Financial Performance - Total revenue for 2023 was $2.63 billion, a 8.3% increase from $2.43 billion in 2022[2] - Net loss for 2023 was $59 million, compared to a net income of $343 million in 2022[2] - Adjusted EBITDA for 2023 was $688 million[2] - Free cash flow for 2023 was $293 million, an increase of 173% from 2022[2] - Fourth quarter revenue was $489 million, down from $574 million in the third quarter of 2023[3] - Net loss in the fourth quarter was $97 million, compared to a net loss of $18 million in the third quarter of 2023[3] - The company reported a net loss attributable to ProFrac Holding Corp. of $97.9 million for the three months ended December 31, 2023, compared to a net loss of $18.9 million for the same period in 2022[22] - The company reported a net loss of $(96.5) million for the three months ended December 31, 2023, compared to a net loss of $(17.9) million for the same period in 2022[22] - The company reported a net loss of $96.5 million for the three months ended December 31, 2023, compared to a net income of $116.0 million for the same period in 2022[23] Revenue by Segment - The Stimulation Services segment generated $2.29 billion in revenue for 2023, with $480 million of Adjusted EBITDA[7] - The Proppant Production segment generated $383 million in revenue for 2023, with $196 million of Adjusted EBITDA[7] - Stimulation services revenue for the three months ended December 31, 2023, was $403.3 million, down from $489.5 million in the previous quarter, a decrease of 17.6%[25] - Proppant production revenue for the three months ended December 31, 2023, was $92.9 million, a decrease of 8.5% from $98.4 million in the previous quarter[25] Cash Flow and Capital Expenditures - The company expects cash capital expenditures for 2024 to be between $150 million and $200 million for maintenance and an additional $100 million for growth initiatives[9] - Cash flows from operating activities provided $10.5 million in Q4 2023, a decrease from $27.3 million in Q4 2022[23] - The company had net cash used in investing activities of $28.4 million in Q4 2023, compared to $398.8 million in Q4 2022[23] - Free cash flow for the twelve months ended December 31, 2023, was $292.7 million, compared to $107.3 million for the previous year, indicating a significant increase[27] Debt and Liabilities - Total net debt as of December 31, 2023 was $1.08 billion, an increase of approximately $27 million from the third quarter[10] - Long-term debt increased to $923.5 million as of December 31, 2023, compared to $735.0 million in 2022, marking a 25.6% rise[21] - Total liabilities increased to $1,742.1 million as of December 31, 2023, from $1,582.9 million in 2022, reflecting a 10.1% increase[21] - Total debt as of December 31, 2023, was $1,068.5 million, an increase from $925.4 million as of December 31, 2022, representing a year-over-year increase of 15.4%[26] - Net debt as of December 31, 2023, increased to $1,082.6 million from $924.3 million as of December 31, 2022, reflecting a year-over-year increase of 17.1%[26] Assets and Equity - Cash and cash equivalents decreased to $25.3 million as of December 31, 2023, down from $35.1 million at the end of 2022[21] - Total current assets were $638.1 million as of December 31, 2023, a decline from $865.4 million in 2022, reflecting a 26.2% decrease[21] - The company’s total assets grew to $3,070.7 million as of December 31, 2023, compared to $2,933.6 million in 2022, representing a 4.7% increase[21] Operating Performance - Operating costs and expenses for the year ended December 31, 2023, totaled $2,463.4 million, up from $2,013.2 million in 2022, indicating a 22.3% increase[22] - The operating loss for the three months ended December 31, 2023, was $(14.3) million, a decrease from an operating income of $20.5 million in the prior quarter[22] - Adjusted EBITDA for the three months ended December 31, 2023, was $109.5 million, down from $149.3 million in the previous quarter, representing a decline of 26.7%[25] Other Financial Metrics - The company experienced depreciation, depletion, and amortization expenses of $107.7 million in Q4 2023, slightly down from $111.5 million in Q4 2022[23] - The company recorded a deferred tax expense of $4.9 million in Q4 2023, compared to a benefit of $5.0 million in Q4 2022[23] - Stock-based compensation expenses were $2.5 million in Q4 2023, a decrease from $14.1 million in Q4 2022[23] - The total cash, cash equivalents, and restricted cash at the end of the period was $27.3 million, down from $48.7 million at the end of Q4 2022[23] - The company reported a loss on investments of $14.4 million in Q4 2023, compared to a gain of $5.1 million in Q4 2022[23] Future Outlook - The company plans to focus on market expansion and new product development to drive future growth[24]

Company Overview - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services company that provides well stimulation services, proppants production, and other complementary products and services to oil and gas companies engaged in the exploration and production of unconventional oil and natural gas resources throughout the United States [2]. Upcoming Financial Results - ProFrac will report its 2023 fourth quarter and full year financial results on March 13, 2024, at 11:00 a.m. Eastern / 10:00 a.m. Central [1]. - The financial results will be presented during a live conference call, which can be accessed via phone or the internet [1]. Environmental Focus - The company aims to employ new technologies to significantly reduce greenhouse gas emissions and increase efficiency in hydraulic fracturing, which is traditionally an emissions-intensive process [2].

Core Viewpoint - ProFrac Holding Corp. has confidentially submitted a draft registration statement for an initial public offering (IPO) of its subsidiary Alpine Silica Holding, LLC, with details on the number of shares and price range yet to be determined [1]. Company Overview - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services company that provides well stimulation services, proppants production, and complementary products to oil and gas companies in the exploration and production of unconventional oil and natural gas resources across the United States [3]. - Founded in 2016, ProFrac aims to be the primary service provider for the hydraulic fracturing needs of exploration and production companies, focusing on employing new technologies to reduce greenhouse gas emissions and enhance efficiency in the emissions-intensive unconventional E&P development process [3].

Core Insights - ProFrac Holding Corp. has outlined its operational and strategic priorities for 2024, focusing on increasing fleet count and enhancing proppant production through higher contracted volumes and reduced mining costs [1] - The company emphasizes three critical components for its business strategy: higher utilization, exceptional customer experience, and the lowest per unit costs in the industry [2] Company Overview - ProFrac Holding Corp. is a technology-focused, vertically integrated energy services company that provides well stimulation services and proppants production to oil and gas companies in the U.S. [3] - Founded in 2016, ProFrac aims to be the primary service provider for hydraulic fracturing needs, utilizing new technologies to reduce greenhouse gas emissions and improve efficiency in unconventional oil and gas resource development [3]

Core Insights - Beal Bank has provided $637,500,000 to refinance ProFrac Holding Corp's existing term loan, with a total refinancing amount of $885,000,000 [1] - The refinancing includes $520,000,000 in senior secured floating rate notes and a $365,000,000 term loan to ProFrac's subsidiary Alpine Silica [1] - The refinancing extends ProFrac's debt maturity to 2029 and creates a bifurcated capital structure for its pressure pumping and frac sand businesses [1] Company Overview - Beal Bank is one of the largest privately owned financial institutions in the U.S., with combined assets of approximately $31.6 billion as of September 30, 2023 [3] - The bank has a strong reputation as a stable and well-capitalized financial institution [3] Industry Commitment - Beal Bank has a history of lending to oil field service companies, including U.S. Silica Holdings, BJ Services, and U.S. Well Services [2] - The bank continues to support the oil and gas industry, emphasizing its commitment to U.S. energy independence despite social pressures [2]

Core Viewpoint - ProFrac Holding Corp. has successfully completed a refinancing of its existing Senior Secured Term Loan and other debts, totaling $885 million, which will mature in 2029, positioning the company for a strong performance in 2024 [1][2]. Financial Overview - The refinancing includes a $365 million Alpine Term Loan and $520 million in Services Senior Secured Notes, aimed at paying off existing debts and providing a stable financial platform [4][7]. - The transaction is cash neutral and maintains liquidity for working capital to support expected increased activity in 2024 [2][3]. - The refinancing eliminates material near-term maturities, providing additional runway for de-leveraging [2][4]. Strategic Focus - ProFrac plans to increase utilization of its proppant and stimulation assets through a diversified commercial approach in 2024 [2][3]. - The company aims to build a strong foundation in its proppant segment to maximize shareholder value [3]. Debt Structure - The Alpine Term Loan has a floating interest rate and requires mandatory principal payments starting in mid-2024, with a maturity date of January 26, 2029 [5][6]. - The Services Senior Secured Notes also bear a floating interest rate and have similar mandatory prepayment schedules, with a maturity date in 2029 [7]. - The ABL Credit Facility has been amended to reduce its maximum capacity from $400 million to $325 million [8]. Advisory and Legal Support - Piper Sandler & Co acted as the sole financial advisor, while Gibson, Dunn & Crutcher LLP and Brown Rudnick LLP provided legal counsel for the refinancing [9].

Financial Data and Key Metrics Changes - The company generated $149 million in adjusted EBITDA, reduced net debt by $123 million, and produced $73 million of free cash flow [7][20]. - Consolidated revenue for Q3 totaled $574 million, a sequential decrease primarily due to a lower fleet count [20]. - Selling, general and administrative costs were $61 million, down $9 million from the previous quarter [21]. - Cash capital expenditures totaled $52.6 million, down 46% from the second quarter [22][23]. Business Line Data and Key Metrics Changes - The Stimulation Services segment generated revenues of $490 million, down from the second quarter, with adjusted EBITDA of $93 million compared to $123 million [21]. - The Proppant Production segment generated revenues of $98 million, down sequentially, with adjusted EBITDA totaling approximately $52 million [21]. - The Manufacturing segment generated revenues of $44 million, up approximately 41% from the second quarter, with adjusted EBITDA of $1.6 million [22]. Market Data and Key Metrics Changes - Sand pricing was down slightly in Q3, but discussions for 2024 suggest stable pricing levels [18][32]. - Approximately 70% of proppant volumes were sold to third-party customers, similar to the last quarter [21][46]. Company Strategy and Development Direction - The company is evaluating strategic options to unlock the full value of its Proppant Production segment, including increasing throughput and diversifying the customer base [9][10]. - A vertical integration strategy aims to optimize the supply chain of frac materials, enhancing competitive advantage [11][12]. - The company plans to maintain a disciplined capital allocation strategy, focusing on generating free cash flow for debt reduction [26]. Management Comments on Operating Environment and Future Outlook - Management acknowledged challenges in Q3 but expressed confidence in the company's positioning for future success, particularly in 2024 [7][8]. - The company is optimistic about the demand from LNG export facilities and plans to ramp up fleet count in response to customer demand [38][39]. - Management highlighted the importance of maintaining relationships with both large operators and smaller private spot-focused operators [15][16]. Other Important Information - The company has received commitments for 52% of its capacity with third-party customers for 2024 [9][33]. - Total liquidity at the end of Q3 was approximately $137 million, with a focus on generating free cash flow for deleveraging [25][26]. Q&A Session Summary Question: Update on fleet profile regarding gas burning versus non - The majority of active fleets are fuel-efficient, with over half being gas-burning in some form [29]. Question: Pricing and demand perspective for next year - There is a price premium for fuel-efficient assets, which provide lower total spend for operators [30][31]. Question: Thoughts on sand pricing and supply-demand fundamentals for 2024 - Management is not concerned about new capacity coming online and has a strong position with 52% of capacity committed [32][33]. Question: Multiyear arrangements from customers - Some customers are looking for multiyear arrangements to secure pricing and reduce market volatility [34][35]. Question: Plans for ramping up operations in response to LNG demand - The company plans to rehire furloughed workers and expects fleet count to increase in Q1 [40][41]. Question: Clean fleet program and operator engagement - The company is not building new fleets on spec and is focused on securing agreements with customers [43][44]. Question: Utilization rates across mines and sales split - Utilization was around 50%, with 70% of sales going to third-party customers [46][48]. Question: Incremental margin and fixed cost absorption - Every incremental ton sold contributes directly to the bottom line, with expectations for increased margins as capacity is sold out [50][51].

Financial Performance - Consolidated revenues for Q3 2023 were $574.2 million, a decrease of $122.5 million (17.7%) from Q3 2022 and a decrease of $135.0 million (19.0%) from Q2 2023[150]. - Consolidated net loss for Q3 2023 was $17.9 million, a decrease of $157.2 million from Q3 2022 and a decrease of $13.3 million from Q2 2023[150]. - Stimulation services revenues for Q3 2023 decreased by $179.1 million (26.8%) from Q3 2022, primarily due to a decrease in average active fleets and lower fleet utilization[154]. - Proppant production revenues for Q3 2023 increased by $73.7 million (297.6%) from Q3 2022, driven by acquisitions that increased the number of mines operated[155]. - Manufacturing revenues for Q3 2023 decreased by $4.9 million (10.1%) from Q3 2022, attributed to decreased intercompany demand[156]. - Total cost of revenues for Q3 2023 was $368.5 million, a decrease of $23.5 million (6.0%) from Q3 2022[159]. - Selling, general and administrative expenses for Q3 2023 were $61.0 million, an increase of $5.0 million (8.1%) from Q3 2022, primarily due to higher labor and non-labor costs associated with acquisitions[162]. - Interest expense for Q3 2023 was $40.2 million, an increase of $23.9 million (146.0%) from Q3 2022, due to higher average debt balances and interest rates[166]. Cash Flow and Liquidity - As of September 30, 2023, the company had $20.6 million in cash and cash equivalents and $116.0 million available for borrowings, totaling a liquidity position of $136.6 million[172]. - Net cash provided by operating activities increased by $254.2 million to $510.8 million for the nine months ended September 30, 2023, compared to $256.6 million in 2022[175]. - The company raised $50.0 million from the sale of Series A preferred stock in the three months ended September 30, 2023[172]. - The net cash used in investing activities increased by $62.9 million, primarily due to higher cash paid for acquisitions[176]. - The company anticipates that cash and cash equivalents, along with cash provided by operations, will be sufficient to fund capital expenditures and financial obligations for at least the next 12 months[173]. Capital Expenditures and Debt - Capital expenditures for the nine months ended September 30, 2023, were $233.9 million, with an estimated range of $280 million to $290 million for the full year[179]. - The company has $1.1 billion in aggregate principal amount of long-term debt outstanding, with $122.8 million due over the next twelve months[178]. - The company plans to reduce capital expenditures for the remainder of the year to align with customer activity levels and maintain target return thresholds[179]. Strategic Initiatives - The company acquired Performance Proppants for $462.5 million on February 24, 2023, enhancing its proppant production capabilities[151]. - The company plans to increase its fleet count at the beginning of 2024 in response to anticipated demand recovery[151]. - The growth strategy includes potential acquisitions, with funding historically sourced from equity securities and borrowings under credit facilities[182]. Taxation - The effective tax rate for the nine months ended September 30, 2023, was 20.5%, up from 5.2% in the same period in 2022[169].

Financial Data and Key Metrics Changes - The company generated $183 million in adjusted EBITDA and $56 million in free cash flow, while reducing debt by approximately $86 million during the quarter [6][18]. - Consolidated revenue for Q2 totaled $709 million, a decrease attributed to lower activity levels [18]. - Selling, general and administrative costs were $70 million in Q2, down slightly from the first quarter, with a baseline SG&A reduction of approximately $1 million from the prior quarter [18][19]. Business Line Data and Key Metrics Changes - The Stimulation Services segment generated revenues of $608 million in Q2, down from the previous quarter, with adjusted EBITDA of $123 million compared to $206 million [19]. - The Proppant Production segment saw revenues of $110 million in Q2, up approximately 34% sequentially, with adjusted EBITDA totaling $58 million, up approximately 40% from the first quarter [19][20]. - The Manufacturing segment generated revenues of $31 million in Q2, down approximately 54% from the previous quarter, with adjusted EBITDA of $3.1 million [20]. Market Data and Key Metrics Changes - The company noted that pricing remains constructive despite lower asset utilization impacting second quarter earnings, with optimism for a stronger second half of the year [10][11]. - The Proppant segment's third-party sales reached 70% of revenue, indicating a focus on diversifying the customer base [8]. Company Strategy and Development Direction - The company aims to capitalize on increasing industry activity and maintain a disciplined approach to capital allocation, focusing on maximizing utilization and profitability [11][12]. - The strategy includes diversifying the customer base and pursuing long-term dedicated contracts to reduce volatility during market dislocations [15][16]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving industry fundamentals and disciplined behavior from peers, supporting a constructive outlook for the second half of 2023 [7][10]. - The company is adjusting its commercial strategy to target a more diverse customer base and is focused on generating free cash flow for debt repayment [22][23]. Other Important Information - The company plans to reduce capital expenditures for the remainder of the year, targeting approximately $300 million, reflecting the deferral of fleet upgrade programs [21][22]. - Total cash and cash equivalents at the end of the quarter was $27 million, with total liquidity of $164 million [22]. Q&A Session Summary Question: Commentary on active fleets and reductions - Management did not provide specific numbers but emphasized maximizing utilization and rightsizing the cost structure [24]. Question: Fleet reactivations in Q4 or 2024 - Management refrained from guiding fleet count but noted close attention to rig count and industry dynamics [26]. Question: Spot pricing trends in different markets - Management acknowledged some spot pricing decreases in West Texas but highlighted that contracting rates remain above the spot market [30][31]. Question: Cost reductions and profitability improvements - Management indicated that costs are relatively fixed, and profitability is expected to improve as utilization and volumes increase [36]. Question: Working capital release expectations - Management anticipates a release of working capital primarily from inventory management, potentially generating over $50 million [38][39].

Revenue Performance - Consolidated revenues for Q2 2023 were $709.2 million, an increase of $119.4 million from Q2 2022, while revenues for the first half of 2023 reached $1,566.7 million, up $631.9 million year-over-year [127]. - Stimulation services revenues for Q2 2023 increased by $31.7 million from Q2 2022, driven by a rise in average active fleets, with total revenues for the first half of 2023 at $1,398.4 million, up $485.7 million from the same period in 2022 [131]. - Proppant production revenues for Q2 2023 rose by $92.3 million year-over-year, totaling $109.8 million, while the first half of 2023 saw revenues of $192.0 million, an increase of $162.1 million from 2022, largely due to acquisitions [132]. - Manufacturing revenues for Q2 2023 decreased by $3.8 million from Q2 2022, totaling $31.1 million, but increased by $31.3 million for the first half of 2023, reaching $98.2 million [133]. Costs and Expenses - Total cost of revenues for Q2 2023 was $467.8 million, an increase of $128.6 million from Q2 2022, with stimulation services costs rising by $95.3 million year-over-year [136]. - Selling, general and administrative expenses for Q2 2023 were $70.3 million, up $17.3 million from Q2 2022, primarily due to higher labor and non-labor costs associated with acquisitions [139]. - Interest expense for Q2 2023 was $41.0 million, significantly higher than $13.4 million in Q2 2022, attributed to increased debt balances and interest rates [144]. Profitability and Net Income - The company reported a consolidated net loss of $4.6 million for Q2 2023, a decrease of $72.0 million from the same period in 2022, while net income for the first half of 2023 was $55.2 million, down $32.2 million year-over-year [127]. - Income taxes for the six months ended June 30, 2023, were $16.3 million, up from $4.5 million in the same period in 2022, resulting in an effective tax rate of 22.8% compared to 4.9% in 2022 [147]. Liquidity and Cash Flow - As of June 30, 2023, the company had $154.7 million in total liquidity, consisting of $18.1 million in cash and cash equivalents and $136.6 million available for borrowings under the ABL credit facility [150]. - Net cash provided by operating activities increased by $302.7 million to $387.2 million for the six months ended June 30, 2023, compared to $84.5 million in 2022 [153]. - The company anticipates that cash and cash equivalents, along with cash provided by operations, will be sufficient to fund capital expenditures and satisfy financial obligations for at least the next 12 months [151]. Capital Expenditures and Investments - Capital expenditures for the six months ended June 30, 2023, were $181.3 million, with a total expected capital expenditure of $300 million for the entire year [159]. - The net cash used in investing activities increased by $253.4 million, primarily due to a $204.6 million increase in cash paid for acquisitions [154]. - The net cash provided by financing activities decreased by $129.8 million, mainly due to a $301.7 million decrease in net proceeds from the issuance of common stock [155]. - Capital expenditures will be evaluated based on customer demand and expected industry activity levels [160]. Strategic Initiatives - The company acquired Producers for approximately $36.5 million and Performance Proppants for $462.5 million in early 2023, enhancing its operational capacity and market presence [128][129]. - The company is adopting a disciplined approach to capital allocation and has reduced its active fleets to align with customer activity levels, aiming to maintain profitability metrics per fleet [128]. - The company is exploring potential acquisitions and strategic transactions, which may impact liquidity needs [161]. - The company has $1.2 billion in aggregate principal amount of long-term debt outstanding, with $114.4 million due within the next twelve months [158].