year ago. Adjusted EBITDA grew over 123% year-over-year, while 2025 net income improved 191%. Finally, we completed the onboarding of our PowerTech assets and the strategic entry into Power Services in 2025. This sets the stage for high-margin recurring revenue growth in 2026 and beyond. All of these results were achieved with zero lost time incidences in the field of operations with our prescriptive chemistry management and Raceland NTI team surpassing over 10 years without a lost time incident. I want 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, We share the viewpoint that despite the near-term volatility and uncertainty created by the ongoing conflicts in the Middle East, the fundamentals for hydrocarbon demand will continue to grow over the medium to long term. A rebalance of supply and demand is expected due to the combination of steeper decline rates from large percentages of unconventionals, diminishing overall reservoir quality, and minimal exploration success will create potential tailwinds for energy and infrastructure services. Substantial investment will be required to maintain current production levels, while additional spending would be needed to meet the expanding power demand driven by AI, data centers, and industrial reassuring, combined with the reliability issues of an aging transmission infrastructure. Our legacy pressure pump and customers continue to capitalize on the portfolio diversification opportunity provided by the demand for remote power generation. Flowtech is poised to support these emerging customers with products and services that help protect their assets while optimizing their operational performance and fuel efficiency. With multi-year waiting lists for turbines and reciprocating engines, protecting these capital-intensive investments is critical, along with enabling reliability standards that exceed greater than 99% uptime requirements. Transitioning from the micro look, let's dive into the details, starting with slide 11 of the earnings deck. I want to spotlight the remarkable progress in our data analytics segment, which saw service revenues increase 381% in Q4 2025 versus Q4 2024, elevating gross profit to 73% in Q4 2025 versus only 39% 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 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 13, at the heart of Powertech is our VARACS 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, our patented conditioning and distribution trailers actively remove liquids and contaminants conditioning high BTU hydrocarbon fees to meet exact turbine or engine performance specifications. But PowerTech is more than just a technology. It's about control. 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 fees and protect high-value turbines or reciprocating engines from catastrophic damage, thus minimizing downtime and operational risk while enhancing safety. More importantly, our velocity of measurement enables direct communication to the OEM engine to automatically adjust engine operation parameters and optimize engine performance. We don't believe there is another analyzer technology capable of executing at this level of real-time automation today. Finally, our 35-plus data analytics patents position Flowtech as a leader across the natural gas value chain. When considering our capabilities, we deliver unmatched monitoring, control, and safety for field gas operations. On March 3rd of 2026, Flowtech announced its first contract within utilities infrastructure sector seen on slide 14. Leveraging our proprietary Powertech platform, Flowtech will partner with leading distributed power service providers to coordinate the installation of up to 50 megawatts of state-of-the-art power generation equipment, including advanced gas distribution and smart conditioning systems, to support critical federal disaster recovery initiatives. The impacted area was struck by a destructive wind event, which caused significant damage to local power infrastructure. This deployment harnesses real-time data analytics for unparalleled efficiency ensuring resilient power that drives the community recovery forward. Under the contract, Flowtech will supply and mobilize cutting-edge smart conditioning skids and advanced gas distribution equipment alongside natural gas-powered gensets. The gas distribution skid provides independent fuel control to each genset, allowing seamless maintenance without interrupting the power flow and guaranteeing uptime even in the harshest conditions. This week, we have boots on the ground evaluating the site selection and continuing to work with engineers and customers to determine the site design, exact power demand, and full deployment schedule. Now, let's transition to slide 15, where we'll dive into our second upstream application, digital valuation. This groundbreaking use case sets a new standard for the oil and gas industry, delivering unprecedented transparency and minimizing enterprise risk, for producing wells like never before through real-time digital twinning of the custody transfer process. 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 EXPECT 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. The EXPECT measurement unit is designed to enable more accurate volume and compositional data, thereby delivering greater transparency for royalty owners, operators, and ministering 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 this manufacturing field deployment. Since completing our EXPECT pilot program in third quarter of 2025, we exited the year with over $120,000 per month in recurring high-margin revenue. Furthermore, 2026 is off to a great start with multiple opportunities on the horizon, each of which can more than double our deployed active EXPECT units. Let's move to our third upstream application, the VeriCal Flare Monitoring Solution. We continue to experience strong operational demand in the fourth quarter of 2025 with total flare monitoring revenue for the full year exceeding $2 million. As we proactively navigate the evolving regulatory landscape, particularly the EPA's flare monitoring and methane emission standards, we are deepening strategic partnerships with leading operators and flare technology developers. This collaborative approach not only ensures seamless compliance, but also delivers substantial operational efficiencies, meaningful methane reductions, and enhanced environmental performance for our clients. It's clear that our transformational strategy to grow the data analytics segment through upstream applications is gaining traction. We increased our upstream revenues from $2.1 million in 2024 to over $21 million in 2025, with gross profits expanding from $1.2 million in 2024 to $18.4 million in 2025. But what is most important is what it means for our stakeholders and investors. Our DASH-driven strategy ensures predictable recurring revenue and cash flow, delivering stability and long-term value. Our proprietary data technologies and 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. Finally, long-term high-margin subscriptions position FlowTech for sustained growth and margin expansion, driving significant shareholder value over time. Now, lastly, looking at 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 18 highlights the resilient performance of our chemistry segments, which delivered a 25% increase in total revenue for full year 2025 compared to 2024, excluding OSP payments. Despite a 24% decline in the average North American fracking count over the same period, from 201 at year-end in 2024 to 154 at year-end in 2025, according to primary vision data. While we anticipate potential near-term commodity price volatility, we see encouraging indicators for cautious optimism in the back half of 2026 and beyond. And we continue to closely monitor operational and supply chain risks for international operations amid the ongoing conflicts in the Eastern Hemisphere. 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. Looking ahead, I am more confident than ever in Flowtech's momentum and our ability to drive sustained, profitable growth as we execute our transformative corporate strategy. We are firmly positioning Flowtech as a high-growth technology leader in the energy and infrastructure sectors, accelerating innovation through the powerful integration of real-time data analytics and advanced chemistry solutions tailored precisely to our customers' evolving needs. Now I'll turn the call over to Bon to provide key financial highlights.