Financial Data and Key Metrics Changes - In 2025, the company reported approximately $14.3 billion in net sales, an increase of about $200 million year-over-year, supported by a 23% increase in light vehicle e-product sales [4][5] - The adjusted operating margin expanded by 60 basis points to 10.7%, with a 14% year-over-year growth in EPS and over $1.2 billion in free cash flow generated, representing a 66% increase compared to 2024 [5][24] - The fourth quarter sales reached just under $3.6 billion, with an adjusted operating income of $427 million, equating to a 12.0% adjusted operating margin, up from 10.2% in the previous year [17][18] Business Line Data and Key Metrics Changes - Light vehicle e-product sales drove significant growth, with a 23% increase, while organic sales growth was approximately 1.6% year-over-year, excluding declines in the battery and charging system segment [4][5] - The PowerDrive Systems segment saw substantial e-product growth, contributing to the overall performance, with expectations for continued growth in the low double digits for 2026 [34][35] Market Data and Key Metrics Changes - The company anticipates a sales decline in the battery business due to reduced North American incentives and weaker European demand, representing a 150 basis point headwind to year-over-year sales growth [19][59] - The China market, which constitutes about 20% of overall business, is experiencing a slowdown in local vehicle sales, but exports from China have reached record highs, providing opportunities for growth [76] Company Strategy and Development Direction - The company is focused on long-term profitable growth, with a new product aimed at the data center market expected to generate over $300 million in sales during its first year of production, starting in 2027 [9][11] - The strategy includes leveraging core competencies in manufacturing and technology to secure new business awards and expand into new markets, such as power generation [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to expand margins and grow adjusted EPS in 2026, despite anticipated declines in market volumes and battery sales [16][25] - The company is optimistic about future product launches and the potential for growth in both foundational and e-product segments, with expectations for improved performance starting in 2027 [66] Other Important Information - The company returned over 50% of its free cash flow to shareholders in 2025 through share repurchases and dividends, demonstrating a balanced capital allocation approach [5][22] - The company has repurchased over 31 million shares since 2021, representing a 13% reduction in outstanding shares [22] Q&A Session Summary Question: Can you elaborate on the data center opportunity and its margins? - The company expects a mid-teens incremental conversion on the $300 million in revenues from the data center business, which is anticipated to be EPS accretive immediately [30][31] Question: What is the size of the recovery in the PowerDrive segment? - The PowerDrive Systems segment saw about 100 basis points of benefit in Q4, with expectations for continued growth in the mid-teens for 2026 [34][35] Question: How does the company view the growth potential of the turbine generator system? - The data center market is expected to grow in the mid-teens annually for the next decade, with the turbine generator system positioned to capture significant market share [40][41] Question: What is the outlook for the battery systems business? - The battery systems business is expected to face a 150 basis point headwind in 2026, but management is optimistic about future growth opportunities and cost structure adjustments [59] Question: How does the company approach M&A opportunities? - The company remains disciplined in its M&A strategy, focusing on acquisitions that leverage core competencies and provide near-term accretion [63][64]

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]