Core Viewpoint - ProFrac Holding Corp. (ACDC) is expected to report a year-over-year decline in earnings and revenues for the quarter ended March 2024, with the consensus outlook indicating a significant drop in performance [1][2]. Financial Expectations - The company is projected to post quarterly earnings of $0.05 per share, reflecting a year-over-year change of -94.5% [2]. - Revenues are anticipated to be $587.6 million, down 31% from the same quarter last year [2]. Estimate Revisions - The consensus EPS estimate has been revised 8.33% lower over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [2][5]. - The Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -53.33% [5]. Earnings Surprise History - In the last reported quarter, ProFrac was expected to post earnings of $0.04 per share but instead reported a loss of $0.19, resulting in a surprise of -575% [7]. - Over the last four quarters, the company has only beaten consensus EPS estimates once [7]. Predictive Indicators - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [4]. - ProFrac currently holds a Zacks Rank of 3, which complicates the prediction of an earnings beat given the negative Earnings ESP [5][6]. Industry Comparison - In contrast, Ormat Technologies (ORA) is expected to post earnings of $0.67 per share for the same quarter, indicating a year-over-year change of +31.4% [9]. - Ormat's revenue is projected to be $224.38 million, up 21.1% from the previous year, although it also faces a negative Earnings ESP of -14.29% [9].

Core Viewpoint - ProFrac Holding Corp. will report its first quarter 2024 financial results on May 9, 2024, with a live conference call available for investors and stakeholders [1]. 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 [2]. - Founded in 2016, ProFrac aims to be the primary service provider for the hydraulic fracturing needs of exploration and production companies, emphasizing the use of new technologies to reduce greenhouse gas emissions and enhance efficiency [2]. - The company operates in three business segments: stimulation services, proppant production, and manufacturing [2].

Company Performance - ProFrac Holding Corp. reported a quarterly loss of $0.19 per share, significantly worse than the Zacks Consensus Estimate of $0.04, and down from earnings of $1.46 per share a year ago, indicating a -575% earnings surprise [1] - The company's revenues for the quarter were $489.1 million, missing the Zacks Consensus Estimate by 17.68%, and down from $794.1 million in the same quarter last year [1] - Over the last four quarters, ProFrac has only surpassed consensus EPS estimates once and has not beaten consensus revenue estimates [1] Market Outlook - ProFrac Holding Corp. shares have declined approximately 8.1% since the beginning of the year, contrasting with the S&P 500's gain of 8% [2] - The company's earnings outlook is currently unfavorable, reflected in a Zacks Rank of 5 (Strong Sell), suggesting expected underperformance in the near future [4] - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $629.07 million, and for the current fiscal year, it is $0.94 on revenues of $2.7 billion [4] Industry Context - The Alternative Energy - Other industry, to which ProFrac belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, indicating potential challenges for stock performance [5] - The performance of ProFrac may also be influenced by the broader industry outlook, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [5]

Operations and Capacity - ProFrac Holding Corp. operates 30 active frac fleets as of January 31, 2024, with 16 Tier IV fleets, 10 Tier II fleets, and 4 electric fleets[15]. - The company has completed six acquisitions since its IPO in 2022, adding approximately 18.7 million tons of annual sand capacity and 13 frac fleets[14]. - ProFrac is the largest producer of in-basin frac sand in the U.S., with approximately 21.5 million tons of annual nameplate capacity across eight frac sand mines[17]. - ProFrac's operations are concentrated in major unconventional oil and gas basins, allowing for a diversified customer base and balanced exposure to public and private E&P companies[16]. - ProFrac's stimulation services segment is one of the largest in the U.S., serving a diversified customer base across various oil and gas reserves[16]. - The company operates in three business segments: stimulation services, proppant production, and manufacturing, focusing on hydraulic fracturing and completion services[223]. Financial Performance - Total revenues for 2023 were $2,630.0 million, an increase of 8.4% compared to $2,425.6 million in 2022[209]. - Operating income for 2023 was $166.6 million, down from $412.4 million in 2022, representing a decline of 59.7%[209]. - Net loss attributable to ProFrac Holding Corp. for 2023 was $97.7 million, compared to a net income of $91.5 million in 2022[209]. - Total current assets decreased to $638.1 million in 2023 from $865.4 million in 2022, a decline of 26.2%[206]. - Total liabilities increased to $1,742.1 million in 2023, up from $1,582.9 million in 2022, reflecting a rise of 10.1%[206]. - Cash and cash equivalents decreased to $25.3 million in 2023 from $35.1 million in 2022, a decrease of 28.0%[206]. - Long-term debt rose to $923.5 million in 2023, compared to $735.0 million in 2022, an increase of 25.6%[206]. - The company reported operating costs and expenses of $2,463.4 million in 2023, up from $2,013.2 million in 2022, an increase of 22.3%[209]. - Earnings per Class A common share for 2023 were $(0.82), compared to $2.06 in 2022[209]. - The company reported a net loss for the period of $101.0 million, compared to a net loss of $97.7 million in the previous period, indicating a 3.3% increase in losses[215]. Acquisitions and Growth Strategy - ProFrac is positioned as an industry consolidator, actively pursuing M&A opportunities to expand its capabilities and scale[14]. - ProFrac acquired Producers Service Holdings LLC for approximately $35.0 million, adding three fleets totaling 200,000 HHP and a 50,000 square foot manufacturing facility[19]. - The acquisition of Performance Proppants was completed for approximately $462.8 million, consisting of $452.4 million in cash and $6.2 million in Class A Common Stock[20]. - The company acquired 100% of Performance Proppants for a total purchase consideration of $462.8 million[187]. - The total purchase consideration for the FTS International acquisition was $405.7 million, with cash consideration of $332.8 million[277]. - The total purchase consideration for the acquisition of Flotek Industries, Inc. was $405.7 million, with identifiable assets acquired valued at $502.0 million[279]. - The acquisition of SP Silica of Monahans, LLC was completed for a total purchase price of $97.4 million, with identifiable assets acquired valued at $146.7 million[286]. - The USWS Acquisition was completed for equity consideration of 12.9 million shares valued at $282.1 million, cash consideration of $195.9 million, and replacement warrants valued at $1.1 million[290]. - The Monarch acquisition was completed for a total consideration of $166.5 million, including cash of $87.5 million and a long-term secured note of $79.0 million[293]. - The REV acquisition involved total consideration of $140.6 million, which included equity consideration valued at $78.0 million and cash consideration of $19.9 million[296]. Debt and Financial Obligations - The company completed debt refinancing totaling $885 million, extending maturities to 2029 and enhancing financial flexibility for 2024[25]. - A 1% increase in interest rates on variable-rate debt would raise annual interest payments by approximately $10.0 million as of December 31, 2023[175]. - ProFrac Holding Corp. has a total long-term debt of $942.1 million as of December 31, 2023, an increase from $797.8 million in the previous year[304]. - The company issued $520 million of senior secured floating rate notes due in December 2029, with an effective interest rate of 14.0% as of December 31, 2023[305][306]. - The Alpine subsidiary secured a term loan of $365 million, with an effective interest rate of 14.3% as of December 31, 2023[309]. - The 2022 ABL Credit Facility has a maximum availability of $325 million, with $117.4 million of borrowings outstanding and an effective interest rate of 9.5%[311]. - The Monarch Note, related to the acquisition of Monarch, has a principal of $87.5 million and requires quarterly payments of $10.9 million, with an effective interest rate of 12.1%[312]. - The company is required to maintain a minimum liquidity of $15 million under the 2022 ABL Credit Facility[311]. - The 2029 Senior Notes require minimum quarterly principal payments of $10 million starting June 30, 2024[308]. - ProFrac Holding Corp. was in compliance with all covenants related to its debt agreements as of December 31, 2023[308][311]. Environmental and Regulatory Risks - The company is subject to stringent environmental regulations, which may impose costly compliance measures and could materially affect operations and financial position[32]. - The company handles hazardous and non-hazardous wastes under the Resource Conservation and Recovery Act, with potential penalties for non-compliance[32]. - The Comprehensive Environmental Response, Compensation and Liability Act imposes strict liability for hazardous substance releases, which could lead to significant remediation costs[32]. - The Clean Water Act and related regulations impose strict controls on pollutant discharges, with potential delays in obtaining necessary permits[33]. - The Clean Air Act regulates air emissions, requiring permits and potentially increasing compliance costs for the company[34]. - The company faces political and regulatory risks related to climate change, including potential new legislation aimed at reducing greenhouse gas emissions[34]. - The Inflation Reduction Act includes a fee on methane emissions starting at $900 per metric ton in 2024, increasing over the following years[34]. - The company may incur increased costs due to new EPA regulations on methane emissions from oil and gas operations, which could affect demand for its services[34]. - The company is monitoring ongoing litigation regarding the definition of "waters of the United States," which could impact regulatory requirements and operational costs[33]. - The company is subject to potential changes in state and federal regulations that could impose more stringent environmental standards, affecting capital and operating expenses[32]. Employee and Operational Metrics - As of December 31, 2023, ProFrac employed 2,949 people, achieving a Total Reportable Incident Rate of 0.54, significantly better than the industry average of 1.00[28]. - Stock-based compensation totaled $8.1 million, which includes $7.8 million for stock-based compensation and $12.4 million related to deemed contributions[215]. - The company incurred severance charges of $1.1 million in 2023 related to the departure of two executives[334]. - The company has a long-term incentive plan with 2,542,708 shares available for future grants as of December 31, 2023[339]. Accounting and Audit Matters - The financial statements of ProFrac Holding Corp. present fairly the financial position as of December 31, 2023 and 2022, in conformity with U.S. GAAP[181]. - The audit identified the estimation of fair value of acquired assets and liabilities as a critical audit matter due to significant management judgments[188]. - The recoverability of contract assets was identified as a critical audit matter, requiring subjective auditor judgment in evaluating key assumptions[202]. - The Company utilized valuation specialists to assist in developing estimates of fair value for acquired assets and liabilities[191]. - The audit procedures included evaluating forecasted financial performance by comparing projected revenues and cash flows to actual historical performance[195]. - The company identified and corrected an error in accounting for deferred tax assets, which understated deferred tax assets by $65.8 million as of December 31, 2022[232]. Stock and Equity Transactions - ProFrac redeemed 104,195,938 ProFrac LLC Units, issuing 101,133,202 shares of Class A Common Stock in exchange[21]. - The issuance of 50,000 shares of Series A Redeemable Convertible Preferred Stock generated gross proceeds of $50.0 million, with an 8% annual dividend rate[22]. - The company issued Class A shares valued at $134.6 million to acquire USWS, contributing to the overall equity changes[218]. - A member contribution of $18.0 million was recorded, which positively impacted the equity balance[218]. - The issuance of Class A shares in the IPO raised $227.7 million, enhancing the company's capital structure[218]. - The adjustment of redeemable noncontrolling interest to redemption amount resulted in a significant decrease of $(1,438.0) million[218]. - The redemption amount for the preferred stock as of December 31, 2023, would be $58.7 million, reflecting a potential cash payout upon redemption[332].

Financial Data and Key Metrics Changes - In 2023, the company generated $688 million of adjusted EBITDA on $2.6 billion in revenue, resulting in an overall EBITDA margin of 26% [23] - Free cash flow for the year was $293 million, an increase of 173% over 2022 [6][23] - Fourth quarter revenue totaled $489 million, a sequential decrease primarily due to a lower fleet count [23] - EBITDA for the fourth quarter was $110 million, impacted by lower efficiencies and pricing [24] Business Line Data and Key Metrics Changes - Stimulation services revenues in the fourth quarter decreased to $403 million, with 75% of the reduction attributed to a lower number of fleets [24] - The Proppant Production segment generated $383 million in full-year revenues, significantly up from $90 million in 2022, with fourth quarter revenues at $93 million, down approximately 6% due to lower sand pricing [25] - The Manufacturing segment generated revenues of $34 million in the fourth quarter, down approximately 22% from the third quarter [26] Market Data and Key Metrics Changes - The company expects to improve utilization by at least 30% in 2024, with a focus on dedicated agreements with operators at favorable prices [16][18] - Current spot pricing for frac sand is in the $20s to $30s, with a focus on minimizing exposure to the spot market [41] Company Strategy and Development Direction - The company aims to enhance its position as a leader in the oilfield services industry through strategic acquisitions and operational improvements [8][14] - Focus areas for 2024 include maximizing vertical integration, improving asset utilization, and maintaining low operating costs [12][13] - The company plans to generate significant cash flow to deleverage its balance sheet and potentially return cash to shareholders [14] Management Comments on Operating Environment and Future Outlook - Management acknowledged challenges in 2023 due to market conditions but expressed optimism for improved results in 2024 [6][10] - The company is committed to correcting past mistakes and regaining market share, regardless of overall market activity [11][61] - Management expects to achieve profitability per active fleet in the range of $20 million to $25 million in the first half of 2024 [34][46] Other Important Information - The company completed several acquisitions in 2023, expanding its asset base and geographic footprint [7] - A recapitalization of the senior secured term loan was completed, enhancing financial flexibility [8] Q&A Session All Questions and Answers Question: Can you talk about the market structure and your strategy regarding fleet reactivations? - The company added 10 fleets, primarily in the first quarter, and expects to reach around 41% to 42% utilization, potentially increasing to 45% if market conditions allow [33] Question: What are the current dynamics in pricing and supply-demand? - The market is currently flat, with the company adding fleets in an environment without an increase in active fleets, focusing on cost absorption and reducing per unit costs [39] Question: Can you provide insights on free cash flow expectations for 2024? - The company expects to generate significant free cash flow and aims to cut its debt in half this year [43] Question: What is the company's exposure to the natural gas market? - Approximately one-third of the business is exposed to gas markets, and the company remains committed to its customer base in these areas [49] Question: What are the drivers for the expected increase in utilization? - Improved demand in the Permian assets and a focus on providing excellent service to customers are key drivers for increased utilization [52]

Core Viewpoint - ProFrac Holding Corp. reported a decline in net income for 2023, with total revenue increasing to $2.63 billion but a net loss of $59 million compared to a net income of $343 million in 2022. The company aims to enhance its position in the oilfield services industry through strategic initiatives and improved operational efficiencies in 2024 [2][3][4]. Financial Performance - Total revenue for 2023 was $2.63 billion, up from $2.43 billion in 2022 [2]. - The net loss for 2023 was $59 million, a significant decline from a net income of $343 million in 2022 [2]. - Adjusted EBITDA for 2023 was $688 million [2]. - Net cash provided by operating activities was $554 million, with capital expenditures totaling $267 million [2]. - Free cash flow increased by 173% to $293 million compared to 2022 [2]. Quarterly Results - In Q4 2023, total revenue was $489 million, down from $574 million in Q3 2023 [3]. - The net loss for Q4 was $97 million, compared to a net loss of $18 million in Q3 2023 [3]. - Adjusted EBITDA for Q4 was $110 million [3]. - Free cash flow for Q4 was $13 million [3]. Strategic Initiatives - The company has focused on three strategic priorities: enhancing service quality, improving utilization, and achieving the lowest operating costs in the industry [4]. - ProFrac has increased its fleet count and improved pumping efficiencies, achieving nearly 20% higher pumping hours per active fleet in early 2024 compared to the 2023 average [5]. Business Segment Performance - The Stimulation Services segment generated $2.29 billion in revenue for 2023, with an Adjusted EBITDA of $480 million [7]. - The Proppant Production segment generated $383 million in revenue for 2023, resulting in $196 million of Adjusted EBITDA [8]. - The Manufacturing segment generated $176 million in revenue for 2023, with an Adjusted EBITDA of $15 million [8]. - Other Business Activities generated $193 million in revenue for 2023, resulting in a negative Adjusted EBITDA of $1.6 million [9]. Capital Expenditures and Outlook - Total capital expenditures for 2023 were $267 million, a 25% reduction from 2022 [10]. - For 2024, the company expects capital expenditures between $150 million and $200 million for maintenance and an additional $100 million for growth initiatives [10]. - The company anticipates modest improvement in mine utilization and pricing in the Proppant Production segment in early 2024 [6]. Balance Sheet and Liquidity - As of December 31, 2023, total net debt was $1.08 billion, an increase of approximately $27 million from Q3 2023 [11]. - Total cash and cash equivalents were $25 million, with $103 million in liquidity available [11].

Financial Performance - Total revenue for 2023 was $2.63 billion, a 8.3% increase from $2.43 billion in 2022[2] - Net loss for 2023 was $59 million, compared to a net income of $343 million in 2022[2] - Adjusted EBITDA for 2023 was $688 million[2] - Free cash flow for 2023 was $293 million, an increase of 173% from 2022[2] - Fourth quarter revenue was $489 million, down from $574 million in the third quarter of 2023[3] - Net loss in the fourth quarter was $97 million, compared to a net loss of $18 million in the third quarter of 2023[3] - The company reported a net loss attributable to ProFrac Holding Corp. of $97.9 million for the three months ended December 31, 2023, compared to a net loss of $18.9 million for the same period in 2022[22] - The company reported a net loss of $(96.5) million for the three months ended December 31, 2023, compared to a net loss of $(17.9) million for the same period in 2022[22] - The company reported a net loss of $96.5 million for the three months ended December 31, 2023, compared to a net income of $116.0 million for the same period in 2022[23] Revenue by Segment - The Stimulation Services segment generated $2.29 billion in revenue for 2023, with $480 million of Adjusted EBITDA[7] - The Proppant Production segment generated $383 million in revenue for 2023, with $196 million of Adjusted EBITDA[7] - Stimulation services revenue for the three months ended December 31, 2023, was $403.3 million, down from $489.5 million in the previous quarter, a decrease of 17.6%[25] - Proppant production revenue for the three months ended December 31, 2023, was $92.9 million, a decrease of 8.5% from $98.4 million in the previous quarter[25] Cash Flow and Capital Expenditures - The company expects cash capital expenditures for 2024 to be between $150 million and $200 million for maintenance and an additional $100 million for growth initiatives[9] - Cash flows from operating activities provided $10.5 million in Q4 2023, a decrease from $27.3 million in Q4 2022[23] - The company had net cash used in investing activities of $28.4 million in Q4 2023, compared to $398.8 million in Q4 2022[23] - Free cash flow for the twelve months ended December 31, 2023, was $292.7 million, compared to $107.3 million for the previous year, indicating a significant increase[27] Debt and Liabilities - Total net debt as of December 31, 2023 was $1.08 billion, an increase of approximately $27 million from the third quarter[10] - Long-term debt increased to $923.5 million as of December 31, 2023, compared to $735.0 million in 2022, marking a 25.6% rise[21] - Total liabilities increased to $1,742.1 million as of December 31, 2023, from $1,582.9 million in 2022, reflecting a 10.1% increase[21] - Total debt as of December 31, 2023, was $1,068.5 million, an increase from $925.4 million as of December 31, 2022, representing a year-over-year increase of 15.4%[26] - Net debt as of December 31, 2023, increased to $1,082.6 million from $924.3 million as of December 31, 2022, reflecting a year-over-year increase of 17.1%[26] Assets and Equity - Cash and cash equivalents decreased to $25.3 million as of December 31, 2023, down from $35.1 million at the end of 2022[21] - Total current assets were $638.1 million as of December 31, 2023, a decline from $865.4 million in 2022, reflecting a 26.2% decrease[21] - The company’s total assets grew to $3,070.7 million as of December 31, 2023, compared to $2,933.6 million in 2022, representing a 4.7% increase[21] Operating Performance - Operating costs and expenses for the year ended December 31, 2023, totaled $2,463.4 million, up from $2,013.2 million in 2022, indicating a 22.3% increase[22] - The operating loss for the three months ended December 31, 2023, was $(14.3) million, a decrease from an operating income of $20.5 million in the prior quarter[22] - Adjusted EBITDA for the three months ended December 31, 2023, was $109.5 million, down from $149.3 million in the previous quarter, representing a decline of 26.7%[25] Other Financial Metrics - The company experienced depreciation, depletion, and amortization expenses of $107.7 million in Q4 2023, slightly down from $111.5 million in Q4 2022[23] - The company recorded a deferred tax expense of $4.9 million in Q4 2023, compared to a benefit of $5.0 million in Q4 2022[23] - Stock-based compensation expenses were $2.5 million in Q4 2023, a decrease from $14.1 million in Q4 2022[23] - The total cash, cash equivalents, and restricted cash at the end of the period was $27.3 million, down from $48.7 million at the end of Q4 2022[23] - The company reported a loss on investments of $14.4 million in Q4 2023, compared to a gain of $5.1 million in Q4 2022[23] Future Outlook - The company plans to focus on market expansion and new product development to drive future growth[24]

Company Overview - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services company that provides well stimulation services, proppants production, and other complementary products and services to oil and gas companies engaged in the exploration and production of unconventional oil and natural gas resources throughout the United States [2]. Upcoming Financial Results - ProFrac will report its 2023 fourth quarter and full year financial results on March 13, 2024, at 11:00 a.m. Eastern / 10:00 a.m. Central [1]. - The financial results will be presented during a live conference call, which can be accessed via phone or the internet [1]. Environmental Focus - The company aims to employ new technologies to significantly reduce greenhouse gas emissions and increase efficiency in hydraulic fracturing, which is traditionally an emissions-intensive process [2].

Core Viewpoint - ProFrac Holding Corp. has confidentially submitted a draft registration statement for an initial public offering (IPO) of its subsidiary Alpine Silica Holding, LLC, with details on the number of shares and price range yet to be determined [1]. Company Overview - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services company that provides well stimulation services, proppants production, and complementary products to oil and gas companies in the exploration and production of unconventional oil and natural gas resources across the United States [3]. - Founded in 2016, ProFrac aims to be the primary service provider for the hydraulic fracturing needs of exploration and production companies, focusing on employing new technologies to reduce greenhouse gas emissions and enhance efficiency in the emissions-intensive unconventional E&P development process [3].

Core Insights - ProFrac Holding Corp. has outlined its operational and strategic priorities for 2024, focusing on increasing fleet count and enhancing proppant production through higher contracted volumes and reduced mining costs [1] - The company emphasizes three critical components for its business strategy: higher utilization, exceptional customer experience, and the lowest per unit costs in the industry [2] Company Overview - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services company that provides well stimulation services and proppants production to oil and gas companies in the U.S. [3] - Founded in 2016, ProFrac aims to be the primary service provider for hydraulic fracturing needs, utilizing new technologies to reduce greenhouse gas emissions and improve efficiency in unconventional oil and gas resource development [3]