Financial Data and Key Metrics Changes - Revenue for Q3 2022 totaled $696 million, up nearly 20% compared to Q2 2022 [25] - Net income was $143 million for the quarter, compared to $70 million in Q2 2022 [26] - Adjusted EBITDA increased to $256 million, or $267 million when excluding losses from other business activities, representing a 22% sequential increase [16][26] - Annualized adjusted EBITDA per fleet rose 23% to $34 million from $28.1 million in Q2 2022 [17][26] Business Segment Data and Key Metrics Changes - Stimulation services segment generated revenues of $669 million, up 16% from Q2 2022, with adjusted EBITDA of $250 million [28][29] - Manufacturing segment revenues increased by 40% to $49 million, with adjusted EBITDA slightly down to $8.4 million [30] - Proppant Production segment revenues rose 41% to $25 million, but adjusted EBITDA decreased to $9.2 million due to lower utilization and selling prices [31][32] Market Data and Key Metrics Changes - Demand for all fleet types remains strong, particularly for newer technology fleets [22] - Pricing levels for equipment types are expected to remain constructive into Q4 and 2023 [23] - The company reported the highest level of utilization in terms of pumping hours during Q3 2022 [21] Company Strategy and Development Direction - The company completed the acquisition of U.S. Well Services, positioning itself as the largest provider of electric fracturing services globally [8] - Focus on vertical integration to capture more of customers' completion budgets, with a goal to provide sand, chemicals, storage, and logistics [19][54] - Plans to increase the number of electric fleets and accelerate Tier 4 dual fuel upgrades to meet customer demand [15][36] Management's Comments on Operating Environment and Future Outlook - Management expressed a bullish outlook for the oil field services market, citing limited supply and strong demand [44][59] - The company anticipates a strong 2023 pipeline and book of contracted work, the strongest seen in 14 years [24][88] - Management highlighted the importance of reducing downtime and increasing efficiency through strategic investments in maintenance and upgrades [51][53] Other Important Information - Capital expenditures for Q3 2022 were $123 million, with expectations for full-year CapEx to range between $330 million and $350 million [34] - The company ended Q3 with $549 million in outstanding principal debt and $246 million in liquidity [38] - The company expects to maintain a leverage ratio below one turn of debt to EBITDA [59] Q&A Session Summary Question: Regarding U.S. Well Service assets and their EBITDA contribution - Management expects a 10% to 15% per fleet dilution across the entire fleet due to the integration of U.S. Well Services [64] Question: Thoughts on shareholder returns and potential buybacks - Management does not expect to see any buybacks, focusing instead on maintaining a high-quality float and returning capital to stakeholders [72][73] Question: Insights on the 2023 book of work and visibility across E&Ps - Management noted a strong backlog for 2023, with a fully sold-out market and challenges in the supply chain [88] Question: Guidance on SG&A expenses post-U.S. Well Services acquisition - Management indicated that SG&A will increase, estimating around $20 million per year for U.S. Well Services, with realization of synergies expected over the next six months [85] Question: Discussion on the ramp-up of new sand mines - Management expects a ramp-up period of two to four months for new mines, with plans to start shipping sand soon [82][84]

IPO and Acquisitions - The company completed its IPO on May 12, 2022, raising net proceeds of $303.9 million from the sale of 16,000,000 shares at $18.00 per share, with an additional 2,228,153 shares sold through an over-allotment option[231]. - The acquisition of FTS International, Inc. was finalized on March 4, 2022, for a total purchase price of $405.7 million, which included $332.8 million in cash and $72.9 million in equity interests[235]. - ProFrac II LLC acquired 100% of SP Silica of Monahans LLC and SP Silica Sales, LLC for $90 million in cash plus approximately $10 million in working capital adjustments on July 25, 2022[240]. - The company announced an agreement to acquire U.S. Well Services, Inc. on June 21, 2022, with total stock consideration estimated at approximately $270 million and the assumption of $55 million in USWS debt[245]. - The company has made strategic acquisitions, including Monahans, FTSI, and West Munger, which are expected to enhance future revenue streams[267]. Business Operations and Capacity - The company operates three business segments: stimulation services, manufacturing, and proppant production, with a focus on providing hydraulic fracturing services to upstream oil and gas companies[249]. - As of June 30, 2022, the company had an installed capacity of 34 conventional fleets, with 31 active fleets[249]. - The average number of active fleets increased to 31 in Q2 2022 from 14 in Q2 2021, reflecting expansion in operational capacity[274]. Financial Performance - Total revenues for Q2 2022 reached $589.8 million, a 237% increase from $174.8 million in Q2 2021[274]. - Stimulation services revenues increased by $408 million, or 242%, for Q2 2022 compared to Q2 2021, driven by higher customer activity and pricing[275]. - Manufacturing revenues rose by $18.6 million, or 115%, for Q2 2022 compared to Q2 2021, attributed to increased demand for products in the oilfield service industry[276]. - Proppant production revenues for Q2 2022 were $17.5 million, up from $7.8 million in Q2 2021, reflecting a significant growth in this segment[274]. - The company recorded a net income of $70.1 million for Q2 2022, compared to a net loss of $8.6 million in Q2 2021, showcasing a turnaround in profitability[274]. Operational Efficiency and Costs - The company has experienced improved operational results due to increased fleet utilization and higher prices for products and services, despite facing supply chain disruptions and inflationary pressures[252]. - Adjusted EBITDA for the stimulation services segment was $196.1 million in Q2 2022, compared to $30.5 million in Q2 2021, indicating improved operational efficiency[274]. - Operating costs for stimulation services increased by $218.1 million, or 172%, in Q2 2022 compared to Q2 2021, mainly due to higher activity levels and input cost inflation[280]. - Selling, general and administrative expenses surged by $73.5 million, or 521%, in Q2 2022 compared to Q2 2021, largely due to stock-based compensation and increased personnel costs[286]. Investments and Future Plans - The company is investing in advanced technologies to reduce greenhouse gas emissions and improve operational efficiency, including upgrading engines from Tier II to Tier IV DGB at a rate of five to ten engines per month[253]. - The 2022 capital expenditure budget is estimated between $265 million and $290 million, with significant investments planned for electric-powered fleets and a sand mine[305]. - Capital expenditures for the six months ended June 30, 2022, were $116.1 million, up from $53.6 million in the same period in 2021, with expectations for further increases in 2022 and 2023[347]. Debt and Financing - The New ABL Credit Facility was amended to increase the borrowing base and lender commitments from $100.0 million to $200.0 million on April 8, 2022[312]. - As of June 30, 2022, the New ABL Credit Facility had $143.4 million of borrowings outstanding and $9.2 million of letters of credit, resulting in approximately $47.4 million of remaining availability[312]. - The New Term Loan Credit Facility has an aggregate principal amount of $450.0 million, with approximately $302.4 million outstanding as of June 30, 2022[320]. - The interest rate for SOFR Rate Loans under the New Term Loan Credit Facility was 8.50% until October 1, 2022[321]. - The New Term Loan Credit Facility requires a Total Net Leverage Ratio of no more than 2.00 to 1.00 for the fiscal quarter ending on June 30, 2022[328]. - The New Term Loan Facility was amended on July 25, 2022, to increase its size by $150.0 million, with an option for an additional $100.0 million[332]. - The New ABL Credit Facility matures on March 4, 2027, while the New Term Loan Credit Facility matures on March 4, 2025[319][320]. - The principal maturity schedule for long-term debt as of June 30, 2022, totals $495.045 million, including $143.350 million under the New ABL Credit Facility and $302.380 million under the New Term Loan Credit Facility[347]. - A 1% increase in interest rates would result in an annual increase in interest expense of approximately $4.5 million based on outstanding debt as of June 30, 2022[355]. Credit Management - ProFrac LLC has established procedures to manage credit exposure, including credit evaluations and maintaining an allowance for doubtful accounts[357].

Financial Data and Key Metrics Changes - The company reported consolidated revenue of $589.8 million for Q2 2022, a significant increase from $345 million in Q1 2022 and $421.6 million on a pro forma basis adjusted for the FTS acquisition [33] - Net income for the quarter was $70.1 million, with adjusted net income excluding stock compensation at $108.9 million compared to $24.1 million in the previous quarter [33] - Adjusted EBITDA was $210.6 million for Q1 2022, increasing to $218 million when excluding Flowtek's results, resulting in $28.1 million of EBITDA per fleet on an annualized basis [34] Business Line Data and Key Metrics Changes - The stimulation services segment generated revenues of $576.6 million in Q2 2022, up 72% from Q1 2022, with adjusted EBITDA for the segment at $196.1 million [40] - The manufacturing segment reported revenues of $34.9 million, an 8.9% increase from Q1 2022, with adjusted EBITDA slightly down to $9.4 million [41] - The profit production segment generated revenues of $17.5 million, up 41% from the previous quarter, with adjusted EBITDA increasing to $12.6 million [42] Market Data and Key Metrics Changes - The company noted that the supply of pressure pumping horsepower is limited, with many competitors sold out and facing supply chain challenges [7] - The company expects continued margin expansion due to the current market dynamics, which are seen as the best since entering the industry over 20 years ago [8] Company Strategy and Development Direction - The company has a two-pronged growth strategy focusing on acquiring, retiring, and replacing equipment while scaling vertical integration in the supply chain [10] - The recent acquisition of Monahans West Texas sand operations and the pending acquisition of US Well Services are part of the strategy to enhance cash generation and shareholder returns [12] - Vertical integration is emphasized as a means to reduce costs and improve profitability, with the company controlling critical inputs and logistics [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future of the industry, citing strong pricing power and the ability to provide more materials to customers [22][26] - The company expects to exit Q3 2022 with 32 fleets and plans to deploy additional electric fleets, indicating a focus on innovation and efficiency [23] - Management highlighted the importance of maintaining a strong balance sheet and prioritizing shareholder returns while pursuing growth opportunities [11][59] Other Important Information - The company ended Q2 2022 with $477.5 million in outstanding principal and $88 million in liquidity, excluding Flowtek's liquidity [46] - Operating cash flow was $39.5 million during the quarter, impacted by a working capital build due to higher pricing and efficiency [47] Q&A Session Summary Question: Insights on bundling materials for profitability growth - Management indicated that bundling materials could provide significant profitability growth opportunities, with expectations of increased contributions from bundled services over the next 12 months [50][51] Question: Capital allocation priorities - The company prioritizes maintaining equipment, shareholder returns, and growth initiatives, emphasizing the importance of profitability in the oilfield services sector [56][58] Question: Power generation ownership and approach - Management is taking a cautious approach to power generation, focusing on reliability and control over the supply chain [64][65] Question: Sand capacity and pricing expectations - The company believes it can achieve annual production of 7 to 7.5 million tons of sand, with pricing expected to stabilize between $35 and $50 per ton [97][99] Question: Flowtech's profitability timeline - Management expects Flowtech to reach full contracted volumes by early 2023, with economies of scale driving profitability improvements [107] Question: Equipment demand and pricing outlook for 2023 - The company is seeing early demand for equipment in 2023, with expectations of better margins and continued pricing expansion [83]

IPO and Acquisitions - The company completed its IPO on May 12, 2022, raising net proceeds of $303.9 million from the sale of 16,000,000 shares at $18.00 per share, with an additional 2,228,153 shares sold through an over-allotment option[213]. - The acquisition of FTS International, Inc. was completed on March 4, 2022, for a total purchase price of $405.7 million, consisting of $332.8 million in cash and $72.9 million in equity interests[216]. - ProFrac II LLC agreed to acquire the SP Companies for $90 million in cash, with the closing expected to occur shortly after all conditions are met[216]. - The merger with U.S. Well Services, Inc. is anticipated to be completed in Q4 2022, with total stock consideration estimated at approximately $270 million based on the closing price of $21.49 per share[221]. Business Segments and Operations - The company operates three business segments: stimulation services, manufacturing, and proppant production, with installed capacity of 34 conventional fleets, 31 of which were active as of March 31, 2022[225]. - The company has invested in over 140 dual fuel kits for Tier IV engines to enhance its low carbon emission solutions[227]. - The company has experienced improved operational results due to increased fleet utilization and higher prices for products and services, despite facing supply chain disruptions and inflationary pressures[229]. - The company is upgrading five to ten engines per month from Tier II to Tier IV DGB to reduce carbon emissions and improve profitability[230]. - Approximately 84% of the manufacturing segment's revenue for Q1 2022 was intersegment revenue, indicating strong internal demand[233]. - The proppant production segment saw a significant increase in intersegment revenue from 29% in Q1 2021 to 69% in Q1 2022, reflecting enhanced operational integration[235]. Financial Performance - Total revenues increased by $195.4 million, or 130.6%, to $344.98 million for the three months ended March 31, 2022, compared to $149.59 million for the same period in 2021[252]. - Revenues from stimulation services rose by $192.5 million, or 134%, to $336.2 million, driven by increased customer activity and contributions from the FTSI acquisition[253]. - Adjusted EBITDA for the three months ended March 31, 2022, was $91.48 million, a significant increase from $17.69 million in the same period of 2021[252]. - Adjusted EBITDA for Stimulation services increased by $60.6 million to $73.6 million for Q1 2022, compared to $13.0 million in Q1 2021, driven by higher active fleets and increased pricing[268]. - Adjusted EBITDA for Manufacturing rose by $7.7 million to $10.0 million for Q1 2022, up from $2.3 million in Q1 2021, primarily due to increased product volume for oil field services customers[269]. - Adjusted EBITDA for Proppant production increased by $5.5 million to $7.9 million for Q1 2022, compared to $2.4 million in Q1 2021, attributed to higher proppant production and pricing in the Permian basin[270]. Costs and Expenses - Cost of revenues, exclusive of depreciation, increased by $114.29 million, or 96.6%, to $232.6 million, primarily due to higher activity levels and input cost inflation[258]. - Selling, general, and administrative expenses increased by $20.3 million, or 148%, to $34.1 million, largely due to higher personnel costs and expenses related to the FTSI acquisition[263]. - Interest expense rose by $3.2 million, or 53.3%, to $9.3 million, attributed to increased debt balances and higher average interest rates[264]. - The company recorded a loss on extinguishment of debt amounting to $8.3 million due to refinancing transactions during the quarter[265]. Market Conditions - The average oil price per barrel increased to $94.45, up from $57.79 in the previous year, reflecting market trends[252]. - The average natural gas price per thousand cubic feet rose to $4.84, compared to $3.70 in the same period last year[252]. Capital Expenditures and Debt - The company expects to incur approximately $2.5 million in non-recurring costs related to its transition to a publicly traded corporation[247]. - The 2022 capital expenditure budget is estimated to be between $240 million and $290 million, with $65 million to $70 million allocated for constructing three electric-powered fleets[280]. - As of March 31, 2022, the New ABL Credit Facility had $100.0 million in lender commitments, with $70.7 million borrowed and $20.1 million remaining availability[287]. - The New Term Loan Credit Facility has an aggregate principal amount of $450.0 million, with approximately $450.0 million outstanding as of March 31, 2022[295]. - The New Term Loan Credit Facility has an interest rate of 8.50% for SOFR Rate Loans and 7.50% for Base Rate Loans until October 1, 2022, with a three-tier pricing grid thereafter[296]. - The applicable margin for SOFR Rate Loans ranges from 6.50% to 8.00%, and for Base Rate Loans, it ranges from 5.50% to 7.00%, depending on the Total Net Leverage Ratio[297]. - The New Term Loan Credit Facility requires maintaining a Total Net Leverage Ratio of no more than 2.00:1.00 for the fiscal quarter ending June 30, 2022, and no more than 1.25 for each fiscal quarter ending March 31, 2023, and thereafter[304]. - The New Term Loan Credit Facility mandates a minimum liquidity of $30.0 million at all times[305]. - Capital expenditures for the three months ended March 31, 2022, were $41.5 million, up from $17.4 million in the same period in 2021, with expectations for further increases in 2022 and 2023[325]. - The New Term Loan Credit Facility is subject to quarterly amortization beginning June 2022, with excess cash flow payments reducing the required amortization[299]. - The New Term Loan Credit Facility includes a quarterly mandatory prepayment starting from the calendar quarter ending September 30, 2022, based on the Applicable ECF Percentage, which ranges from 50% to 25% of Excess Cash Flow[300]. - ProFrac II LLC entered into a $30.0 million loan agreement with First Financial Bank, with $26.4 million outstanding as of March 31, 2022[308]. - The Equify Bridge Note of $45.8 million was fully paid in June 2022 with net proceeds from the IPO[315]. - The New Term Loan Credit Facility is secured by a lien on substantially all assets of the guarantors, including equipment, real estate, and intellectual property[298]. Risk Management and Accounting - The company evaluates its critical accounting policies and estimates based on historical experience and current conditions, which may lead to actual results differing from estimates[327]. - The company assesses its ownership and interests in variable interest entities (VIE) to determine consolidation in financial statements[329]. - The company faces market risk primarily related to fluctuations in long-term debt fair value due to interest rate changes, with no engagement in speculative transactions[330]. - Material costs for the company include inventory for pressure pumping services and manufacturing, with volatility in prices due to supply and demand dynamics[331]. - A 1% increase in interest rates would result in an annual increase in interest expense of approximately $5.2 million based on outstanding debt as of March 31, 2022[332]. - The company manages credit risk through credit evaluations and maintaining an allowance for doubtful accounts related to trade account receivables[333].

Financial Data and Key Metrics Changes - In Q1 2022, U.S. Well Services generated approximately $41.2 million in revenue, with an adjusted EBITDA loss of $3.5 million, compared to a loss of $7.9 million in Q4 2021 [7][15]. - Total revenue increased by 6% sequentially from $38.9 million in Q4 2021, with service and equipment revenue rising by 17% quarter-over-quarter [14][15]. - The company ended Q1 2022 with $41 million in cash and restricted cash, and $8.5 million of ABL availability [16]. Business Line Data and Key Metrics Changes - The average cash G&A per active fleet increased to approximately $5.7 million in Q1 2022, compared to $4.75 million in the previous three quarters [8]. - Revenue from materials such as sand, chemicals, and trucking declined by 45% sequentially, as no sand was provided to customers during Q1 2022 [14]. Market Data and Key Metrics Changes - The company averaged 4.7 active fleets during the quarter with a utilization rate of 94%, resulting in 4.4 fully utilized fleets [14]. - The month of March 2022 alone accounted for over $20 million in revenue, representing 49% of the total quarterly revenue [9]. Company Strategy and Development Direction - U.S. Well Services is transitioning to an all-electric fleet, with plans to deploy new Nyx Clean Fleets throughout 2022, aiming to meet customer needs with high-spec electric horsepower [12][17]. - The company believes that the electric segment offers premium pricing and lower maintenance costs, positioning itself favorably in the market [10][11]. Management's Comments on Operating Environment and Future Outlook - Management noted that the pressure pumping industry is experiencing tight capacity and rising prices, with most service providers sold out [11]. - The company expects to see continued improvement in revenue and profitability as more fleets are deployed and operational efficiencies are realized [22]. Other Important Information - The company is facing inflationary pressures, with costs increasing by 8% to 10% for most items compared to 2021 levels [15]. - U.S. Well Services plans to spend approximately $95 to $115 million over the remainder of the year to complete the build-out of new fleets [16]. Q&A Session Summary Question: Can you speak to some of the components parts that you may have pre-purchased for the new build program in 2023? - Management confirmed that some longer lead time components have been secured, allowing for potential fleet deliveries in early 2023, but no commitments have been made yet [19]. Question: Is the guidance for Q2 including one diesel fleet? - Management clarified that the guidance for Q2 includes one diesel fleet [20]. Question: What are the drivers of EBITDA per fleet, and is break-even possible in Q2 2022? - Management indicated that increased revenue and more fleets in the field are key drivers for improved EBITDA per fleet, with expectations for continued improvement throughout the year [22].

Financial Data and Key Metrics Changes - U.S. Well Services reported total revenue of $38.9 million for Q4 2021, down 31% from $56.5 million in Q3 2021, largely due to nonproductive time related to sand and water constraints [13][14] - Adjusted EBITDA for Q4 2021 was a loss of $7.9 million, with total liquidity at $20.2 million at year-end, which increased to $84.6 million after recent capital raises [15][16] - The company generated $250 million in revenue for the full year 2021, a modest increase from $244 million in 2020, with a net loss of $70.6 million compared to $229.3 million in 2020 [18][19] Business Line Data and Key Metrics Changes - The average active fleet count during Q4 was five, with a utilization rate of 82%, down from 89% in Q3 2021 [12][13] - Cost of sales in Q4 was $41.4 million, down 29% sequentially, attributed to a lower active fleet count and a 50% reduction in sand and consumables sold [14] - SG&A expenses decreased to $6.8 million in Q4 from $11.1 million in Q3, primarily due to reduced personnel costs [14] Market Data and Key Metrics Changes - The company faced significant operational challenges due to a lack of truck drivers and customers' inability to obtain necessary sand and water, resulting in 67 days of nonproductive time in Q4 [8][13] - Diesel prices rose to over $5 per gallon from $3.50 in Q4, leading to potential savings of $1.25 million per fleet per month for customers [10] Company Strategy and Development Direction - U.S. Well Services is transitioning away from conventional diesel fleets, reducing its active fleet count from 11 in Q1 to five by Q3, and is focusing on electric clean fleets [7][8] - The company plans to roll out four new Nyx Clean Fleets starting in Q2 2022, which are expected to command premium pricing due to their operational efficiencies [9][10] - Management believes the future is bright for the company, emphasizing the advantages of electric pressure pumping technology in terms of economics and environmental benefits [21] Management Comments on Operating Environment and Future Outlook - Management acknowledged the difficulties faced during the strategic transformation and macroeconomic headwinds but expressed confidence in improved results starting in Q2 2022 as new fleets are deployed [8][9] - There is an expectation of increased demand for next-generation solutions, such as electric clean fleets, which positions the company favorably in the market [9][10] Other Important Information - The company executed over 40 asset sales to raise approximately $120 million and reduced its senior secured term loan by $125.6 million during 2021 [7] - U.S. Well Services secured a 0% interest rate for Q1 2022 and a 1% cash interest rate for the remainder of the year, resulting in significant cash savings [17] Q&A Session Summary Question: Expected increase in profitability with fleet rollout - Management indicated that profitability is expected to increase as new fleets are deployed, with the first fleet going to work in Q2 and the last two fleets by Q4 [24][25] Question: Impact of frac sand and mine constraints - Management noted that benefits from new fleets are anticipated to begin in Q2, addressing inefficiencies caused by sand and water constraints [26][27]

Financial Data and Key Metrics Changes - U.S. Well Services reported total revenue of $56.5 million for Q3 2021, down 28% from $78.8 million in Q2 2021, primarily due to a reduction in active fleet count [14] - The average active fleet count during the quarter was 5.7, with a utilization rate of 89%, equating to five fully utilized fleets [14] - Revenue per fully utilized fleet increased by 13% in Q3 compared to Q2, indicating improved revenue-generating potential [15] - Adjusted EBITDA was a loss of $465,000 for Q3 2021 [19] Business Line Data and Key Metrics Changes - The company transitioned to a fully electric pressure pumping service provider, retiring its last conventional fleet by the end of August 2021 [8] - The fleet count decreased from a peak of 11 to 5 fleets, impacting staffing levels and operational costs [9] - U.S. Well Services spent nearly $2 million in Q3 to transition to an outsourced power generation model and prepare legacy equipment for sale [9] Market Data and Key Metrics Changes - The company faced inflationary pressures across its supply chain, including rising input prices and increased costs for trucking and logistics [10] - Labor costs increased due to a 15% wage hike implemented in September, which was not immediately passed on to customers due to existing fixed pricing agreements [16] Company Strategy and Development Direction - U.S. Well Services aims to position itself as a leader in electric pressure pumping technology, with plans to deliver the first Nyx Clean Fleets in late Q1 2022 [11] - The company is focused on reducing its debt load and simplifying its capital structure, having repaid nearly $90 million of its senior secured term loan since the beginning of the year [13] - The company believes that ongoing debt reductions will create value for shareholders [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, noting a shift in the pressure pumping industry towards electric and dual fuel fleets, which are now in high demand [10] - The company anticipates challenges during the transition period but expects to ramp up operations with new fleets in early 2022 [24] - Management highlighted the importance of maintaining key personnel during the transition to ensure growth [24] Other Important Information - U.S. Well Services ended Q3 with $47.5 million in total liquidity, consisting of $30.6 million in cash and $16.9 million available under its ABL [20] - The company recognized $1 million in equity compensation expense related to share-based awards during the quarter [18] Q&A Session Summary Question: Visibility into Q4 and expected utilization rates - Management indicated that Q4 may experience typical seasonal slowdowns, affecting utilization rates [23] Question: Recovery of wage increases and EBITDA outlook - Wage recovery is expected to materialize in 2022 as existing contracts roll over to new agreements [25] Question: Economics of conventional horsepower disposals - Management noted that they do not expect to compete with buyers of their diesel horsepower, as most customers prefer electric fleets [27] Question: Premium on bids for electric horsepower - Management has not yet observed an increase in premiums for electric horsepower bids despite rising diesel prices [29] Question: Cost structure and future EBITDA expectations - Management anticipates achieving mid-teens EBITDA per fleet in the second half of next year as new fleets are deployed [31] Question: Repair and maintenance costs during fleet transition - Elevated repair and maintenance costs were attributed to preparing diesel fleets for sale [37] Question: Debt load and cash balance covenants - There are no financial covenants related to cash balance, focusing instead on debt levels for interest relief [40] Question: Q4 adjusted EBITDA expectations - Q4 is expected to resemble Q3 in terms of adjusted EBITDA performance, with potential for slight declines due to seasonality [42] Question: Customer conversations regarding shared economics - Management emphasized that the business model aims for shared economics, targeting a payback period of 2 to 2.5 years for new fleets [44]

Financial Data and Key Metrics Changes - U.S. Well Services reported adjusted EBITDA of $36.9 million for Q2 2021, with an annualized adjusted EBITDA per fleet increasing by 39% to $7.3 million [8][15] - Revenue for the second quarter was $78.8 million, reflecting a 3% sequential increase [12] - Cost of sales decreased by 5% to $59.3 million, primarily due to lower fleet activity [12][13] - SG&A expenses were $7.2 million, down 2% from the previous quarter [13] Business Line Data and Key Metrics Changes - The company averaged 9.3 active fleets during the quarter, achieving a utilization rate of 85% [12] - Revenue from the sale of materials, including sand and chemicals, grew over 80% sequentially [12] - Adjusted EBITDA from hydraulic fracturing operations was approximately $14.4 million, up 25% from the previous quarter [15] Market Data and Key Metrics Changes - The demand for electric fracturing solutions has surged due to increased pressure on E&P companies to reduce greenhouse gas emissions [9][10] - The market for conventional diesel fleets remains oversupplied, with pricing not recovering to pre-COVID-19 levels [9] Company Strategy and Development Direction - U.S. Well Services is transitioning to an all-electric fleet, divesting non-core assets, including conventional diesel-powered frac equipment [10][11] - The company plans to build four new Nyx Clean Fleets, each consisting of 10 dual pump trailers totaling 60,000 horsepower [10] - The strategy includes deploying advanced, cost-effective, and low-emission fleets while reducing debt through asset sales [11] Management Comments on Operating Environment and Future Outlook - Management believes the trends towards electric solutions are permanent and that demand for older diesel equipment will not recover [10] - The company expects to see improved profitability as it transitions to electric fleets and absorbs overhead costs [24][50] Other Important Information - The company ended the quarter with total liquidity of $70.7 million, consisting of cash and availability under its ABL facility [15] - U.S. Well Services has completed over $21 million in asset sales to date, with plans to accelerate sales in the third quarter [11][16] Q&A Session Summary Question: Contribution of conventional horsepower to EBITDA - Management indicated that the EBITDA contribution from the diesel fleet was minimal in the first half of the year due to slow recovery in diesel pricing [22][23] Question: Economics and return objectives for new builds - The expected payback period for the new fleet is 24 months on a cash basis, with strong demand for electric fleets [27] Question: Customer preference between electric and Tier IV DGB - Customers are gravitating towards next-generation solutions due to fuel cost savings and emission reductions, with electric fleets offering more complete benefits [30][32] Question: Maintenance cost comparison between electric and diesel fleets - Historically, electric fleets have shown a 35% to 40% cost advantage over diesel fleets [36] Question: Asset sales and debt reduction strategy - The company is targeting approximately $130 million in total asset sale proceeds to reduce debt levels [58]