ProFrac (US:ACDC)2025-03-10 20:05Operations and Capacity - ProFrac operates 28 active hydraulic fracturing fleets as of December 31, 2024, with 15 Tier IV fleets, 9 Tier II fleets, and 4 electric fleets[32]. - The company has approximately 21.5 million tons of annual nameplate capacity across eight frac sand mines, positioning it as one of the largest producers of in-basin frac sand in the U.S.[33]. - ProFrac's operations are strategically located in major unconventional oil and gas basins, enhancing its ability to serve a diversified customer base[32]. - ProFrac's scale and geographic diversification allow it to respond flexibly to market volatility and improve operational efficiencies[41]. Business Model and Strategy - ProFrac's business model emphasizes vertical integration and technological innovation, allowing for tailored products and services to meet customer needs[30]. - The company aims to be the most reliable, cost-effective supplier of in-basin frac sand, maximizing value through strong cash flow generation[40]. - The company focuses on integrating new technologies in a cost-effective manner through its in-house manufacturing capabilities[44]. - ProFrac's manufacturing segment enables cost-advantaged growth and maintenance by assembling new fleets and refurbishing existing ones[43]. Acquisitions and Investments - In April 2024, the company acquired Basin Production and Completion LLC for a total consideration of $39.8 million, consisting of $14.9 million in cash and a pre-existing investment of $24.9 million[51]. - In June 2024, the company acquired Advanced Stimulation Technologies, Inc. for $174.0 million in cash, enhancing its pressure pumping services in the Permian Basin[52]. - The company acquired NRG Manufacturing, Inc. and its affiliate for a total consideration of $6.0 million in cash in June 2024, further expanding its capabilities in the hydraulic fracturing industry[53]. - The company acquired Producers Service Holdings LLC for approximately $35.0 million, adding three fleets totaling 200,000 HHP and a manufacturing facility in Ohio[55]. - The acquisition of Performance Proppants in February 2023 totaled approximately $462.8 million, with $452.4 million paid in cash, enhancing the company's frac sand supply capabilities[56]. Financial Performance - Total revenues for 2024 were $2,190.9 million, a decrease of 16.7% from $2,630.0 million in 2023[417]. - Services revenue decreased to $1,886.7 million in 2024 from $2,274.2 million in 2023, representing a decline of 16.9%[417]. - Product sales revenue decreased significantly to $304.2 million in 2024 from $355.8 million in 2023, a drop of 14.5%[417]. - Operating loss for 2024 was $60.4 million, compared to an operating income of $166.6 million in 2023[417]. - Net loss attributable to ProFrac Holding Corp. for 2024 was $215.1 million, compared to a net loss of $97.7 million in 2023[418]. - Earnings per Class A common share (basic and diluted) for 2024 was $(1.38), compared to $(0.82) in 2023[418]. - Total assets decreased to $2,988.1 million as of December 31, 2024, down from $3,070.7 million in 2023[416]. - Total liabilities increased to $1,848.5 million in 2024 from $1,742.1 million in 2023[416]. Environmental and Regulatory Compliance - The company operates under stringent environmental and occupational health and safety regulations, which may impose costly compliance measures and potential penalties for non-compliance[79]. - The Resource Conservation and Recovery Act (RCRA) and state laws impose requirements on the handling, transportation, and disposal of hazardous and non-hazardous wastes, affecting operational costs[81]. - The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) imposes strict liability for the cleanup of hazardous substances, which could lead to significant financial liabilities for the company[83]. - The Clean Water Act (CWA) and related regulations impose strict controls on the discharge of pollutants, potentially increasing operational costs and delays in obtaining necessary permits[87]. - The Clean Air Act (CAA) regulates air emissions, with new stringent requirements potentially increasing compliance costs for the company[88]. - Climate change regulations are evolving, with potential future legislation that could impose stricter GHG emissions standards, impacting operational costs and demand for services[89]. - The Endangered Species Act (ESA) may affect exploration and production activities, leading to additional costs or operational restrictions in certain areas[96]. - Hydraulic fracturing operations are significant for the company, but increased regulatory scrutiny could lead to higher costs and reduced activity on federal lands[100]. - The company is actively participating in conservation agreements to mitigate potential impacts from environmental regulations[96]. Safety and Workforce - As of December 31, 2024, the company employed 3,077 people, with a Total Reportable Incident Rate of 0.28 for safety performance[69]. - Compliance with OSHA standards for worker exposure to silica may result in material additional costs for the company and its customers[105]. Debt and Financial Management - The company completed a debt refinancing in December 2023, totaling $885 million, extending significant debt maturities to 2029[64]. - A 1% increase in interest rates on variable-rate debt would raise annual interest payments by approximately $10.7 million as of December 31, 2024[389]. - The company has no derivative instruments that materially increase exposure to market risks as of December 31, 2024[389]. Goodwill and Asset Management - The company holds $209.1 million in goodwill related to its Stimulation Services reporting unit, with no impairment identified following a quantitative assessment[400]. - Goodwill impairment of $74.5 million was recognized in 2024, indicating challenges in asset recoverability[418]. - Goodwill balance as of December 31, 2024, is $302.0 million, down from $325.9 million in 2023, reflecting an impairment of $74.5 million in the Proppant segment[466]. Cash Flow and Capital Expenditures - Cash provided by operating activities for 2024 was $367.3 million, down from $553.5 million in 2023 and $415.2 million in 2022[433]. - Cash used in investing activities was $372.3 million in 2024, compared to $715.8 million in 2023 and $1,028.6 million in 2022[433]. - The company incurred capital expenditures of $32.4 million included in accounts payable for 2024[435]. - Cash payments for interest in 2024 were $137.8 million, slightly down from $139.1 million in 2023[435]. - The company reported a net cash used in financing activities of $5.5 million in 2024, compared to a net cash provided of $149.7 million in 2023[433].