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ProPetro (NYSE:PUMP) FY Conference Summary Company Overview - **Company**: ProPetro Holding Corp. - **Ticker**: PUMP - **Industry**: Oil and Gas Services, specifically hydraulic fracturing and power generation - **Headquarters**: Midland, Texas - **Key Executives**: Matt Augustine (VP of Finance and Investor Relations), Shelby Fietz (Chief Commercial Officer) Key Points Financial Performance - **Q3 Revenue**: $294 million - **Adjusted EBITDA**: $35 million - **Free Cash Flow from Completion Business**: $25 million - **Revenue Mix**: 71% hydraulic fracturing, 18% wireline, 11% cement [6][8][19] Investment Thesis - Built on four pillars: sustainable free cash flow, exposure to the Permian Basin, technology innovation, and a strong balance sheet [4][6] - Over $1 billion invested since 2022 to refresh assets and technology [4] ProPower Business - New business line generating revenue since December 2024, with 220 megawatts contracted [7][13] - Focus on long-term take-or-pay contracts to build sustainable free cash flow [5][12] - Initial contract for 80 megawatts for 10 years with a large E&P operator in the Permian Basin [12] - Anticipated installed capacity of at least 1 gigawatt by 2030, with projected EBITDA of $265 million-$280 million from this business [14][15] Market Position and Strategy - ProPetro is the second leading horsepower provider in the Permian Basin, with a significant market share [35] - Focus on capital efficiency and maintaining a strong balance sheet while investing in growth [21][26] - Emphasis on industrialized operations and technology to reduce operating expenses and emissions [10][20] Industry Dynamics - Current market characterized by high attrition rates among smaller players, leading to consolidation [33][34] - Stable free cash flow generation despite fluctuations in oil prices, with a focus on maintaining operational efficiency [30][31] - Anticipated increase in activity levels as production in the Permian Basin is expected to roll over [32] Challenges and Opportunities - Need for education among customers regarding the efficiency and cost savings of ProPower solutions compared to traditional diesel generators [46][49] - Growing demand for power generation in the Permian Basin and data center sectors, with ProPetro positioned to meet this demand [39][40] - Competitive advantage due to established relationships with suppliers like Caterpillar and existing customer bases [11][18] Future Outlook - ProPetro aims to leverage its strong free cash flow from the completion business to fund growth in the ProPower segment [13][21] - Continued focus on diversifying customer base beyond oil and gas to include data centers and utility-like projects [38][42] - Anticipation of a re-rate in valuation due to improved free cash flow generation and market positioning [25][26] Additional Insights - The company has a history of successful mergers and acquisitions to bolster its service offerings [22] - ProPetro's operational efficiency and technology investments are expected to yield long-term benefits, particularly in a challenging market environment [23][24]

Core Insights - ProPetro Holding (PUMP) reported a revenue of $293.92 million for the quarter ended September 2025, reflecting a year-over-year decline of 18.6% and an EPS of -$0.02 compared to $0.12 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $257.78 million by 14.02%, while the EPS surprised positively by 81.82% against a consensus estimate of -$0.11 [1] Revenue Breakdown - Hydraulic Fracturing service revenue was $210.19 million, surpassing the three-analyst average estimate of $185.15 million, but showing a year-over-year decline of 23.3% [4] - Cementing service revenue reached $31.64 million, exceeding the average estimate of $28.73 million [4] - Wireline service revenue was reported at $52.17 million, outperforming the average estimate of $40.31 million, with a year-over-year increase of 8.8% [4] - Reconciling Items revenue was $0.24 million, compared to an estimated -$0.03 million [4] Adjusted EBITDA Performance - Adjusted EBITDA for Hydraulic Fracturing was $35.39 million, slightly below the average estimate of $38.27 million [4] - Adjusted EBITDA for Wireline was $10.89 million, significantly above the average estimate of $6.43 million [4] - Adjusted EBITDA for Cementing was $5.59 million, exceeding the average estimate of $4.34 million [4] - Adjusted EBITDA for Reconciling Items was reported at -$12.57 million, close to the average estimate of -$12.65 million [4] Stock Performance - ProPetro's shares have returned +95.8% over the past month, contrasting with a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - ProPetro Holding Corp. (PUMP) reported a narrower adjusted net loss of 2 cents per share for Q3 2025, compared to an expected loss of 11 cents, attributed to a 44.4% year-over-year decrease in costs and expenses, although it declined from a profit of 12 cents in the same quarter last year [1][9] - Revenues reached $294 million, exceeding the consensus estimate of $258 million, driven by $157 million from the Power Generation segment and $52.2 million from the Wireline segment, which was 29.5% above expectations; however, this represented an 8.6% decrease from $361 million in the prior year [2][9] - Adjusted EBITDA was $35 million, down 29% from the previous quarter's $50 million, missing the model estimate of $44.7 million due to softer revenues and costs from fleet downsizing [3] Financial Performance - Total costs and expenses for Q3 were $300 million, down 44.4% year-over-year but above the forecast of $273.2 million [8] - The cost of services (excluding depreciation and amortization) was $236.5 million, down from $267.6 million in the prior year, while general and administrative expenses decreased to $22.5 million from $26.6 million [10] - As of September 30, 2025, PUMP had $66.5 million in cash and equivalents, $45 million in borrowings, and total liquidity of $158 million, with a debt-to-total capital ratio of 9.5% [11] Business Developments - PUMP extended its $200 million stock repurchase program by 19 months, having repurchased 13 million shares since May 2023, representing nearly 11% of total common shares outstanding [4] - The company made significant progress in its PROPWR business, securing a long-term contract for 60 megawatts to power a data center and negotiating an additional 70-megawatt contract, with total contracted capacity expected to exceed 220 megawatts by year-end [5][6] - ProPetro ordered 140 megawatts of equipment, aiming for a total capacity of 750 megawatts by 2028, with estimated costs of $1.1 million per megawatt [6] Segment Performance - The Pressure Pumping segment contributed 100% to total revenues, with service revenues decreasing 18.6% to $293.9 million from the prior year, although it exceeded the estimate of $259.2 million [7] - The company anticipates capital expenditures for 2025 to be between $270 million and $290 million, with $190 million allocated for the PROPWR business [13][14] - Operationally, ProPetro plans to run 10 to 11 hydraulic fracturing fleets through Q4 2025, expecting to maintain this level into 2026 [16]

Revenue and Financial Performance - For the three months ended September 30, 2025, total service revenue was $293.9 million, a decrease from $360.9 million in the same period of 2024, representing a decline of approximately 18.6%[175]. - Adjusted EBITDA for the three months ended September 30, 2025, was $35.2 million, down from $71.1 million in the same period of 2024, indicating a decrease of about 50.5%[177]. - The company reported a net loss of $2.4 million for the three months ended September 30, 2025, compared to a net loss of $137.1 million in the same period of 2024[177]. - Total revenue decreased by 12.8%, or $144.2 million, to $979.5 million for the nine months ended September 30, 2025, compared to $1,123.7 million for the same period in 2024[202]. - Net income improved to $82 thousand for the nine months ended September 30, 2025, compared to a net loss of $120.8 million for the same period in 2024[202]. Segment Performance - Hydraulic Fracturing segment revenue decreased by 15.2%, or $129.7 million, primarily due to decreased customer activity and pricing, despite a $41.6 million increase from AquaProp's operations[202]. - Wireline segment revenue decreased by 2.8%, or $4.4 million, attributed to decreased customer activity and pricing during the first half of fiscal year 2025[203]. - Cementing segment revenue decreased by 9.2%, or $10.2 million, mainly due to the sale of the cementing business in Vernal, Utah, which contributed $19.3 million in revenue in the prior year[204]. - Hydraulic Fracturing segment revenue decreased by 23.3%, or $63.9 million, primarily due to decreased customer activity and idling of fleets[186]. - Wireline segment revenue increased by 8.8%, or $4.2 million, attributed to increased customer activity[187]. - Cementing segment revenue decreased by 18.7%, or $7.3 million, due to the sale of the cementing business in Vernal, Utah[188]. Capital Expenditures and Investments - Capital expenditures incurred for the three months ended September 30, 2025, totaled $98.4 million, compared to $36.8 million for the same period in 2024, reflecting an increase of approximately 167.5%[175]. - Capital expenditures for the three months ended September 30, 2025, were $98.4 million, a significant increase from $36.8 million in the same period in 2024, primarily for the power generation segment[221]. - Projected capital expenditures for 2025 are expected to range between $270 million and $290 million, including approximately $80 million to $100 million for completion services and $190 million for the PROPWR business[222]. - Capital expenditures incurred for the nine months ended September 30, 2025, totaled $210.1 million, compared to $108.6 million in 2024, with significant investments in the power generation segment[230]. Operational Changes and Strategic Moves - The company formed a new subsidiary, ProPetro Energy Solutions, LLC, which began revenue-generating activities in the three months ended September 30, 2025, and has a total capacity of approximately 360 megawatts under contractual arrangements for power generation equipment[155]. - The AquaProp Acquisition expanded the company's services to include wet sand solutions, with total consideration amounting to $35.1 million, including cash and contingent consideration[157]. - The company sold its cementing business for $13.0 million, recording a gain on disposal of $8.2 million, as part of a strategic repositioning[156]. - The company expects to capitalize on drilling and completion activity in the Permian Basin, particularly in the Midland and Delaware sub-basins, which are anticipated to command a significant share of future North American E&P spending[159]. Equipment and Emissions Transition - The company transitioned its hydraulic fracturing equipment portfolio from approximately 60% lower emissions equipment in 2023 to approximately 75% as of September 30, 2025[168]. - The transition to lower emissions equipment is capital intensive, and the company is working to meet customer demands for such equipment to avoid adverse impacts on service demand[168]. Market Conditions - The average West Texas Intermediate (WTI) crude oil price declined to approximately $64 per barrel in September 2025, influenced by various geopolitical and economic factors[166]. - The Permian Basin rig count decreased from 304 at the end of 2024 to 251 at the end of September 2025, leading to reduced demand for completion services[166]. Liquidity and Financial Position - Total liquidity as of September 30, 2025, was approximately $157.6 million, consisting of $66.5 million in cash and cash equivalents and $91.1 million available under the ABL Credit Facility[218]. - The Company has a borrowing capacity of up to $225.0 million under its ABL Credit Facility, with a borrowing base of approximately $144.6 million as of September 30, 2025[232][233]. Tax and Share Repurchase - The effective tax rate for the nine months ended September 30, 2025, was 97.1%, compared to an income tax benefit and an effective tax rate of 18.8% for the same period in 2024[216]. - The Company approved an extension of its share repurchase program, allowing for the repurchase of up to $200 million of common stock through December 31, 2026, with $89.2 million remaining authorized for future repurchases as of September 30, 2025[219].

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Financial Performance - Total revenue for Q3 2025 was $294 million, a decrease of 10% from $326 million in Q2 2025[5] - Net loss for the quarter was $2 million, or $0.02 loss per diluted share, compared to a net loss of $7 million, or $0.07 loss per diluted share in the prior quarter[10] - Adjusted EBITDA was $35 million, representing 12% of revenue, down 29% from $50 million in Q2 2025[10] - Service revenue for Q3 2025 was $293,916 thousand, a decrease of 20% from $360,868 thousand in Q3 2024[31] - The net loss for Q3 2025 was $2,365 thousand, compared to a net loss of $137,067 thousand in Q3 2024, indicating improved financial performance[31] - Service revenue for the three months ended September 30, 2025, was $293.916 million, a decrease from $326.151 million for the three months ended June 30, 2025, representing a decline of approximately 9.8%[37] - Adjusted EBITDA for the three months ended September 30, 2025, was $35.164 million, down from $49.607 million for the three months ended June 30, 2025, reflecting a decrease of about 29.1%[41] - Net loss for the three months ended September 30, 2025, was $2.365 million, an improvement compared to a net loss of $7.155 million for the three months ended June 30, 2025[41] Cash Flow and Assets - Free Cash Flow for the completions business was $25 million, totaling $92 million year-to-date through Q3 2025[5] - Cash and cash equivalents increased to $66,541 thousand as of September 30, 2025, up from $50,443 thousand at the beginning of the period[33] - The company experienced a net cash provided by operating activities of $150,563 thousand for the nine months ended September 30, 2025, compared to $214,432 thousand in 2024[33] - The total shareholders' equity increased to $826,210 thousand as of September 30, 2025, from $816,273 thousand at the end of 2024[32] Capital Expenditures - Capital expenditures incurred were $98 million, with $79 million supporting PROPWR orders[19] - The company anticipates full-year 2025 capital expenditures to be between $270 million and $290 million, with PROPWR accounting for approximately $190 million[21] - The company reported capital expenditures of $122,084 thousand for the nine months ended September 30, 2025, compared to $112,449 thousand for the same period in 2024[33] - Capital expenditures incurred for the three months ended September 30, 2025, totaled $98.353 million, compared to $73.092 million for the three months ended June 30, 2025, indicating an increase of approximately 34.6%[37] Contracts and Growth - The company secured a long-term contract for 60 megawatts of power capacity for a hyperscaler data center, marking its entry into the data center power market[5] - Total contracted capacity for PROPWR expanded to over 150 megawatts, with expectations to reach at least 220 megawatts by year-end 2025[14] - The company has executed a letter of intent for a $350 million lease financing facility to support PROPWR growth[16] - The company targets an installed capacity of one gigawatt or greater by 2030, driven by growth in oilfield and data center power projects[17] Other Financial Metrics - Total costs and expenses for Q3 2025 were $299,982 thousand, down from $539,160 thousand in Q3 2024, reflecting a significant reduction[31] - Accounts receivable increased to $209,225 thousand as of September 30, 2025, from $195,994 thousand at the end of 2024[32] - The weighted average common shares outstanding for Q3 2025 were 103,974 thousand, consistent with the previous quarter[31] - Depreciation and amortization for the three months ended September 30, 2025, was $41.660 million, down from $43.309 million for the three months ended June 30, 2025[41] - Interest expense for the three months ended September 30, 2025, was $2.110 million, an increase from $1.811 million for the three months ended June 30, 2025[41] - The company reported a $2.0 million unrealized gain on short-term investments for the three months ended September 30, 2025, contributing to other income[43] - The company incurred a retention bonus and severance expense of $200 thousand for the three months ended September 30, 2025, compared to $327 thousand for the three months ended June 30, 2025[41]

Financial Data and Key Metrics Changes - ProPetro generated total revenue of $294 million, a decrease of 10% compared to the prior quarter [19] - Net loss totaled $2 million or $0.02 loss per diluted share, an improvement from a net loss of $7 million or $0.07 loss per diluted share in the previous quarter [19] - Adjusted EBITDA was $35 million, representing 12% of revenue, and decreased by 29% compared to the prior quarter [19] - Free cash flow for the completions business was $25 million [19] Business Line Data and Key Metrics Changes - The completions business continues to generate sustainable free cash flow despite a decline in activity and related revenue [20] - Capital expenditures incurred were $98 million, with approximately $79 million supporting ProPWR orders [21] - The company anticipates full-year 2025 capital expenditures to be between $270 million and $290 million, down from previous guidance [22] Market Data and Key Metrics Changes - Approximately 70 full-time frac fleets are currently operating in the Permian, down from 90 to 100 fleets at the beginning of the year, indicating a slowdown in the completions market [4] - Pricing discipline has softened at the lower end of the market, particularly among subscale frac providers [7] Company Strategy and Development Direction - ProPetro is focusing on capital light investments and the ProPWR segment as key growth engines [6][10] - The company secured a long-term contract for 60 megawatts to support a hyperscale data center, marking its entry into the data center power market [11] - ProPetro plans to expand its capacity to 750 megawatts by the end of 2028, with a focus on both oilfield power projects and data center applications [12][15] Management's Comments on Operating Environment and Future Outlook - The management expects the challenging operating environment to persist into at least the first half of next year due to tariffs and OPEC production increases [5] - Despite current market challenges, ProPetro is well-positioned with a strong balance sheet and a focus on operational excellence [17] - The company anticipates maintaining 10 to 11 active fleets in the fourth quarter, with expectations for sequential improvement in the ProPWR segment [16] Other Important Information - ProPetro has executed a letter of intent for a $350 million leasing facility to support its ProPWR growth [13][25] - The company is committed to a disciplined approach to capital deployment, ensuring flexibility to pivot between key priorities [24] Q&A Session Summary Question: Details on the 60 megawatt data center contract - The contract involves reciprocating engines and battery energy storage systems, with potential for future capacity expansion [30][33] Question: Future funding structures and liquidity runway - The company prioritizes organic free cash flow for funding, with additional options available for future capital needs [35][38] Question: Contract duration preferences in the current environment - The company evaluates each deal on a case-by-case basis, balancing long-term contracts with potential for higher margins in shorter terms [44][46] Question: Equipment cost differentials between data centers and oilfield microgrids - There is no significant cost differential; the average cost of equipment is around $1.1 million per megawatt [47][48] Question: Deployment of megawatts across different markets - The company anticipates a balanced distribution between oilfield contracts and data center contracts, with potential shifts based on market opportunities [53][56] Question: Concerns about power being bid away from frac business - The company feels confident about its current positioning and the differentiation in equipment used for different applications [61][62] Question: Differentiation between frac and power generation services - Both service lines focus on customer needs, with a strong emphasis on operational excellence and flexibility [66][68]

Financial Data and Key Metrics Changes - ProPetro generated total revenue of $294 million, a decrease of 10% compared to the prior quarter [19] - Net loss totaled $2 million or $0.02 loss per diluted share, an improvement from a net loss of $7 million or $0.07 loss per diluted share in the second quarter [19] - Adjusted EBITDA was $35 million, representing 12% of revenue, and decreased by 29% compared to the prior quarter [19] - Free cash flow for the completions business was $25 million [19] Business Line Data and Key Metrics Changes - The completions business continues to generate sustainable free cash flow despite a decline in activity and related revenue [20] - Capital expenditures incurred were $98 million, with approximately $79 million supporting PROPWR orders [21] - The company anticipates full-year 2025 capital expenditures to be between $270 million and $290 million, down from previous guidance [23] Market Data and Key Metrics Changes - Approximately 70 full-time frac fleets are currently operating in the Permian, down from 90-100 fleets at the beginning of the year, indicating a slowdown in the completions market [4] - Pricing discipline has softened at the lower end of the market, particularly among subscale frac providers [7] Company Strategy and Development Direction - ProPetro is focusing on capital light investments and the industrialized operating model to generate free cash flow [4] - The company is prioritizing investments in PROPWR and FORCE Electric fleets to support future growth [7] - ProPetro secured a long-term contract for 60 MW to support a hyperscale data center, marking its entry into the data center power market [11] Management's Comments on Operating Environment and Future Outlook - Management expects the challenging operating environment to continue into at least the first half of next year due to tariffs and OPEC production increases [5] - The company anticipates maintaining 10-11 active fleets in the fourth quarter, with expectations for sequential improvement in the PROPWR segment [16] - Management remains confident in the company's strategy and future growth, particularly in the PROPWR segment [27] Other Important Information - ProPetro has secured a letter of intent for a $350 million leasing facility to support growth in the PROPWR business [13] - The company plans to reach at least 220 MW contracted by the end of the year, with expectations to deliver 750 MW by year-end 2028 [12] Q&A Session Summary Question: Details on the 60 MW data center contract - The technology deployed includes reciprocating engines and battery energy storage systems, with potential for future capacity expansion [33][34] Question: Future funding structures and liquidity runway - The company prioritizes organic free cash flow for funding, with the leasing facility providing flexible capital for growth [37][39] Question: Contract duration preferences - The 60 MW contract is long-term, with the company evaluating each deal on a case-by-case basis for optimal terms [45][47] Question: Equipment cost differentials - The average cost of equipment, including battery systems, is about $1.1 million per megawatt, with no significant cost differential between data center and Permian microgrid projects [48][49] Question: Deployment of megawatts across markets - The company anticipates a balanced distribution of contracts between data centers and oilfield applications, with potential shifts based on market opportunities [55][56] Question: Differentiation in service lines - Both the frac and power generation businesses focus on customer needs, with a strong emphasis on operational excellence and technology expertise [66][69]

Financial Data and Key Metrics Changes - ProPetro generated total revenue of $294 million, a decrease of 10% compared to the prior quarter [29] - Net loss totaled $2 million or $0.02 loss per diluted share, compared to a net loss of $7 million or $0.07 loss per diluted share for the second quarter of 2025 [29] - Adjusted EBITDA totaled $35 million, representing 12% of revenue, and decreased 29% compared to the prior quarter [29] - Free cash flow for the completions business was $25 million [29] Business Line Data and Key Metrics Changes - The completions business continues to generate sustainable free cash flow despite a decline in activity and related revenue [30] - Capital expenditures incurred were $98 million, with approximately $79 million supporting ProPWR orders [30] - The company anticipates full-year 2025 capital expenditures incurred to be between $270 million and $290 million, down from the previous range [32] Market Data and Key Metrics Changes - Approximately 70 full-time frac fleets are currently operating in the Permian, down from 90 to 100 fleets at the beginning of the year, indicating depressed activity levels [14] - The company expects the challenging operating environment to persist into 2026 due to tariffs and OPEC production increases [15][26] Company Strategy and Development Direction - ProPetro is focusing on capital light investments and the development of its ProPWR segment, which is expected to drive future growth [15][20] - The company has secured contracts for seven frac fleets, with 75% of the fleet consisting of next-generation gas-burning equipment [20] - ProPetro aims to deepen existing relationships and expand its reach to new partners in the power generation market, targeting at least 220 megawatts contracted by the end of the year [23] Management's Comments on Operating Environment and Future Outlook - Management believes the current market conditions present valuable opportunities, and the company is well-positioned to navigate the market [19] - The company expects to maintain 10 to 11 active fleets in the fourth quarter, with a sequential improvement anticipated in the ProPWR segment [26][27] - Management remains confident in the strategy and future of ProPetro, emphasizing the importance of a strong balance sheet and disciplined capital allocation [38] Other Important Information - ProPetro has executed a letter of intent for a $350 million leasing facility to support growth in the ProPWR business [24][34] - The company plans to reach a total of 750 megawatts delivered by year-end 2028, with a focus on long-term take-or-pay contracts [24][33] Q&A Session Summary Question: Details on the 60 megawatts data center contract - The contract involves reciprocating engines and battery energy storage systems, with potential for future capacity expansion [49] Question: Future funding structures and liquidity runway - The company prioritizes organic free cash flow for funding, with the leasing facility providing flexible capital as needed [58][60] Question: Contract term preferences in the current environment - The company evaluates each deal on a case-by-case basis, considering both long-term and shorter-term contracts based on market conditions [75] Question: Equipment cost differential for data centers versus Permian microgrids - The average cost of equipment is about $1.1 million per megawatt, with similar economics across both sectors [78][95] Question: Deployment of megawatts across different markets - The current distribution of contracted megawatts is expected to remain similar in the near term, with potential shifts as more data center contracts are pursued [84]