Koil Energy Solutions Inc

Good day and welcome to the Coil Energy Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should 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. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. After the speaker's remarks, you will be invited to participate in this question and answer session. A detailed disclaimer related to Coil Energy's forward-looking statements is included in the press release issued this 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, Erik Wiik. Please go ahead.

Ladies and gentlemen, thank you for joining us today. In this briefing, I'll be presenting an overview of our financial performance for the second quarter of 2026. Finally, I'll be happy to answer any questions you may have. Kurt Keller, Chief Financial Officer of Coil Energy, is joining me and he will provide more details on the numbers. With strong momentum across the subsea industry, Coil's team remains sharply focused on execution and growth. delivering record financial performance quarter after quarter. For the three months ending June 30th, 2026, Coil Energy generated revenues of 9.2 million with a 12% EBTA margin. This is 78% higher revenue than the second quarter of 2025, highlighting the impact of our strategic investments and operational excellence. Our second quarter results reflect the strength of a top tier sales team and outstanding project execution as product sales increased 49% year over year. Bold investment in rental equipment and the flawless work of our service technicians fueled record setting growth in our service business. This performance includes an impressive 115% year over year increase in service revenue. EBITDA was approximately 1.1 million which is 955,000 higher year over year. This improvement was driven by increased volume as the quarter reflected very high project activity including significant milestone achievements on major system projects. All milestones were achieved on time or ahead of schedule. I'll now turn the call over to our Chief Financial Officer, Kurt Keller.

Thank you, Erik. Oil Energy delivered another strong quarter, driven by solid demand and disciplined execution. In the three months ending June 30, 2026, we generated revenues of $9.2 million, a 78% increase compared to revenues of $5.2 million for the same period last year. In addition to solid gains across both our fixed price and services product lines, we continue to see solid revenue growth from customers acquired over the last 12 months. These new customers contributed 32% of revenue for the period. Gross profit for the quarter totaled $3 million, or 32% of revenues. representing a one percentage point decrease in gross margin compared to $2.4 million for 33% revenues in the second quarter of 2025. On a sequential basis, gross profit was maintained at approximately the same level. While large, longer-term projects can carry slightly lower gross margins, the difference is largely offset by growth in higher margin rental equipment contracts. Selling general and administrative expenses during the quarter equaled $2.3 million, up $339,000 from the prior year, mainly due to increased headcount from 74 at the end of the second quarter of 2025 to 90 full-time equivalent employees and contractors this quarter with selective additions to key overhead roles in sales, administration, and finance. On a sequential basis, SG&A expenses fell by $34,000 as a reduction in audit expense was partially offset by an increase in contract legal expenses and sales commission. Moving to net income, we reported a gain of $652,000 in the second quarter, which translates to $0.05 earnings for fully-delivered share. This compares the net income of $61,000 in the second quarter of 2025 and earnings of one cent for fully diluted share. Even though for the current quarter rose to $1.1 million, which was $955,000 higher than the prior year period, demonstrating the earnings power of our organization as we optimize employee utilization and leverage overhead functions. Turning to our balance sheet, as of June 30, 2026, we reported $3.8 million in working capital, including $922,000 in cash and $7.3 million in net receivables. This compares to $4.8 million in working capital at year-end 2025, with $1.5 million in cash and $4.8 million in net receivables. The shift is primarily due to work on a large carousel award and the timing of associated project billings and collections. During the second quarter, we entered into an asset-based lending facility with a maximum borrowing capacity of $5 million. At the end of the period, borrowings under the facility equaled $2.4 million. We continue to evaluate additional financing sources in the normal course of business to help support the purchase of additional rental equipment and other growth initiatives while maintaining a strong balance sheet. I would like to acknowledge that this quarter's record financial performance reflects strong collaboration across the entire organization and the teamwork that continues to fuel our growth.