ProFrac (US:ACDC)2022-11-12 07:47Financial Data and Key Metrics Changes - Revenue for Q3 2022 totaled $696 million, up nearly 20% compared to Q2 2022 [25] - Net income was $143 million for the quarter, compared to $70 million in Q2 2022 [26] - Adjusted EBITDA increased to $256 million, or $267 million when excluding losses from other business activities, representing a 22% sequential increase [16][26] - Annualized adjusted EBITDA per fleet rose 23% to $34 million from $28.1 million in Q2 2022 [17][26] Business Segment Data and Key Metrics Changes - Stimulation services segment generated revenues of $669 million, up 16% from Q2 2022, with adjusted EBITDA of $250 million [28][29] - Manufacturing segment revenues increased by 40% to $49 million, with adjusted EBITDA slightly down to $8.4 million [30] - Proppant Production segment revenues rose 41% to $25 million, but adjusted EBITDA decreased to $9.2 million due to lower utilization and selling prices [31][32] Market Data and Key Metrics Changes - Demand for all fleet types remains strong, particularly for newer technology fleets [22] - Pricing levels for equipment types are expected to remain constructive into Q4 and 2023 [23] - The company reported the highest level of utilization in terms of pumping hours during Q3 2022 [21] Company Strategy and Development Direction - The company completed the acquisition of U.S. Well Services, positioning itself as the largest provider of electric fracturing services globally [8] - Focus on vertical integration to capture more of customers' completion budgets, with a goal to provide sand, chemicals, storage, and logistics [19][54] - Plans to increase the number of electric fleets and accelerate Tier 4 dual fuel upgrades to meet customer demand [15][36] Management's Comments on Operating Environment and Future Outlook - Management expressed a bullish outlook for the oil field services market, citing limited supply and strong demand [44][59] - The company anticipates a strong 2023 pipeline and book of contracted work, the strongest seen in 14 years [24][88] - Management highlighted the importance of reducing downtime and increasing efficiency through strategic investments in maintenance and upgrades [51][53] Other Important Information - Capital expenditures for Q3 2022 were $123 million, with expectations for full-year CapEx to range between $330 million and $350 million [34] - The company ended Q3 with $549 million in outstanding principal debt and $246 million in liquidity [38] - The company expects to maintain a leverage ratio below one turn of debt to EBITDA [59] Q&A Session Summary Question: Regarding U.S. Well Service assets and their EBITDA contribution - Management expects a 10% to 15% per fleet dilution across the entire fleet due to the integration of U.S. Well Services [64] Question: Thoughts on shareholder returns and potential buybacks - Management does not expect to see any buybacks, focusing instead on maintaining a high-quality float and returning capital to stakeholders [72][73] Question: Insights on the 2023 book of work and visibility across E&Ps - Management noted a strong backlog for 2023, with a fully sold-out market and challenges in the supply chain [88] Question: Guidance on SG&A expenses post-U.S. Well Services acquisition - Management indicated that SG&A will increase, estimating around $20 million per year for U.S. Well Services, with realization of synergies expected over the next six months [85] Question: Discussion on the ramp-up of new sand mines - Management expects a ramp-up period of two to four months for new mines, with plans to start shipping sand soon [82][84]