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]

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]