Operator: Good day, and welcome to the Koil Energy Second Quarter 2026 Earnings Conference Call. [Operator Instructions] A detailed disclaimer related to Koil 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, koilenergy.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. Koil 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.

Erik Wiik: 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 Koil Energy, is joining me, and he will provide more details on the numbers. With strong momentum across the subsea industry, Koil's team remains sharply focused on execution and growth, delivering record financial performance quarter after quarter. For the three months ending June 30, 2026, Koil Energy generated revenues of $9.2 million with a 12% EBITDA 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.

Kurt Keller: Thank you, Erik. Koil 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 1 percentage point decrease in gross margin compared to $2.4 million (sic) [ $1.7 milion ], or 33% of 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 per fully diluted share. This compares to net income of $61,000 in the second quarter of 2025 and earnings of $0.01 per fully diluted share. EBITDA 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 optimized employee utilization and leveraged 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.

Erik Wiik: Thank you, Kurt. In June 2026, Koil announced the award of a major project for subsea umbilical handling, spooling, and storage services. This project requires two large carousels, including a large mobile offshore carousel and a stationary land-based carousel to execute the work. This award was a pivotal moment for Koil and further validates our strategy to expand the rental equipment and services platform. The project is being executed by Koil's experienced service team and contributed to the second quarter results due to rapid completion of construction activities and early mobilization of the assets. Most of the project work is expected to be performed during the second half of 2026, followed by the long-term storage of the customer's umbilical system. To support execution of the project, Koil secured financing and acquired a new mobile carousel while also redeploying an underutilized carousel from its existing fleet. The newly acquired 3,500-metric-ton modular offshore carousel is designed to be assembled on board a vessel, enabling rapid mobilization and redeployment to project locations in the U.S. and internationally. This carousel is essentially a new asset and is now ready for mobilization for its first project. Subsequent to June 30, Koil announced that we secured a significant contract in Brazil, marking the company's first subsea umbilical maintenance campaign in the world's largest deepwater market. The project represents an important milestone in establishing Koil as the preferred provider of subsea services in Brazil. The global subsea market remains highly attractive, with growth in greenfield developments complemented by even faster expansion in subsea tieback projects, creating a compelling near-term and long-term global opportunity. Subsea tiebacks represent the core area of Koil Energy's expertise. One metric used for subsea market activity is the number of subsea trees awarded and later installed. Westwood Global Energy Group is reporting planned subsea trees expected to -- over the next four years to be 1,380 installations. This reflects a robust volume of work, especially in light of the industry consolidation and manufacturing retraction seen over the last 10 years. Our roadmap to 2030 will focus on three growth pillars: 1, distribution systems; 2, Brazilian expansion; and 3, rental equipment. We are advancing quickly on all three pillars, reflecting the momentum behind our strategy. Thank you. Shareholders can find a more detailed overview of our strategy by visiting our investors' webpage. That concludes our prepared remarks today, so I will turn the call back to the operator to take investor questions.

Operator: We will now begin the question-and-answer session. [Operator Instructions] Our next question today comes from [ Mike Travios ], a private investor. Please go ahead.

Unknown Shareholder: One quick housekeeping item. I noticed on the press release you didn't show the $0.05 on the earnings per share. Did I miss that?

Kurt Keller: I think we showed the year-to-date. I'm trying to remember specifically.

Unknown Shareholder: I'm just looking at the quick one-page bullet points and summary.

Kurt Keller: It may have been, it should be in the table.

Unknown Shareholder: Oh, I see. I'm sorry. I didn't come down. I was talking about the wording up top.

Kurt Keller: Okay. Got you. No worries.

Unknown Shareholder: So first question, I guess in a broad sense, do you feel that the inflection point for the growth strategy is upon us, you get investments made, you're getting operating leverage from the fixed costs, et cetera, et cetera?

Erik Wiik: Yes, absolutely. And thank you for the question, Mike. What we are set out to do this year is to deliver on the initiatives that we have been working on for almost two years. And last year particularly where we expanded internationally and many of those customers have given us additional work just for this period. 32% of the revenue is from new customers we acquired last year. And most of those are international customers. So absolutely, we're seeing a point of delivery on our initiatives, and hopefully, we'll continue to see that going forward.

Unknown Shareholder: Okay. Another question, the rental equipment business, following the company for many years, it always had a little bit of a rental business going or on the cusp of doing something, but now we've jumped into it. Has it always been there and it's a great opportunity, we just weren't taking advantage of it?

Erik Wiik: So, Koil Energy initially was a service company. So that's how it started. And that has continued to be with us. What we saw a few years ago was that the service business was smaller than the manufacturing aspect or the fixed-price contracts. I think two years ago it was like 70-30, 70% was fixed-price and then 30% was service, and the service included rental equipment. What we saw over the last year was that when we invested in rental equipment, not only did we benefit from the rental income as revenue, but also additional service. So then we, particularly on mechanical equipment, we insist on using our own service technicians. So then you get the revenue from the personnel as well. So it's a double growth effect that we have here. And so this has been with us from the beginning. There are many customers out there that see us as a service company. But of course, now we have been growing the product business, and over the last quarter, I think it's pretty much 50-50, or actually with slightly higher revenue from service, and a large portion of that was rental equipment. So, yes, this is our core business.

Unknown Shareholder: Was that a little bit of a surprise that it turned out to be better than you thought it was?

Erik Wiik: No, I think it slowly grew on us. We did adjust our strategy last year to focus more on service and focus more on rental equipment. So, yes, we did have some learning in the beginning that, yes, we maximized manufacturing. Those projects goes up and down, so it's a little bit lumpy, but service is really a good part of the business, and we did adjust our strategy last year to go after that more aggressively.

Unknown Shareholder: The Brazil business sounds like it's getting to be exciting. What do you think the trajectory is there?

Erik Wiik: Yes, so actually I would give the same comments to that. What we learned over the last year in Brazil as we started up and got qualified for work into that market, we've been bidding product bids, and we've been bidding service projects, and we see that we actually have a better chance of growing the service also in Brazil, and that was the award we recently announced is actually a service job. So it is interesting when you get into a new market and you're doing both, and one happened to be growing faster than the other. And that's the case in Brazil as well. So service is probably where over the next couple of quarters we'll see more growth in service than in manufacturing. But we're going after both there as well.

Unknown Shareholder: Okay, well last question, you mentioned the subsea tiebacks marketplace has got a robustness to it and a good future, is that the resurgence of the deepwater exploration coming back, oil prices, et cetera?

Erik Wiik: Yes, so the subsea tieback is when the operator adds one or two wells, sometimes even more, to an existing field that he's been working on for maybe 10, 15 years. So it is, for the operator, it's an advantage -- turn that around within two years.

Unknown Shareholder: I'm sorry, you cut out. I didn't hear you.

Erik Wiik: Okay, so the operators have a benefit of using tiebacks because it's something that can turn around within two years. So most of them that have existing subsea fields are looking at tiebacks as a very attractive way of increasing production and increasing their revenue faster than if you have a greenfield. So we see that this is typical in the Gulf of America. We see that most subsea installation in the North Sea is going to be subsea tieback. And then significant number of the wells that we see in Brazil is also going to be subsea tiebacks. So it's a very attractive part of subsea. And it's, of course, where we have an advantage. We work much faster. We have all the tie-in equipment, all the controls adjustments that you need to make with the distribution equipment. So this is perfect for Koil Energy.

Unknown Shareholder: So, I mean, theoretically, they can just keep doing that until they think the field is depleted?

Erik Wiik: Absolutely. So they keep on doing that as long as they have a financial return on that additional well. So this is something you can not only do once, you can do it twice, and add satellites and new wells to an existing field. It's very attractive for the operator.

Unknown Shareholder: Great. Thanks for the color and great job on the quarter. And I'm going to jump back in.

Operator: Thank you very much. Thank you. And our next question today comes from Walter Schenker with MAZ Partners. Please go ahead.

Walter Schenker: Hi, Erik. Nice to see the quarter. Just a couple of questions on the major contract for the carousels. The one you had was, I think, fully written off as an asset. So did you just book revenue? And there's a second part on the new one. Did you just book revenue on a service basis on that? Or I'm just trying to understand the economics of the carousel you already owned?

Erik Wiik: Yes, so two carousels are being mobilized for the job, the new one that is on a barge, and then the second one is an old asset that we have had for many, many years, completely written off and hasn't been utilized for several years. So it was really fortunate that we were able to utilize that. So the umbilical system, which is a very large umbilical, very long umbilical, almost 50 miles long, it's going to be stored on that carousel for a long period of time. And during that time, we are charging a day rate for that storage and of course providing the service to both spool it over to the old carousel as well as testing it after we have stored it, secured it and stored it on the carousel. So it's a double effect of this project that we both are able to utilize the newly acquired carousel as well as the old asset.

Walter Schenker: So, and on the new carousel which you acquired and are renting, when this project is done, they will continue to pay you a storage fee, that may not be the right word. So they have secured the carousel for a longer period than is necessary just for this project?

Erik Wiik: So for the old carousel, yes. So the old carousel is turning into a storage carousel. We don't know how long that's going to happen. The new carousel will be freed up for new projects as soon as we move it over.

Walter Schenker: Okay. And this project should run through the second half of the year, roughly?

Erik Wiik: It will be executed during the second half, that's correct.

Operator: That does conclude the question-and-answer session. I'd like to turn the conference back over to Mr. Wiik for any closing remarks.

Erik Wiik: All right. Thank you, Operator. And thank you for joining us on our call today. We appreciate your interest in Koil Energy and look forward to the next earnings call. This concludes our call. Thank you very much.

Operator: Thank you, sir, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.