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ProFrac (ACDC) - 2022 Q3 - Earnings Call Transcript
ACDCProFrac (ACDC)2022-11-12 07:47
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Financial Data and Key Metrics Changes - Revenue for Q3 2022 totaled 696million,upnearly20696 million, up nearly 20% compared to Q2 2022 [25] - Net income was 143 million for the quarter, compared to 70millioninQ22022[26]−AdjustedEBITDAincreasedto70 million in Q2 2022 [26] - Adjusted EBITDA increased to 256 million, or 267millionwhenexcludinglossesfromotherbusinessactivities,representinga22267 million when excluding losses from other business activities, representing a 22% sequential increase [16][26] - Annualized adjusted EBITDA per fleet rose 23% to 34 million from 28.1millioninQ22022[17][26]BusinessSegmentDataandKeyMetricsChanges−Stimulationservicessegmentgeneratedrevenuesof28.1 million in Q2 2022 [17][26] Business Segment Data and Key Metrics Changes - Stimulation services segment generated revenues of 669 million, up 16% from Q2 2022, with adjusted EBITDA of 250million[28][29]−Manufacturingsegmentrevenuesincreasedby40250 million [28][29] - Manufacturing segment revenues increased by 40% to 49 million, with adjusted EBITDA slightly down to 8.4million[30]−ProppantProductionsegmentrevenuesrose418.4 million [30] - Proppant Production segment revenues rose 41% to 25 million, but adjusted EBITDA decreased to 9.2millionduetolowerutilizationandsellingprices[31][32]MarketDataandKeyMetricsChanges−Demandforallfleettypesremainsstrong,particularlyfornewertechnologyfleets[22]−PricinglevelsforequipmenttypesareexpectedtoremainconstructiveintoQ4and2023[23]−ThecompanyreportedthehighestlevelofutilizationintermsofpumpinghoursduringQ32022[21]CompanyStrategyandDevelopmentDirection−ThecompanycompletedtheacquisitionofU.S.WellServices,positioningitselfasthelargestproviderofelectricfracturingservicesglobally[8]−Focusonverticalintegrationtocapturemoreofcustomers′completionbudgets,withagoaltoprovidesand,chemicals,storage,andlogistics[19][54]−PlanstoincreasethenumberofelectricfleetsandaccelerateTier4dualfuelupgradestomeetcustomerdemand[15][36]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedabullishoutlookfortheoilfieldservicesmarket,citinglimitedsupplyandstrongdemand[44][59]−Thecompanyanticipatesastrong2023pipelineandbookofcontractedwork,thestrongestseenin14years[24][88]−Managementhighlightedtheimportanceofreducingdowntimeandincreasingefficiencythroughstrategicinvestmentsinmaintenanceandupgrades[51][53]OtherImportantInformation−CapitalexpendituresforQ32022were9.2 million due to lower utilization and selling prices [31][32] Market Data and Key Metrics Changes - Demand for all fleet types remains strong, particularly for newer technology fleets [22] - Pricing levels for equipment types are expected to remain constructive into Q4 and 2023 [23] - The company reported the highest level of utilization in terms of pumping hours during Q3 2022 [21] Company Strategy and Development Direction - The company completed the acquisition of U.S. Well Services, positioning itself as the largest provider of electric fracturing services globally [8] - Focus on vertical integration to capture more of customers' completion budgets, with a goal to provide sand, chemicals, storage, and logistics [19][54] - Plans to increase the number of electric fleets and accelerate Tier 4 dual fuel upgrades to meet customer demand [15][36] Management's Comments on Operating Environment and Future Outlook - Management expressed a bullish outlook for the oil field services market, citing limited supply and strong demand [44][59] - The company anticipates a strong 2023 pipeline and book of contracted work, the strongest seen in 14 years [24][88] - Management highlighted the importance of reducing downtime and increasing efficiency through strategic investments in maintenance and upgrades [51][53] Other Important Information - Capital expenditures for Q3 2022 were 123 million, with expectations for full-year CapEx to range between 330millionand330 million and 350 million [34] - The company ended Q3 with 549millioninoutstandingprincipaldebtand549 million in outstanding principal debt and 246 million in liquidity [38] - The company expects to maintain a leverage ratio below one turn of debt to EBITDA [59] Q&A Session Summary Question: Regarding U.S. Well Service assets and their EBITDA contribution - Management expects a 10% to 15% per fleet dilution across the entire fleet due to the integration of U.S. Well Services [64] Question: Thoughts on shareholder returns and potential buybacks - Management does not expect to see any buybacks, focusing instead on maintaining a high-quality float and returning capital to stakeholders [72][73] Question: Insights on the 2023 book of work and visibility across E&Ps - Management noted a strong backlog for 2023, with a fully sold-out market and challenges in the supply chain [88] Question: Guidance on SG&A expenses post-U.S. Well Services acquisition - Management indicated that SG&A will increase, estimating around $20 million per year for U.S. Well Services, with realization of synergies expected over the next six months [85] Question: Discussion on the ramp-up of new sand mines - Management expects a ramp-up period of two to four months for new mines, with plans to start shipping sand soon [82][84]