Koil Energy Solutions Inc

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Coil Energy's third quarter 2024 conference call. During the presentation, all participants will be in listen-only mode. After the speaker's remarks, you will be invited to participate in a question and answer session. As a reminder, this call is being recorded today, Monday, November 4, 2024. A detailed disclaimer related to Coil Energy's forward-looking statement is included in the press release issued Monday morning and filed with the SEC. It is also available on the company's website, coilenergy.com, or upon request. A reconciliation of non-GAAP financial measures used in the press release and on today's call is included in the press release and on the website. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Coil Energy also undertakes no obligation to revise any of its forward-looking statements to reflect events or circumstances after the date made. At this time, I'd like to turn the call over to CEO Eric Wieck. Please go ahead.

Good morning, ladies and gentlemen. Thank you for joining us today. In this briefing, I'll provide an overview of our third quarter performance and update you on our ongoing strategic initiatives. Following my review, Trevor will deliver a detailed analysis of our financial performance. Next, I'll provide an update of our strategic roadmap and how COIL is positioned for future growth. Finally, I'll be happy to answer any questions you may have. We delivered another quarter of robust performance highlighted by year-over-year growth and driven by a proactive growth strategy. Compared to the third quarter of last year, revenue grew 27%, gross margin increased to 40%, and adjusted EBITDA improved from a loss to a margin of 13%. We have so far generated a free cash flow of approximately $1 million. Thanks to effective collection, cash at the end of Q3 was at $3 million. Despite an increase in revenue from service contracts, Our overall revenue decreased by 10% sequentially quarter over quarter due to lower percent of completion POC on our fixed price projects caused by delayed deliveries from our machining suppliers. This outcome falls a bit short of expectations as we aim to demonstrate consistent quarter over quarter growth to our shareholders. especially given our strong backlog and adequate internal production capacity. Expanding the capacity of our supply chain is crucial to our growth strategy. We have since restructured our projects and supply chain management organizations, and moving forward, we are committed to managing this component much more effectively. Consequently, the deferred percent of completion revenue is forecasted to be recognized in Q4. Our clients continue to give me great feedback on our team's performance. For instance, during Q3, our engineering team completed the design of a 1,000-foot gas lift steel tube flying lead. This unique innovation was developed in close collaboration with our client. Another example is the design and fabrication of a drift frame, a concept developed to solve an expensive problem for our client. This solution reduces the need to mobilize vessels and can also be applied to similar future campaigns. Perhaps the pinnacle of our accomplishments this quarter was the comprehensive installation campaign of subsea equipment in the Gulf of Mexico, which included a rapid turnaround of an intervention logic cap. To address an issue the client faced, was having with the existing subsea equipment. From the moment that the problem was identified offshore, our team took less than 24 hours to design, approve, source parts, build, and successfully pressure test the device. The enthusiastic feedback from the client's team regarding COIL's performance on this turnaround continues to pour in. During the third quarter, we were awarded a significant contract to provide bench stiffener latchers to an operator in a new region. Our proprietary solution is designed to secure a sub-symbolical cable to a topside facility without the need for divers. This contract award is a recognition of our team's endeavors in continuously developing our product, enabling growth in new markets and underscoring CoilStrong's technology position in the global subsea industry. We also announced that we secured a significant contract to provide maintenance services on an offshore production platform for an international oil and gas company. The scope of work includes the removal, welding, termination, and commissioning of specialty alloy tubing used for chemical injection and hydraulic control, as well as the termination and testing of electrical cables. COIL has been awarded an increasing number of similar termination projects, demonstrating the company's expertise in managing critical repairs in confined spaces. This expertise includes identifying and mitigating risk and hazards before work begins, ensuring a swift, controlled, and safe startup to resume well production. Planning, engineering, and procurement activities have already commenced for both projects at COIL's facility in Houston. And with that overview, I'll now turn the call over to our Vice President of Finance, Trevor Ashurst.

Thank you, Eric. We'll now take a minute to review our third quarter results in more detail. For the three months ended September 30, 2024, COIL Energy generated revenues of $5.2 million. reflecting a 27% increase compared to revenues of $4.1 million for the same period in 2023. This year-over-year improvement in revenues primarily stems from increased product-oriented fixed-price contracts in the manufacturer of subsea distribution equipment. Gross profit for the third quarter of 2024 was $2.1 million, or 40% of revenues, representing a 7% increase in gross margin compared to $1.4 million or 33% of revenues in the third quarter of 2023. And this improvement was mainly driven by higher revenues and improved project margins. Selling general and administrative expenses remained steady year over year at $1.6 million. So moving to net income, we reported approximately $500,000 for the third quarter, which translates to 4 cents per diluted share. This is a substantial improvement from the net loss of $143,000 or one cent loss per share recorded in Q3 of 2023. This positive shift in earnings was primarily driven by revenue growth and increased gross profit due to higher fixed project activity. Turning to our balance sheet, we had $4.9 million in working capital as of September 30, 2024, including $3.1 million in cash and $5.3 million in net receivables. This compares favorably to $2.6 million in net working capital as of December 31, 2023, which included $2 million in cash and $4.2 million in net receivables. Our working capital investments from earlier this year have effectively converted to cash, resulting in a stronger cash balance by quarter end. Additionally, we generated approximately $1 million in free cash flow in the first nine months of 2024, further reinforcing our liquidity position. This concludes the financial summary for the third quarter. Thank you for your time, and I'll now turn the call over to Eric.