ProFrac (US:ACDC)2023-03-29 16:00Acquisitions and Growth - ProFrac has completed six acquisitions since its IPO, adding approximately 18.7 million tons of annual sand capacity and 13 frac fleets[15]. - The company completed the acquisition of FTS International for approximately $405.7 million, enhancing its hydraulic fracturing service capabilities[26]. - ProFrac acquired U.S. Well Services for a total consideration of $479.1 million, focusing on electric-powered pressure pumping services[30]. - The acquisition of Performance Proppants for $475.0 million expands ProFrac's frac sand supply in the Haynesville basin[34]. - The company completed acquisitions of five businesses in 2022 for an aggregate consideration of approximately $1.3 billion[214]. - ProFrac's vertically integrated business model allows for faster integration of acquired assets and efficient cannibalization and refurbishment of equipment[17]. - The company has a focused M&A strategy to acquire high-quality businesses at attractive valuations to increase scale and expand technological capabilities[15]. Financial Performance - Revenues for the year 2022 reached $2,425.6 million, a significant increase from $768.4 million in 2021, representing a growth of 215%[230]. - Operating income for 2022 was $412.4 million, compared to an operating loss of $18.0 million in 2021, indicating a turnaround in profitability[230]. - Net income attributable to ProFrac Holding Corp. was $91.5 million in 2022, a recovery from a net loss of $43.5 million in the previous year[230]. - Total current assets increased to $865.4 million in 2022, up from $251.7 million in 2021, reflecting a growth of 243%[228]. - Total liabilities rose to $1,582.9 million in 2022, compared to $516.5 million in 2021, marking an increase of 206%[228]. - Cash and cash equivalents increased significantly to $35.1 million in 2022 from $5.4 million in 2021[228]. - The company reported total operating costs and expenses of $2,013.2 million in 2022, compared to $786.4 million in 2021, an increase of 156%[230]. - Basic and diluted earnings per Class A common share for 2022 were $2.06, reflecting a positive shift from the previous year's loss[230]. - The total assets of the company reached $2,933.6 million in 2022, a substantial increase from $664.6 million in 2021, representing a growth of 341%[228]. - The company reported a net income of $136.7 million for the year, a significant turnaround from the previous year's losses, indicating strong operational performance[236]. Debt and Financial Obligations - The company had a net debt of $924.3 million as of December 31, 2022, with total gross debt of $959.4 million[18]. - A 1% increase in interest rates would have resulted in an annual increase in interest expense of approximately $5.2 million based on outstanding debt as of December 31, 2022[204]. - The total gross debt as of December 31, 2022, was $959.4 million, a substantial increase from $306.7 million in 2021[323]. - The 2022 Term Loan Credit Facility was established with an aggregate amount of $450.0 million, with an effective interest rate of 11.1% as of December 31, 2022[324]. - The company repaid $143.8 million of the 2022 Term Loan Credit Facility using proceeds from its IPO[324]. - The principal maturity schedule for total debt outstanding as of December 31, 2022, is $959.4 million, with significant amounts due in 2023 ($127.6 million) and 2024 ($103.9 million)[345]. Operational Capacity and Production - As of January 3, 2023, ProFrac operates 42 active fleets, positioning it among the largest well stimulation service providers in the United States[15]. - ProFrac operates 42 active fleets, with four additional fleets under construction, including 20 Tier IV fleets and eight electric fleets[19]. - The company has an annual production capacity of approximately 21 million tons of proppants across eight mines, making it the largest producer of in-basin proppants[22]. - ProFrac's Kermit mine has a capacity of three million tons annually and is estimated to have 46 million tons of total recoverable mineral reserves[22]. - The Monarch mine in the Eagle Ford Shale represents approximately 21% of supply in the region, with a production capacity of three million tons annually[22]. - ProFrac's Haynesville mines account for approximately 57% of total production capacity in the Haynesville Shale, with an annual capacity of about 10 million tons[23]. Environmental and Regulatory Considerations - The company aims to equip all conventional fleets with emissions reduction technology, aligning with its environmental focus[19]. - The company is subject to stringent environmental regulations, which may impose costly compliance measures and could materially affect operations[42]. - The company has observed seasonal variations in operations, particularly a slowdown during the fourth quarter holiday season[37]. - The company recognizes the importance of ESG principles and has established an internal ESG committee to document sustainability efforts[35]. - The Biden Administration aims to reduce U.S. emissions by 50-52% below 2005 levels by 2030, with a focus on methane emissions reduction of at least 30% by 2030 relative to 2020 levels[48]. - The Inflation Reduction Act (IRA) commits approximately $375 billion over a decade to promote clean energy, including incentives for solar, wind power, and electric vehicles[48]. - Increased regulatory risks and costs related to GHG emissions and hydraulic fracturing could adversely impact demand for the company's services[51]. Employee and Safety Metrics - The company employed 3,664 people as of December 31, 2022, with a Total Reportable Incident Rate of 0.59, outperforming the industry average of 0.70[38]. - The Total Reportable Incident Rate (TRIR) for ProFrac was 0.59 for the year ended December 31, 2022, compared to the industry average of 0.70[18]. - The company has adopted enhanced safety measures in response to COVID-19 to protect employee health and minimize business disruption[38]. Stock and Equity Information - The company completed its IPO on May 17, 2022, raising net proceeds of $301.7 million from the sale of 16,000,000 shares at $18.00 per share[243]. - The company issued Class A shares in an IPO, raising $72.9 million, which contributed positively to its capital structure[236]. - ProFrac Corp. owned 34.1% of ProFrac LLC, with 54.0 million Class A shares and 104.2 million Class B shares outstanding[248]. - The company recognized stock-based compensation of $4.1 million, which includes $2.2 million related to deemed contributions, indicating ongoing investment in employee incentives[236]. - The company reported stock-based compensation of $45.6 million for the year ended December 31, 2022[248].