ProFrac Holding Corp. (ACDC) shares soared 23% in the last trading session to close at $5.30. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 40.6% loss over the past four weeks.An analyst from Stifel has recently raised the target price for ProFrac Holding Corp.’s stocks. This might have led to ACDC’s latest share price hike.This company is expected to post quarterly loss of $0.31 per share in its upcoming report, which represen ...

Core Viewpoint - JP Morgan analyst Arun Jayaram maintains an Underweight rating on ProFrac Holding Corp. (ACDC) with a price target of $7, following disappointing fourth-quarter results that missed sales expectations and reported a significant net loss [1]. Financial Performance - ACDC reported fourth-quarter sales of $454.7 million, falling short of the consensus estimate of $479.3 million, and recorded a net loss of $105.0 million compared to a loss of $45.2 million in the same quarter last year [1]. - The results were impacted by misses in EBITDA and free cash flow (FCF) attributed to seasonality and a weaker macroeconomic environment [1]. Operational Insights - Management noted an increase in ACDC's active fleet count, reaching its highest level since mid-2024, with six additional fleets secured since the fourth-quarter low point [2]. - The company expects lower average pricing to slightly offset modestly higher activity in Stimulation Services year-over-year [2]. - Continued industry-wide equipment attrition is anticipated due to higher hours pumped per fleet and lower reinvestment levels [2]. Future Projections - The analyst estimates an average of 29.3 fleets in the first quarter of 2025, leading to Stimulation Services EBITDA of approximately $80 million [3]. - Profitability is expected to improve as utilization increases across business units throughout the year, albeit at a slower pace [3]. - Revised EBITDA forecasts for 2025 and 2026 are $472 million and $588 million, down from previous estimates of $543 million and $680 million, respectively [3]. Cash Flow and Capital Expenditure - Projected FCF generation for 2025 and 2026 is $78 million and $184 million, respectively, with capital expenditures estimated at $340 million and $447 million for the same periods [4]. - Investors can gain exposure to ACDC through the Invesco Oil & Gas Services ETF (PXJ) [4]. Stock Performance - ACDC shares are down 1.65%, trading at $7.15 as of the last check on Monday [4].

Operations and Capacity - ProFrac operates 28 active hydraulic fracturing fleets as of December 31, 2024, with 15 Tier IV fleets, 9 Tier II fleets, and 4 electric fleets[32]. - The company has approximately 21.5 million tons of annual nameplate capacity across eight frac sand mines, positioning it as one of the largest producers of in-basin frac sand in the U.S.[33]. - ProFrac's operations are strategically located in major unconventional oil and gas basins, enhancing its ability to serve a diversified customer base[32]. - ProFrac's scale and geographic diversification allow it to respond flexibly to market volatility and improve operational efficiencies[41]. Business Model and Strategy - ProFrac's business model emphasizes vertical integration and technological innovation, allowing for tailored products and services to meet customer needs[30]. - The company aims to be the most reliable, cost-effective supplier of in-basin frac sand, maximizing value through strong cash flow generation[40]. - The company focuses on integrating new technologies in a cost-effective manner through its in-house manufacturing capabilities[44]. - ProFrac's manufacturing segment enables cost-advantaged growth and maintenance by assembling new fleets and refurbishing existing ones[43]. Acquisitions and Investments - In April 2024, the company acquired Basin Production and Completion LLC for a total consideration of $39.8 million, consisting of $14.9 million in cash and a pre-existing investment of $24.9 million[51]. - In June 2024, the company acquired Advanced Stimulation Technologies, Inc. for $174.0 million in cash, enhancing its pressure pumping services in the Permian Basin[52]. - The company acquired NRG Manufacturing, Inc. and its affiliate for a total consideration of $6.0 million in cash in June 2024, further expanding its capabilities in the hydraulic fracturing industry[53]. - The company acquired Producers Service Holdings LLC for approximately $35.0 million, adding three fleets totaling 200,000 HHP and a manufacturing facility in Ohio[55]. - The acquisition of Performance Proppants in February 2023 totaled approximately $462.8 million, with $452.4 million paid in cash, enhancing the company's frac sand supply capabilities[56]. Financial Performance - Total revenues for 2024 were $2,190.9 million, a decrease of 16.7% from $2,630.0 million in 2023[417]. - Services revenue decreased to $1,886.7 million in 2024 from $2,274.2 million in 2023, representing a decline of 16.9%[417]. - Product sales revenue decreased significantly to $304.2 million in 2024 from $355.8 million in 2023, a drop of 14.5%[417]. - Operating loss for 2024 was $60.4 million, compared to an operating income of $166.6 million in 2023[417]. - Net loss attributable to ProFrac Holding Corp. for 2024 was $215.1 million, compared to a net loss of $97.7 million in 2023[418]. - Earnings per Class A common share (basic and diluted) for 2024 was $(1.38), compared to $(0.82) in 2023[418]. - Total assets decreased to $2,988.1 million as of December 31, 2024, down from $3,070.7 million in 2023[416]. - Total liabilities increased to $1,848.5 million in 2024 from $1,742.1 million in 2023[416]. Environmental and Regulatory Compliance - The company operates under stringent environmental and occupational health and safety regulations, which may impose costly compliance measures and potential penalties for non-compliance[79]. - The Resource Conservation and Recovery Act (RCRA) and state laws impose requirements on the handling, transportation, and disposal of hazardous and non-hazardous wastes, affecting operational costs[81]. - The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) imposes strict liability for the cleanup of hazardous substances, which could lead to significant financial liabilities for the company[83]. - The Clean Water Act (CWA) and related regulations impose strict controls on the discharge of pollutants, potentially increasing operational costs and delays in obtaining necessary permits[87]. - The Clean Air Act (CAA) regulates air emissions, with new stringent requirements potentially increasing compliance costs for the company[88]. - Climate change regulations are evolving, with potential future legislation that could impose stricter GHG emissions standards, impacting operational costs and demand for services[89]. - The Endangered Species Act (ESA) may affect exploration and production activities, leading to additional costs or operational restrictions in certain areas[96]. - Hydraulic fracturing operations are significant for the company, but increased regulatory scrutiny could lead to higher costs and reduced activity on federal lands[100]. - The company is actively participating in conservation agreements to mitigate potential impacts from environmental regulations[96]. Safety and Workforce - As of December 31, 2024, the company employed 3,077 people, with a Total Reportable Incident Rate of 0.28 for safety performance[69]. - Compliance with OSHA standards for worker exposure to silica may result in material additional costs for the company and its customers[105]. Debt and Financial Management - The company completed a debt refinancing in December 2023, totaling $885 million, extending significant debt maturities to 2029[64]. - A 1% increase in interest rates on variable-rate debt would raise annual interest payments by approximately $10.7 million as of December 31, 2024[389]. - The company has no derivative instruments that materially increase exposure to market risks as of December 31, 2024[389]. Goodwill and Asset Management - The company holds $209.1 million in goodwill related to its Stimulation Services reporting unit, with no impairment identified following a quantitative assessment[400]. - Goodwill impairment of $74.5 million was recognized in 2024, indicating challenges in asset recoverability[418]. - Goodwill balance as of December 31, 2024, is $302.0 million, down from $325.9 million in 2023, reflecting an impairment of $74.5 million in the Proppant segment[466]. Cash Flow and Capital Expenditures - Cash provided by operating activities for 2024 was $367.3 million, down from $553.5 million in 2023 and $415.2 million in 2022[433]. - Cash used in investing activities was $372.3 million in 2024, compared to $715.8 million in 2023 and $1,028.6 million in 2022[433]. - The company incurred capital expenditures of $32.4 million included in accounts payable for 2024[435]. - Cash payments for interest in 2024 were $137.8 million, slightly down from $139.1 million in 2023[435]. - The company reported a net cash used in financing activities of $5.5 million in 2024, compared to a net cash provided of $149.7 million in 2023[433].

Financial Data and Key Metrics Changes - In Q4 2024, ProFrac reported revenue of $455 million and adjusted EBITDA of $71 million, down from $575 million and $135 million in Q3 2024 respectively [17][42] - For the full year 2024, revenue was $2.19 billion with adjusted EBITDA of $501 million, reflecting a margin of 23% [17][43] - Free cash flow for Q4 was $54 million, an increase from $31 million in Q3, totaling $185 million for the year [20][44] Business Line Data and Key Metrics Changes - Stimulation services revenue decreased to $384 million in Q4 from $507 million in Q3, with adjusted EBITDA dropping to $54 million from $113 million [44][45] - Proppant Production segment generated $47 million in revenue for Q4, down from $53 million in Q3, with adjusted EBITDA of $14 million [46][48] - Manufacturing segment revenues remained flat at $62 million in Q4, with adjusted EBITDA increasing to $3 million from near break-even in Q3 [51][52] Market Data and Key Metrics Changes - The North American completions industry faced challenges in Q4 due to budget constraints, holiday shutdowns, and adverse weather conditions [17][21] - There is potential for increased activity in the Haynesville region, driven by improved gas prices and proximity to LNG export terminals [19] - The company has the largest proppant footprint in the Haynesville with a capacity of 10 million tons per annum across four mines [19] Company Strategy and Development Direction - ProFrac continues to execute a differentiated commercial strategy by partnering with operators who prioritize integrated, efficient solutions [10][22] - The launch of Livewire Power marks a significant step in the company's power generation strategy, focusing on the demand for power in remote locations [15][23] - The company is committed to innovation, investing in next-generation pumps and software platforms to maintain industry leadership [16][23] Management's Comments on Operating Environment and Future Outlook - Management noted a recovery in activity levels in the Stimulation business since the end of 2024, with expectations for continued efficiency improvements [12][26] - The company anticipates marginal growth in the frac market throughout 2025, despite lower average pricing [32][28] - Management emphasized the importance of long-term customer relationships over short-term pricing gains [68][90] Other Important Information - The company generated $54 million of free cash flow in Q4 and $185 million for the full year, indicating strong cash generation capabilities [20][44] - Total cash and cash equivalents as of December 31, 2024, were approximately $15 million, with total liquidity at about $81 million [56][57] - The company repaid approximately $157 million of long-term debt in 2024 and plans to continue using free cash flow for deleveraging [57] Q&A Session Summary Question: Activity improvement in Stimulation and Proppant - Management noted that the year started well with operators returning to work and increasing fleet activity, leading to a positive outlook for 2025 [66][67] Question: Livewire business ramp-up and CapEx guidance - Management indicated that internal demand is the priority for Livewire, with capital investments focused on projects that meet economic return thresholds [69][72] Question: Frac supply-demand dynamics and asset attrition - Management highlighted that high utilization rates are leading to accelerated attrition of older assets, creating opportunities for price improvements [85][86] Question: Current pricing levels compared to 12 months ago - Management refrained from providing specific pricing details but emphasized a focus on long-term customer relationships rather than short-term pricing strategies [90][91] Question: Active frac fleet count and outlook - Management confirmed that the active fleet count is in the low-30s and will remain stable unless market demand justifies an increase [108][109] Question: Proppant business market share and optimization - Management confirmed that while one asset in the Haynesville is idle, the remaining operational assets are performing well, with a focus on long-term commitments rather than immediate price increases [114][115]

Financial Performance - Total revenue for 2024 was $2.19 billion, a decrease of 16.7% from $2.63 billion in 2023[4] - Net loss for 2024 was $208 million, compared to a net loss of $59 million in 2023[4] - Adjusted EBITDA for 2024 was $501 million, representing 23% of revenue, down from 26% in 2023[4] - Operating income for the twelve months ended December 31, 2024, was a loss of $60.4 million, compared to an operating income of $166.6 million for the same period in 2023[33] - Net loss attributable to ProFrac Holding Corp. for the three months ended December 31, 2024, was $105.0 million, compared to a net loss of $97.9 million for the same period in 2023[33] - Total revenues for the three months ended December 31, 2024, were $454.7 million, a decrease of 21% from $575.3 million in the previous quarter[36] - Adjusted EBITDA for the three months ended December 31, 2024, was $70.8 million, down from $134.8 million in the previous quarter, reflecting a decline of 47.5%[35] Cash Flow and Investments - Free cash flow for 2024 was $185 million, with net cash provided by operating activities at $367 million[4] - Cash flows from operating activities generated $76.5 million for the three months ended December 31, 2024, compared to $98.0 million in the previous quarter[34] - For the three months ended December 31, 2024, net cash provided by operating activities was $76.5 million, compared to $42.7 million for the same period in 2023, reflecting a 79% increase[38] - Free cash flow for the three months ended December 31, 2024, was $54.3 million, up from $12.8 million in the same period of 2023, representing a 324% increase[38] - The net cash provided by operating activities for the twelve months ended December 31, 2024, was $367.3 million, down from $553.5 million in 2023, reflecting a decline of 33.6%[38] - For the twelve months ended December 31, 2024, free cash flow was $185.2 million, compared to $292.7 million in 2023, showing a decrease of 36.7%[38] - Investment in property, plant & equipment for the twelve months ended December 31, 2024, was $255.0 million, a decrease from $267.0 million in 2023, indicating a 4.5% reduction[38] - The investment in property, plant & equipment for the three months ended December 31, 2024, was $63.2 million, down from $33.1 million in the same period of 2023, representing a 90% increase[38] Assets and Liabilities - Total current assets decreased to $574.1 million as of December 31, 2024, from $638.1 million as of December 31, 2023, representing a decline of approximately 10%[32] - Total liabilities increased to $1,848.5 million as of December 31, 2024, compared to $1,742.1 million as of December 31, 2023, reflecting an increase of about 6%[32] - Cash and cash equivalents decreased to $14.8 million as of December 31, 2024, down from $25.3 million as of December 31, 2023, a decline of approximately 41%[32] - Long-term debt remained relatively stable at $931.1 million as of December 31, 2024, compared to $923.5 million as of December 31, 2023[32] - The company’s total debt increased to $1,109.0 million as of December 31, 2024, up from $1,068.5 million in the previous year[37] - The current portion of long-term debt increased to $164.6 million as of December 31, 2024, compared to $126.4 million in the previous year[37] Segment Performance - The Stimulation Services segment generated revenues of $1.91 billion in 2024, with an Adjusted EBITDA margin of 21%[10] - The Proppant Production segment's revenues for 2024 were $247 million, with a margin of 35%[11] - Stimulation services revenue for the three months ended December 31, 2024, was $384.4 million, a decrease of 24.2% from $507.1 million in the previous quarter[36] Goodwill and Equity - The company experienced a goodwill impairment of $74.5 million for the twelve months ended December 31, 2024[33] - Total stockholders' equity attributable to ProFrac Holding Corp. decreased to $1,006.9 million as of December 31, 2024, from $1,211.2 million as of December 31, 2023, a decline of approximately 17%[32] - The company reported acquisition and integration costs of $2.7 million for the three months ended December 31, 2024, compared to $1.7 million for the same period in 2023[33] New Initiatives - The company launched Livewire Power in Q4 2024 to address the demand for flexible power generation solutions[7]

Core Viewpoint - ProFrac Holding (NASDAQ: ACDC) is identified as an undervalued vertically integrated energy services company with resilient free cash flow, leading to a stock price increase of over 24% since the last analysis [1]. Company Analysis - ProFrac Holding has demonstrated strong performance in the energy services sector, showcasing its ability to generate free cash flow despite market fluctuations [1]. - The company is positioned as a value investment opportunity, appealing to investors looking for low-risk and high uncertainty bets [1]. Investment Philosophy - The analysis reflects a focus on emerging markets and a willingness to seek out undervalued companies, influenced by notable investors and economic thinkers [1]. - The investment approach emphasizes an owner-mindset, prioritizing company fundamentals over macroeconomic noise [1].

Core Viewpoint - The article emphasizes the importance of value investing and highlights ProFrac Holding Corp. (ACDC) as a strong value stock based on its favorable valuation metrics and earnings outlook [2][3][6]. Company Analysis - ProFrac Holding Corp. (ACDC) currently holds a Zacks Rank of 2 (Buy) and has a Value grade of A, indicating it is among the best value stocks available [3]. - ACDC's price-to-book (P/B) ratio is 1.13, which is attractive compared to the industry average of 2.20. The P/B ratio has fluctuated between 0.73 and 1.25 over the past year, with a median of 0.98 [4]. - The company's price-to-cash flow (P/CF) ratio stands at 4.98, significantly lower than the industry average of 9.26. This ratio has ranged from 2.86 to 5.53 in the past year, with a median of 4.16 [5]. - These valuation metrics suggest that ACDC is likely undervalued at present, supported by a strong earnings outlook [6].

Core Insights - ProFrac Holding Corp. has partnered with Prairie Operating Co. to implement an electric frac fleet in Colorado, featuring 25 advanced 3,000 HHP single E-Pumps for fully electrified hydraulic fracturing and pump down operations [1][2][3] - The initiative aims to enhance operational capabilities while significantly reducing environmental impact, aligning with Colorado's stringent emissions standards [3][5][6] - The fleet will utilize state-of-the-art electric blender units and turbine generators powered by 100% natural gas, marking a shift from conventional diesel-powered operations [4][5] Company Overview - Prairie Operating Co. is an independent energy company focused on the development and acquisition of oil and natural gas resources, primarily in the Denver-Julesburg Basin [7] - ProFrac Holding Corp. is a technology-driven energy services holding company providing hydraulic fracturing and related services to upstream oil and natural gas companies [8]

Financial Performance - Total revenue for the three and nine months ended September 30, 2024, was $575.3 million and $1,736.2 million, representing an increase of $1.1 million and a decrease of $404.7 million from the same periods in 2023[135]. - Net loss attributable to ProFrac Holding Corp. for the three and nine months ended September 30, 2024, was $45.2 million and $110.1 million, reflecting decreases of $26.3 million and $110.3 million from the same periods in 2023, including pretax goodwill impairment charges of $6.8 million and $74.5 million, respectively[135]. - Stimulation services revenues for the three months ended September 30, 2024, increased by $17.6 million, or 4%, while for the nine months, it decreased by $357.9 million, or 19%[137]. - Proppant production revenues for the three and nine months ended September 30, 2024, decreased by $45.6 million and $90.4 million, or 46% and 31%, respectively[138]. - Manufacturing revenues for the three and nine months ended September 30, 2024, increased by $17.7 million and $18.9 million, or 40% and 13%, respectively[139]. Expenses and Impairments - Selling, general and administrative expenses, excluding stock-based compensation, for the three months ended September 30, 2024, increased by $2.6 million, or 5%[147]. - Goodwill impairment charge of $67.7 million was recorded for the three months ended September 30, 2024, due to reduced operating results in the Haynesville Proppant reporting unit[150]. - In Q3 2024, the company reported goodwill impairment charges of $2.4 million and $4.4 million for the Permian Proppant and Eagle Ford Proppant reporting units, respectively, due to reduced operating results[151]. - Total operating expenses for the nine months ended September 30, 2024, were $27.2 million, compared to $17.8 million in the same period of 2023, reflecting an increase in litigation expenses and supply commitment charges[152]. - Interest expense for the nine months ended September 30, 2024, was $117.8 million, consistent with $116.1 million in the same period of 2023[157]. Cash Flow and Liquidity - Cash flows from operating activities decreased to $290.8 million for the nine months ended September 30, 2024, down from $510.8 million in the same period of 2023, primarily due to lower earnings[167]. - As of September 30, 2024, the company had $20.5 million in cash and cash equivalents and $88.7 million available for borrowings, resulting in a total liquidity position of $109.2 million[165]. - The company had $1,205.7 million in long-term debt outstanding as of September 30, 2024, with $171.9 million due within the next twelve months[171]. Capital Expenditures and Commitments - Capital expenditures for the nine months ended September 30, 2024, were $191.8 million, with expectations for full-year expenditures ranging from $150 million to $200 million for maintenance and an additional $100 million for growth initiatives[174][175]. - Purchase commitments as of September 30, 2024, included $5.4 million for 2024 and $55.8 million for 2025 related to minimum sand commitments and hydraulic fracturing equipment components[177]. Acquisitions and Legal Matters - In April 2024, the company acquired all remaining equity interests of BPC for a total purchase consideration of $39.8 million[135]. - In June 2024, the company acquired 100% of AST for $174.0 million in cash and 100% of NRG for $6.0 million in cash[135]. - The company settled multiple patent infringement lawsuits with Halliburton in September 2024, with the financial effects included in the consolidated financial statements[179]. Market Risks - As of September 30, 2024, the company held no derivative instruments that materially increased exposure to market risks[183]. - The company is subject to interest rate risk on its variable-rate debt[183]. - A 1% increase in interest rates on variable-rate debt would increase annual interest payments by approximately $11.1 million[183].

Financial Data and Key Metrics Changes - ProFrac reported revenues of $575 million and adjusted EBITDA of $135 million for Q3 2024, with an adjusted EBITDA margin of 23% [8][36] - Free cash flow was $31 million, a decrease from the previous quarter, primarily due to a muted impact from asset sales [36][37] - Adjusted EBITDA for the Stimulation Services segment was $113 million, reflecting a 5% improvement versus Q2, while the Proppant Production segment saw a 24% sequential decline in revenue to $53 million [38][41] Business Line Data and Key Metrics Changes - Stimulation Services revenues increased to $507 million, with a slight increase in average active fleet count, but pricing pressures partially offset gains [38] - Proppant Production segment's adjusted EBITDA decreased by 33% to $17 million, with a decline in average realized price per ton [42][43] - Manufacturing segment revenues rose by approximately 10% to $62 million, driven by increased fleet activity [44] Market Data and Key Metrics Changes - The market environment was characterized by decreased activity and budget exhaustion, impacting overall performance [25][30] - The Haynesville region experienced subdued drilling and completion activity, negatively affecting ProFrac's assets in that area [19][20] - Competitive pressures in West Texas continued to challenge the Proppant Production segment, impacting both volumes and pricing [41] Company Strategy and Development Direction - ProFrac aims to invest in next-generation equipment, focusing on e-fleets and dual fuel technologies, with approximately three-quarters of active fleets utilizing next-generation technology [15][16][21] - The company is strategically retiring 400,000 horsepower of legacy diesel-burning frac pumps that do not meet reinvestment thresholds [13][22] - ProFrac's integrated model provides a competitive advantage, allowing it to deliver comprehensive solutions and maintain strong customer partnerships [14][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a recovery in activity levels in 2025, particularly in West Texas and South Texas, despite current market challenges [19][21] - The company anticipates further softness in Q4 due to budget exhaustion and seasonality, but expects improved commercial opportunities in 2025 [30][41] - Management highlighted the importance of controlling costs and leveraging efficiencies throughout the value chain to navigate the current market environment [56][58] Other Important Information - ProFrac's internal R&D and manufacturing capabilities are crucial for driving commercial innovation and maintaining fleet quality [10][12] - The company is making strategic investments in power generation capabilities to meet increasing demand for on-demand power at wellheads [17][33] - Total cash and cash equivalents as of September 30 were $26 million, with total liquidity at approximately $109 million [48] Q&A Session Summary Question: Can you share more about your 2025 outlook, particularly in West Texas and South Texas? - Management sees Q1 2025 picking up from Q4 and Q3 levels, with a flat to slightly down year-over-year outlook [53][54] Question: How are you managing the interplay between pricing and cost management? - Management emphasized their vertical integration allows for better control over fixed costs and operating leverage, which is beneficial in the current competitive pricing environment [56][58] Question: What is the expected impact of Dune Express on your business next year? - Management does not anticipate a material impact from Dune Express, citing a highly competitive environment [67] Question: How much uplift in activity do you expect in the Haynesville? - Management indicated uncertainty but expressed hope for increased activity as gas prices rebound, while remaining committed to their market position [72][73]