ProFrac Holding Corp. Q3 FY2024 earnings call

• ProFrac delivered revenue of $575 million and adjusted EBITDA of $135 million in the third quarter. • Continued setting new operating efficiency records and partnering with operators for integrated solutions. • Record-setting efficiency per active fleet, with ~three quarters of active fleets using next-generation technology. • Actively retiring 400,000 horsepower of legacy diesel burning equipment. • Successfully tested new generation electric pumps and a novel software platform. • Proppant segment impacted by weak natural gas activity and West Texas competition, but anticipating recovery in 2025. • Strategic investments in power generation due to grid constraints and electrification trends.

Stimulation Services: Revenues were $507 million in the third quarter, up sequentially. Adjusted EBITDA was $113 million, an improvement of approximately 5% versus Q2, with a margin of 22%. Proppant Production: Generated $53 million of revenue in the third quarter, a 24% sequential decline. Adjusted EBITDA was $17 million, a 33% sequential decrease. Manufacturing: Third quarter revenues were $62 million, up approximately 10% from the second quarter. Adjusted EBITDA for the Manufacturing segment was approximately $100,000 for the quarter, flat with Q2.

• Expect to continue investing in next-generation equipment disposing of diesel. • Anticipate a recovery in activity in 2025, particularly in West Texas and South Texas. • Q1 2025 expected to pick up from Q4 and Q3 levels, though year-over-year will be flat to slightly down. • Prudent capital allocation to align with demand and prepare for improved activity in 2025.

• Market challenges including budget exhaustion, seasonality, and pricing pressures. • Equipment attrition across the industry leading to potential supply and demand dynamics issues. • Continued weakness in natural gas-related activity impacting proppant segment. • Uncertainties in power generation market adoption and competition.

Q: Could you share more color on the 2025 outlook, especially on the oil side?

A: Matt Wilks stated South Texas and West Texas Q1 2025 expected to pick up from Q4/Q3 levels, but year-over-year flat to slightly down, due to seasonality.

Q: Talk about interplay between pricing and cost management?

A: Matt Wilks said vertical integration allows control over fixed costs, operating leverage helps dilute cost structure. Ladd Wilks added focus on controlling controllable costs and leveraging efficiencies in the value chain.

Q: Thoughts on CapEx for 2025?

A: Austin Harbour said it's too early to tell, still early in RFP season with no preliminary guidance on CapEx.

Q: Sense for frac business EBITDA and fleet deployments?

A: Matt Wilks mentioned focus on keeping fleets working, benefiting from operating leverage, and supply and demand tighter due to attrition.

Q: Impact of Dune Express on proppant business?

A: Matt Wilks said no material impact, but excited about growing customer base and volumes in proppant business.

Q: Color on power generation business?

A: Ladd Wilks said e-fleet business offers opportunities for microgrid solutions, focusing on derisking and satisfying internal needs with potential for wider market outside oil and gas.

Q: Uplift in Haynesville activity and sand prices?

A: Ladd Wilks said it's hard to say due to factors like weather and LNG offtake timelines, but committed to Haynesville market and expecting recovery when conditions improve