Koil Energy Solutions, Inc. ($KLNG)

Thank you for attending Koil Energy Investor Day. I'm so excited that you all are participating today. We have a lot of information and I'm going to make it worthwhile for you guys to listen to us. We have a story to tell, both on accomplishments from the past. And more importantly, we're going to talk about the strategy going forward. We will give you a brief introduction in the beginning about who we are, what we do, what is unique with Koil. Many of you have seen this or heard this before. Some of you have not. So I'm going to through it again and make sure you fully understand who Koil energy is. So Today, Kurt Keller, our CFO, will join us, and he will go through the recent financial presentation. We are basing this on the fourth quarter 2025 and also look at that in perspective of previous years where we are. And then we'll summarize some of the accomplishments on our road map. We have had a growth road map for the last 3 years that we're working on. It's almost complete. So now in this presentation, I will shift over to the next 2 years towards 2030. And in that presentation about the future, I'll have Chris Sebesta, Director of Business Development, join me in talking about integrated solutions. Gustavo Goncalves, our Managing Director in Brazil is here with us. He will talk about our accomplishments and plans in Brazil. And then we have Derek Anton, our Director of Operations talk about rental equipment. So I can tell you that the 3 main things in our strategy is all about integrated solutions, Brazil and rental equipment. And we're going to give you the information about that and around that, so you have a full understanding of what we're planning to do here. And then I'll give you a summary and then the question-and-answer. So I'm looking forward to this, and thank you again for being with us. So we will share information today that includes market predictions, activity levels, and bidding activity. These are metrics and statements that talk a little bit about what's going to happen in the future. But they are forward-looking statements. So please be cautioned we never know if we're able to fully deliver on this. And of course, converting opportunities to revenue and bottom line profit is hard to predict. So please be aware of our forward-looking statements. And you can find more information about this on our web page on koilenergy.com. So who's Koil Energy? And who are we really is a question often asked. And actually, we're not a huge company. those of you that know as well can answer that question, but many cannot. So awards and feedback, customer feedback has put us in a leadership position. And we're not the biggest company in the subsea space either, but all the good feedback and the long track record we have in the industry we can humbly call ourselves a leader in that segment. Everything that we deliver to our clients is mission-critical. It means that it's very important for the client to get that equipment, get it on time and get a solution that is reliable. We have a proven track record, 28 years run time. And this is also needed in the subsea segment. This is a market where it is a high threshold to get into this industry. I've spent most of my career in Subsea and seen many companies not succeeding in getting into this space. There's also stickiness in our relationship with the client. They do appreciate what we do. And when we do well, we get repeat orders. Our slogan is "Engineered for Service". And the reason for that is that everything we do, delivering products, performance services includes a bit of engineering. Everything is custom-made. It's unique for that application. So there's nothing off the shelf. There's very few standard solutions. So this is what we do, and this is what we're good at. So the whole supply chain that includes the various companies in this industry are very important to each and every project that you see in the subsea industry. Our role as Koil Energy is to connect the major equipment that you have in a subsea field development. We do not provide the well head, the voluntary, the manifold, the big pipelines, et cetera. What we provide is the connectors and the connecting activity between all those large pieces of equipment. This is our forte. This is what we're good at. And we call ourselves the plumber and the electricity of the subsea industry. And it's actually very many similarities to that -- to those trades. So our job is to make sure that everything works at the end of the day. And that equals significant products that goes in with that as well as the services to actually connect it and then making -- and test this and making sure it actually works. So that's our role, the plumbers and the electricians of the oilfield. So we have a very broad offering within the subsea space. We -- this includes about 20 different products that we manufacture and sell to the industry. And it also includes about 10 service lines connected testing, deploying and installing this equipment. So this is a very broad offering. Most of the smaller providers in our space don't have this proud offering. So 28 years of developing this company, excellent work done by the founder and then all our teams in the past to put us into this position. This is very unique in the industry. Koil is a unique company. We offer something that the customer appreciates, and we have developed this product portfolio and service portfolio over 28 years. This is really a fantastic position. So the various products and services are separate their individual products and individual services, they may be -- that are sold in a purchase order, but we also bundle many of these products and services, and we now are providing systems that include multiple products and services. So I'll get back to that a little bit later on. We haven't experienced labor force. When I joined the company more than 2 years ago, this was one of the first thing I noticed. We have engineers, we have operators, service technicians, salespeople, professionals that are -- have been in the industry for many years, but also being with the company for many years. So we have tenders of 10 years and above, which is also unique in this industry. So our teams understand the business. They understand the application the customers have and they do a really good job. The feedback we always get from customers is exceptional. So this is a unique company also from the perspective of our team and our personnel. So we have about 80 people today, expanding every month with new people to bring on board. And the question we often ask ourselves, are we doing this? Well, are we expanding the organization in a controlled manner is Koil scalable, it's a very important question when you have a growth strategy, right? So over the past couple of years, what we have done is to ask ourselves, who is Koil who are we really? Why are we successful? So we put together a team of employees, some news, some older and some from operations, some from service and also some managers. And we asked them these questions. And there were -- all the questions in the beginning was different answers to questions, but then it started to come together. And so this is not something we have invented or created. This is actually describing the company the way it is today. And it's very important to understand that and particularly when you grow. As we scale the company and bring new employees on board, we're going to be able to tell them who we are and how we do business, right? So we have a very clear mission that is so customer focused. It's all about helping them get to oil and gas production. And what is -- an interesting topic here is sort of what's our work philosophy? What is unique with us what makes us successful. So that's what I call the business DNA. That's our philosophy. And it's clearly all about speed and collaboration. And that means that any time a customer give us a call asking a question, once a quotation, we respond very quickly. And it's not within days, it is within hours. And when we do that, we have skilled people addressing those issues, and then we can tell them, give them an answer or we can tell them when they get that answer, and then we collaborate. Then we work together in order to come up with those solutions. So that's the responsiveness that our clients really appreciate and is reflective through the way we work. As you visit our Koil campus is a fully integrated campus here. So we have everybody located together. So we have engineers, designer, project manager, operations and service technicians working together, they huddle together to solve problems. You can see it here. Nobody is working from home, everybody is here and we contribute to finding that solution together. That is what Koil is. And that is the unique description of Koil while we are successful. So this was developed by that team. They asked a question and sharpen the answer. So now we are able to crystallize who we really are. And I really think this is supercharging the whole organization and why we can scale this the way we believe we can Intellectual property is very important in the subsea industry. I mean oil and gas in general. This company have patents that are very critical to our operations. And we are now in the program that we have started a year ago where we are focusing on patenting much more of what we're doing. And when I see what we do here today, and the engineers and designers didn't really acknowledge that right away. But every day, we create new intellectual proprietary solutions. The reason is that the clients come to us with problems. We sold them, that is intellectual property. We don't always want to patent it because we want to keep it as a secret. But then much of it we do patent. And I'm pleased to share with you that one of our new patents were awarded in last month. and this includes an automatic latching connector where you take the riser or the umbilical or the cable to connect it to the top side and which has to be done in a safe manner and has to be done in an efficient manner. So this solution is automatic. We don't need the ROV support that we usually requires. This is a new pattern for us. We plan to double the number of patents within the next couple of years. And these patents are -- these patents are not something we're starting to work on now. This is the pipeline of patents that we already have submitted applications to. So the process takes a couple of years, 2 to 3 years. So this -- we know for sure that this will be something that hopefully will be awarded when they come through. So patents, very important to reflect the enterprise value of the company, but again, also a great example of the effort that the teams put in here to grow the company. All right. So let's take a look at our financial performance over the last quarters. And these are -- this is information that is out there it's now based on the fourth quarter of 2025. But we want to take a look at what does that look like? And what does it look like over several quarters. And Kurt Keller, our CFO, will take you through that. Kurt?

Thanks, Erik. Hi. I'm Kurt Keller, and I'm CFO of Koil Energy. Next week, we'll be announcing the first quarter results for 2026. Having said that, we want to review the latest quarterly financial results as of year-end. Our quarterly revenue grew 22% year-over-year in the fourth quarter, from the fourth quarter of 2024 through the fourth quarter of 2025. Sequentially, it grew 14%. What we're seeing are larger jobs. While we are getting these larger jobs, they're still coming in at decent margins. And importantly, we are getting a more diverse customer base. We've never been reliant on just one customer, but our growth has been diversifying our customer base and has allowed us to derisk in that side where we have a larger portfolio of customers to draw from. Looking at our product revenue, we saw a 21% year-over-year growth in the fourth quarter and a 27% sequential growth from the third quarter. Much of this was due to a large greenfield project, which will last for 15 months and was announced in August of 2025. We also had much more work in our fabrication shop. As discussed before, 90% of our fabrication is in-house. And this was an area that we could use and utilize more effectively to drive more throughput. Our service revenue grew 24% year-over-year in the fourth quarter. On a sequential basis, it was mostly thought with actually a 5% decrease, but that was from an already solid amount. There is substantial demand for our skilled personnel out in the oilfields. We pride ourselves on supplying people with long tenures, and we're seeing some payoff of that. We know to the equipment in the market is lacking. There's been a dearth of equipment investment by the larger oilfield services companies. They have been very cash flow disciplined which the market likes, but it also gives us an opportunity to invest in key pieces of equipment and for our existing equipment to become more fully utilized, which is also in the service revenue category. For the second half of the 2025, we see a strong recovery from the first half. During the first half, like a lot of companies in our space, we were impacted by the tariffs and our customers' reaction to them. As a result, we have lower utilization of our personnel and our top line suffered. In the second half 2025, we won large products, and we were able to put our people to work. We demonstrated what can be done with our company when it's hitting all cylinders and demonstrated that what we did in 2024 wasn't just a onetime thing that we can continue to grow and continue to develop a larger business across all our product lines.

So we developed a growth road map that we have been working on over the last 3 years. So this was developed in 2023 and then we delivered on that in '24 and '25. So '26 is part of this road map. But we have basically delivered on all these goals that we put in here. we have advanced both on the key account side, on the products and services and our geomarket that we set out. So that's why I'm presenting today the new strategy, which is our role to 2030. So what we have accomplished here overall is on the key account is to bring our customer much closer to us and then be able to deliver to them a bundle of products or a complete system. So that is taking place. On the products and services, we have expanded our brownfield offering. And we also are cross-selling some of these products in combination now. And in the geo market, we put all our effort into Brazil, and we are established in Brazil and are doing business there while we're waiting for the bigger awards Brazil. So there's been an incredible journey so far, and the team has really delivered on each of these goals. So I'm really looking forward to the next phase for Koil. A way to summarize this, and our goal has always been to have profitable growth every quarter. Now that is a tall order in a market that swings. And in the product business, we do have lumpiness in awards. And in the service industry, you have seasonality in some of the things you're doing. But our goal is still the same. We want to demonstrate to the market that we can grow every quarter. And of course, when we grow, we also want to be profitable. So if you look back in 2023 and I came on board, as a consultant at the end of 2023. And the root cause of not making money consistently and not growing the company prior to that, was that we were below critical mass. So that was something we determined to be not only that this is a situation we're in. This is really the root cause. When you don't have the volume coming in to cover your fixed cost, then it's very, very hard to make a profit. So the company was focusing on a single market and few customers. Since we are in a niche segment, which is typical subsea, we need to be global. If you're not global, you're going to be following whatever is going on within your particular region or with the few customers you have. And things changes when you are dependent on that. So we need more regions to rely on, we needed more customers. So this is really what we set out. Now the first target in '24 was to maximize domestic growth. To go back to our customers that we had and just deliver more products to them and tell them that we have a big portfolio here that you should take advantage of. And they listen they basically give us more orders. We were able to bundle some of these things. And we picked every low-hanging fruit we can find in the market. So that was 2024, high revenue growth during those quarters and good return. So that was typically when you maximize what you had. So we started at the same time to invest in our growth and '25 was clearly where we invested in our international growth. And in the beginning, the revenue was slightly low, but much higher than 2023. And then towards the end of last year, we started to grow again. And we spend money on our growth. So that's why our margins are slightly lower but we expanded with 4 new clients in '25. We grew the service 45%. And then we establish ourselves in Brazil as well as the intellectual property within. So all that doesn't come free. So we're spending money now in order to grow and invest in that. In '26, what you will see this year, okay, so we're going to deliver results from the growth initiatives. We don't need to wait years in order to have a to see that grow. So we're going to continue to offer systems, crop selling services here in our domestic market and the high bidding activity that we see now is continuing. The market is working with you -- with us. And we are investing in rental equipment. We continue to do that because we see that is what drives the growth in service. We have also increased our sales activities in West of Africa and recently got an award in that region. So what we're doing right now, adding more clients internationally, and we are investing in rental equipment and also in growing our system capability. Going global. That's basically where we are. But the investment are control, okay? So we don't -- we're not going to spend all our money on growing because we got to deliver on the bottom line. So our -- we know we can deliver a high teens EBITDA. We did that in '24. And -- so what we've been doing now over the last year is to spend perhaps 3% to 5% of our revenue in R&D, international expansion. So we're going to continue to do that. So our margins will be slightly lower, perhaps around 10%, sometimes lower, sometimes higher than that. But that's what we're aiming at while we are investing in growth. So I think we can chew gum and bicycle at the same time here. So that's what we're trying to do. All right. So we're talking about Koil in 2030. I can't believe we're talking about 2030, but we have into '26. So it's right around the corner. So what is going to happen with this company over the next few years? So in this remaining part of the presentation, we'll talk about the favorable industry trends that we see out there. It's a bullish subsea market right now and over the next few years, and we have a long runway for growth. Three things, again, to remember the integrated systems is a key part of our strategy. Brazil is the major investment internationally and rental equipment is what drives service and we invested in it. So that's what you will see here. Industry trends at the moment has picked up speed. Part of it has to do with the crisis in the Middle East. But we are also solving a problem we had for several years. And that is the natural decline of the large offshore reservoirs that we have had developed in the past. So these are shrinking about 5% to 7% every year. So if we do nothing, we're going to run out of work. So what is happening is that our clients are now planning to invest more. We have had 10 years of low investment. We now need to pick that up unless going to run into our problems over the next few years. So this is a good place to be. And this is not changing soon. So we've got several years here where we will see continued investment in new resources and project demands in the subsea space. Offshore is where you find the large fields, we still have going to see development and growth onshore field development. But the signals we're getting from our clients is that you perhaps going to see less growth onshore and more offshore for several reasons. So subsea is a technology now that is acceptable for all the major clients. This is nothing new anymore. We've been around for 25, 30 years developing subject field. So this can be done also in ultra deepwater. And what we see now is several things happening at the same time, but it's really exciting for us. So the long-cycle greenfield development, these sort of things we hear about in the press. These are the financial decisions on large fines around the world. And you can see on this map, there's many of them and most of them are subsea wells. So this is continuing to happen, and we will continue to find large field. Obviously, we don't know that until we do find them. But that is the -- a very big part of the opportunity for us. The second thing that is really exciting is the subsea tieback projects. This is where the client drill adjacent wells to our existing field and tie that production of Koil and gas into an existing infrastructure. They can do this much faster than a large greenfield. That's why it's so attractive to them. And this is where really Koil fit in. This is our expertise. We've been doing subsea tiebacks for the last 20 years. So this is something that is really a good match for what we can do and what the market offer going forward. The third part of this is the maintenance because we've been around for a long time, their equipment on the seabed that needs to be upgraded, maintained, tested. And that's also an area where our service division is really involved in. So I'll definitely call this a bullish market going forward, and we have seen several years ahead of us here. Just to show you some specific metrics here, why we think this is a bullish market. One of the things we're tracking is the subsea tree award and this is where the main piece of equipment is put in a drill well. And this counts basically the number of subsea wells also. So 270-plus trees per year is a good market for us. 10 years ago, yes, it was much higher. But since then, the industry have consolidated, have shrunk manufacturing capacity. So this is a good market for the whole industry. So this is an indication for us that more work is coming. And we usually get in perhaps about a year after the award, but a very good indication on what's going to happen there. The second part is also that we are tracking when the trees are installed. And that's usually 2 to 3, maybe 4 years after this is awarded. And that is correlated with our subsea services. So we have 2 global metrics in the industry that we are tracking in order to understand what's going to happen to us. So we are forecasting now is much better than they ever have been, and we were able to see what's going to happen. So 270 trees per year going forward, very excited, very good market for us and we see growth opportunity, not only as the market is growing, but also take market share. So let's talk about that strategy. Towards 2030, we want to be a global subsea provider. That is our goal for the next few years. And I really truly believe there's a long runway here for organic growth. We have shown that we can grow organically that we can scale this company, our philosophy is scalable. Our knowledge can be exported. And the broad portfolio we have of products and services is excellent. So the next few years, what we're going to do. First of all, we're going to win some foundational projects. And the reason I called a foundational is because it's going to be the big one in Brazil. It's going to be investments in rental equipment that's going to give us bigger and larger service jobs. So those are examples that really going to bring us further. So foundational projects first thing and is we're right in the middle of it now. The next step will be to deliver integrated solutions and doing this on a global basis. So we're going to expand our sales capability internationally. And that includes Southeast Asia, West of Africa and the North Sea in order to export more of our products and services. We're also going to expand our product line in order to be able to deliver bigger systems. After that, we are seeing that there is a demand for a global rental within our space. We want to establish us there, and that's going to be a step-by-step investment in new technology as well as new investment in equipment, and we see that as an opportunity for us. Here, we also see we're probably going to have the next base location already in a couple of years. That could be in the North Sea. It could be elsewhere but that's going to be a similar plan as we now have in Brazil. We're also going to expand our service base. We have a lot of interface tools with the remote operating vehicles and we're going to expand that area. And finally, towards a full offering everywhere. So having a large and broad portfolio, we obviously are picking products and services that fits that market and slowly expanding that. So we see that by 2030, we're going to be able to offer everything in all the subsea basin, and that is truly a global subsea provider. Now this is the organic growth, which is our highway towards 2030. However, we're going to consider M&A. We have considered acquisitions in the past and chosen to follow our organic growth plan. We are still considering those opportunities, but we're going to make sure that is in the interest of our shareholders. I'll talk to many of the current shareholders and some of our new ones interested in the company. So what we're trying to do is to follow that feedback. And obviously, the feedback is you got to have a good deal, and of course, we're not going to buy a company unless it's a good deal. However, what does that mean? It means that it needs to be a logical fit to what we're doing. It needs to compete with organic growth and it needs to be something we can easily explain. I need to be able to explain to our shareholders that we're going to spend your money buying another company, either small or large or merge with somebody, and we need to be 100% sure that, that is in the best interest for the company and will lead to accelerating our growth. rather than going organic. So this is part of the business, and we will consider that. But our highway towards 2030 is organic growth. So now we're going to take a closer look at some of these examples, and I'll ask my colleagues to introduce the system integration, Brazil opportunities as well as our service rental investment.

I'm Chris Sebesta. I'm the Director of Business Development for Koil Energy. Earlier this year, Koil Energy announced a major milestone for our company. the award of our first integrated subsea distribution system project. This wasn't just another equipment order. This was Koil being selected to deliver a complete subsea system for a deepwater development, representing a meaningful step forward and how we position ourselves in the market, not just a component provider, but as a fully integrated subsea solution partner. As you can see in the simplified fill lay out, showing how the system connects across a subsea field tying the host facility, umbilicals, distribution equipment and ultimately, the wells together. At a high level, a subsea distribution system is what allows an operator to control power and communications with their wells on the sea bay. Breaking this down more simply. You have the umbilical termination assembly, which is the interface from the topside facility that feeds into distribution equipment like hydraulics or electric molds and then through flying leads, which carry hydraulic fluids electrical power and fire optic signal out to the trees and subsea equipment. Individually, these are components. But when engineered and delivered together, they become a full integrated system that enables production. What makes this different and more valuable is that coal is responsible for how all these pieces work together as one. We're not just delivering hardware. We're managing interfaces between components, compatibility across suppliers and fully system functionality from day 1. For the operator, that means less risk fewer handoffs and more reliable outcomes. Now from an engineering standpoint, this is where the real ship happens. Yes, a system project involves significant more drawings, documentation and design complexity, but that's not the most important part. What truly changes is how Koil engages and how we deliver value. Instead of designing a single piece of equipment in isolation, our teams are working across the full system. Coordinated mechanical, hydraulic, electrical and installation considerations all at once. Our engineering, manufacturing and service teams work in parallel, not in sequence, and we actively engage with internal and client technical authorities throughout the process. This allows us to optimize interface early, eliminate inefficiencies between components designed with installation and operation in mind from day 1. We are looking at the project holistically from manufacturing all the way through installation and life of field. So while the engineering scope increases, what we are really delivering is efficiency, risk reduction and life cycle value for the client. Another key element of a system project is procurement and integration, and this is where Koil's role continues to expand. Traditionally, resource critical components from a network of qualified suppliers managing those vendors and ensuring everything integrates in a single cohesive system, but we are now actively expanding into additional product lines, including electrical solutions. This is an important step for us. By bringing more of these capabilities under the Koil umbrella, we are able to reduce dependency on external suppliers, improved schedule control and predictability and ensure tight quality alignment across the entire system. At the same time, we continue to manage and integrate third-party equipment where it makes sense. So our role is not just manufacturing but strategic combination in-house capabilities with the best-in-class external suppliers. This positions Koil as a true systems integrator, responsible for making sure every component performs exactly as intended. Ultimately, this approach allows us to deliver a more reliable system with fewer interfaces, reducing risk and better overall execution for our customers. Now the next slide helps us bring it all together visually. Across the top, you can see the individual components each with its own function. But when combined, and engineered as a system, they become what you see below a full connected subsea network. Let me quickly walk you through this system functionality using the visuals. Starting top side, everything originates at the top side umbilical termination assembly where the power and controls are introducing to the system. That runs down the umbilical to the seabed where it connects to the umbilical termination assembly. The billable termination acts as the main interface, distributing hardware and electrical subsea services. From there, the flying leads carry those services across the field, connecting to the trees and menopause for production. They can also connect into subsea distribution units which enables future tiebacks and field expansion. So what you're seeing is a system that not only supports current operations, but it is designed to scale with the field over time. For Koil, this creates a significant opportunity. We are no longer limited to a single component. We are now capturing value across multiple hardware packages, expanded fabrication and assembly, system-level testing and additional services scopes, including insulation and offshore support. It allows us to increase both revenue per project and margin opportunities while leveraging capabilities we already have in-house. This is important. This brings us closer to the customer. We are now engaged earlier in the project life cycle, working directly with the operators and EPCs on system level decisions in helping shape solutions that impact schedule, cost and production outcomes. That positions Koil as more than a supplier positions us as a partner in delivering first production. This first system award is a strong validation of where Koil is headed. Our integrated model combines engineering procurement, fabrication, testing and services allows us to deliver complete subsea distribution solutions faster and with less risk. And as we continue to build on these capabilities, we see that this is a scalable platform for growth across projects, regions and customers.

Hi, everyone. I am Gustavo Gonsalves, Managing Director of Koil Energy in Brazil. Our operation in Brazil in Macae, it's already up and running with its basic infrastructure in place. We are already providing subsea equipment storage services and support services for offshore installations. In Brazil, we have already locally manufactured and delivered 3 deployment frames for flying leads installation. Today, these assets are operating under lease with an independent operator on an offshore environment. And we continue to move forward. We are equipping the facility to support upcoming projects with greater scale and efficiency. In other words, Koil is already turning local presence into operating capability and initial revenue. Our Brazil operation is gaining traction quickly. We are already prequalified as a supplier with 5 Koil and gas operators, 4 major industrial integrators and equipment manufacturers and 3 installers with a broad pipeline of opportunities. Today, we compete in both manufacturing and services with an established supply chain and technical and operational teams expanding. The Brazil model was designed at a scalable growth platform step-by-step replicating Houston's operating structure with growth driven by contracts and real customer demand. The growth in the number of FPSOs is a direct indicator of the expansion of the subsea equipment market. As you might already know, Brazil is expected to account for around 40% of the global EPC spending between 2026 and 2030, reinforcing the strategic relevance of this market for Koil. And the investment thesis goes beyond volume that is proven and growing demand for subsea buybacks, which connect new wells to existing infrastructure reducing costs, time to production and execution risks. This is exactly the kind of environment where Koil Energy's technical solutions, local service capability and operational street create above average value.

Hello, I'm Derek Anton, I'm the Director of Operations here at Koil Energy. I oversee the day-to-day operations at our facility, including fabrication, our service team and our production team. Let me start by walking through what a typical subsea distribution look in because once that's clear, the role of our rental equipment becomes much more easier to understand. At a high level, you can think of this system like an extension cord and a power trip, just on a much larger and more complex scale. The umbilical pillars, power, fluids and communication from the surface and the distribution equipment directs it to where it needs to go subsea. Koil provides key components within that system, but more importantly, we ensure that everything functions together reliably in some of the most challenging environments in the world. Our rural equipment generally falls into a couple of key categories. First, fluid and pressure systems, things like pumps. These are used for precharging systems and commissioning umbilicals which is simply replacing storage fluids with field-specific fluids. These are some of the highest value assets and require our technicians to operate, which naturally expands our service presence offshore. Second, handling and installation equipment, such as tensioners under rollers, mobile carousels and our horizontal drive units, commonly known as our HDUs. These are used to transport control and install umbilicals or flying leads safely and efficiently. And third, newer and expanding product lines like our ROV baskets. These are designed to installation efficiency by allowing multiple tools or components to be deployed in a single subsea trip and deepwater environments reducing even 1 trip can have a meaningful impact on time and cost. We're also continuing to expand into additional installation equipment like ROV tooling and wheel drive systems, which will allow us to take on a broader scope of board, increase our presence offshore and capture more revenue per project. Now before any of this equipment goes offshore, it goes through multiple layers of testing. Factory acceptance testing, also known as FAT and system integration testing, commonly known as SIT. What's important to understand is that these are not generic tests. Our engineering team develops project-specific procedures to ensure everything is fully functional for whatever leaves our facility. And that level of preparation is critical because once this equipment is deployed, there is no direct human access. Everything is handled remotely using ROVs at water depths up to around 9,000 feet. Now to put that in perspective, on a deepwater project, single trip from surface down to the seabed can take several hours. One small issue, something as minor as a leak can result in a significant amount of loss time, which is extremely costly. So the work that we do upfront is really about eliminating risk and helping our clients reduce time to production. Once the equipment is offshore, that's where our rental fleet and service teams come into play. We do not just provide equipment. We provide integrated where our assets and our personnel support installations as well as commissioning from start to finish. From a strategy -- from a strategy standpoint, the key is getting your first piece of equipment on the back deck. Once we're there, we're able to upsell and expand the scope, adding additional equipment, increasing service days and ultimately growing the value of the project. This ties directly into the service growth that we've seen. A significant portion of that growth has been driven by expanding our rental fleet and pairing it with our field service personnel. Every piece of equipment we deploy not only generates rental revenue, but also creates additional offshore days for our technicians. And that model only works because of the people behind it. Our team brings a high level of experience and long tenure they're not just operating equipment. They're actively solving problems in the field. From the client's perspective, what matters most is safety, reliability and execution, but just as important as flexibility, the ability to troubleshoot and adapt them real because offshore being slow, unprepared or making mistakes is not just inconvenient. It's extremely expensive. That's where we believe we stand apart. Our teams are known for moving quickly, collaborating effectively and finding solutions and challenging ambitions. And as a result, we consistently receive strong feedback from our clients on our performance, particularly around preparedness, professionalism and also execution of the deal. So when you look at our rental business, it's not just about equipment, it's about delivering complete reliable solutions and environments where failure option. More importantly, we continue to invest in this segment, expanding our rail fleet, developing new installation capabilities and growing our service presence to drive higher utilization and increased offshore activity and sustained revenue growth. Thank you for your time.

Moving on to our stock. Our current exchange is the OTC QB Exchange. We note that our stock price has risen from the $0.50 range in 2023, where it traded most of the year to below $2. We believe investors are increasingly recognizing our story, and we're continuing to promote our story and broaden the reach. We still believe our stock is undervalued at this point. One thing that we did do over the past is get more institutional money in, and we allowed our founder to decrease their stake from 20% in 2024 to 11% in 2025. We're a relatively small cap company with about $30 million of market cap. And for investors, we think that our execution can create outsized value as opposed to a larger company.

So we have given you -- all right. We will take your questions now. And if you haven't set the mine please do so now. We have a few here already. So here's the first question. Do you include people to operate the rental equipment. So we have some rental equipment that doesn't include our service techs, but most do. And obviously, we prefer to have people with the rental equipment. And when you have mechanical hydraulic equipment with systems, we actually insist on bringing our own technicians with the equipment. So that is the exciting opportunity with expanding within rental equipment is that you not only get the revenue from the rental, you also get the additional revenue from having additional crews out there. Here's one for you, Kurt. Can you talk about margins for products and rentals and services.

Yes. I think that layers on to what you just spoke about, Service margins especially be rich. When you get rental equipment along with the day rates that we earn from our service personnel, it's the margin that we met is pretty nice. The service equipment doesn't require a lot of maintenance and it produces overall good margin. Having said that, product revenue can be maybe not quite as good on average as service, but it can be pretty solid, especially when intellectual property and our proprietary designs.

All right. The next one here, what percentage of revenue is new clients. And this is regarding '26 '27. Kurt, could you answer this one?

So when I think about new clients, for 2025, new clients comprised 10% of revenue, which is a nice bump. But what that really translates to is a lot of revenue in future years. So for those new clients that comprise -- or 10% in 25 in the first quarter of this year, they already provided 25%. So there's a nice growth curve to that. I think in looking forward, we'll still be adding new clients. They may provide 10% of new revenue in any given year, but there's a good ramp up to that we maybe sell an initial job or a job gets started and we end up selling them more work.

All right. Next one here. This is a good one. Potential acquisitions potential being bought, consolidation opportunities, my fabric question. So we have shared with you today our road map going forward and there is a long runway for organic growth. So that's our highway, right? But we will consider M&A opportunities, and that could be acquiring technology, acquiring smaller companies or it could be something bigger. I think that the things we have been looking at so far, and we do some surveillance here and have a conversation, but nothing has come to the point where I bring to the Board yet, but obviously, if there's something interest, I will do that. What I feel we need to have is a few more years, certain a few more quarters with good EBITDA. That will set us up for a better enterprise value in any form of acquisition, certainly when equity is involved. And right now, we don't have that. So I don't think we will get the enterprise value that our shareholders. So perhaps a little bit more time here, but any opportunity that I see where we can get a good return on investment for our shareholders, we'll take a look at that. All right. How do you see the big players in the space? So we mentioned that our -- most of our competitors are much bigger than us. And there are now 3 major providers of subsea equipment, and they are sometimes competing with us, but most often, they're actually our clients. and we sell into their projects. And I think that's going to grow for a couple of reasons. First, there has been consolidation. So the capacity in the space totally is less than it was a few years ago. And when you see mergers at that level with the major service companies, they will also have to focus on what they're going to do. and then also consolidate some of their manufacturing capacity. So we have conversations with them regularly, particularly on that topic. I encourage them to give us all the subsea distribution equipment because we're best at that in the whole industry. They can focus on the bigger stuff. So I think that's going to come that's going to happen. It's going to come our way. So that's -- that's a great opportunity there. But we have a great relationship with them because most often, they are our clients. Brazil is not an easy place to do business. Why Brazil first. Well, first of all, we're not doing -- not going to Brazil because it's easy. We're doing it because it's hard. And that means we need a company, technology and the reputation of a company like Koil in order to be successful in Brazil, which is a prime and share that information with you and Gustavo talk that actually, this could be the biggest subsea market in the world. So obviously, we want to go after that. since we want to grow. But also, I have done business in Brazil, my whole career. This is a very professional environment, and they're often leading the technology within deepwater and subsea. So we're very comfortable in Brazil, but it will go into any new country. We are careful. We manage our risks, and we have confident people -- the team in Brazil is the best you can pick for this job. So I'm very confident with how we have started out that venture. Why are you expanding globally? And what does that plan look like? Okay? I think we shared a plan with you, but let me emphasize a couple of things. So we have to go internationally in order to grow this company. And for several reasons, but in order to grow it, but also to be prepared for the ups and downs that is always in the Koil and gas market. So we need to be in different regions and in different countries and have more customers, that will not only enable us to grow but also make the company more sustainable. So that's why we are going internationally. And the plan, I shared that with you. And Brazil is our #1, but we are expanding in otherwise elsewhere. So that is the reason we're doing -- there's another 1 for you, Kurt. Do you have the balance sheet for this expansion?

Our balance sheet right now, as I mentioned before, we don't have debt on our balance sheet -- we do have a factoring line. We haven't used it right now. We are opportunistically looking at other things as we are more bankable now with our track record longer. We produced good operating cash flow as well. So I think the combination of those things gives us the support we need to do the expansion that we want to do.

Thank you. And here's another 1 coming in. Do you supply and offer electrical flying leads and offshore terminations right now. And yes, we do, and we have been doing that for many years. That is part of our portfolio, but we use the supply chain to do most of that work. What we want to add here going forward is to have a better offering to our clients. This is coming from the clients. They want to do more in the electrical space of subsea. So we're going to do more, but yes, we have offered this in the past, and we are delivering projects today on that. How are you dealing with geopolitics of the global Koil supply. I think as I mentioned earlier, the political issues and the special situation in the Middle East right now have raised the awareness among politicians and the investors and the operators in everywhere in the world. And what I hear from them is that they need to do more where they are. They need to secure supply in their region and in their country. And then the operators in those areas are encouraged to do that. And subsea is the primary way to do that. That is the ideal technology. It's culture technology being around for a long time. And that's why we significant growth here because perhaps of the geopolitics -- all right. Here's one. All right, does your Board have the expertise to shepherd you to grow. That's a good one. Now I like to talk about the Board. I have a fantastic Board. The Board in Koil Energy has a good mix of very astute investors and industry leaders, and they have a understanding of not only Koil as a company historically, but also the industry. They are very supportive of our strategy. They like what we're doing. And they are encouraging us to lean forward and go after these opportunities. So I'm very pleased with the Board. Of course, I guess I couldn't say anything else. Could -- so I think that's the last question here. This has been a great Investor Day. Thank you so much for participating. Thank you for all the good questions, and thanks to you, Kurt, and the other presenters. This is really good. Now don't leave us yet. We have a virtual tour. We just recorded it -- this is exactly what's going on in the facility today, and you will see some of our great team members out there. So all you get. Thank you.