ACDC - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to the ProFrac Holding Corp First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Michael Messina, Director of Finance for ProFrac Holding Corp. Thank you.

begin. may You

Michael Messina

are Good Financial for operator. to We you and me appreciate our Wilks, Chairman; Thank Executive Chief Holding morning, Corp's us Officer; today With results. ProFrac quarter Turner, webcast Wilks, conference joining Executive first Lad Chief you, Lance XXXX everyone. Matt Officer. call review and

to statements. will United differ my adjusted as the management found available information information on reader will future XXXX.More forward-looking in time before of of note contingencies in or the Exchange achievements information reflect a can current guarantees measures highlights performance any contain the uncertainties only SEC financial certain and on comments may transcript views access and the ProFrac's first reading. with risks, release. those and risks, today's other features may remarks, read including by meaning financial and materially Also, The provide X, speaks quarter on contribution Investor management's call that longer management is also business reported to other call statements the There pfholdingscorp.com as replay forward-looking is contingencies.The telephonic the Filings XX, Relations forward-looking Following this how listener of are webcast you company's of the be cause from company's that on expressed to be within the well opening Securities your expectations today, call replay of Form up under as on recording Various May of call operational Commission, exclude the States not could laws, this Flotek. the time-sensitive of comments May federal securities statements as and be results, uncertainties website and sec.gov a figures high-level or no therefore, filings of questions. as any XXXX, of the the These available until commentary of at to the included Please listening well earnings advised on to are replay accurate or future non-GAAP tab those section management's as company's actual the performance. financial performance. encouraged understand and and today or website XX-K which at include to ProFrac's these

can are to Wilks. the and Matt company's now website. in Additional the turn comparable most Executive ProFrac's be found the measures like financial would the GAAP reconciliations details release, And I earnings Mr. and included over consolidated Chairman, on which directly quarterly to call to

Matthew Wilks

financial further Thanks, Michael, subsidiaries, my and our the good performance will will our performance. Lad go on Lance through After prepared remarks, morning, everyone. comment and of

very our We now the are We what progress on last pleased results. we made results. first told and you are seeing quarter with quarter

the industry. We to are better first focused utilization cost of $XXX are million million operator EBITDA of ensure generated of In back increased foundations $XXX we experience, and the an we the customer in incredible our subsidiaries our to getting all cost provide on and throughout revenue. lowest control quarter, adjusted to

fourth were We deployed quarter. our were recent efficiencies up. and in low Our XX down, most costs our the

in As we saw we scale, to benefit personally, greater a we quarter. and and the were first returns absorb that costs able deliver of

best conversion believe The and industry. working of portfolio our people. that we the in capital. and has expanded the is quarter, its highly flow the fund customers. demonstrate of the growth substantial results the of ProFrac In earnings efficient our assets fleets cash used addition, underlying capabilities to In we generated We cash our

in Looking opportunity market. see we this forward, continue to

quarter. timing the second lead for the count quarter of will grow on average based activations the first Our during

increase we to in we on remain Similar opportunities a stable. last also pursue pricing continue the track have disciplined flat Overall, year industry, outlook our to to to relatively in in for Alpine. the remain expect laid rig continue as pressure manner. have fleet the and will confident with activity count We we scenario.Turning weather our Weakness count out results. to quarter, I impacted gas even progresses, we am wins for pumping to a and markets the what

volumes However, further we that are boost seeing later this output. anticipate starting year demand should an and uptick in increases

XX% but to expect continued we we get is getting target, see We we division upside that this We natural that continue gas want to in where we view XX% to prices need as utilization to recognize inflection this it. our to proppant the and believe will closer. improvement achieve likely utilization getting opportunity, point

largest our month. deployment. component our of These a city e-fleet, to to are which Recently, the of our was e-fleets last a West the pad we customers. Midland e-fleet of and our meaningful and completed continues opportunities demonstrated our reliability our one Another in of limits be quiet value versatility, fleet Texas most proposition efficient in nature actually

significant part Our highly service ability made demonstrate with offerings. thought of operations e-fleets customers to our provide has and efficient savings, after and reliability maintain high our fuel a critical

proud of building in are organization on we our and our priorities deployed outlined last team call, expect to e-fleets backlog our our have the am later XXXX. I momentum. I'm e-fleet of of the the across and proud We all during execution the

diverse right level, direction heading with approximately fleets customer are of have dedicated for on on operating efficient a large acquired the XX% we each in a of our initiatives. customer the basis. base customers successfully We At

highest electric demand We also dual Tier-X with inbound continue technologies. fuel requests fill for to new deployments and for additional being the

high our achieve to incrementals significant cost strengthened and relentless on every efficient but also by pressure we pumping yielding customers allowed partly company. our step-up a firm focus the integration, utilization, This improved quarter-over-quarter. working with our focus grip margin downtime driven across minimizing vertical focus teams highly by on at with is assets, our results saw on the Regarding opportunity.Finally, us

we dilute what progress to As goal. by QX, we an example, made March, costs controllable able QX average. call our we XX% from significant in And by were towards our

center As a are leader all in front our industry, priorities for and of these services teams. the oilfield we maintaining

we continue to the a will is are stakeholders, priorities We positioned our ensure and to And footing, maintain our to best-in-class strategic for solid our on with Lad. our standing goals believe over continues industry create improve. focus and the well to turn to key services We customers. market that on provide long-term to on the that, our I'll value execute within call

Ladd Wilks

overview each our We Pressure segment, quarter that generated levels per roughly efficiency ProFrac's and fleet, segment. we Matt. quarter in Thank with begin I'm achieved to the pumping first efficient in XX% you, Pumping an improvement for in proud QX record a our most I'll report of an Pumping. history. with Pressure sequential performance makes starting hours in

to our customers. set records continue numerous We for

hours. One customer of record XXX this on most our by all-time also large of this team really the product A efficiency pumping over is. an our up for a of recent across focusing the is March fleet occurred fleets that customers. the our highlights QX commercial employed in thru-cycle for on focus demonstrates by examples how a in This entire we strategy nearly was dedicated amazing portion of the hit all industry, when March one Efficiency XXXX. of XX% but

for profit in X scale like quarter, In believe that fleets, we the in teens On best laid division, have let last best we of our I'd a are the industry. per customers. at exclusive and generate lowest the mid- to considerably. activated our have consistently crews industry putting increasing our and scale, high We the achieved the first numbers we path we reiterate cost EBITDA call, we that. the up to the out to

importantly, full should quarter We higher that and our believe impact in to will to EBITDA the quarter-over-quarter. improvement expect continue to More level, in of we activated QX, fleet due this lead average count adjusted incremental be at fleets.

benefits that unique progress. and superior have in vertically scale, to our making will profit cost also The of yielding We segment we returns, a is that from lower integrated demonstrate continue results. business

due of little our and the weather. on, transformation weakness We the remains in Overall, schedule has natural objective our on are embarked team activity behind impact the a gas primarily same. to

impacted initiatives improve a our have we ensure sales QX rapidly the pipeline operational we QX, will heading our service we expanded the To utilization to of of this, implemented can weather have in pipeline. disruptions results. and volumes mines While number that in into address the

are we preferred providers over believe the produce be completed improvement summary, to at cost require visibility, to built This purposes, transformation ProFrac. providers has us For back what operators materials. service we gas total mid-March a pains each and results, domestically for and need month exactly large above overcame, improved quarter. to improvement In that enabled South positioned are Lamesa levels. Based volumes fourth in lower positioning to we In utilization business well there current high in at for on believe operators. continue marketplace, per are be our in quarter our very on some we second multi-basin a the ton.Looking and we These track. high Alpine segments throughput, at double and the a similar both remains output This example, have the achieve for are to we growing expect are to working led Texas, our supply are strong. abroad. is utilization with custody seeing and natural there sequential as We demand recover has sufficient scale is quickly plant for to to XX% utilization. we minor lower the we growing massive of variety getting or on plant Despite chain

executing it believe with reputation we run.I to benefit on best in place outstanding team will hard Throughout thank right in outlined strong now to Lance have to our this with remarks. on the and So we provide gassier financial firmly our a consolidated believe the team in detail the organization, dedication are we Matt industry. and results. continue commitment our I'll of to focus over people his their work, and us the plans We presence in and that want plays, to in safety. more the maintain customers our hand for the initiatives three long areas

Lance Turner

Thank you, Lad.

$XXX of overall of Our a fourth We first increase. for an generated quarter $XXX in million of represent adjusted million the XX%. XX% quarter sequential margin EBITDA revenues EBITDA

per the generated to was lower payable, line segment's driven Total the to first in to approximately of reduce with outstanding cost scale-up The the on natural customers prior cash XX% we costs heels The of behavior improved due compared first XX% resulting and count in value. held our the add went EBITDA and quarter. the Approximately totaled partially conjunction of shortfall later largely $XX quarter. sequentially. pay per $XXX first are costs to excess million production result general ton particular, us revenues to was The since segment of quarter. quarter in prices, focus generated million EBITDA usage. primarily stable approximately the driven is three-cycle XX% sequentially volume quarter certain higher due growth-related during of segment hours the improvement The XX% weather highest segment $XX of the first million, $XX $XX third-party was quarter and was production as fourth our Simulation of output at approximately in that and and the the and other to strategy were came initiatives which improvements. offset reduction mine our and the million costs The with and operational commercial this segment down CapEx quarter, but pricing intercompany. $X.X higher of $X we and slightly, of in fleets our on quarter, million efficiencies, volumes the by year. of quarter $XX.X profit XX% consumable fleet XX%. XX% well also for sales revenues customers. $XX profit reactivation debt. increase approximately million in in quarter, Selling, the cost-conscious customers agreement year. was drove Adjusted spending up XXX% number in EBITDA from of down highly the was of most with higher related mine of pump results. Simulation as by segment accounts first the the start stands down expense first on toward to were and category generated with results our first improved fleet evidence seen unit our is and capital lower was last Services in was approximately the the for sold a sequentially to fixed quarter. and million. in expenditures Approximately $XX absorption Approximately which as general by improvements can $XXX Manufacturing pricing coupled a quarter we incurred in with this Simulation of for higher in which up working structure. approximately impacts where certain and gas cost levels but of segment and for in Manufacturing fourth impacted the working of toward by supply activity a up to forward. in the but cost segment were in fleets a Flotek. tonnage in related going administrative with we primarily structure million, see also capital as also the strategy million in million the the First sold incrementals increased incrementals by activities. fleet No lower to to in efficient the yielding million, Cash was in $XX.X a segment, to $X.X demonstrated to during through quarter. quarter represents third-party quarter, last driven appears predominantly million revenues limitations. EBITDA migrated segment Services improved focus of decline, the single-digit compared the be weaker periods totaled lower the EBITDA The This and as upgrades paid Margins $X active sequential pricing first Adjusted to one for were Margins initiatives Adjusted of up increased benefits our segment, Average revenue sequential reliance whether million the the million

to between Despite in growth-related XX% on capital count million million along CapEx $XXX million improvement working continue cash for in $XXX We $XX maintenance with efficiencies, in expect million. was and $XXX fleet increase year, to for the incur XX% used only approximately and CapEx. the

which We provided continue million focus our on inventory, quarter. to rightsizing a $XX this capital the working benefit

help for $X the offset March reduce quarter the and million ramp-up Flotek. in $XXX cash days we million the $XX addition, DSOs to able activity with In were was AR our build required $XXX attributable by cash at XX borrowings X approximately at ABL including Total to the under to quarter levels.Total ended approximately million, equivalents liquidity end was and million.

emphasis please on beyond. and efficiencies continue positioning in will value our relative on bear for remarks. see customers. fruit formal improve line we our our to shareholder We believe opportunity Operator, XXXX to in and to drive questions. open We providing concludes That for focused the strategic the remain initiatives already to ahead. improvement we our begun has best-in-class execution, While operational services XXXX,

Operator

We Instructions] with Energy of first [Operator comes Daniel will question line now Blake be conducting McLean Our a from the Partners. question-and-answer session.

Blake McLean

was to obviously, sequential hoping cuts share maybe guys on course on more progressing over just on maybe sort improvement and color you fleet. market of the Yes. around the I dynamics the the cost you could split that any in provide color between more frac increase EBITDA market do a profitability of you of can and year? speak see saw and generally. I How you that any per the the Just Maybe some could mean, absorption? you that nice really side. in guys

Ladd Wilks

Definitely.

off. when the So market the was you when falling gas look at

on early the You side. had reset budgets

count year remaining saw be natural you'll for climb industry, expect the bounce for we And being that, the a see nice that to a relatively stable up. we the a relatively there of If in and then stable to the and part it so see prices. gas fleet migration we exception back with fleet

Blake McLean

improvements there. side, And on Right. the the profitability then

about the on cost talked absorption, those opportunities each of of How think kind additional QX, about we for front? of QX talked the QX should You you that and weight and cuts. about

Ladd Wilks

the nature the very cost The to leverage relative more of cost variable to structure that integration was it Definitely. Yes, absorbing Vertical costs. of have us them is some peers our gives operating our this that we most a tremendous. business structure. fixed in through have more

QX more and when broader put efficient we're out running, a we more, And those So there absorb shows we that. to costs able more think have in I much way. fleets we're showcases much,

Blake McLean

have to you color any wondering was could they're back into might the some was to ask the have more. of basin. Anything give things think things on how conversations one obviously insight on in I that us world just into I at. you And a guys this with more the maybe operators, are gas share year 'XX. focused hoping if lot you looking insight of about for And into half

Ladd Wilks

Yes, certainly.

and and doing with some picking we're we're or we're disciplined of very lean several that is and And half So to forward remaining to curve soon. they guns. are this want that being forward year. early the what encouraging. operators into have. we in seeing but too the conservative don't we to there up towards But where to with communication that the it opportunities sticking a on But QX, phenomenal these QX. their still talking overly back too on, It's get activity market it, in we they're operators see our bullish with we're of job look think much constant

Operator

from with comes the Gengaro question next Our Stephen Stifel. line of

Stephen Gengaro

how approximately many fleet me. things two right in Is right it's to have? low probably One count. you active on Are the is we that the that from now? Just mid-XXs fleet

Ladd Wilks

Yes.

Stephen Gengaro

dual breakdown to give the a and details diesel. about, lower assume close it's two of sort your fleet emission which us any we rough talk utilized. makeup you of Can maybe older us around when fuel fully that? And Can basically assets, and look even electric at current between Okay. I give are you

Ladd Wilks

get doubt, won't without customers We it, too but a detailed prefer fuel with efficiency.

e-fleets this I that's fleets I as is cost to And focused our this a a on us an our that financials. because we overall area mean, dual that to diesel. of fuel for without lower the fuel having as savings. the by just the well think value provided But impact and places customers. it allows detrimental lot

to expect trend So we seeing. this is a that continue

that prefer that's many there the these fleet. options some basins associated of customers However, on the bringing associated the other with of gas lily driven are by people really And diesel to and fill. costs

I think see the equipment the well. it's is This growth all capital configuration. going. to that really across as where industry going space more upgrading in you majority the a almost this And it's is of to fuel-efficient of

Stephen Gengaro

Great. And final just me. one for then

You've allocating but when -- or been this how building think industry about potential the and in about consolidation, capital you for past, assets involved we placeholder to assets new do think between in future dynamics

Ladd Wilks

there, market. that value we it. the to is just if see unless tremendous see with avoid things very And and think we're but a we way few in transaction that us interested far I we We're to is between. We about patient approach value market. the coming best in think are value, of And a amount and out the take a generally

Operator

question from Pant comes Our of of the with Bank line next Saurabh America.

Saurabh Pant

a start I'll Maybe follow-up. with

much be highly with Lad, remarks, you Matt, Matt, your efficient in the give a next do visibility seeing you you X white gas the about potential what portfolio is on or you are deferrals color, and next basins. X look doing. months? especially for to we the which of think, thinking light maybe the basins as space commendable in you prepared the months? the to much should your said we Can us how should that's little I the in X completion X in gas have in obviously worry customers, How I'm expanded we that forward

Matthew Wilks

costs. to market but to work strategy. unpack we certainly and scale a a some fleet fits we've benefits lot in there's look absorb to Yes, won't very put at There's Yes, ability our our unless in the to got disciplined and availability, way it there. overall

that a when up make we very we sure solve there's vertical really disciplined if markets no tight, the it our comes so of to that get market at with needs issues from undersupplied also is of too, look that that And if it we customers these, becomes our respond opportunities, and XXXX. where situation want and one in can fees even we deploy tight that meet an into end with things to we available, in back, a deploy we quickly, way. that when integration any means gas the coming And we

Saurabh Pant

And it. got quick a I Okay. just clarification.

foreseeable payable have million think, expectations just I quarter $X to to mentioned, future, I that Lance, you in and shortfall in Should given expect we the Flotek. you that now? you in said cost right think continue the second volume the

Lance Turner

where So chemical to our to with expand be. need we we're our and get customers working profile to back

so up. And as a that we it ramp takes expect to it, we but time of bit little reduce

Saurabh Pant

Okay. Perfect. me. And one for then just one last

remarks Is you think were deployed that talking partially of in about your by, you quick later prepared said you electric think that couple this fleets you said that well? completed. that. a by the have all clarification just Because a to Are have said fleets those electric 'XX think fleets? deployed of comment in I But a you on 'XX. or on end expect your Matt, as I you I was

Matthew Wilks

as Yes. those We're talking about well.

we And the sensitivity in of when said we deal of Texas in fleet the towards the where at year there's had was of great look the So limits everybody's noise. most this it's offices. there -- success Midland, and we in recent remainder a quite front that efficient of West city

industry. the for on So it was full display

from so that not quieter fleet and where should and you capable or skill same what deal think from of market the any areas sensitive settings a you is can the great really are so results that fuel need compromises. These really conditional with deliver these e-fleet to that things you of, the the excitement in than overall profile there's for expect people showcasing these And what that trying better efficiencies are and and we're a that a I they'll seeing sleep to are good work that live. and as savings

we're and have that for working inbounds that. seeing We're an we very in every expect customers. So excited of a status e-pump about to have lot active

Ladd Wilks

e-fleet, I'll fleet to the that, come we're just when Yes. come talking fuels. from not it hybrid to market growth, duel it's wants. fleets out come about add like going to reductions. going to offerings from come have, it going pricing of differentiated not And It's the slugging from that from pricing will or offerings whether It's over conventional that That's we fleets. Visa the

Matthew Wilks

see Yes, creating where the our from customers, we bring. but comes offering it essentially value to value value savings, and our that proposition customers

Saurabh Pant

Right. No, pricing-based pull very helpful. good versus supply just Always push. see to a that's demand

fantastic. So

Operator

Our line next Johnson the question Don with from comes Crist Rice. of

Donald Crist

wanted I macro question. a ask to more

needing horsepower I'm XXX-plus is a just horsepower those Are pump XX-plus the no premise And today, pretty just requirements? thousand horsepower. hours the is per to requirements you're longer and service Given of where horsepower day, we of as that we given Matt, opinion amount or are that. fleet macro from today perspective? hours, curious those XX,XXX to through balanced your traditional pump XX,XXX fleet extra where in just If to a

Matthew Wilks

Yes.

spacing in. really it depends you're mean, what I So

failures. when do And pressure higher solve that. fleet fail, higher but how about redundancy they around the I equipment think need is more and where requirement because for you on your managing we this a

quality all. in an not there's the service So at interruption

fail only anywhere, your see pump you one XXX to would you you're but a to of typically, XX so pumps, need while going And pumps is really barrels minute, pumping.

by you then should the rotation. then in probably and So maintenance X have stand in on X XX line and

should on bit hours redundancy when configuration. XX a typical some you a into be that when going you're you need that's work. pump So pressure, or day see more zipper get to doing with fracs. to But little XX, that able And you higher

fracs got a these Some running. XXX are minute sides barrels if of both you've

you'll line have do of many a And number pumps see on number how do pumping.So how to much in probably wide a think you higher pretty so number I horsepower The need that then of a you you keep pumps pumping. requirement to of is how to has with you're pumps. more the required. that barrels of has redundancy puts pressure And with -- much in the hear scale

incredible like have team people your pit you road. redundancy business have cycle it's times. -- of We But higher failure run rates. Some our our maintenance and like when care equipment you maintenance take

If get get your pit down it stop pit full X of in instances. X you can love a nowadays, times XX see they're But Indica and 'XXs, and cycle We quick seconds seconds. took seconds under for some the the really at almost stop looking a in set a tires fuel. to in

bind. the design Under the service that delivering design, circumstance cutting rates and and we no corners not highest just pump customer in assets. fall putting ourselves the spec performance We consistently So get best of rate that's focus to maintenance the see on. It's quality the want without utilization want below to for we a what or in out time, customers. our We do the want tightest require. they deliver times it's cycle our

Donald Crist

a the few is cetera, enough of basins, maybe that's slack going just horsepower could macro today a a matter fleets not Or of I pumps in swap horsepower that. XX appreciate terms excess we're for work? fleets of across we get XX to in out demand but of given valves from in XX I there today? couple gas or a we where industry do to an seats, we significant and And perspective, a fairly back And industry fleet in to balanced from the uplift if the expect XX? a or tightening you see uplift can replacement, the required absorb et think

Ladd Wilks

you that's you have if there nasty we do. out think don't It's and that definitely vertical integration fair. I have don't pretty scale if the

where CapEx I our higher of environment defer historical a to potentially means or see players than maintenance And anything cut vertical think across costs, I like the you'll don't also deferring per that allows seeing that. absorb and dilute we to maintenance think they're the It a of that or this space attrition us have basis. the corners integration where level type costs on with various compounder is norm.

You add are many the fleet of a to available beyond with And fracs. horsepower. -- rates, market also that, I line right. do of of with tightening requiring to customers fill bit at any you think could they're the It's that basis, don't pumping you wrong is you see goes And higher a gas a focus how not fleets bounce prices, set look year-over-year issues those a and the that sure your simul in market. sure working When redundancy. see up the for back and beyond on count that at and that more accommodate we of that that But able make come to they're tighter questioning more along they on squeeze that on what end that a trend. exactly is simul-frac making

Donald Crist

I appreciate the color. I agree.

I forward. queue. turn if had pricing uplift of a amount But the going see here, could it in think back we fleet significant a I'll we minimal into

Matthew Wilks

their customers our a that that -- a we is them what's they're Yes. But CapEx flows about when great that price up. important prices easy focused with stability thing and it's at one our can important cash surprises. so And as no really some for us. that some customers, get for partners on are most us to for to deliver see excited product see that they thing certainty working and constraints, like I'll the and going supply to look say reliable well. with What reliable and at you

and path out that of upswing, the reliable And cycle. a so And count in some partnerships when spike on. our pullbacks we of certainly the the little the takes can deliver create them DCD to that customers at pricing it out with bite forward, takes as any they long-lasting opportunities of bit but of look the maybe

Operator

final that any Thank turn to you. Wilks Ladies session. question-and-answer for Mr. back I'll the comments. floor our and gentlemen, concludes

Matthew Wilks

and we And today. look continuing everybody. just brings. this you about you, more Thank Very but excited We to forward for time results. excited this what your these year about on your time, appreciate we quarter, thank carrying and

thank So you.

Operator

This Thank today's conference you. concludes call.

your at You you may Thank disconnect your this participation. for time. lines

ProFrac Holding (ACDC) 9 May 242024 Q1 Earnings call transcript