Q4 2024 ProFrac Holding Corp Earnings Call
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Greetings and welcome to the pros Pratt fourth quarter and year end 2024 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Operator: Greetings and welcome to the Profrac fourth quarter and year-end 2024 earnings call. At this time, all participants are in a listen-only mode.
Operator: The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone key. As a reminder, this conference is being recorded.
One should require operator assistance. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Michael Messina: It is now my pleasure to introduce Michael Messina, Director of Finance. Please go ahead. Thank you, Operator. Good morning, everyone.
Speaker Change: It is now my pleasure to introduce Michael Massena Director of Finance. Please go ahead.
Speaker Change: Thank you operator, good morning, everyone. Thank you for joining us for pro Frac, holding Corp's conference call and webcast to review our results for the fourth quarter and year ended December 31st 2024.
Michael Messina: Thank you for joining us for Profrac Holding Corp's conference call and webcast to review our results for the fourth quarter and year ended December 31st, 2024. With me today are Matt Wilks, Executive Chairman, Ladd Wilks, Chief Executive Officer, and Austin Harbour, Chief Financial Officer. Following my remarks, management will provide high-level commentary on the operational and financial highlights of the quarter and year before opening up the call to your questions.
Matt: With me today are Matt <unk> Executive Chairman, <unk>, Chief Executive Officer, and Austin Harbor, Chief Financial Officer.
Matt: Following my remarks management will provide high level commentary on the operational and financial highlights of the quarter and year before opening up the call to your questions.
Michael Messina: A replay of today's call will be available by webcast on the company's website at pfholdingscorp.com. More information on how to access the replay is included in the company's earnings press Please note that the information recorded on this call speaks only as of today, March 6, 2025, and therefore you are advised that any time sensitive information may no longer be accurate at the time of any subsequent replay, listening or transcript.
Matt: A replay of today's call will be available by webcast on the company's web site at P. F Holdings Corp Dotcom.
Matt: More information on how to access the replay is included in the company's earnings press release.
Matt: Please note that the information reported on this call speaks only as of today March six 2025.
Matt: And therefore, you are advised that any time sensitive information may no longer be accurate at the time of any subsequent to replay listening or transcript reading.
Matt: Also comments on this call may contain forward looking statements within the meaning of the United States Federal Securities laws, including management's expectations of future financial and business performance.
Michael Messina: Also, comments on this call may contain forward-looking statements within the meaning of the United States federal securities laws, including management's expectations of future financial and business performance. These forward-looking statements reflect the current use of Profrac's management and are not guarantees of future performance. Various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in management's forward-looking statement.
Matt: These forward looking statements reflect the current views of pro Fracs management and are not guarantees of future performance.
Matt: Various risks uncertainties and contingencies could cause actual results performance or achievements to differ materially from those expressed in management's forward looking statements.
Michael Messina: The listener or reader is encouraged to read Profrac's Form 10-K and other filings with the Securities and Exchange Commission, which can be found at sec.gov or on the company's Investor Relations website section under the SEC's Filing tab, to understand those risks, uncertainties, and contingencies. The comments today also include certain non-GAAP financial measures. as well as other adjusted figures to exclude the contribution of floaters. Additional details and reconciliations to the most directly comparable, consolidated, and GAAP financial measures are included in the quarterly earnings press release, which can be found on the company's website.
Matt: The listener or reader is encouraged to read prophylaxis Form 10-K, and other filings with the Securities and Exchange Commission, which can be found at SEC Gov or on the company's Investor Relations website section under the FCC's filing Tad do you understand those risks uncertainties and contingencies.
Matt: Our comments today also include certain non-GAAP financial measures as.
Matt: As well as other adjusted figures to exclude the contribution of Flotek added.
Matt: Additional details and reconciliations to the most directly comparable consolidated and GAAP financial measures are included in the quarterly earnings press release, which can be found on the company's website.
Matthew Wilks: And now I would like to turn the call over to Profrac's Executive Chairman, Mr. Matt Wilks. Thanks, Michael, and good morning, everyone. I'll start with some brief remarks. Ladd will elaborate on the performance of our subsidiaries, and then Austin will walk through our financial performance. Profrac's leadership across the completion value chain consistently positions us to achieve strong financial and operational performance. We continue to execute our differentiated commercial strategy by partnering with operators who prioritize integrated, highly efficient solutions at scale. As the market evolves and operators consolidate, our ability to provide comprehensive solutions at the pad enables us to capitalize on new opportunities in the most active U.S.
Matt Walsh: And now I would like to turn the call over to <unk> Executive Chairman, Mr. Matt Walsh.
Speaker Change: Thanks, Michael and good morning, everyone I'll start with some brief remarks lateral will elaborate on the performance of our subsidiaries and then Austin will walk through our financial performance.
Speaker Change: Oh, Frank's leadership across the completion value chain consistently positioned us to achieve strong financial and operational performance.
Speaker Change: We continue to execute our differentiated commercial strategy by partnering with operators you'd prioritize integrated highly efficient solutions at scale as the market evolves and the operators consolidate our ability to provide comprehensive solutions at the pad enables us to capitalize on new opportunities in the most active U S.
Matthew Wilks: space. In Stimulation Services, our emphasis on improving service quality, coupled with our internal R&D, manufacturing, and maintenance capabilities, has allowed us to efficiently maintain and upgrade our pressure pumping fleet and drive commercial innovation. In essence, every fleet we deploy must consistently meet our rigorous quality and reliability standards. Excellence in operations is also underpinned by having an efficient maintenance program. To this end, our asset management platform, which prioritizes quality control and centralized maintenance, is making a big difference in the quality and economics of our pumping operation. Ladd will speak more to this, but at a high level, our integrated asset management program is designed to deliver field-ready equipment that is engineered for safety and reliability.
Speaker Change: Basis.
Speaker Change: And stimulation services, our emphasis on improving service quality, coupled with our internal R&D manufacturing and maintenance capabilities has allowed us to efficiently maintain and upgrade our pressure pumping fleet and drive commercial innovation and that's at every suite, we deploy must consistently meet our rigorous.
Speaker Change: Quality and reliability standards.
Speaker Change: Excellence in operations is also underpinned by having it in fish and efficient maintenance program to this in our asset management platform with which prioritizes quality control in centralized maintenance is making a big difference in the quality and economics of our pumping operations.
Speaker Change: Black will speak more to this but at a high level. Our integrated asset management program is designed to deliver field ready equipment that is engineered for safety and reliability.
Matthew Wilks: Purpose built to meet every job requirement and standardized in both appearance and operation to ensure that our equipment meets the highest industry standards. On our last call, I discussed record efficiencies in our simulation business, highlighting the best-in-class execution we see from our employees in the field every day. As Ladd will discuss, we have already seen a sizable improvement in activity in our simulation business since the end of 2024, and I am confident that we will be able to surpass our Q3 2024 efficiency per fleet record in the coming months. Already in January, we achieved new record efficiencies for a single month despite adding a number of incremental fleets in operation and despite challenging weather conditions in certain regions.
Speaker Change: Its built to meet every job requirement.
Speaker Change: Standardized and both the parents and the operation to ensure that our equipment needs the highest industry standards.
On our last call I discussed record efficiencies in our stimulation business highlighting the best in class execution, we see from our employees in the field every day as.
Speaker Change: As Brad will discuss we have already seen a sizable improvement in activity in our stimulation business. Since the end of 2024 and I'm confident that we will be able to surpass our Q3 2024 efficiency per fleet record in the coming months already in January we achieved new record efficiencies for a single month.
Speaker Change: By adding a number of incremental fleets in operation and despite challenging weather conditions in certain regions.
Speaker Change: In recent earnings calls, we briefly discussed the growing and rapidly evolving opportunity.
Matthew Wilks: In recent earnings calls, we briefly discussed the growing and rapidly evolving opportunity in the power generation market. Through acquisitions and our own organic growth, we possess extensive experience in running electric frac operations and managing power in the field. Having an in-house PowerGen business is yet another local logical extension of the holistic integrated platform we offer.
Speaker Change: In the power generation market through acquisition and our own organic growth.
Speaker Change: That's extensive experience in running electric Frac operations and managing power in the field.
Speaker Change: Having an in house power Gen business is yet another local logical extension of the holistic integrated platform we offer.
Matthew Wilks: Today, we are excited to introduce this new business venture, LiveWire Power. LiveWire began operations in the fourth quarter and marks a significant step forward in our power generation strategy, focusing on the growing demand for power in remote locations driven by advances in electric frac technology. EFRAC technology requires temporary yet substantial power generation, a need not adequately met by existing electrical infrastructure. Distributed power generation will be a key component of our strategy going forward, offering a reliable and scalable solution for oilfield services companies. and other industrial users.
Speaker Change: We were excited to introduce this new business venture.
Speaker Change: Wired power.
Speaker Change: I wanted to begin operations in the fourth quarter and marks a significant step forward in our power generation strategy focusing on the growing demand from power in remote locations driven by advances in electric Frac technology.
Speaker Change: E Frac technology requires temporary yet substantial power generation.
Speaker Change: Need not adequately met by existing electrical infrastructure.
Speaker Change: Distributed power generation will be a key component of our strategy going forward offering a reliable and scalable solution for oilfield services companies.
Speaker Change: And other industrial users.
Matthew Wilks: I'll let Ladd elaborate on LiveWire shortly. Looking to the future, we continue to invest in our next generation pumps and novel software platforms to stay ahead of the curve. Our commitment to innovation ensures we remain at the forefront of the industry, delivering superior performance. and value to our customers. In the fourth quarter, Profrac delivered revenue of $455 million and adjusted EBITDA of $71 million. As others in the industry have noted, the North American completions industry faced typical fourth quarter challenges, including budget constraints. Holiday Shutdowns, and Adverse Weather Conditions. For the full year 2024, we achieved revenue of $2.19 billion and adjusted EBITDA of $501 million against a backdrop of competitive pressures from softening activity in the North American oilfield services market.
Speaker Change: Let me elaborate on LIBOR here shortly.
Speaker Change: Looking to the future we continue to invest in our next generation pumps and novel software platform to stay ahead of the curve.
Speaker Change: Our commitment to innovation ensures we remain at the forefront of the industry delivering superior performance and.
Speaker Change: And value to our customers.
Speaker Change: In the fourth quarter, Protract delivered revenue of $455 million and adjusted EBITDA of $71 million as others in the industry have noted.
Speaker Change: North American completions industry faced typical fourth quarter challenges, including budget constraints.
Speaker Change: Holiday shutdowns and adverse weather conditions.
Speaker Change: For the full year 2024, we achieved revenue of $2, one 9 billion and adjusted EBITDA of $501 million.
Speaker Change: The backdrop of competitive pressures from softening activity in the North American oilfield services market.
Matthew Wilks: keeping with the theme of driving efficiencies in profit production. We have made strategic improvements both operationally and commercially that we expect to drive significant gains. This business has a very high degree of operating leverage, and we anticipate increased volumes and profitability in 2025. Beyond driving gains through our own initiatives, we have reason to be cautiously optimistic that the market may provide favorable tailwind. By now, you have likely heard of the potential for increased activity in the Hainesville, the largest LNG basin in the U.S. driven by improved gas prices and the region's close proximity to LNG export terminals in the Gulf of America.
Speaker Change: Keeping with the theme of driving efficiencies and profit production.
Speaker Change: We have made strategic improvements both operationally and commercially that we expect to drive significant gains. This business has a very high degree of operating leverage and we anticipate increased volumes and profitability in 2025.
Speaker Change: Beyond driving games through our own initiatives. We have we have reason to be cautiously optimistic that the market may provide favorable tailwind.
Speaker Change: By now you've likely heard of potential for the potential for increased activity in the haynesville the largest LNG basin in the U S.
Speaker Change: Driven by improved gas prices and the regions close proximity to LNG export terminals in the Gulf of America.
Speaker Change: As a reminder, we have the largest proppant footprint surfing and serving the haynesville with 10 million tonnes per annum of capacity across four months, our scale uniquely positions alpine to take advantage of an inflection in natural gas completions activity.
Matthew Wilks: As a reminder, we have the largest profit footprint serving the Hainesville with 10 million tons per annum of capacity across four months. Our scale uniquely positions alpine to take advantage of an inflection and natural gas completions activity. But importantly, I want to note that improved results at Alpine is not predicated on a ramp in the Haynesville activity. As we maneuver the competitive South and West Texas markets, we expect to improve the results in those regions as well, driven by our initiatives to further optimize operations and potentially some modest improvements. to pricing as we progress through the year.
Speaker Change: But importantly, I wanted to note that improved results at alpine is not predicated on a ramping in haynesville activity as we maneuver the competitive south and West Texas markets, we expect to improve the results in those regions as well driven by our initiatives to further optimize operations and potentially some modest improvements.
Speaker Change: Pricing as we progressed through the year.
Matthew Wilks: We remain committed to a disciplined approach to managing our asset portfolio and capital allocation, prioritizing returns and enhancing our free cash flow, maximizing liquidity, and effectively managing debt, service, and working capital. Of note, we generated $54 million of free cash flow in Q4 and $185 million in total in 2024.
Speaker Change: We remain committed to a disciplined approach to managing our asset portfolio and capital allocation priority prioritizing returns and enhancing our free cash flow maximizing liquidity and effectively managing debt service and working capital we generated 54 million of free cash flow in Q4 and 180.
Speaker Change: <unk> 5 million in total in 2024.
Matthew Wilks: For more information visit www.fema.gov Before turning the call to Ladd, I'd like to wrap up with the following summary remarks. In Q4, Profrac delivered $455 million in revenue and $71 million in adjusted EBITDA despite pronounced 4th quarter budget exhaustion, holiday shutdowns, and adverse weather. For the full year 2024, we achieved $2.19 billion in revenue and $501 million in adjusted EBITDA, demonstrating a resilient model and successful navigation of competitive pressures in the North American oilfield services market. Our leadership in the completions value chain has positioned us to consistently drive strong financial and operational performance. We continue to partner with operators who prioritize integrated, highly efficient solutions.
Speaker Change: Before turning the call to Lat I'd like to wrap up with the following summary remarks.
Speaker Change: In Q4 pro Frac delivered $455 million in revenue and $71 million and adjusted EBITDA.
Speaker Change: Pronounced fourth quarter budget, exhausting holiday shutdowns and adverse weather.
Speaker Change: For the full year 2024, we achieved $2, one 9 billion in revenue and $501 million and adjusted EBITDA, demonstrating our resilient model and successful navigation of competitive pressures in the North American oilfield service, it's Marty.
Speaker Change: Our leadership in the completion value chain has positioned us to consistently drive strong financial and operational performance, we continue to partner with operators, who prioritize integrated highly efficient solutions.
Matthew Wilks: Our focus on service quality, internal R&D, and efficient maintenance through our asset management platform continues to enhance our pressure pumping operations. We are building upon our leadership in electric track operations with our new power management venture, Live Wire Power, marking a significant step forward. We will continue to invest in next generation technologies that help us maintain our leadership position. In prop and production, strategic initiatives are expected to drive improvement in 2025, and our footprint in the Haynesville offers differentiated exposure to increased natural gas completion activity in the largest gas-producing region, proximal to LNG export facilities along the Gulf Coast.
Speaker Change: Our focus on service quality internal R&D and efficient maintenance through our asset management platform continues to enhance our pressure pumping operations. We are building upon our leadership in electric Frac operations with our new power management venture log wired power, marking a significant step forward we will.
Speaker Change: Continue to invest in next generation technologies that help us maintain our leadership position.
Speaker Change: And proppant production strategic initiatives are expected to drive improvement in 2025, and our footprint in the Haynesville offers differentiated exposure to increase natural gas compared to completion activity and the largest gas producing region proximal to.
Speaker Change: Two LNG export facilities, along the Gulf Coast.
Matthew Wilks: And finally, we have strategically positioned Profrac to create long-term value for our stakeholders by providing the most efficient solutions through vertically integrated in-basin scaled offerings, exceptional service, and an unwavering focus on generating free cash flow through the cycle. This success is already evident and will continue as we move through 2025 and beyond.
Speaker Change: And finally, we have strategically positioned pro frac to create long term value for our stakeholders by providing the most efficient solutions through vertically integrated in basin scaled offerings exceptional service and an unwavering focus on generating free cash flow through the cycle.
Speaker Change: This excess is already evident and will continue as we move through 2025 and beyond.
Ladd Wilks: And with that, I'll turn it over to Ladd. Thank you, Matt. And good morning everyone. I'll provide more color on several themes Matt touched on as I elaborate on the segments, starting with the performance in our pressure pumping business. The fourth quarter saw an even more pronounced impact than we expected, which drove a sharper than anticipated drop in our active fleet count. Additionally, pricing softened in part due to lower activity. However, Thanks to our cost control and collaboration with customers, we were able to right-size quickly without hampering our ability to redeploy assets. Looking at the pressure pumping market today.
Speaker Change: I'll turn it over to lab.
lab: Thank you Matt.
lab: And good morning, everyone.
Speaker Change: I'll provide more color on several things Matt touched on as I elaborated on the segments.
lab: <unk> with the performance in our pressure pumping business the.
lab: The fourth quarter saw an even more pronounced impact than we expected, which drove a sharper than anticipated drop in our active fleet count.
lab: Additionally, pricing softened in part due to lower activity.
lab: However.
lab: Thanks to our cost control and collaboration with customers, we were able to right size quickly without hampering our ability to redeploy assets.
lab: Looking at the pressure pumping market today.
Ladd Wilks: We have seen improvement in our active sleep count in the first few months of the year. In fact, we have the highest number of active fleets working today since mid-year 2024, having already put six fleets back into active service since late 2024 into early 2025. Further, we are effectively sold out of our E-Fleet and next generation gas burning equipment. Combined, 80% of our active fleets utilize next generation equipment. The pickup in frack fleets has been more pronounced in West Texas and South Texas operating regions. Perhaps more importantly for you all to know is that we have increased our base of active operating assets from their respective troughs in the fourth quarters in all our ongoing active regions.
lab: We have seen improvement in our active fleet count in the first few months of the year.
lab: In fact, we had the highest number of active fleets working today since midyear 2024, having already put fixed fleets back into active service.
lab: Since late 2024, and the early 2025.
lab: Further we are effectively sold out very easily and next generation gas burning equipment.
lab: Combined 80% of our active fleets utilized next generation equipment.
lab: The pickup in Frac fleets has been more pronounced in west, Texas, and South Texas operating regions.
lab: More importantly for you all to know is that we have increased our base of active operating assets from their respective troughs in the fourth quarter and all are ongoing active regions.
lab: Looking forward, we believe the frac market well.
Ladd Wilks: Looking forward, we believe the frac market will support marginal growth from current levels as we progress through the year. Given our excellence in execution, both in our asset management program and the field, we anticipate that we will continue to deliver our new efficiency records in 2025.
lab: It will support marginal growth from current levels as we progress through the year.
lab: Our excellence in execution, both in our asset management program and the field, we anticipate that we will continue to deliver our new efficiency records in 2025.
Ladd Wilks: I would like to genuinely thank our hardworking employees for their determination, perseverance, and strong performance despite what has been a challenging run in the market. We are proactively engaging with customers so that we are aligned concerning the total economics of bringing a well to completion in the pursuit of continued efficiency. We often re-evaluate our commercial strategy and approach with customers to fine-tune relationships. We have found... that while we have a high quality sales force, we need to high-grade the conversations we have with customers to ensure a sustainable as well as profitable relationship. I believe we are on a new and improved footing with some historically core customers that we have not partnered with in some time.
Speaker Change: I would lie to genuinely thank our hardworking employees for their determination and perseverance and strong performance. Despite what has been a challenging run in the market.
Speaker Change: We are proactively engaging with customers. So that we are aligned concerning the total economics of bringing the world of completion in the pursuit of continued efficiencies.
Speaker Change: We often reevaluate our commercial strategy and approach with customers to fine tune relationships, we have found.
Speaker Change: While we have a high quality sales force, we need to high grade the conversations we have with customers to ensure a sustainable as well as profitable relationships.
Speaker Change: I believe we are on a new and improved footing with some historically core customers that we have not partnered with in some time.
Speaker Change: Pricing gradually decline through 24 and has stabilized with potential increases in our cost including from tariffs and labor inflation, we anticipate the pricing dynamic will be revisited as we move through the year.
Ladd Wilks: Pricing gradually declined through 24 and has stabilized with potential increases in our cost, including from tariffs and labor inflation. We anticipate the pricing dynamic will be revisited as we move through the year. Putting this all together, we expect our stimulation services segment to see marginally higher activity year-on-year in 2025. but for lower average pricings to offset much of this benefit.
Speaker Change: Putting this all together, we expect our stimulation services segment to see marginally higher activity year on year in 2025.
Speaker Change: But for lower average pricing to offset much of this benefit.
Speaker Change: I'd now like to zero in on our asset management platform, which Matt touched on.
Ladd Wilks: I'd now like to zero in on our asset management platform, which Matt touched on. Cost control, equipment quality, and standardization are core to the asset management program. We have fleets across most major basins and at no time are the maintenance needs exactly the same in two places. If left unchecked, this can result in tremendous inefficiencies in spare parts inventory. By moving to a centralized maintenance platform, we are able to optimize our maintenance process As a result, we can minimize costs, shorten lead times, and streamline the overall equipment management apparatus, while reducing non-productive time and improving efficiencies in the field.
Speaker Change: Cost control equipment quality and standardization are core to the asset management program, we have police across most major basin and at no time are the maintenance needs exactly the same in two places.
Speaker Change: Left unchecked. This can result in tremendous inefficiencies in spare parts inventory.
Speaker Change: By moving to a centralized maintenance platform, we are able to optimize our maintenance processes.
Speaker Change: As a result, we can minimize costs shorten lead times and streamline the overall equipment management apparatus, while reducing nonproductive time and improving efficiencies in the field.
Speaker Change: We are still in the relatively early days of this program, but have already witness the benefits of deploying a meaningful number of fleets in a compressed timeline, while improving on pump hours per fleet.
Ladd Wilks: We are still in the relatively early days of this program but have already witnessed the benefits of deploying a meaningful number of fleets in a compressed timeline while improving on pump hours per fleet. Additionally, asset quality driving field performance has resulted in improved customer relationships.
Additionally.
Speaker Change: Asset quality driving field performance has resulted in improved customer relationships.
Speaker Change: I'd also like to spend a few minutes on our new power Gen business lab layer.
Ladd Wilks: I'd also like to spend a few minutes on our new PowerGen business, LiveWire. The power generation market, especially for the oil and gas sector and other high-power consuming industries, faces challenges due to heavy capital requirements, long lead times, and project-based demands. To address these challenges, LiveWIRE, built on a legacy of deep knowledge and experience from across the organization, operates a fleet of state-of-the-art power generation assets. continues to evolve in the gas conditioning space and innovates with customers to provide integrated solutions.
Speaker Change: The power generation market, especially for the oil and gas sector and other high power consuming industries faces challenges due to heavy capital requirements long lead times and project based demand.
Speaker Change: To address these challenges livewire builds on a legacy of deep knowledge and experience from across the organization operates a fleet of state of the art power generation assets.
Speaker Change: Continues to evolve and the gas conditioning space and innovate with customers to provide integrated solutions.
Ladd Wilks: The strategic alignment with Profrac will provide a strong foundation for LabWire's operations and future growth. While Livewire is focused on servicing Profrac, we do plan to expand Livewire's operations into adjacent markets with high growth potential. We look forward to providing updates on future market opportunities.
Speaker Change: The strategic alignment with Prophage will provide a strong foundation for LIBOR its operations and future growth.
While LIBOR, it's focused on servicing pro Frac, we do plan to expand lab, whereas operations into adjacent markets with high growth potential.
Speaker Change: We look forward to providing updates on future market opportunities.
Speaker Change: Okay.
Ladd Wilks: Now to our profit segment. As with stimulation services, results were similarly impacted by seasonality. However, in the first quarter, we have already recovered meaningfully. Although mine improvements and ramp-up costs will weigh on Q1 results. On pricing, we did experience some softness in the fourth quarter. This is carried over into Q1, but we do expect to see improvement in pricing as the year unfolds.
Speaker Change: Now to our proppant segment.
Speaker Change: With stimulation services results were similarly impacted by seasonality.
Speaker Change: However, in the first quarter, we have already recovered meaningfully.
Speaker Change: Although mine improvements and ramp up costs will weigh on Q1 results.
Speaker Change: On pricing, we did experience some softness in the fourth quarter. This is carried over into Q1, but we do expect to see improvement in pricing as the year unfolds.
Ladd Wilks: As Matt conveyed, we have taken significant strides to improve our commercial efforts and operational efficiencies in our profit business, which includes conducting a strategic review of leadership across the segment, both at the mines and at the executive level, and implementing identified changes necessary to drive segment results in 2025. Our Sand Sales Strategy is focused on optimizing mine utilization by way of a portfolio management approach to manage volume fluctuations affecting We are working to improve utilization rates by concentrating production in key mines, expanding throughput, and complementing existing with new customer commitment. We have temporarily increased spending in Q1 to grow volumes that we expect to drive increased margins in 2025 versus 2024.
Speaker Change: As Matt conveyed we have taken significant strides to improve our commercial efforts and operational efficiencies in our proppant business, which includes conducting a strategic review of leadership across the segment both at the mines and at the executive level and implementing identified changes necessary to drive segment results and 2025.
Speaker Change: Our sand sales strategy is focused on optimizing mine utilization by way of a portfolio management approach to manage volume fluctuations effectively.
Speaker Change: We are working to improve utilization rates by concentrating production in key mines, expanding throughput and complimenting existing with new customer commitments.
Speaker Change: We have temporarily increased spending in Q1 to grow volumes that we expect to drive increased margins in 2025 versus 24.
Speaker Change: To wrap up our.
Ladd Wilks: To wrap up, our deepest thanks goes out to our remarkable team for their hard work, dedication, and commitment to safety. Their execution of our differentiated strategy is what makes Profrac successful day in and day out.
Speaker Change: Our deepest thanks goes out to our remarkable team for their hard work dedication and commitment to safety their execution of our differentiated strategy is what makes perfect successful day in and day yeah.
Speaker Change: Yes.
Austin Harbour: I'll now hand the call over to Austin to cover our financial results in more detail. Thanks, Ladd. In the fourth quarter, revenues were $455 million as compared with $575 million in the third quarter. We generated $71 million of adjusted EBITDA with an adjusted EBITDA margin of 16% compared with $135 million in the third quarter, or 23% of revenue. Top line and margins were impacted by a sharp year-end drop-off in activity and continued pricing pressure during the period as referenced earlier. Of note, EBITDA in the fourth quarter included reactivation costs of approximately $4 million in repair and maintenance and approximately $2 million in labor costs associated with excess crews in anticipation of expected fleet redeployments in the fourth quarter.
Speaker Change: I'll now hand, the call over to Austin to cover our financial results in more detail.
Speaker Change: Thanks flat in the fourth quarter revenues were $455 million as compared with $575 million in the third quarter.
Speaker Change: We generated $71 million of adjusted EBITDA with an adjusted EBITDA margin of 16% compared with $135 million in the third quarter or 23% of revenue.
Speaker Change: Top line and margins were impacted by a sharp drop off in activity and continued pricing pressure during the period as referenced earlier.
Speaker Change: Oh no EBITDA in the fourth quarter included reactivation costs of approximately $4 million in repair and maintenance and approximately $2 million in labor costs associated with excess crews in anticipation of expected fleet redeployment in the fourth quarter.
Austin Harbour: For full year 2024, revenues were $2.2 billion with adjusted EBITDA of $501 million and an adjusted EBITDA margin of 23%. Free cash flow was $54 million in the fourth quarter, an increase from $31 million in Q3 due to a step up in asset sales as we generated $41 million primarily from a sale-leaseback transaction. For the full year, free cash flow was $185 million. Turning to our segments, Stimulation Services revenues were $384 million in the fourth quarter versus $507 million in the third quarter on both the decline in average active fleet count and pricing. Adjusted EBITDA on Q4 was $54 million versus $113 million in Q3 with margins coming in at 14% versus 22% in the prior quarter.
Speaker Change: For full year 2024 revenues were $2 2 billion with adjusted EBITDA of $501 million and an adjusted EBITDA margin of 23% free cash flow was $54 million in the fourth quarter, an increase from $31 million in Q3 due to a step up in asset sales as we generated $41 million primarily from the sale of <unk>.
Speaker Change: Spak transaction for the full year free cash flow was $185 million.
Speaker Change: Turning to our segments stimulation services revenues were $384 million in the fourth quarter versus $507 million in the third quarter on both a decline in average active fleet count and pricing.
Speaker Change: Adjusted EBITDA in Q4 was $54 million versus $113 million in Q3 with margins coming in at 14% versus 22% in the prior quarter.
Austin Harbour: This segment was impacted by approximately $9 million in shortfall expense related to our supply agreement with Flowtech compared to $7 million in the prior quarter. Of note, as we initiated and implemented our asset management program, we allocated capital to maintain, standardize, and activate. As mentioned earlier, we've seen a significant improvement in our Stimulation Services business since the Q4 trough adding six fleets. For full year 2024, simulation services revenues were $1.9 billion, with adjusted EBITDA of $399 million and an adjusted EBITDA margin of 21%. The profit production segment generated $47 million of revenue in the fourth quarter compared with $53 million of revenue in the third quarter.
Speaker Change: This segment was impacted by approximately $9 million in shortfall expense related to our supply agreement with flotek compared to $7 million in the prior quarter.
Speaker Change: No as we initiated and implemented our asset management program, we allocated capital to maintain standardized and activate fleets.
Speaker Change: As mentioned earlier, we have seen a significant improvement in our stimulation services business since the Q4 trough, adding six fleets.
Speaker Change: For full year 2020 for stimulation services revenues were $1 9 billion with adjusted EBITDA of 399 million and an adjusted EBITDA margin of 21%.
Speaker Change: The proppant production segment generated $47 million of revenue in the fourth quarter compared with $53 million of revenue in the third quarter. The decline in revenue was primarily attributable to lower pricing and slightly lower sales volumes in the quarter.
Austin Harbour: The decline of revenue was primarily attributable to lower pricing and slightly lower sales volumes in the quarter. As Matt and Ladd mentioned, we experienced pressure in the West Texas market, which remains very competitive. However, we believe pricing has stabilized around current levels and with demand having increased, there may be room for pricing to improve not only in West Texas, but also with an increase in activity in the Haines area. Approximately 73 percent of volumes were sold to third-party customers during the fourth quarter versus 72 percent in Q3. Adjusted EBITDA for the profit production segment was $14 million for the fourth quarter versus $17 million in Q3.
Speaker Change: As Matt mentioned, we experienced pressure in the west, Texas market, which remains very competitive.
Speaker Change: However, we believe pricing has stabilized around current levels and with demand having increase there may be room for pricing to improve not only in west, Texas, but also with an increase in activity in the haynesville.
Speaker Change: Approximately 73% of volumes were sold to third party customers during the fourth quarter versus 72% in Q3.
Speaker Change: Adjusted EBITDA for the profit production segment was $14 million for the fourth quarter versus $17 million in Q3 on a margin basis EBITDA margins came in at 31% in the fourth quarter versus 33% in Q3, largely due to lower cost absorption and a decline in average realized price per ton.
Austin Harbour: On a margin basis, EBITDA margins came in at 31 percent in the fourth quarter versus 33 percent in Q3, largely due to lower cost absorption and a decline in average realized price per ton. For full year 2024, profit production revenues were $247 million with adjusted EBITDA of $86 million and an adjusted EBITDA margin of 35%. As discussed earlier, we're seeing improved commercial opportunities and expect a notable improvement in operational efficiencies in this segment, which we anticipate will drop a sizable recovery in volumes in 2025. We believe pricing is stabilized, and with increased demand, there will be opportunities for pricing improvement.
Speaker Change: For full year 2024 profit production revenues were $247 million with adjusted EBITDA of $86 million and an adjusted EBITDA margin of 35% as discussed earlier, we are seeing improved commercial opportunities and expect a notable improvement in operational efficiencies in this segment, which we anticipate.
Speaker Change: We'll drive a sizable recovery in volumes in 2025.
Speaker Change: We believe pricing has stabilized and with increased demand there will be opportunities for pricing improvement. However, our focus is on total returns through the cycle. Therefore, our preference will be to Derisk, our long term cash flows and enhance our existing and future customer relationships.
Austin Harbour: However, our focus is on total returns through the cycle. Therefore, our preference will be to de-risk our long-term cash flows and enhance our existing and future customer relationships. Our manufacturing segment generated fourth quarter revenues of $62 million flat sequentially. Approximately 77% of segment revenues were generated via intercompany sales. Flat sales in the fourth quarter reflected approximately flat capital expenditures in the stimulation services sector. Adjusted EBITDA for the manufacturing segment stepped up from near break-even in the third quarter to $3 million in Q4, reflecting an increase in power generation services provided to Profrac, which were originally operated by EKU while we stood up LiveWire.
Speaker Change: Our manufacturing segment generated fourth quarter revenues of $62 million flat sequentially approximately 77% of segment revenues were generated via intercompany sales flat sales in the fourth quarter reflected approximately flat capital expenditures and the stimulation services segment.
Speaker Change: Adjusted EBITDA for the manufacturing segment stepped up from near breakeven in the third quarter to $3 million in Q4, reflecting an increase in power generation services provided to <unk>, which were originally operated by <unk>, while we stood up LIBOR.
Austin Harbour: LiveWire, however, consolidates to our other business activities segment. Due to this transition, I expect the contributions of power generation to be split approximately evenly between manufacturing and other business activities when we report the first quarter with power generation being fully captured within other business activities in the second quarter and beyond. For full year 2024, manufacturing segment revenues were $233, excuse me, stop. For full year 2024, manufacturing segment revenues were $223 million with adjusted EBIT of $8 million and an adjusted EBIT on margin of 3%. Selling general and administrative expenses improved to $48 million in the fourth quarter from $52 million in the third quarter as we remain focused on cost control.
Speaker Change: <unk>, however, consolidated to our other business activities segment.
Speaker Change: Due to this transition I expect the contributions of power generation to be split approximately evenly between manufacturing and other business activities. When we report the first quarter with power generation being fully captured within other business activities in the second quarter and beyond.
Speaker Change: For full year 2024 manufacturing segment revenues were 233 Skus stop.
For full year 2024 manufacturing segment revenues were $223 million with adjusted EBITDA of $8 million and an adjusted EBITDA margin of 3%.
Speaker Change: Selling general and administrative expenses improved to $48 million in the fourth quarter from $52 million in the third quarter as we remain focused on cost control.
Austin Harbour: Cash capital expenditures decreased to $63 million in the fourth quarter from $70 million in the third quarter as we quickly right-sized our CapEx profile. for the lower activity levels while continuing to invest in our fleet via asset management and fleet readiness efforts in anticipation of ramping up quickly in late Q4 into early Q1. For the full year 2024, CapEx totaled $255 million. in line with the lower bound of our previously guided range, which is also down from $267 million in 2023. We continue to maintain our focus on capital discipline while positioning our segments to capitalize on upside potential as markets improve.
Speaker Change: Cash capital expenditures decreased to $63 million in the fourth quarter from $70 million in the third quarter as we quickly rightsize, our capex profile for.
Speaker Change: The lower activity levels, while continuing to invest in our fleet the asset management and fleet readiness efforts in anticipation of ramping up quickly in late Q4 into early Q1 for the full year 2024, capex totaled $255 million.
Speaker Change: In line with the lower bound of our previously guided range, which is also down from $267 million in 2023.
Speaker Change: We continue to maintain our focus on capital discipline, while positioning our segments to capitalize on.
Speaker Change: Outside potential as markets improve to that end, we expect to incur total capital expenditures. During 2025 that are in line with some modestly higher than 2024 levels are between $250 and $300 million.
Austin Harbour: To that end, we expect to incur total capital expenditures during 2025 that are in line with, to modestly higher than 2024 levels, or between $250 and $300 million. Total cash and cash equivalents as of December 31, 2024 were approximately $15 million, including approximately $4 million attributable to FloTet. Total liquidity at year-end was approximately $81 million, including $71 million available under the ABL. Borrowings under the ABL credit facility ended the quarter at $140 million, down approximately $23 million from the prior quarter. At year end, we had approximately $1.1 billion of debt outstanding, with the majority not due until 2029.
Speaker Change: Total cash and cash equivalents as of December 31, 2024, or approximately $15 million, including approximately $4 million attributable to flotek.
Speaker Change: Total liquidity at year end was approximately $81 million, including $71 million available under the ABL.
Speaker Change: Borrowings under the ABL credit facility ended the quarter at $140 million down approximately $23 million from the prior quarter.
Speaker Change: At year end, we had approximately $1 1 billion of debt outstanding with the majority not due until 2029.
Austin Harbour: We repaid approximately $157 million of long-term debt in 2024 and intend to continue to use free cash flow in future periods to deleverage. We're committed to advancing our strategic goals, working closely with clients to offer cutting edge integrated solutions, boosting efficiency throughout the company and maximizing our free cash flow.
Speaker Change: We repaid approximately $157 million of long term debt in 2024, and intend to continue to use free cash flow in future periods to deleverage.
Speaker Change: We're committed to advancing our strategic goals working closely with clients to offer cutting edge integrated solutions boosting efficiency throughout the company and maximizing our free cash flow.
Operator: That concludes our prepared remarks. Operator, please open the line for questions. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Thank you.
Speaker Change: That concludes our prepared remarks, operator, please open the line for questions.
Speaker Change: Thank you.
Speaker Change: No.
Speaker Change: A question and answer session.
Speaker Change: To ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is open questions.
Speaker Change: Two quick questions in the queue.
Speaker Change: So participants using speaker equipment.
Speaker Change: So quick question the strategies.
Speaker Change: First of all it's all for questions.
Speaker Change: Thank you.
Saurabh Pant: Our first question is from Saurabh Pant with Bank of America. Please proceed with your question. Hi, good morning Matt, Ladd and Austin. Good morning. Matt, Ladd, maybe I'll start with a big picture question on activity improvement. I'm thinking stimulation, but really it sounds like even on the prop end side, you are seeing good improvement early on in the year. You did give a little color in your prepared remarks, but maybe elaborate a little bit on what exactly is driving that. I think some of it is timing, right? Because the fleets that were laid down early on in the fourth quarter are coming back.
Speaker Change: Question <unk>.
Speaker Change: River.
Speaker Change: With Bank of America. Please proceed with your question.
Speaker Change: Hi, good morning matter a lot in Austin.
Speaker Change: Good morning, good morning, good morning.
Speaker Change: Matt maybe I'll start with a big picture question on activity improvement, Oh, I'm thinking stimulation, but really it sounds like even on the proppant side or you are seeing good improvement early on in the U L. A you did give a little color in your prepared remarks, but maybe elaborate a little bit on what exactly is driving that I think some of it is timing right because the fleets that will lay down.
Speaker Change: Early on in the fourth quarter are coming back for six fleet I guess part of it is that but what exactly is driving that and as we as we think through the rest of the Yo I know operating leverage is pretty significant at this distance, but what pricing might be a little bit of a headwind for Q2 on Q, how should we think about profitability moving through 2025 any any preliminary color.
Saurabh Pant: So six fleets, I guess part of it is that. But what exactly is driving that?
Matthew Wilks: And as we think through the rest of the year, I know operating leverage is pretty significant at this business, but pricing might be a little bit of a headwind for Q2-1Q. How should we think about profitability moving through 2025, any preliminaries? Yeah, I think from an activity standpoint, in Q4, due to seasonality and budget exhaustion, it slowed down. But, you know, the year started off really well. Operators getting right back to work and picking up fleets, as well as, you know, adding volumes on sand. So it's been a nice start to the year. Pretty excited about that.
Speaker Change: Yes, I think I think from an activity standpoint.
Speaker Change: Q4.
Speaker Change: Due to seasonality and budget exhaustion slowed down but.
Speaker Change: The year started off really well operators getting right back to work and picking up fleets.
Speaker Change: As well as as well as you know.
Speaker Change: Adding volumes on sand so it's been a nice start to the year I'm pretty excited about that.
Matthew Wilks: When we look at the availability on the supply side, whether that's on horsepower or on sand, you know, the demand has picked up quite a bit. It's put us in a situation where essentially we have a choice between, you know, pushing pricing or focusing on de-risking those cash flows and the overall profitability over time. And the number one priority for that is to make sure that we preserve our long-term relationships with customers and deliver something that's stable through the cycle. and Delivers Us the Respectable Return. So, rather than being too aggressive on pricing, we're looking at the long-term benefits of sustainable pricing and great customer relations.
Speaker Change: When we look at the availability of <unk>.
Speaker Change: On the supply side, whether that's on horsepower on sand.
Speaker Change: It's the demand has picked up quite a bit and it's put us in a situation where essentially we have a choice between.
Speaker Change: Pushing pricing or focusing on de risking those cash flows and the overall profitability.
Speaker Change: Overtime and <unk>.
Speaker Change: The number one priority for that is to make sure that we preserve our long term relationships with customers.
Speaker Change: And deliver something that stable through the cycle.
Speaker Change: And delivers us the respectable return.
Speaker Change: So rather than.
Speaker Change: Being too aggressive on pricing, we're looking at the long term benefits of.
Sustainable sustainable pricing and and a.
Speaker Change: Great customer relationships.
Matthew Wilks: So our focus is on getting longer term commitments so that we can deliver longer term financial results for our stakeholders.
Speaker Change: So our focus is on.
Speaker Change: Getting longer term commitments, so that we can deliver longer term financial results for our stakeholders.
Speaker Change: Okay perfect I got it and then the next one I'm I'm I'm mixing two topics, but for the reason online via and then on Capex guidance, Florida for 20 to $25 50 to 300 million.
Saurabh Pant: Okay, perfect. I got it.
Saurabh Pant: And then the next one, I'm mixing two topics, but for a reason on LiveWire and then on CapEx guidance for for 2025 to 50 to 300. Uh, maybe just give us a little color on how quickly do you think the livewire business ramps up? How much capital, how quickly are you willing to put into that business? And then just the pieces within that 250 to 300, how much of that is going towards upgrades, any more e-fleets, anything else, right? Just a little more color on where that, where those dollars are going. Yeah, certainly. So, when we look at the power business, we've got embedded demand internally.
Speaker Change: Maybe just give us a little color on how quickly do you think the live via business ramps up how much capital. How quickly are you willing to put into that business and then just the pieces within that $2 50 to 300, how much of that is going towards upgrades anymore. You fleet. So anything else right just a little more color on where that where those dollars are going.
Speaker Change: Yes, certainly so when we look at the power business.
Speaker Change: We've got embedded demand internally that is R. R.
Matthew Wilks: That is our first priority and our focus. But we're also evaluating other market opportunities, whether that's in oil and gas or AI or wherever that may be. We're pretty excited about it and see a lot of opportunities, but we're being selective and patient with how we approach that.
Speaker Change: First priority and our focus but we're also evaluating other market opportunities, whether that's in oil and gas.
Speaker Change: Or.
Speaker Change: Or AI or wherever that may be.
Speaker Change: We're pretty excited about it and I see a lot of lot of <unk>.
Speaker Change: Opportunities, but we're being selective.
Speaker Change: Patient with how we approach that we look forward to updating them.
Austin Harbour: We look forward to updating everyone soon. As far as the capital outlay, I'll defer to Austin.
Speaker Change: Updating everyone soon as.
Speaker Change: As far as the capital outlay all Oh.
Speaker Change: Deferred are often.
Austin Harbour: Yeah, I appreciate the question. So, I think just to start, right, on the growth CapEx side, we're not going to invest capital unless we can see real returns coming back from those investments, particularly on the growth side and on the upgrade side. So, I would lead with that. I think to the specific breakdown, right now, the majority of our spend is going to come on the STEM services side. And then in addition to that, we've got a number of ongoing projects and the profit production segment, again, all with paybacks that meet our economic return and threshold profile.
Speaker Change: I appreciate the question. So I think just to start right on the growth Capex side, we're not going to invest capital unless we can see real returns coming back from those investments, particularly on the growth side and on the upgrade side.
Speaker Change: So I would lead with that I think to the specific breakdown.
Speaker Change: Right now the majority of our spend is going to come on the stem services side and then in addition to that we've got a number of ongoing projects.
Speaker Change: The proppant production segment again, all with paybacks that meet our economic return and threshold profile.
Saurabh Pant: With respect to Livewire, I'll echo Matt's comments and sentiment there. I think Right, as we have more detail, more appropriate detail to share, we'll do that. Okay, perfect.
Speaker Change: With respect to live wire.
Speaker Change: Echo Matts comments in sentiment there I think.
Speaker Change: Right as we have more detail and more appropriate detail to share we will do that at that time.
Speaker Change: Okay, perfect and one very quick follow up for you unrelated.
Austin Harbour: Austin, one very quick follow up for you, unrelated. The $41 million in asset sales, can you give us any color at all on what that is? Yeah, it was a sale lease back on some of our STEM services. Okay, I got it. Okay, perfect. Thank you, Matt, Ladd, Austin. I'll turn it back. Appreciate it. Thanks for dialing in. Thank you.
Speaker Change: The $41 million in asset sales can you give us any color at all on what that was.
Yes, it was a sale leaseback on some of our stem services assets.
Speaker Change: Okay I got it okay perfect. Thank you, Matt let Austin has done it back.
Speaker Change: I appreciate it thanks for dialing in.
Speaker Change: Thank you. Our next question is from Stephen Kingara with Stifel. Please proceed with your question.
Stephen Gengaro: Our next question is from Stephen Gengaro with STFL. Please proceed with your question. Thanks. Good morning, everybody.
Speaker Change: Thanks, Good morning, everybody.
Stephen Gengaro: Can you give us your perspective on, just as we sort of think about 25 as it evolves, on just kind of frac supply demand and what your sense is for attrition of older assets and just kind of thinking about maybe what we look like as we get closer to the end of the year. Oh, certainly. It's a great question. When we look at the overall fleet for the industry, and especially when you couple it with the high utilization rates and efficiencies that we're seeing across the market, it's given an accelerated, you know, attrition profile to where, you know, you use equipment quicker, and it increases your maintenance capex and R&M cycles.
Speaker Change: Good morning can you give us your perspective on just as we sort of think about 'twenty five as it evolves and just kind of frac supply demand and what your sense is for attrition of older assets.
Speaker Change: Just kind of thinking about maybe what we look like as we get closer to the end of the year.
Speaker Change: Oh certainly.
Speaker Change: Great question.
Speaker Change: Look at the overall fleet for the industry.
Speaker Change: Especially when you couple it with the high utilization rates and efficiencies that we're seeing across the market.
Speaker Change: It's given an accelerated.
Speaker Change: Attrition.
Speaker Change: File to wear.
Speaker Change: You used equipment quicker and added increases your your maintenance capex in R&M cycles.
Ladd Wilks: You're really putting this equipment through a lot, and because of that, you've seen an accelerated, you know, cycle where there's less equipment available, and it's really chewed through this equipment to where a lot of the legacy equipment is just not up to par with where the industry has come. That's why we're so excited about our platform and how well we manage our assets, as well as the increased benefits that we're already seeing from the asset management program that we've put in place. So, when you look at supply and demand, we think it's... You know, it's pretty tight out there.
Speaker Change: You really putting this equipment through a lot and because of that you have seen an accelerated.
Speaker Change: Cycle, where.
Speaker Change: Theres less equipment available and.
It's really chewed through this equipment to where a lot of the legacy.
Speaker Change: Legacy equipment is just not up to par with where the industry has come.
Speaker Change: That's why we're so excited about our platform and how how well we manage our assets as well as the increased benefits that we're already seeing from the asset management program that we've put in place.
Speaker Change: When you look at supply and demand we think it's.
Speaker Change: It's pretty tight out there and it's.
Ladd Wilks: And it's when when the industry's fleet count is dropping, it's, it's easier to manage assets, and allocate the appropriate assets to the right areas and, and to put up phenomenal efficiencies and utilization rates for your customers. But it chews through a lot of equipment and it's unseen by the market until it stabilizes and starts building the other way. I think that this is going to be a common theme all throughout 2025 across the industry of realizing just how short the market is of horsepower. I think it, I think in. In this part of the cycle, it presents a lot of opportunities to get very substantial price improvements.
Speaker Change: When the industry's fleet count is dropping.
Speaker Change: It's easier to manage assets and and allocate the appropriate assets to the right areas and and to put up a phenomenal.
<unk> and utilization rates for your customer.
Speaker Change: <unk>.
Speaker Change: But it chews through a lot of equipment and it's unseen by the market until it stabilizes and starts building the other way.
Speaker Change: I think this is going to be a common theme all throughout 2025 across the industry of realizing just how short the market as of horsepower.
Speaker Change: I think it I think.
Speaker Change: In this part of the cycle it presents a lot of opportunities to get very substantial price improvements. However.
Ladd Wilks: However, we're taking the long game here and looking at what our long-term relationships with customers should be and how we should structure that relationship, making sure that we have partnerships over short-term financial gain.
Speaker Change: We're taking the long game here and looking at what our long term relationships with customers should be and how we how we should structure of that relationship.
Speaker Change: Ensure that we have partnerships over short term financial gain.
Ladd Wilks: I would just add to that, too, you know. If we continue to see some green shoots, particularly in the natural gas heavy markets, this is, I think, going to become even more acute as we move throughout the year and then the next year. You know, kind of the two-pronged approach of increased attrition coupled with potential increases in demand on the gas side, in addition to kind of flattish activity on the oil side. I think we're going to see a, we could see a meaningful tightening if that unfolds. And the most exciting outcome is that really this pushes and accelerates the industry's move into higher spec, higher value platforms. that is certainly a benefit to us because of our fleet configuration.
Speaker Change: I would just add to that too.
Speaker Change: Yes.
Speaker Change: If we continue to see some green shoots.
Speaker Change: Particularly in the natural gas heavy markets. This is I think going to become even more acute as we move throughout the year and into next year.
Speaker Change: Kind of two pronged approach of increased attrition coupled with potential increases in demand on the gas side. In addition to kind of flattish.
Speaker Change: Activity on the oil side I think we're going to see it we could see.
A meaningful tightening as that unfolds.
Speaker Change: And then.
Speaker Change: The most exciting outcome is that they're really just.
Speaker Change: Pushes and accelerates the industry's move into higher spec higher value platforms.
Speaker Change: Ed.
Speaker Change: That is certainly a benefit to us because of because of our fleet configuration.
Speaker Change: No that makes sense, thank you and the other question.
Stephen Gengaro: No, that makes sense. Thank you.
Ladd Wilks: And the other question, could you give us a sense or range for where pricing is today on a kind of a contracted and maybe contracted and spot basis versus, you know, where it was 12 months ago? I'm just trying to get a sort of just a sense for magnitude of change. Yeah, I know you'd love to have that answer. We're going to pass on that one. I'll tell you, we like the frame up that we have. We like where supply and demand is at and where it's taking us. And our main focus is, you know, we don't want to be greedy here and complicate our relationships with our customers.
Speaker Change: Could you give us.
Speaker Change: A sense or a range for where pricing is today.
Speaker Change: Kind of a <unk>.
Speaker Change: Contract, and maybe contracted and spot basis versus where it was 12 months ago.
Speaker Change: Trying to get a sort of just a sense for magnitude of change.
Speaker Change: Yes.
Speaker Change: I know you'd love to have that answer.
Speaker Change: Yes.
Speaker Change: We're going to we're going to pass on that one I will tell you.
Speaker Change: We like to frame up that we have we like where supply and demand is at and where it's taking us.
Speaker Change: Our main focus is.
Speaker Change: We don't want to be greedy here and complicate our relationships with our customers, but theres certainly.
Austin Harbour: But there's certainly, you know, greater opportunities to pricing. Many of those is that's not something that we're as interested in getting in the short term. We want to look at preserving our relationships with our customers and finding that right balance for full cycle return. And I would just add, again, I can't overemphasize this enough, you know, where we are spending on growth capex and STEM services, it's because we are meeting our economic return threshold. right? So I just want to, I want to put a put a point in that. Make somebody make so much of this business is about utilization and operating leverage.
Speaker Change: Yeah.
Speaker Change: Greater opportunities to push pricing.
Speaker Change: Many of those as.
Speaker Change: That's not something that we're as interested in getting in the short term we want to look at.
Speaker Change: Preserving our relationships with our customers and finding that right balance for full cycle returns.
Pat: Okay. This is Pat again.
Pat: I can't Overemphasize this enough, where we are spending on growth capex and in stem services.
Pat: Because we are meeting our economic return thresholds.
Pat: So I just want to I want to put up put a point in that.
Pat: Somebody can make so much of this business is about utilization and operating leverage and so there is a good balanced by working with the right customers in and finding finding the right relationships so that.
Stephen Gengaro: And so there's a good balance by working with the right customers. and Finding the Right Relationships so that you create mutual value and benefit. Gotcha, that makes sense.
Pat: That you create mutual value and benefit.
Pat: Got you that makes sense.
Stephen Gengaro: And then one final, since you didn't quite answer the other one. But no, seriously, the other one was Do you see, and I'm not sure how to exactly ask this, but when we think about the electrification of some of the frac fleets and we see Power being pulled into other end markets, right, like data centers, etc. Is there any concern that The cost of electricity or the cost of, you know, recepts or whatever it might be will rise because you're getting that power maybe pulled away from the oil path by a customer who's maybe willing to pay more for it.
Pat: And then one final since you didn't quite answer yet.
Pat: But no seriously the other one was.
Pat: Do you see and I'm not sure how exactly asked this but when we think about the electrification of some of the Frac fleets and we see.
Pat: Power being pulled into other end markets right like data centers et cetera is there any concern.
Pat: That.
Pat: The <unk>.
Pat: Cost of electricity in the cost of risk.
Pat: The reception or whatever might be will rise because youre getting.
Pat: That power, maybe pulled away from the oil patch by our customers may be willing to pay more for it.
Pat: Yeah.
Ladd Wilks: You know, that's that's a, you know, those are some high class problems. The way that we look at it is that with our vertical integration and our in house packaging of these platforms, we want to we want to focus on and develop, you know, our growth trajectory around supporting our fleets. But, but it also, you know, we're, we're, we're allocators, And we're going to allocate for the best returns. But again, this is about preserving long-term relationships. And so we'll meet all of our commitments to our customers. And, you know, as we look at the landscape, I think that there's, you know, terrific demand in other segments and other areas.
Pat: That's a.
Pat: Those are some high class problems the way that we look at it is with our vertical integration and our in house packaging of these platforms, we wouldn't we want to focus on and develop.
Pat: Our growth trajectory around supporting our fleets.
Pat: But it also.
Pat: We're we're allocators.
Pat: And we're going to allocate for the best returns, but again this is about preserving long term relationships.
Pat: So we will meet all of our commitments to our customers and.
Pat: As we look at the landscape I think that there is.
Pat: Terrific demand in the other segments and other areas.
Ladd Wilks: And we're closely evaluating the, you know, this specifically for what is the best allocation of resources and how do we sustain both businesses without leaving any of our valued customers stranded in any form or fashion. And so there's careful consideration there. And we're allocators looking for the best returns. And, you know, ultimately, the best returns are from sustainable full-cycle returns and looking at the return on assets through the life of the asset. And so we're evaluating this very, very closely. But we see our in-house demand as a proving ground and an excellent launching pad for some of these opportunities that we see in the market.
Pat: And we're closely evaluating.
Pat: This specifically for what is the best allocation of resources and how do we sustain both businesses without leaving any of our valued customers stranded in any form or fashion and so there is.
Pat: Careful consideration there and we're allocators looking for the best returns and.
Ultimately the best the best returns are from sustainable full cycle returns and looking at the.
Pat: Return on assets through the life of the asset.
Pat: So we are evaluating this very very closely.
Pat: C. R. R in house demand as a proving ground and an excellent launching pad.
Pat: Some of these some of these opportunities.
Pat: That we see in the market.
Stephen Gengaro: Great now that's that's great color. Thank you gentlemen. Thank you.
Pat: Great.
Pat: Great color. Thank you gentlemen.
Pat: Thank you.
Speaker Change: Thank you. Our next question is from Dan Kutz with Morgan Stanley. Please proceed with your.
Dan Kutz: Our next question is from Dan Kutz with Morgan Stanley.
Dan Kutz: Please proceed with your. Hey, thanks. Good morning. Morning. Morning, Dan. So I just wanted to kind of roll up a couple of data points that you guys gave on your active frac fleet count. So I think that... said that you've reactivated six fleets and that activity is up more than 25% on the four kilos. So that would kind of imply maybe you were running mid-20s, maybe low-mid-20s fleets before, and now you're around 30 fleets. Am I thinking about that the right way? And is 30, you know, a decent number to think about through 2025 in terms of the next?
Speaker Change: Hey, Thanks, good morning.
Speaker Change: Good morning, Good morning, Dan.
Speaker Change: So.
Speaker Change: Just wanted to kind of roll up a couple of data points that you guys gave on your active Frac fleet count. So so I think that.
Speaker Change: You'd said that that you've reactivated six fleets and that activity is up.
Speaker Change: More than 25%.
Speaker Change: On the <unk>, so that would kind of imply maybe you're running.
Speaker Change: Mid twenties, maybe low mid Twenty's fleets before and then now you're around.
Speaker Change: 30 fleets am I thinking about that the right way and is 30.
Speaker Change: A decent number to think about.
Speaker Change: Through 2025 in terms of an active fleet count.
Speaker Change: Yes, I think I think.
Ladd Wilks: Yeah, I think I think the low 30s is a safe, safe place to look at throughout the year, I think. You know, and certainly for that's about where we are now. What we're looking at is does it, you know, we're not going to sacrifice financial results for growth. This is this is about being active and maintaining a healthy footprint in a in a great market and and establishing the right the right relationships now, if for whatever reason, there's a call from the market for, you know, the demand is there for more supply. Our number one priority is that we won't ramp up activity unless we see the economic returns that support it.
Speaker Change: <unk> <unk>.
Speaker Change: Safe safe place to look at throughout the year.
Speaker Change: And certainly for.
Speaker Change: That's about where we are now.
We're looking at is does it.
Speaker Change: Not going to sacrifice financial results for growth.
Speaker Change: This is about.
Speaker Change: Be inactive and maintaining a healthy footprint and a great market and.
Speaker Change: Establishing the right relationships now.
Speaker Change: If for whatever reason there is a call.
Speaker Change: From the market for the.
Speaker Change: The demand is there for more supply.
Speaker Change: Our number one priority is.
Speaker Change: We won't ramp up activity unless we see the economic returns that support it and so we're patiently.
Ladd Wilks: And so we're patiently, patiently watching it, excited about what we're seeing in gas and think that there's, you know, as we go into, you know, the latter part of this year and into next year, that there may be a need there. But our our position is that we remain patient and and become great allocators of capital.
Speaker Change: Patiently watching it excited about what we're seeing in gas.
Speaker Change: And think that there is.
Speaker Change: As we go into.
Speaker Change: The latter part of this year and into next year.
Speaker Change: There may be.
Speaker Change: Need there but.
Speaker Change: Our position is that we remain patient and become great allocators of capital.
Speaker Change: Great. That's all that's all really helpful.
Dan Kutz: Great, that's all. It's all really helpful.
Dan Kutz: Then maybe on on the prop business, you guys have kind of given us a bunch of color on Some of the factors driving the improvement that you see for that business this quarter and this year, but a couple other components that I wanted to ask about are our market share gains contemplated in the improvement and in terms of just you guys. you'd flag that, you know, you're looking to optimize the utilization at a given mine at a given time. Is there any, are there any mines that were outright shut down to manage the cost structure or is it just more a matter of kind of managing the volumes and utilization across the different mines?
Speaker Change: And then maybe on the proppant business.
Speaker Change: Guys have kind of given us a bunch of color on <unk>.
Speaker Change: Some of the factors driving the improvement that you see for that business this quarter and this year, but.
Speaker Change: A couple of other components that I wanted to ask about.
Speaker Change: Our our market share gains contemplated in the improvement and in terms of just you guys.
Speaker Change: You'd flagged that youre looking to optimize the utilization that a given mining at a given time is there any.
Speaker Change: Are there any mines that that were outright shutdown.
Speaker Change: To manage the cost structure or is it just more a matter of kind of managing the volumes and utilization across the different mines and then just the last piece is.
Ladd Wilks: And then just the last piece is how much, what's kind of the outlook that's contemplated for your internal versus external? Prop and Sales Yeah, in in 2024, we communicated that we had idled an asset and in the Haynesville market, that asset is still idle. But As we move through 2025 and with the potential of increased activities there, there may be a call on that asset to bring it back. But where we sit now, we have seven assets that are operational and with many of them seeing the best utilization and production rates that they've ever had.
Speaker Change: How much.
Speaker Change: What's kind of the.
Speaker Change: Yes look that's contemplated for your internal versus external.
Speaker Change: Proppant sales.
Speaker Change: If you don't mind.
Speaker Change: Yes.
Speaker Change: 24, we communicated that we have idled an asset.
Speaker Change: The haynesville market that asset is still idle but.
Speaker Change: As we move through 2025.
And.
Speaker Change: With the potential of increased activities there that there may be a call.
Speaker Change: On that asset to bring it back, but where we sit now we have seven assets that.
Speaker Change: That are operational.
Speaker Change: <unk>.
Speaker Change: With many of them seeing.
Speaker Change: The best utilization and production rates that they've that.
Speaker Change: They've ever had so we're pretty excited about where these things are at.
Dan Kutz: So we're pretty excited about where these things are at. We've got a robust order book and as we move through the year, our goal is to focus on long-term commitments rather than taking the first opportunity to push price, which right now we're seeing those types of opportunities, but our focus is let's de-risk these cash flows and turn them into longer-term commitments instead of just a nice feel-good at the beginning of the year. Got it. It's all really helpful. Thanks a lot.
Speaker Change: We've got a.
Speaker Change: Robust order book and what we are.
Speaker Change: As we move through the year our goal is to too.
Speaker Change: Our focus on long term commitments and.
Speaker Change: Rather than taking the first opportunity to push price, which.
Speaker Change: Which which right now we're seeing those those types of opportunities, but our focus is let's let's derisk. These cash flows and turn them into.
Speaker Change: Longer term commitments instead of just a nice feel good at the beginning of the year.
Speaker Change: Got it.
Speaker Change: Really helpful. Thanks, a lot I'll turn it back thank you.
Operator: I'll turn it back. Thanks, Stan. Thank you.
Speaker Change: Thanks, Tim.
Speaker Change: Thank you. This concludes today's question and answer session I would like to hand, the call back over to Matt <unk> for any closing comments.
Matthew Wilks: This concludes today's question and answer session.
Matthew Wilks: I'd like to hand the call back over to Matt Wilks for any closing comments. Thank you, everyone. We appreciate your time today. We are confident that our integrated solutions and strategic partnerships will continue to drive our success in the most active U.S. Our focus on innovation, including next generation equipment, and the launch of live wire power, positions us to capitalize on emerging opportunities.
Speaker Change: Thank you everyone. We appreciate your time today, we are confident that our integrated solutions and strategic partnerships will continue to drive our success in the most active U S basins, our focus on innovation, including next generation equipment and the launch of Blackwater power positions us to capitalize on emerging opportunities, we look forward to <unk>.
Matthew Wilks: We look forward to connecting with everybody on our first quarter 2025 results call. Thank you.
Speaker Change: <unk> with everybody on our first quarter 2025 results call.
Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.