Great. Good morning and welcome back to Sidoti's January Virtual Investor Conference. I'm Steve Ferazani, an analyst at Sidoti. I'll be very pleased to welcome our next presenter in just a moment. But as a reminder, I'm sure you've all heard this before. We should have some time for questions following the presentation. You just press that Q&A icon at the bottom of your screen, type in the question, and we'll get to as many as we can, time permitting. I don't want to take up too much of the time. So, so pleased to welcome Flotek, the ticker is FTK, and we're joined by CEO Ryan Ezell. Ryan, let me turn it over to you. Yeah, thanks everyone for joining this morning. And I'm really excited to start 2025 off by attending and presenting on, you know, what we look at as a, you know, a commendable turnaround story and what we feel is a compelling investment opportunity for the market community, particularly as we look at the energy and chemical space and, more importantly, the rampant growth of our new emerging data analytics business. You know, here, I started at Flotek in the Q4 of 2019. Before coming to Flotek, 25 years of experience in the chemistry side of the business with over 20 years' experience in the energy sector. And Flotek offered a unique opportunity for what I consider to be a complete turnaround and rebuilding of a business that had, you know, multiple decades in existence, but it kind of veered in terms of strategy and where it was headed to. Upon coming in place, we set a common mission and vision around utilizing chemistry as a common value creation platform. In doing so, the strategy that we put forth in place had two phases going forward over a three, five, and 10-year outlook of one, restoring our core chemical technologies business around what we look at in hydraulic fracturing, both internationally and domestically. Also, you know, one of the things that we knew that to make an emerging chemistry business better would be our ability to make real-time data measurements of the chemistries and/or its source and hydrocarbon composition of flowing wells. So, in 2020, we actually acquired a company called JP3 Measurement and bring in near-infrared sensor technology that we've expanded to Raman and a multitude of other measurements that really amplify our business. Since we put this turnaround story in place, we've now started to see great success in that over eight consecutive quarters in improved Adjusted EBITDA. We're now seeing that convergence of our chemistry technologies and our data analytics business to be able to create true values and synergy, not only operationally, but performance-wise for our shareholders. We look at our ability. We've won along the way a long-term ten-year take-or-pay type contract with a major hydraulic fracturing company here in the United States, with the contract valued at $2.1 billion, which has provided a large economy of scale for us and is kind of a baseline for growth. When you look at where we are on the balance sheet, we've got essentially no debt. We have a small asset-based loan that we use for managing working capital. Very clean balance sheet. But most importantly, when we look at the energy sector, we represent a company that is that handshake from total cost of ownership to environmental cost of ownership by improving operational efficiencies, asset performance, and the overall life of a well, which, you know, leads to the direction we're going for energy independence as well as a clean environment. So when you look at Flotek in a little bit more detail, you know, we've been we're a publicly traded company at FTK on the NYSE. This company has been around for multiple decades and gone through quite a lot of evolutions in the past. But right now, you know, we're definitely focused around that chemistry and our ability to monitor in real time as a differentiating component around what we do. We have two unique segments: our chemistry technologies group, which is a lot of our core business, that's leveraged by over 170 intellectual property patents around unique technologies that improve the overall production from fractured and unconventional and conventional wells. And we have our emerging data analytics segment, which brings up our Data as a Service and real-time solution measurements that we see inside the business. We believe in the long-term future of this business that these two will complement one another in that our ability to do real-time measurements creates a differentiated way to grow the chemistry business. What we're really excited about on the data side is that we potentially see the future growth of a business that, when you look at it as a standalone piece, as we see the EBITDA improve, that could actually have a market cap or a value that's greater than our current market cap as an organization. We have a really small workforce. We have less than 150 employees, even though we operate in over 60 countries selling chemistry and data tech. You know, when you look at where we are in Q4 or Q3 for 2024 results, we saw, you know, solid gross profit margin, improvements in net income, again, adjusted EBITDA. And now we've seen our adjusted EBITDA margin move into the double digits, which shows significant improvements since 2020 year- over- year. Looking at Q3 in a little bit more detail, our, you know, revenue is up. Our cost base on SG&A continues to decline. We had net income improvements of 97% year- over- year and adjusted EBITDA of 43%, which, you know, goes along with the story of being a turnaround and consistent financial improvement. We raised the midpoint of our guidance, which showed about a 35% increase from where we started originally at the first part of the year, and more importantly, as we mentioned earlier, we maintain a clear balance sheet as we have about 0.1x debt to adjusted EBITDA, and, you know, again, we'll talk in quite a bit more detail around this emerging Data as a Service business to where we're not only selling sensors, but more importantly, whole solutions. One of those growth areas that we see is around our flare monitoring, which represents the entry into measurements for the Quad Ob, Quad Oc, EPA regulatory body, and that represented 25% of the data analytics revenues, and we look to see that continue to grow not only in our upcoming Q4, but also what we see in 2025, so we talk about, you know, the trends of the organization over these eight consecutive quarters of EBITDA improvement, and what you really see is the backbone of a company that has shown significant turnaround capabilities and now is moving into continued profitability and growth, even in a market that we've seen contract. If you look at the overall activity in our chemical side of the business throughout 2024, you saw a decrease in hydraulic fracturing fleets in the U.S., drilling rig counts, et cetera. You've seen a business that's continued to grow not only in revenue, but also Adjusted EBITDA. All these things are indicative of picking up market share by differentiated technologies and differentiated approach to creating value for our customers. In return, this is generating value for our shareholders, as you've seen the market improvement in our share price throughout 2024 and as we've moved into 2025. You know, one thing to note is that when you look at year-on-year improvements in gross profit and Adjusted EBITDA, they're shocking on the improvement. As we do, Adjusted EBITDA improved almost $25 million from Q3 of 2023 to Q3 of 2024. You know, we talk about our core segments. Despite the challenges that we've seen in not only the domestic completions market here in the U.S., as we've seen declining frac fleets, and we've seen that go on for the past two years, we're continuing to grow this business and improve profitability, which, again, goes to where we're bucking the trend in terms of declining business, and this is indicative of picking up market share. In 2021, when we put this, we really got this strategy in place post-COVID, we represented less than, you know, 1% of chemicals moved to, in North America, in regard to fracturing. Exiting Q4 will represent between 17% - 18% of that volume market going forward, so significant improvements on what I consider to be the backbone of a differentiated, not only technology chemistry, but also our service and engineering as part of our Prescriptive Chemistry Management. Now, I just mentioned around, you know, why Flotek, what's allowed us to have this significant growth and improvement, and it all comes down to a differentiated approach to delivering a better well. We've been known for decades to have intellectual property around surfactant technology, but there's no one completion here in the United States or anywhere else you see around the globe that looks like the other one. It requires bespoke custom solutions each time, different, whether it's concentration of chemicals, different types of chemistries, all related to geo-specific reservoir targets, temperature, pressure, compositional analysis of the reservoir. Our engineering process allows us to take a synergy between all these measurements and allows us to give you the exact type of solution that not only gives you the best performance of the well, but more importantly, does it at an effective cost. Now, what we've also started to leverage as part of a combination of our data and our next business is that over the past couple of decades, of Flotek being in existence, we've now completed over 20,000 wells here in North America. We've gone back and now started looking at fundamental physicochemical properties of these wells and utilizing AI-driven data analytics tools to correlate diagnostics for each target geological zone and various basins in the United States. And what you see is all these are delivering faster response, predictive solutions that are delivering better well performance that can be observed in publicly available production data where Flotek Chemistry is on location. And then we talked about, you know, utilizing the ability of real-time data and what we're seeing in the backlog of information that we've got. We truly, you know, we don't use that as a buzzword in terms of these advanced data analytics. We are actually running models and cubes around everything from water analysis, X-ray diffraction on reservoir composition, on what shale types it is, to what exact chemistry. This is starting to align not only with reactive chemistry that people used to look at on how a well was performing to the next well. We're starting to give predictive analytics. This is a more rapid testing protocol utilizing microfluidics, et cetera. What we've seen is not only does it give us a better well and the chemistry is better cost, but we've reduced our R&D costs from about $12 million a year to about $1.2 million a year. It's unbelievable the utilization of data and real-time measurements is how it's advancing not only our data segment, but also our chemistry business. Moving on to our second and really exciting segment, as we mentioned around our real-time measurement business. What you're starting to see is the emergence and growth of that business. We saw that really become prolific in Q4, I mean, Q3 of 2024. Its delivery and profitability is starting to flow through. We feel that the data analytics segment is the future of where we go with Flotek. More importantly, when we acquired JP3 in the past, it was truly a 100% sensor business in that we had all the revenue came from CapEx sales. Now what you're starting to see is a transition to our SaaS and Data as a Service type business, and it's representing a meaningful component of the total revenue, and we're going to see that continue to grow. We feel like we're going to report a solid improvement to that in Q4 and where we look at for the future going in 2025, and so when we talk about creating a Data as a Service business from, you know, an originally acquired sensor company. Is, well, what do we mean by that, and we look at what we call our measure more strategy to where our foundational components on CapEx sales were already in the midstream around things such as transmix monitoring, Reid vapor pressure, refined fuels, et cetera. But where we really feel that real-time capabilities are highly differentiated against traditional methods like gas chromatography as we move closer to the wellhead and to the upstream component, to where we look at the emerging markets around flare monitoring. We look at this massive emerging market of custody transfer to where we provide transparency to resource owners, operators, and the end-use buyers on what is the true real-time chemical composition of a flowing well, where traditionally speaking, you would look at a compositional analysis being taken once every six to nine months at a certain time of the day. You could see it in real time, 24 hours a day, and it gives true compositional analysis. And also a really exciting piece is around our power generation market. We have Verax units on location measuring stranded field gas that can now effectively be used to run generation for rig power. It can be used to run Frac fleets for Tier 4 or electric fleets. It also can be utilized to measure the quality of gas going to power gen units. They're actually putting market energy back into the power grid, which is fantastic. We see we're going to see the energy and electricity demands in the United States grow for the first time over the next decade. We're also going to see the importance of natural gas as being a clean source of that. So, you know, when you look at Flotek, we're very well positioned for how this energy market is going to continue to evolve and emerge. Looking at a little more detail, we talked about the Verax units and the flare monitoring. Here's just an example of the actual unit, what it looks like, how it is on location, and it's important to note that initially when the Quad Ob and Quad Oc regulations came out, that gas chromatography was the founding measurement in terms of laboratory analysis of taking flare samples and taking time to bring it to the laboratory, turn around, take the measurements. This actually brings the lab to location, and it takes out the potential error from sampling. It takes out any other type of issue you have on handling, and more importantly, we're plugged directly into the flow line, and in parallel, if you look on the sides of this instrument, there are validation cells that run calibration gas right next to it. So you know when you're taking a real-time measurement that the instrumentation and laser are staying in line because they are monitoring a calibration gas at the same time. So this adds a huge amount of transparency and effectiveness. And we can have these things monitoring at any mobile location here in the U.S. We also talked about our custody transfer business. And I talked about the potential value creation there is if you look on the picture on the left, that's an actual expect unit sitting on location at a flow line. And what you see in that chromatograph there are the peaks and valleys of BTU quality taken throughout a 24-hour process. These stars represent single sampled analysis. And you can see that variation. What we saw over a 60-day average of BTU value, you're seeing as much as 25% swings of associated gas values that you couldn't see with gas chromatography. And overall, you see up to 16% error in just the sampling of itself alone. Whenever you play this out for a resource owner or an operator over an annualized period, you could see up to $4 million of potential revenue and proceeds impact per well or location that you're taking the measurement. These are huge components when you look at a zero-sum game of where this goes and what this ability of custody transfer does. It offers up a level of transparency never before seen in the transfer of minerals here when we talk about hydrocarbons here domestically. We look at, you know, when you take these sampling measurements, the impact of associated gas. You know, traditionally speaking, this is our spectra that you see along the bottom, and most of the time, GCs won't see that liquid that's moving through there. And in this case, what you'll see is that actual liquid will come out of this pressure valve on the flow line. It'll actually pop out, and it's stuff that it just doesn't account for. And it leaves, you know, over an annualized period, a lot of money on the table. So operators and/or landowners want to be compensated for these carryover products, which have been proceeds generated on the back end. And so these are certain things, like I say. It's driven around transparency and an overall efficiency gain throughout the entire energy cycle, and then this is just a detailed schematic. We look at the impact of having real-time measurements and ability to use flare gas, I mean, a field gas monitoring to run power generation. This is a picture of our Verax unit on a gas distribution and treatment skid. What happens is when they've got this stranded field gas, they put a frac fleet or a drill rig on location. They're actually using that gas to power the gensets and/or the pumps, et cetera, to do the actual work. Where our Verax creates value is that it's monitoring the gas as it comes to the equipment to perform the operation. If it actually sees a spike in BTU value, which could overrev the engines on a frac fleet and cause a fire or cause particulates to come into a gas turbine for electricity creation, it can actually have a PLC. It can stop that operation, convert them over to diesel and/or CNG or compressed natural gas, and prevent any damage from coming to the equipment. When we did the first initial trial of this in location, we were able to basically convert over 70% of the uptime to field gas. And this alone saved almost 1.2 million gallons of diesel from being burned on just this single usage. And then we realized 100% total uptime of equipment. We never had to shut down. So when you look at it in terms of operational efficiency, cost, and carbon footprint impacted in environmental risk, and creating a value across multiple value chains, and it changed the energy sector, our ability to play in this emerging power gen market is substantial. And again, you know, just another piece of quality that we feel is going to happen in our emerging data analytics business. So as we close up today, again, I just want to reiterate that I do believe that Flotek represents a company that's been around for numerous years, but it truly is a turnaround story. As we've invigorated or reinvigorated our overall core chemistry business, we've aligned it with an emerging real-time data measurement business that we believe will create a convergence between the two and a synergy for overall value creation for shareholders. If you look at the improved EBITDA as shown by our business, you look at our positioning in the market, you look at the value creation of shareholders in 2024, and the fact that we're doing all this growth with an exceptionally clean balance sheet, I think it creates quite an impelling story for the investment community. We have some additional upcoming events. We'll be at the HFTC here in Houston or in The Woodlands, Texas, coming forward. We'll also be presenting at the Roth Conference in Laguna Beach, California, in person. We've also got details for any follow-ups with Mike Critelli. He's our Director of Finance and Investor Relations. And so with that, we'll wrap up and take any questions. Thanks so much, Ryan. Very informative presentation. The queue is already filling up. We have about eight minutes remaining. I'll remind everyone, you press that Q&A button at the bottom of the screen, and we'll get to as many questions as we can. I just want to start with asking the obvious question before I start looking through the queue. Turnarounds usually are very easy in a growing market and an improving market. You've done it through two years of declining U.S. land activity and pretty significant declining activity. You have to look far and wide to see anyone who raised their guidance in this space in the current year. You've had consolidation of operators. Can you sort of walk us through how you've done this in what is clearly. It's very hard to get E&Ps to spend more anytime. Really hard right now. What are you doing differently? I think it comes down to the unique strategy that we have in terms of, you know, the core DNA of the company was always around differentiated technologies. You look at 170-plus intellectual property patents, the ability to bring green and better emission standards, et cetera. But what we've really done here at Flotek is we've created a handshake between total cost of ownership and operational efficiency and environmental stewardship. And so our ability to automate and bring some of the best technologies to the world, I think, has created a difference. You look at the chemistry side, we now have full-service operational solutions through PCM that not only reduce cost, they improve asset performance. And we also have the ability to take performance measurements in real time. And this provides an open transparency to our customers. And I think that this really drives what we're doing. They've seen us really transition our business in terms of what we look at in R&D, from R&D overspent to transparency around microfluidics and interfacial interactions. And we really explain what we're doing in a way that Flotek didn't do in the past. And I think that's been very well accepted by the market. So far, so good, it appears. Got a question about the EPA flare monitoring regulations. Obviously, that's helped significantly on your data analytics business. Any thoughts on where that goes from here? Because you ramped that up pretty well. Yeah. So, you know, that represented when it first came out, you know, we looked at it in terms of what was just the existing potential flare sites here in the U.S.. And we talked about that number being over 55,000 wells that would have to come back and be tested to meet the Quad Ob, Quad Oc regulatory environment. So you're, you know, there's not enough equipment right now to even address that. So you look at it's a big addressable market. And all those wells would need those legacy wells to be tested in a three-year period. There was an update that came out in December to that, that it slightly reduced those numbers of legacy wells. But what it did was expand the scope of future wells. So in reality, that played a positive for us in terms of they're saying, "Hey, we don't, you know, a lot of these unassisted wells, et cetera, in the past, we're not too much concerned about those. But all the assisted wells, any of the new ones that are coming on, we need to look at putting testing in place." And so that really you look at, I think that's a great shift for the U.S. in total in terms of the ownership around carbon footprint and emissions to make responsible well and responsible production. And so that plays to the strength of what we're going to do. And I think we're well positioned in there is, like I say, we were the first non-GC technology approved for monitoring flare gas. Okay. I also have a question on the data analytics side around the potentially on the custody transfer market. I think anyone who spends a lot of time looking at this market knows that issue is potentially huge, and there's always been a lot of assumptions made. How do you build awareness for that? And there's one side in the two-party transaction that will have interest in it and the other will not, right? So how do you work that? You know, that market is something we're extremely excited about. In reality, the founder of JP3, it actually started the business to actually provide the transparency around custody transfer because his family himself owned a lot of acreage in West and South Texas. And they felt like there needed to be better transparency related to co-mingling production, the way it's sampled, et cetera. Now, there's pros and cons of both of these in terms of where I think the market looks at it today. I don't think there's cons for them at looking forward. I think sometimes the market is concerned with the potential liabilities on a backward glance in terms of the potential exposure at that level of transparency. Because I think there's pluses and minuses on both sides of the table for that. But whenever we start to speak to, you know, resource owners are hugely in favor of it because they just feel it's a transparency component. And I believe most of the operators we talk to would love to understand that the quality of production they think they're getting matches what, you know, how they're getting measured. And, you know, in my opinion, the people who purchase on the back end will understand exactly what they're getting as well. Right. So I think it will catch the traction they need. We're seeing that. And we've got multiple basin trials ongoing right now. It's actually coming forward faster than we thought. I still think it's a long-term play for us. But the trials that we're seeing are coming forward. And, you know, and I think it's just a piece of getting over the exposure to the back end, to be honest with you. And then because everybody's positive on what it does on the going forward piece, look at it. You did mention JP3. Where are you in the M&A market? What do you look at? And is that, you know, can you talk a little bit about capital allocation and how that where that fits? Yeah. You know, we've been a, you know, we've talked extensively in the past about how we've used the CapEx. We've been pretty tight with CapEx on our chemistry business because we have a very big footprint for manufacturing. You look at our ability to grow our chemistry business, we could double the revenue chemistry business and not have to build another facility. We've got great potential in that side. Most of the CapEx that we'll spend going forward is in the growth of JP3, whether we're looking at R&D development or building new assets to put into the field to do whether it's flare measurements, whether it's doing chain of custody or power gen. And so we're really excited about that. I think that's been our big piece on how we look at potential revenue projections and how we allocate the capital there. There's no doubt for us. There's ways to organically grow in some of these markets, but there are very much potential private equities, stranded assets, et cetera, that fit into our value stream that we're evaluating on both chemistry and the data side of the business. We're definitely interested on the data components or something that relates to the two because we think in terms of EV, the EBITDA multiple improvement, there's a bigger impact there. I would definitely say that anything we potentially look at on M&A side needs to be immediately accretive. We're not much into the play of a, "Hey, let's take a look and see if it works," kind of thing. We're definitely looking at something that creates a one plus one equals three. And so we've been highly invested in that part. We're just looking for, we've been meticulous about growing the business and how we do it and creating efficiency. And so we're definitely active in looking, but we just want it to be something of substantial impact. Okay. No, we are running out of time, but I do want to get to this question because I know I've heard it a lot. You mentioned the 10 year agreement with ProFrac. It's take or pay. It's significant. How important is it to expand the revenue base so as not to have the dependency on ProFrac going forward? You know, I would say when we talk to the investment community, two things always come up. One is the ProFrac contract and our JP3 business. You know, the ProFrac contract has been monumental to establish a $2.1 billion style backlog valuation component. It has been huge for us from an economy of scale. ProFrac has been a phenomenal partner to work with. In the past, we had a similar, we didn't have a direct contract. We had big customers like Halliburton back then. So ProFrac has done a good job at stepping in and helping us in that aspect in terms of our size and our footprint. You know, when we first kicked the contract off during the growth phase, ProFrac probably represented 80% of the initial revenue on the chemistry side of the business as we were growing and establishing. I think we'll exit Q4 with them barely 50%. So we're making an impact on a percentage of the revenue. The best part about it is them as an investment partner, you know, Matt Wilks sits on them, sits on our board. You know, that contract is incentivized for them to become single-digit percent of revenue. As they drop in revenue, our cost plus items actually increase in price. That's right. So we're incentivized to get better and in terms of them being a lower percent of revenue. So that agreement fits wholly into the strategy. And I would say them as a partner with us have been very much supportive of the growth and success we see here at Flotek. Excellent. I know there were some more questions. I'm sorry we weren't able to get to all of them. I certainly can reach out to Mike Critelli and Ryan at Flotek or reach out to me and we can pass them along. We have run a little bit long. Ryan, any closing comments before we wrap it up? No, I just want to say Happy New Year to everybody. Thank you guys for the time, Steve. And again, as you mentioned, if there's any further questions or interest in Flotek, please reach out to Mike or myself. We'd love to speak with anyone around it. And we're looking forward to an exciting future. I mean, this is a true turnaround story based on innovative and impactful solutions. So please reach out to us. Excellent. Thanks so much, Ryan Ezell and Flotek. I hope everyone found it as informative as I did and hope everyone enjoys the remainder of the conference. Thanks, everybody. Thanks so much.