Strategic Reset and Operational Context

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• Performance in Q1 was heavily impacted by severe weather in the Northeast and Permian, which caused operational inefficiencies and frac delays that management described as catastrophic.

• The company successfully emerged from Chapter 11 bankruptcy on March 5, 2026, implementing fresh start accounting and maintaining all material customer and vendor relationships.

• A $5.5 million noncash inventory write-down negatively affected adjusted EBITDA, but management views this as a one-time cleanup item that will not recur in future periods.

• Strategic positioning has shifted toward gas-levered basins, evidenced by the opening of a new wireline facility in the Haynesville to capture sustained natural gas-driven activity.

• Management noted that while U.S. rig counts remained flat, pricing for technology and service offerings stayed mostly unchanged despite the volatile macro environment.

• The international tools business remains a core growth pillar, delivering 14% sequential revenue growth in 2025 with continued strength in the UAE, Argentina, and Saudi Arabia.

Outlook and Strategic Initiatives

• Q2 guidance assumes a return to normalized operating cadences with revenue projected between $136 million and $146 million and adjusted EBITDA of $10 million to $15 million.

• Management anticipates a shift in operator behavior in the back half of 2026, with early indications of increased completion activity through the drawdown of drilled but uncompleted (DUC) wells.

• Full-year capital expenditure is projected at $20 million to $30 million, which includes catch-up investments to position the business for organic and inorganic growth.

• The company expects to deploy a suite of differentiated and entirely new downhole tools starting in the summer of 2026, supported by a new state-of-the-art R&D and test facility.

• Pricing strategy for the back half of the year will likely involve increases to offset wage inflation and rising cost of goods as inventory levels normalize across the industry.

Structural Changes and Risk Factors

• The application of fresh start accounting on March 5, 2026, created a new basis of accounting, resulting in 'predecessor' and 'successor' reporting periods for the quarter.

• Liquidity as of March 31, 2026, stood at $46.9 million, consisting of $11.2 million in cash and $35.7 million available under the revolving credit facility.

• Management is closely monitoring the Iranian conflict for potential impacts on the international tools business, though minimal disruption was noted through early Q2.

• The company reached a milestone of 500,000 Scorpion plugs sold, signaling sustained market demand for its core completion technology.