ProFrac (US:ACDC)2022-08-14 16:00IPO 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].