Core Insights - ProFrac Holding Corp. reported a total revenue of $579.4 million for Q2 2024, a slight decrease from $581.5 million in Q1 2024. The company experienced a net loss of $65.6 million compared to a net income of $3.0 million in the previous quarter [2][3][5] - Adjusted EBITDA for Q2 2024 was $135.6 million, down from $159.7 million in Q1 2024. However, net cash provided by operating activities increased by approximately 43% sequentially to $113.5 million, and free cash flow grew 187% sequentially to $74.0 million [2][3][5] - The company faced challenges in the market due to reduced drilling and completion activity, particularly in natural gas regions, leading to lower results in the second quarter [2][3] Financial Performance - Total revenue for the Stimulation Services segment was $505.6 million, generating $107.3 million in Adjusted EBITDA. The Proppant Production segment generated $69.5 million in revenue with $25.7 million in Adjusted EBITDA, while the Manufacturing segment brought in $55.9 million with only $0.1 million in Adjusted EBITDA [5][33] - The company recognized a goodwill impairment of $67.7 million related to its Haynesville Proppant reporting unit, which did not impact Adjusted EBITDA [5][33] Capital Expenditures and Liquidity - Capital expenditures totaled $61.9 million in Q2 2024, remaining flat from the prior quarter. For the full year 2024, the company expects capital expenditures to be closer to the lower end of previously provided guidance, with maintenance-related expenditures projected at $150 million to $200 million [6][7] - As of June 30, 2024, total debt outstanding was $1.20 billion, an increase from $1.05 billion in Q1 2024. The company had $24.0 million in cash and cash equivalents, with $161.2 million of liquidity available [8][34] Market Outlook - In the Stimulation Services segment, pricing is expected to remain steady, with opportunities for improved profitability per fleet due to the company's superior cost structure and operating leverage. The company continues to receive requests for additional integrated fleet deployments, particularly for electric and Tier 4 dual fuel technologies [4][5] - In the Proppant Production segment, total volumes and pricing are anticipated to decline, followed by a gradual recovery. The company expects to offset some reduction in profitability through operating cost reductions and the idling of an underperforming mine [4][5]

Core Viewpoint - The market anticipates ProFrac Holding Corp. (ACDC) to report flat earnings of $0.13 per share for the quarter ended June 2024, with revenues expected to decline by 11.9% to $624.64 million compared to the previous year [2][8]. Earnings Estimates - The consensus EPS estimate has been revised down by 27.43% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [3][6]. - ProFrac Holding Corp. has an Earnings ESP of -10.25%, suggesting a lower Most Accurate Estimate compared to the Zacks Consensus Estimate [7]. Earnings History - In the last reported quarter, ProFrac Holding Corp. met the expected earnings of $0.03 per share, but it has not surpassed consensus EPS estimates in any of the last four quarters [8]. Industry Comparison - Bloom Energy (BE), another player in the Zacks Alternative Energy - Other industry, is expected to report earnings of $0.06 per share, reflecting a year-over-year increase of 64.7%, with revenues projected to rise by 4.8% to $315.64 million [10].

Group 1 - ProFrac Holding Corp. will report its second quarter 2024 financial results on August 8, 2024, at 11:00 a.m. Eastern / 10:00 a.m. Central [1] - The conference call will be accessible via phone and live over the Internet, with a replay available until August 15, 2024 [1] - An archive of the webcast will be available for 90 days after the call [1] Group 2 - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services holding company [2] - The company provides hydraulic fracturing, proppant production, and related completion services to upstream oil and natural gas companies in North America [2] - ProFrac operates through three business segments: stimulation services, proppant production, and manufacturing [2]

Industry Overview - Oil prices remain elevated, with U.S. oil production 1.4% higher than record levels from a year ago, and West Texas Intermediate (WTI) prices approximately 7% higher than a year ago, indicating continued strength in the energy sector [1] - The current market environment supports a race to maximize oil production, benefiting firms capable of increasing output [1] - Small cap oil stocks are being targeted by investors for their potential to deliver significant returns [1] ProFrac Holding (ACDC) - ProFrac Holding, an oil and gas equipment and services firm, reported a 19% sequential increase in revenue, transitioning from negative to positive operating income [2] - Free cash flow more than doubled to $25.8 million, primarily driven by its simulation segment, which provides analytics and 3D visualizations for fracking projects [2] - The company anticipates steady to improving pricing and enhanced profitability moving forward [2] Newpark Resources (NR) - Newpark Resources, which provides products and rentals to the energy industry, reported a 30% increase in net income despite a decline in revenue, indicating improved efficiency [5][6] - The company is well-positioned to benefit from rising production due to high oil prices, supplying essential drilling fluids and matting systems [5] - Anticipation of continued activity acceleration into the second quarter supports investment consideration [6] Southwestern Energy (SWN) - Southwestern Energy focuses on oil and natural gas exploration and production, particularly in unconventional resources across several states [7] - The company is currently an acquisition target for Chesapeake Energy, with a proposed merger expected to close by the end of the second quarter [7] - Despite recent net losses making it less attractive fundamentally, its status as a takeover target presents an investment opportunity [8]

Company Leadership Changes - ProFrac Holding Corp. announced the resignation of Lance Turner as Chief Financial Officer (CFO), effective June 17, 2024, with plans for him to serve as a consultant during the transition to the new CFO, Austin Harbour [1][2] - Matt Wilks, ProFrac's Executive Chairman, expressed gratitude for Turner's contributions to the company's financial management and strategic direction, highlighting his role in strengthening the balance sheet and enhancing liquidity [1] New CFO Profile - Austin Harbour, the new CFO, has extensive industry experience, having worked in the energy & power investment banking group at Piper Sandler Companies from 2021 to 2024, and previously from 2012 to 2015 [2][3] - Harbour's background includes significant roles in energy services and equipment, advising on major M&A and restructuring transactions, and serving as CFO at Superior Energy Services for its North American business [3] Company Overview - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services holding company that provides hydraulic fracturing, proppant production, and other completion services to upstream oil and natural gas companies in North America [4] - Founded in 2016, ProFrac aims to be the primary service provider for hydraulic fracturing needs, focusing on employing new technologies to reduce greenhouse gas emissions and increase efficiency in the unconventional exploration and production process [4]

Core Viewpoint - ProFrac Holding Corp. reported quarterly earnings of $0.03 per share, aligning with the Zacks Consensus Estimate, but significantly down from $0.91 per share a year ago [1] - The company posted revenues of $581.5 million for the quarter, missing the Zacks Consensus Estimate by 1.04% and down from $851.7 million year-over-year [1] Financial Performance - The earnings surprise for the previous quarter was -575%, with an expected earnings of $0.04 per share but resulting in a loss of $0.19 [1] - Over the last four quarters, ProFrac has consistently failed to surpass consensus EPS and revenue estimates [1] Stock Performance - ProFrac shares have declined approximately 2.7% since the beginning of the year, contrasting with the S&P 500's gain of 9.3% [2] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $684.88 million, and for the current fiscal year, it is $0.88 on revenues of $2.71 billion [4] - The estimate revisions trend for ProFrac is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [4] Industry Context - The Alternative Energy - Other industry, to which ProFrac belongs, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable industry outlook [5] - The performance of ProFrac's stock may be influenced by the overall industry outlook, as the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [5]

Financial Performance - Total revenue for Q1 2024 was $581.5 million, a decrease of $276.0 million or 32.2% from Q1 2023[111] - Net income for Q1 2024 was $1.8 million, down $20.2 million or 91.5% compared to Q1 2023[111] - Cash provided by operating activities in Q1 2024 was $79.1 million, a decrease of $154.4 million or 66.1% from Q1 2023[111] - Stimulation services revenue decreased by $272.9 million or 35% in Q1 2024 compared to Q1 2023, primarily due to lower average pricing and a decrease in active fleets[114] - Proppant production revenue decreased by $4.5 million or 5% in Q1 2024, attributed to lower average prices despite increased volumes sold[115] - Manufacturing revenue decreased by $23.6 million or 35% in Q1 2024, primarily due to lower intercompany demand[116] Debt and Financing - Total principal amount of long-term debt was $1,085.1 million as of March 31, 2024, a decrease of $22.8 million from December 31, 2023[111] - Interest expense for Q1 2024 was $37.6 million, an increase from $34.9 million in Q1 2023, due to higher average interest rates[128] - As of March 31, 2024, the company had $1,085.1 million in long-term debt, with $136.4 million due within the next twelve months[139] - A 1% increase in interest rates on variable-rate debt would raise annual interest payments by approximately $10.0 million[147] - Net cash used in financing activities was $22.8 million in Q1 2024, compared to $327.1 million provided in Q1 2023, mainly due to debt repayments[137] Cash Flow and Investments - Net cash provided by operating activities decreased to $79.1 million in Q1 2024 from $233.5 million in Q1 2023, primarily due to lower earnings[136] - Net cash used in investing activities was $53.3 million in Q1 2024, significantly lower than $525.8 million in Q1 2023, reflecting reduced cash for acquisitions and capital expenditures[137] - Capital expenditures for Q1 2024 amounted to $59.9 million, with full-year estimates ranging from $150 million to $200 million for maintenance and an additional $100 million for growth initiatives[141] Acquisitions and Expenses - The company acquired all remaining equity interests of BPC in April 2024 for approximately $23 million, including cash and debt obligations[112] - Selling, general and administrative expenses decreased by $16.3 million or 25% in Q1 2024, mainly due to acquisition synergies[122] Legal and Compliance - The company is closely monitoring compliance with a covenant requiring a maximum Total Net Leverage Ratio of 2.00 to 1.00 due to lower than expected operating results[140] - The company is engaged in multiple patent infringement lawsuits, which could materially affect liquidity depending on the outcomes[144] Other Obligations - The company has $71.1 million in estimated tax receivable agreement obligations, with $6.4 million due in the next twelve months[143] - Purchase commitments for hydraulic fracturing equipment components totaled $28.7 million as of March 31, 2024[142]

Financial Data and Key Metrics Changes - The company reported first-quarter revenues of $582 million, representing a 19% sequential increase [20] - Adjusted EBITDA for the first quarter was $160 million, reflecting a 46% sequential improvement and an overall EBITDA margin of 27% [20] - Cash generated in the quarter was primarily allocated towards working capital and capital expenditures, including a $23 million debt repayment [20][24] Business Line Data and Key Metrics Changes - The Pressure Pumping segment achieved record efficiency levels, with an 11% sequential improvement in pumping hours per fleet [15] - The Proppant segment generated revenues of $78 million, down sequentially due to lower tonnage sold, but utilization is expected to improve [21][22] - The Manufacturing segment saw revenues increase to $43.5 million, up approximately 28% from the previous quarter, driven by higher output [22][23] Market Data and Key Metrics Changes - The company noted a stable fleet count in the industry, with expectations for a potential increase in natural gas prices impacting fleet growth [30][31] - There is a growing demand for electric and dual-fuel technologies, with a focus on fuel efficiency among customers [40][50] Company Strategy and Development Direction - The company is focused on enhancing customer experience, increasing utilization, and maintaining cost control to be the lowest cost operator in the industry [9][14] - The deployment of e-fleets is a significant part of the company's strategy, with plans to have all e-fleets operational by the end of 2024 [12][49] - The company aims to maintain a disciplined approach to fleet deployment, ensuring alignment with overall strategic goals [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market opportunities, anticipating stable pricing and continued growth in fleet count [10][20] - There is recognition of challenges in the gas markets, but management expects demand to increase later in the year [11][19] - The company is committed to operational execution and improving its market position to drive shareholder value [25] Other Important Information - The company achieved a 25% reduction in controllable costs from the previous quarter [13] - Total liquidity at the end of the quarter was approximately $167 million, with borrowings under the ABL at $138 million [25] Q&A Session Summary Question: Market dynamics on the frac side and profitability increase - Management noted that most profitability improvements were due to cost absorption and operational leverage, with expectations for stable fleet counts [30][32] Question: Current fleet count and asset breakdown - The active fleet count is in the low to mid-30s, with a focus on fuel-efficient assets [38][39] Question: Visibility for the next three to six months - Management emphasized a disciplined approach to fleet deployment and the ability to respond quickly to market changes [45] Question: Shortfall costs related to Flotek - Management expects to reduce shortfall costs as they expand their chemical profile with customers [47] Question: Future fleet deployment and electric fleets - All e-fleets are expected to be deployed by the end of 2024, showcasing their efficiency and value proposition [49] Question: Macro perspective on horsepower requirements - Management discussed the need for more horsepower in high-pressure scenarios and the importance of maintenance and redundancy [55][56] Question: Market balance and potential tightening - Management indicated that a bounce back in gas prices could lead to market tightening, emphasizing the importance of operational efficiency [60]

Financial Performance - Total revenue for Q1 2024 was $581.5 million, representing a sequential growth of approximately 19% compared to Q4 2023[2] - Net income for Q1 2024 was $3.0 million, a significant improvement from a net loss of $96.5 million in Q4 2023[2] - Adjusted EBITDA increased by approximately 46% sequentially to $159.7 million in Q1 2024[2] - Free cash flow for Q1 2024 grew 102% sequentially to $25.8 million[2] - Operating income for the three months ended March 31, 2024, was $39.9 million, compared to an operating loss of $14.3 million for the previous quarter[19] - Net income attributable to ProFrac Holding Corp. for the three months ended March 31, 2024, was $1.8 million, a significant recovery from a net loss of $97.9 million in the previous quarter[19] - Adjusted EBITDA for the same period was $159.7 million, compared to $109.5 million in the prior quarter, reflecting a growth of 45.9%[23] - Net income for the three months ended March 31, 2024, was a loss of $3.0 million, a significant improvement from a loss of $96.5 million in the previous quarter[22] Revenue Breakdown - The Stimulation Services segment generated revenues of $517.3 million with an Adjusted EBITDA of $125.0 million in Q1 2024[4] - The Proppant Production segment reported revenues of $77.7 million and Adjusted EBITDA of $28.4 million, with 31% of its revenue being intercompany[4] - Stimulation services generated $517.3 million in revenue, an increase from $403.3 million in the previous quarter, marking a growth of 28.3%[23] - Proppant production revenue decreased to $77.7 million from $92.9 million in the previous quarter, a decline of 16.3%[23] Cash Flow and Debt Management - Net cash provided by operating activities grew approximately 85% sequentially to $79.1 million in Q1 2024[2] - Cash flows from operating activities for the three months ended March 31, 2024, were $79.1 million, compared to $42.7 million for the three months ended December 31, 2023[20] - Total net debt outstanding as of March 31, 2024, was $1.06 billion, a decrease of approximately $26 million from the previous quarter[6] - The company's net debt decreased to $1,056.8 million as of March 31, 2024, down from $1,082.6 million at the end of the previous quarter, a reduction of 2.4%[24] - Total debt decreased to $1,048.6 million from $1,068.5 million in the previous quarter, a decrease of 1.9%[24] - Interest expense, net, was $37.6 million for the three months ended March 31, 2024, slightly down from $38.8 million in the previous quarter[22] Asset and Liability Management - Total current assets increased to $664.6 million as of March 31, 2024, up from $638.1 million as of December 31, 2023[18] - Total liabilities decreased to $1,673.4 million as of March 31, 2024, down from $1,742.1 million as of December 31, 2023[18] - Cash and cash equivalents increased to $28.3 million as of March 31, 2024, compared to $25.3 million as of December 31, 2023[20] - The company reported a decrease in accounts payable to $281.8 million as of March 31, 2024, from $319.0 million as of December 31, 2023[18] Future Outlook - The company expects to incur maintenance-related capital expenditures of between $150 million and $200 million for the full year 2024[5] - The company anticipates steady pricing in the Stimulation Services segment and improved profitability in the Proppant Production segment as third-party volumes expand[3] - ProFrac Holding Corp. plans to continue focusing on market expansion and new product development in the upcoming quarters[21] - The company reported a significant reduction in acquisition and integration costs to $0.2 million for the three months ended March 31, 2024, compared to $1.7 million in the previous quarter[19]

Core Viewpoint - ProFrac Holding Corp. reported strong financial results for Q1 2024, showing significant improvements in revenue, net income, and cash flow compared to the previous quarter, indicating effective execution of strategic initiatives and operational efficiencies [2][4][5]. Financial Performance - Total revenue for Q1 2024 was $581.5 million, a sequential increase of approximately 19% from Q4 2023 [2][24]. - Net income was $3.0 million, a turnaround from a net loss of $96.5 million in Q4 2023 [2][21]. - Adjusted EBITDA grew approximately 46% sequentially to $159.7 million [2][24]. - Net cash provided by operating activities increased approximately 85% sequentially to $79.1 million [2][25]. - Free cash flow grew 102% sequentially to $25.8 million [2][25]. Business Segment Performance - The Stimulation Services segment generated revenues of $517.3 million with an Adjusted EBITDA of $125.0 million [4][24]. - The Proppant Production segment reported revenues of $77.7 million and Adjusted EBITDA of $28.4 million, with 31% of its revenue being intercompany [4][24]. - The Manufacturing segment generated revenues of $43.5 million with an Adjusted EBITDA of $4.4 million, where 78% of the revenue was intercompany [4][24]. - Other Business Activities generated revenues of $41.7 million with an Adjusted EBITDA of $3.6 million [4][24]. Capital Expenditures and Allocation - Cash capital expenditures totaled $59.9 million in Q1 2024, reflecting investments in fleet deployments and growth initiatives [5]. - The company expects maintenance-related capital expenditures for the full year 2024 to be between $150 million and $200 million, with growth-related capital expenditures around $100 million [5]. Balance Sheet and Liquidity - Total net debt outstanding as of March 31, 2024, was $1.06 billion, a decrease of approximately $26 million from the previous quarter [7]. - Total cash and cash equivalents were $28.3 million, with $5.2 million related to Flotek and not accessible by the company [7]. - The company had $166.9 million of liquidity, including approximately $23.1 million in cash and cash equivalents, excluding Flotek [7]. Outlook - The company anticipates steady pricing in the Stimulation Services segment and expects further improvements in profitability per fleet due to its superior cost structure [3]. - In the Proppant Production segment, volumes and profitability are expected to improve alongside the expansion of third-party volumes [3].