Koil Energy Solutions Inc

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Coil Energy's fourth quarter and full year 2025 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, Tuesday, March 31st, 2026. A detailed disclaimer related to Coil Energy's forward-looking statements 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.

Good morning, everyone. Thank you for joining us today. In this briefing, I'll be presenting an overview of our financial performance for the fourth quarter and the entire year of 2025. I'll also share an update on our strategic roadmap and discuss how Coil Energy is positioned for further growth. Finally, I'll be happy to answer any questions you may have. I'm incredibly proud of the Coil Energy team for delivering an outstanding quarter and achieving a new milestone in our growth journey. In the fourth quarter, we achieved a revenue of $7.3 million and EBITDA of $700,000. resulting in a 10% margin. This represents a 22% year-over-year increase in quarterly revenue and 14% sequential growth from the third quarter of 2025. Coil Energy is growing again. For the full year 2025, we achieved revenue of $24 million, marking a 6% year-over-year increase. Adjusted EBITDA was $1 million in 2025 compared to $3.5 million in 2024. The reduction was driven by investments tied to our growth initiatives. COIL remained focused on long-term growth by deploying free cash flow to acquire new rental equipment, fund growth-related expenses, including development of intellectual property, the establishment of our Brazil operations, and bidding activity that supports our international sales pipeline. These investments are already delivering positive growth results. And with that overview, I'll now turn the call over to our Chief Financial Officer, Kurt Keller.

Thank you, Eric. Let me walk through our fourth quarter results in more detail. For the three months ended December 31st, 2025, Coil Energy generated revenues of $7.3 million, a 22% increase compared to revenues of $5.9 million the same period last year. Gross profit for the quarter totaled $2.5 million or 35% of revenue, representing a 5% increase in gross profit compared to $2.4 million or 41% of revenues in the fourth quarter of 2024. The decline in margin reflects the shift in revenue mix and volume. Sequentially, quarter over quarter, gross margin improved from 32% of sales to 35%. Selling general and administrative expenses during the quarter equaled $2.1 million. The increase is largely driven by increased sales efforts and legal assistance with patents, master service agreements, and international contracts. Moving to net income, we reported a gain of $370,000 for the fourth quarter, which translates to a 3 cents earnings for diluted share. This compared to net income of $541,000, or 4 cents per diluted share, recorded in the fourth quarter of 2024. This reduction in earnings reflected higher SG&A expenses. The full year's financials reflected a 6% increase in revenue, driven by a 45% increase in service revenue. The relatively modest overall growth was primarily due to a slump in fixed-price contract revenues in the first half of the year. Gross margin increased steadily throughout the year from 32% to 35%. The gross margin for the full year was 33%, down from 39% in 2024. This was driven by increased direct overhead as a result of 15% higher headcount levels and lower labor utilization during the first half of 2025. Selling general and administrative expenses were 8.3 million for the year, compared to 6.2 million incurred during the previous year. EBITDA for the year was 960,000, which was 2.6 million lower than in 2024. The reduction reflects 1.3 million in expenses related to our growth initiatives. with 680,000 resulting from higher headcount levels and lower utilization in the first half of 2025, and a 570,000 receivable write-down, which we are actively pursuing through legal action. This led to break-even earnings per share, compared to 22 cents per share the previous year. Turning to our balance sheet, as of December 31st, 2025, we reported $4.8 million in working capital, including $1.5 million in cash and $4.7 million in net receivables. This compares to $5.7 million in working capital at year-end 2024 with $3.4 million in cash and $2.8 million in net receivables. The shift is primarily due to the timing of billing and collections tied to fixed-price contract milestones. Before I hand the call back over to Eric, I want to briefly acknowledge that while 2025 was not the year we had hoped for, the significant improvements throughout the year that led to a great fourth quarter demonstrate the ability of the COIL team to carefully manage our growth journey. During 2025, we restructured and strengthened the finance team and successfully implemented NetSuite as their new ERP system. Our focus remains on profitable growth, disciplined execution, and scaling investments appropriately. Thank you.