ProPetro Holding Corp. Q1 FY2025 earnings call

• ProPetro had a strong first quarter operationally and financially, with resilient free cash flow despite macroeconomic volatility. The focus on capital-efficient asset investments and industrialized model is working.
• Demand for next-generation services remained strong, with 75% of the fleet using Tier 4 DGB dual fuel and electric offerings, and 50% of active hydraulic horsepower under contract. There are seven Tier 4 DGB dual fuel fleets and four Force fleets under long-term contracts, with a fifth Force fleet expected this year.
• Pro Power has approximately 220 megawatts of mobile natural gas fuel power generation equipment on order, with letters of intent on 75 megawatts of long-term Pro Power service capacity in the Permian Basin. The company plans to allocate $170 million in 2025 and $60 million in 2026 for Pro Power equipment.
• Financial improvements over the past two years are due to execution of the capital allocation strategy, including disciplined M&A, Pro Power offering, and Force Electric fleet transition. Full year 2025 CapEx is expected to be between $295 million and $345 million, a 9% reduction from prior guidance.

ProPetro's first quarter performance was strong. Total revenue for the quarter was $359 million, a 12% increase from the prior quarter. Adjusted EBITDA totaled $73 million, which was 20% of revenue and a 38% increase from the prior quarter. Net income was $10 million or $0.09 per diluted share, compared to a net loss of $17 million or $0.17 per diluted share in the fourth quarter of 2024. Net cash provided by operating activities was $55 million and free cash flow was $22 million. Capital expenditures for the first quarter were $39 million. The company's Force Electric fleet transition is significant, with 75% of the fleet using Tier 4 DGB dual fuel and electric offerings, and 50% of active hydraulic horsepower under contract. Pro Power has approximately 220 megawatts of mobile natural gas fuel power generation equipment on order, with $170 million allocated in 2025 and $60 million in 2026 for Pro Power equipment orders.

• Full year 2025 CapEx is anticipated to be between $295 million and $345 million, down from the prior guidance of $300 million to $400 million. The midpoint represents a 9% reduction.
• The completion business is expected to account for $125 million to $175 million.
• Anticipate operating approximately between thirteen and fourteen fleets in the second quarter, a reduction from the 14 to 15 fleets in the first quarter.
• Plan to continue to transition capital from legacy diesel equipment to Force electric equipment, with a fifth Force fleet expected to be deployed under contract this year.

• Macro-economic volatility, including the impact of tariffs and OPEC+ production increases, has placed pressure on the energy market and crude oil prices, creating uncertainty for the entire energy value chain.
• The near-term outlook is unclear due to recent decline in oil prices influenced by tariffs and OPEC+ production increases, which could affect fleet operations and asset deployment.

Q: John Daniel asked about Pro Power's focus, specifically if it's limited to the Permian and opportunities outside.

A: Sam Sledge said Pro Power was initially focused on Permian oil and gas operations but has potential to service other areas and industries, with an open ear to outside opportunities while focusing on Permian oil and gas initially.

Q: John Daniel asked about the shift from 14-15 fleets to 13-14 fleets.

A: Sam Sledge said it's a combination of customer reducing activity and choosing to walk away from lower prices, with almost half of frac capacity under long-term contracts.

Q: Alex Schielehofer asked about pricing for pressure pumping equipment.

A: Sam Sledge said contracted market pricing is steady, with newer assets like Force Electric offering efficiencies and economics, and spot market having price discipline with some low pricing being unsustainable.

Q: Alex Schielehofer asked about capital allocation between power business and buybacks.

A: Sam Sledge said power business and Force Electric offering are top of the stack due to known returns from contracts, with other capital allocation opportunities including M&A, wirelines, cement, and buybacks.

Q: Waqar Syed asked about crews in the Permian in June.

A: Sam Sledge said there could be a downtick in June, with expectation to pull at least one fleet out due to pricing pressure. CapEx cuts on pumping side are mostly due to optimization. Mobile power mix is flexible based on strategy and availability.

Q: Arun Jayaram asked about longer-term ambitions on Force newbuilds.

A: Sam Sledge said electric frac is the future, with five Force fleets including a 200 barrel a minute charmeral frac, and expectation to continue transitioning to more e-fleets, with existing e-fleets potentially transitioning to Simul. Returns on power LOIs are expected to be strong with four-year paybacks or better.

Q: Arun Jayaram asked about returns on power LOIs versus frac side.

A: Sam Sledge said returns on power LOIs are in the ballpark of $300,000 of EBITDA per megawatt per year, leading to four-year paybacks, and it's a win-win for ProPetro and customers.