Flowco Holdings Inc. Q4 FY2025 earnings call

• Fourth quarter had strong performance with 83.5 million adjusted EBITDA, exceeding expectations. Full year adjusted EBITDA grew 11% vs pro forma consolidated 2024. - Rental platform continued strong momentum with rental revenues growing ~4% q-o-q. - Sales had solid quarter of growth with natural gas technology segment seeing healthy activity in vapor recovery sales and rebound in natural gas systems, downhole components had less seasonality than expected. - Announced acquisition of Valiant Artificial Lift Solutions, which expands artificial lift solutions suite, broadens addressable market, and creates cross-selling opportunities. - Teams are preparing for Valiant integration with focus on disciplined execution and maintaining continuity for customers and employees. - Entering 2026 with continued momentum, expecting strong start to the year, and focusing on strengthening business for sustained long-term value creation including international expansion and operational initiatives to drive efficiency and margin expansion

In the fourth quarter, rental revenue surpassed $110 million for the first time, with rental revenues growing ~4% q-o-q driven by HPGL and VRU solutions. Rental fleet generates contracted recurring revenue. For the full year, adjusted EBITDA grew 11% vs pro forma consolidated 2024. Fourth quarter adjusted net income was $43 million on revenue of $197 million, total revenue increased 11% sequentially, adjusted EBITDA was $83.5 million. Production solutions segment fourth quarter revenue increased 1.5% q-o-q to $127 million, adjusted segment EBITDA increased 4% from third quarter to $57 million. Natural gas technology segment fourth quarter revenue increased 36% q-o-q to $70 million, adjusted segment EBITDA increased 18.4% to $30 million

• Anticipates adjusted EBITDA for first quarter 2026 of 82 to 86 million. - Expects continued incremental growth across surface equipment and vapor recovery rental fleets. - Within production solutions excluding Valiant, anticipates segment revenue generally consistent with fourth quarter 2025. - In natural gas technologies, expects sales activity to be similar to fourth quarter levels. - Corporate expenses expected to increase modestly in first quarter, including approximately one month of contribution from Valiant assuming transaction closes in early March. - Excluding capital associated with Valiant or other M&A, expects to invest total CapEx including maintenance of approximately $115 million in 2026 to support higher free cash flow

Q: Talk about trends between rentals and product sales, mix trending and expectations.

A: Consistently investing in HPGL and VRU fleets, CapEx level driving growth in rental revenue and EBITDA, expecting mix shift to continue in 2026 with market conditions dictating CapEx level.

Q: Details on international growth initiatives, game plan for 2026.

A: International expansion is early, following customers and new customers, with two partnership agreements in Middle East and LATAM, taking capital light approach.

Q: Initial reaction from customers on Valiant acquisition, excitement about delivering all artificial lift solutions.

A: Very positive, customers and Valiant customers welcome collaboration, now able to offer right solution in well's life including both early lift applications, and see revenue synergy with ESPs leading to conventional gas lift sales.

Q: Free cash flow conversion scenario with combined business and Valiant.

A: Valiant has similar cash flow conversion characteristics, Q4 was great but not expecting to continue at that level in 2026, expecting something more like 2025.

Q: Optimal lift solution for deeper zones with higher pressure and GOR, opportunity for FloCo.

A: Higher pressures and GORs feed into gas lift solutions, especially high GORs, and FloCo is supporting customers in evaluating early production data.

Q: Penetration of non-Permian markets with ESPs and margin maintenance.

A: Footprint expands beyond Permian to Bakken and MidCon markets, margin profile expected to be similar to Permian.

Q: Other acquisition opportunities or product holes in portfolio.

A: Always looking for right opportunities, robust M&A pipeline, wanting to round out product portfolio and expand geographies while staying true to production focus.

Q: CapEx lead times for ESP market and change.

A: Six-month lead time is consistent, ESP business has slightly more complicated supply chain but comfortable navigating.

Q: Shifts in customers' approach to artificial lift across well's life.

A: Operators focused on production, FloCo is proactively talking with operators about lift changes as wells mature, hosting artificial lift schools for customers