ProFrac (ACDC) - 2024 Q1 - Earnings Call Transcript

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]