ProPetro Holding Corp (PUMP) FY Conference Summary Company Overview - ProPetro Holding Corp operates in the oil and gas services industry, specifically focusing on hydraulic fracturing and related services in the Permian Basin [1][2] - The company has reinvested over $1 billion into capital-light, efficient equipment over the past five years [3][4] Financial Performance - ProPetro reported second-quarter revenue of $326 million, with a free cash flow of $26 million [3][4] - The company has experienced a decline in revenue and EBITDA from Q1 to Q2, reflecting broader industry challenges [4][9] - Despite a drop in rig counts, ProPetro has maintained durable free cash flow, generating $67 million year-to-date in 2025 [9][20] Strategic Initiatives - ProPetro is transitioning to a fleet of capital-light, electric equipment, moving away from diesel-burning machinery [6][22] - The company plans to introduce a new service line, Pro Power, which is expected to compete with existing service lines and generate significant revenue [5][6] - Pro Power aims to address the growing demand for energy in the Permian Basin, particularly for oilfield applications and data centers [31][36] Market Position and Competitive Landscape - ProPetro is currently valued at a discount compared to peers in the energy service sector, presenting a potential investment opportunity [15][16] - The company has engaged in M&A activities, acquiring Silvertip wireline and enhancing its cementing operations, which contribute to its competitive advantage [12][13] Equipment and Technology - ProPetro has phased out capital-heavy diesel equipment in favor of more efficient gas-burning and electric equipment [22][27] - The company has established a modular approach to power generation, allowing for flexibility and efficiency in meeting customer needs [44][45] Future Outlook - ProPetro anticipates significant growth in its Pro Power segment, with plans to contract 220 megawatts of power generation capacity by the end of the year [33][36] - The company is focused on maintaining free cash flow while scaling its operations in the electric power sector [24][19] Key Takeaways - ProPetro's strategic focus on capital-light, efficient equipment positions it well for future growth in a challenging market [6][19] - The introduction of Pro Power is expected to diversify revenue streams and reduce reliance on traditional oil and gas services [31][36] - The company is committed to operational excellence and leveraging existing customer relationships to drive growth in its new power generation business [46][47]

Financial Data and Key Metrics Changes - ProPetro generated total revenue of $326 million, a decrease of 9% compared to the prior quarter [19] - The net loss totaled $7 million, or $0.07 loss per diluted share, compared to net income of $10 million, or $0.09 income per diluted share for the previous year [19] - Adjusted EBITDA totaled $50 million, representing 15% of revenue, and decreased 32% compared to the prior quarter [19] - Free cash flow for the completions business was $26 million, demonstrating sustainable cash generation despite market challenges [20] Business Line Data and Key Metrics Changes - The legacy completions business continues to generate sustainable free cash flow, supported by ongoing cost optimization and targeted capital programs [8] - Utilization across all segments was down due to macro impacts, including lower commodity prices and weather downtime [16] - Capital expenditures incurred were $73 million, with $30 million primarily supporting maintenance in the completions business and $43 million supporting Pro Power orders [20] Market Data and Key Metrics Changes - The Permian frac fleet counts are likely approaching 70, down from approximately 90 to 100 fleets operating at the start of the year [9] - Increased market uncertainty driven by tariffs and rising OPEC plus production has resulted in more idle capacity than anticipated [9] - The company expects to operate an average of 10 to 11 fleets in the third quarter, with the possibility of running fewer fleets in the fourth quarter [17] Company Strategy and Development Direction - ProPetro's strategy focuses on capital discipline and efficiency, emphasizing capital light assets and disciplined investments [8] - The company is transitioning from Tier two diesel equipment to Force electric equipment due to high demand and successful contracts [12] - Pro Power is a new initiative aimed at providing power generation capacity, with a significant contract already secured [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current market challenges and highlighted the company's strong balance sheet and low debt [10] - The outlook for the second half of the year remains uncertain due to ongoing market volatility, but management believes the company is well-positioned for future opportunities [17][18] - Management anticipates a reduction in activity in the third quarter, particularly with conventional equipment, but remains optimistic about long-term growth [17] Other Important Information - As of June 30, 2025, total cash was $75 million, and total liquidity was $178 million [22] - The company extended its $200 million share repurchase program to December 2026, having repurchased 13 million shares since its inception [22] Q&A Session Summary Question: How much of an overhang do you think this will be on the Permian Basin? - Management indicated that the looseness in the market is likely to persist into 2026, but they are well-positioned to capitalize on future recovery [29] Question: Any thoughts around continuing with the current equipment orders? - Management expressed satisfaction with the flexibility of the current equipment and indicated a focus on oil and gas for now, with exploratory conversations about non-oil and gas opportunities [30][35] Question: How should we think about the trajectory for Q4? - Management noted that while historical trends show a decline, the current market conditions make it difficult to predict, and they are being conservative in their outlook [38][42] Question: Does power demand suggest a disconnect from drilling and completions activity? - Management confirmed that power demand is primarily tied to production and midstream activities, which remain stable despite drilling and completions volatility [45] Question: What is the stability of pricing given long-term contracts? - Management stated that contracts have semi-annual adjustments resulting in low single-digit changes, indicating stable pricing [72]

Financial Data and Key Metrics Changes - ProPetro generated total revenue of $359 million, an increase of 12% compared to the prior quarter [14] - Net income totaled $10 million or $0.09 per diluted share, compared to a net loss of $17 million or $0.17 per diluted share for the fourth quarter of 2024 [15] - Adjusted EBITDA was $73 million, representing 20% of revenue and an increase of 38% compared to the prior quarter [15] - Free cash flow was $22 million, with net cash provided by operating activities at $55 million [15] - Capital expenditures for the first quarter were $39 million, with a full-year CapEx guidance of $295 million to $345 million, down from previous guidance [17] Business Line Data and Key Metrics Changes - The company operates seven Tier four DGB dual fuel fleets, with two under long-term contracts, and four Force fleets in the field, with a fifth expected to be deployed under contract this year [6][7] - Approximately 75% of the fleet is now utilizing next-generation services, which includes Tier four DGB dual fuel and electric offerings [6] Market Data and Key Metrics Changes - The company anticipates operating between 13 and 14 fleets in the second quarter, a reduction from the 14 to 15 fleets operated in the first quarter [12] - The Permian Basin is expected to see a downtick in fleet activity, with projections of running 75 to 85 fleets in June, down from approximately 85 to 90 today [52][54] Company Strategy and Development Direction - ProPetro's strategy focuses on capital-efficient asset investments, disciplined M&A, and transitioning to electric fleets, which are expected to yield durable returns [5][10] - The company is positioning its Pro Power offering to capitalize on the growing demand for reliable, low-emission power solutions [9][10] - The capital allocation strategy emphasizes balancing investments in share repurchases, fleet conversion, and Pro Power investments while maintaining a strong balance sheet [19][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the near-term outlook is unclear due to recent declines in oil prices influenced by tariffs and production increases [12] - The company remains confident in its ability to generate free cash flow and maximize long-term value for shareholders despite market volatility [12][20] Other Important Information - ProPetro has retired approximately 13 million shares, representing about 11% of its outstanding common stock since the inception of the share repurchase program [18] - The company has secured letters of intent for approximately 75 megawatts of long-term Pro Power service capacity with two operators in the Permian Basin [9] Q&A Session Summary Question: Focus on Pro Power opportunities - Management confirmed that while the initial focus is on the Permian Basin, they are open to opportunities outside the basin as they grow [25][27] Question: Changes in fleet operation numbers - The reduction in fleet numbers is attributed to both customer activity reductions and the company's choice to avoid low pricing, with a focus on maintaining operational efficiency [28][30] Question: Pricing for pressure pumping equipment - Management noted that contracted pricing remains steady, while spot pricing is more fluid, with some competitors pricing unsustainably low [39][42] Question: Capital allocation framework - The power business and Force Electric offering are prioritized due to known returns, with ongoing flexibility to allocate capital across various opportunities [44][48] Question: Future fleet builds and returns on power generation - Management expects to transition to more electric fleets at a rate of one to two per year, with anticipated returns on power generation assets around four-year paybacks [71][74]