Flowco Holdings Inc. M&A announcement

Please go ahead. Good morning, everyone, and thank you for joining us to discuss Floco's acquisition of Lifting Solutions.

Before we begin, I'd like to remind you that today's call will include forward looking statements. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. These risks include risks described in the press release we issued this morning announcing the transaction, the investor presentation that is available on our website and our SEC filings, which are also available on our website. We undertake no obligation to update these forward looking statements except as required by law, and we caution you not to place undue reliance on them.

We will also reference certain non GAAP financial measures during today's call. These measures should not be considered alternatives to or more meaningful indicators of financial performance as determined in accordance with GAAP. Our methods of determining these measures may differ from the methods used by other companies and may not be comparable. Additional information regarding these non GAAP measures is included in the investor presentation that accompanies today's webcast. For those joining by phone or via the live webcast, the presentation is available on the webcast and for download from our website, and you can reference it throughout the discussion.

Joining me on the call today are our President and Chief Executive Officer, Joe Bob Edwards and our Chief Financial Officer, John Byers. Following our prepared remarks, we'll open the call for questions. With that, I'll turn the call over to our President and Chief Executive Officer, Joe Bob Edwards.

Thank you, Andrew, and thank you to everybody for joining us this morning. Earlier this morning, we announced our acquisition of Lifting Solutions Energy Services, a vertically integrated manufacturer of artificial lift technologies based in Edmonton, Alberta. This transaction is an important step forward in our strategy to build a differentiated production optimization platform. Today, we'll walk through the details of the transaction, the strategic rationale for making the acquisition and why we believe Lifting Solutions is the right fit for Floco. Let's start on Slide three with an overview.

We acquired Lifting Solutions for approximately $113,000,000 which we expect to fund with borrowings under our existing ABL. At approximately five times Lifting Solutions' expected twenty twenty seven adjusted EBITDA, we expect the acquisition to be accretive to earnings and free cash flow. Following the acquisition, we expect net leverage to remain conservative at approximately a turn of EBITDA, which is consistent with our disciplined approach to capital allocation. And importantly, Lifting Solutions' management team will remain with Flowco, providing continuity and retaining the expertise and entrepreneurial spirit that has helped drive the company's success. The transaction also includes a small potential future contingent payment tied to 2027 financial performance, further aligning management's incentives with Lifting Solutions' continued growth.

Today, we're going to walk through the merits of the transaction throughout this presentation, but strategically, the rationale is straightforward and compelling. Earlier this year, we acquired Valiant, expanding our portfolio and creating a meaningful cross selling opportunity across our customer base. Lifting Solutions builds upon that strategy by adding differentiated rod lift and progressing cavity pump technologies and further expanding the range of artificial lift solutions we can provide our growing customer base. Additionally, Lifting Solutions' presence in Canada and other international markets extends our reach into attractive new geographies outside The U. S. Let's turn to Slide four and talk about the company and what attracted us to this opportunity.

Lifting Solutions is a leading provider of two artificial lift technologies: continuous rod and progressing cavity pumps, or PCPs. I'll explain more about these technologies in a minute, but one of the most compelling qualities of this opportunity is the fact that Lifting Solutions is vertically integrated with research and development, engineering, manufacturing and field services all performed in house. This investment in being a solutions provider has driven continued innovation across the portfolio, including proprietary coated rod technologies designed to improve performance in demanding environments as well as differentiated PCP designs engineered for greater reliability and longer run life. The company's manufacturing footprint spans two critical geographies, Canada and The Middle East.

Additionally, Lifting Solutions maintains an expansive service network throughout Canada, The U. S. And Oman, allowing it to provide an integrated offering from product selection through installation and ongoing field service. That combination of technology, manufacturing and service capabilities has helped Lifting Solutions build long standing relationships with blue chip operators and established strong positions across its core markets. Approximately 77% of Lifting Solutions' 2025 revenue was generated outside The U.