Q1 2025 ProFrac Holding Corp Earnings Call
Chris Eaton, Johnthan Wilson, Austin Harbour, Mark Farrell, Unknown Executive of Taylor Lyle, Chris Eaton, Kelsey Leahan, Austin Harbour, мало Eaton Aaron Englund Natural Resource Science, Corrat Johnson geherae, A squirrel blobs furrow, Indigo &세요, Tim McQueen, Joshua Walsh, Henigraphy slocii grow, Michael Tyson, Mattheth Wilks, Johnathan Wilks, Bran Trimmer, Unknown Executive, Michael Messina, Austin Harbour, Unknown Neighbor, Morgan Sisson School, National Natural and Singapore前浦 カルスション教育協會 Honda crispy macchiato,
Johnathan Wilks, Unknown Executive, Michael Messina, Austin Harbour, Unknown Executive,
Johnathan Wilks, Unknown Executive, Michael Messina, Austin Harbour, Unknown Executive,
Greetings and welcome to Profrac's first quarter 2025 earnings conference call.
At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad.
As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Messina, Director of Finance. Thank you, please go ahead.
Speaker Change: Thank you, Operator. Good morning, everyone. Thank you for joining us for Profrac Holding Corpse Conference call and webcast to review our results for the first quarter and at March 31st, 2025.
Speaker Change: With me today are Matt Wilks, Executive Chairman, Lad Wilks, Chief Executive Officer, and Austin Harbour, Chief Financial Officer.
Speaker Change: Following live remarks, management will provide high-level commentary on the operational and financial highlights of the quarter before opening up the call to your questions.
Speaker Change: A reply of today's call will be available by webcast on the company's website at pfmoldingscork.com
Speaker Change: More information on how to access the replay is included in the company's earnings release.
Speaker Change: Please note that information reported on this call speaks only as of today, May 7th, 2025.
Speaker Change: Also, comments on this call may contain forward-looking statements within the meaning of the United States Federal Security Laws, including management's expectations of future financial and business performance.
Speaker Change: These poor-looking statements reflect the current views of Profrac's management and are not guarantees of future performance.
Speaker Change: Various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in management for local statements.
Speaker Change: The listener or reader is encouraged to read Profrac's form 10K and other filings with the Securities and Exchange Commission.
Speaker Change: which can be found at SEC.gov or on the company's investor relations website section under the SEC filing tab to understand those risks, uncertainties, and contingencies.
The comments today also include certain non-GAAP financial measures.
Speaker Change: as well as other adjustments figures to exclude the contribution of flow tech.
Speaker Change: Additional details and reconciliation to the most directly comparable, consolidated and GAAP financial measures are included in the quarterly earnings press release which can be found at SEC.gov and on the company's website.
Speaker Change: And now, I would like to turn the call over to Profrac's Executive Chairman, Mr.
Matt Wilks: Thank you, Michael, and good morning to all. I'll begin with brief remarks, turn it to Lad to elaborate on segment performance, and then Austin will run through our first quarter financials.
Matt Wilks: In the first quarter, Profrac delivered strong results that significantly exceeded consensus estimates. Compared to the fourth quarter, revenue grew 32% to 600 million, while adjusted even I increased 83% to 130 million.
Matt Wilks: Our results demonstrate the resilience of our differentiated business model, including in-house R&D, manufacturing and maintenance capabilities, our asset management platform, as well as integrated solutions.
Matt Wilks: These differentiators underpin our ability to deliver top tier, reliable and safe solutions to our customers.
Matt Wilks: In the first quarter we hit yet again a new record in total pumping hours as well as average pumping hours per fleet as we were able to rapidly redeployed fleets and execute in the field as activity ramped up.
Matt Wilks: RSAT Management Platform has been a critical factor underpending our success. Through standardized designs and streamlined operations, we were able to promptly
Matt Wilks: and cost-effectively maintain and upgrade our pressure pumping fleet to deliver consistent reliable equipment that meets rigorous safety standards and job specific requirements.
Matt Wilks: Innovation remains at the core of our business and we are encouraged by the results of tests conducted during the first quarter on our pro pilot automation software for hydraulic fracturing.
Matt Wilks: Especially unique to our technology is that ProPilot requires zero manual startup for the initial stage. You just hit play. ProPilot is a groundbreaking auto-frag platform that benefits our equipment and crews in various ways.
Matt Wilks: We expect pro-pilot to drastically reduce the need for human intervention by automatically recommending courses of action to adhere to job designs. By our measure, pro-pilot eliminates the majority of the human decision points involved in track operations.
Matt Wilks: The technology factors in the specific pumps down to their individual components and automatically adjust recommendations based on mechanical feedback, fleet configuration.
Matt Wilks: OEM ratings, as well as wear and tear on the components, which we believe will enable us to extend to useful lives and further minimize failures of our equipment. This system also enables us to further optimize natural gas substitution rates to deliver fuel settings for our customers.
Matt Wilks: In April , we implemented propala autofrack functionality into a fleet in South Texas with great success. Next month, we planned to deploy it to another fleet in West Texas. We remain committed to delivering cutting-edge solutions and setting industry benchmarks that create measurable value for our customers.
Matt Wilks: Last week we co-announced the completion of a transaction flow tech that included the sale of innovative mobile power generation solutions.
Matt Wilks: This transaction represents an evolutionary step forward in our business relationship with
Matt Wilks: By leveraging cutting-edge intellectual property, these solutions provide industry-leading gas quality assurance and asset integrity to customers while providing a platform for future growth.
Matt Wilks: We believe assets that consume gas can benefit from flow text technology.
Matt Wilks: especially applications that consume volatile gas molecules. For example, power generation, compression, refining, chemical plants, and flaring represent a few of the near-term adjacent applications we've identified.
Matt Wilks: We remain focused on proactive customer engagement. Simply put, our priority is partnering with operators who recognize our efficient, scalable offering enabling long-term margin-enhancing relationships with key customers.
Pivoting briefly to profit
Matt Wilks: On our last call, we spoke constructively about the trends in the segment. The changes we implemented late last year and through the first quarter drove significant volume gains in the first quarter.
Matt Wilks: We expect volumes in the second quarter to slightly decline compared to the first quarter. However, we anticipate that we will be able to partially offset the declines in sales volumes with favorable average sales prices.
Matt Wilks: and increased logistics activity. Further, our position in the Haynesville is a source of potential upside in the back half of the year. More on this when Ladspeaks.
Turning the lab wire power [inaudible]
Matt Wilks: Our power generation business continues to make progress. Since its launch in the fourth quarter, the business has been executing on its initial objective of supporting our internal operations while delivering capabilities for future growth.
Matt Wilks: We remain excited about the long-term potential of this business and the industry's power generation needs continue to evolve to the end of the world.
Matt Wilks: to put a fine point on Mark so far. We leveraged our strengths in an improving North American completion's market to deliver first quarter results that I'm proud of, and to advance key strategic initiatives.
Matt Wilks: I want to take this moment to thank all of our employees for their dedication and effort in achieving these results.
Matt Wilks: All that said, market dynamics shifted in the early days of the second quarter.
Matt Wilks: Economic uncertainty from tariffs, along with OPEC's announcement to increase old production beginning and April , had an immediate impact on commodity prices, and more importantly, on the outlook for prices, activity and spending.
Matt Wilks: Lad will provide more detail on how these dynamics are impacting our business. But I'd like to first set the stage with some high level observations.
Matt Wilks: Importantly, as we entered this period of uncertainty, industry-wide drilling in completions activity was consistent with maintaining relatively flat
Matt Wilks: Meaning any sharp or prolonged slowdown in activity would lead to production decline.
Matt Wilks: The primary challenge facing operators today is increased cost input from tariffs and uncertainty about where commodity prices will trend amid persistent concerns about a potential economic slowdown and softening global demand.
Coupled with increased supply from up there.
Matt Wilks: The responses by operators to current parking conditions remain highly individualized and shaped by factors including acreage portfolios, regional and commodity exposure, cash return commitments.
Hedge Positions, and Overall Corporate Strategy.
Matt Wilks: Early feedback from our customers indicates that activity will decline in the second quarter relative to the first quarter as fleets in earlier programs largely targeting oil production
Matt Wilks: Some operators are maintaining relatively steady activity levels while others have adopted a more measured weight and feed approach Particularly with marginal projects that might deliver better returns and an improved pricing environment
Matt Wilks: Meanwhile, the natural gas market appears to be holding up relatively well.
Matt Wilks: Secular Tailwinds driven by growing AI-related power demand and continued strength and LNG demand are supporting the potential for increased activity in the second half of 2025, which Lad will also expand on shortly.
Matt Wilks: We're optimistic about the opportunity in the Haynesville, particularly given our proper position in that region.
Matt Wilks: Regardless of the market backdrop, we continue to take the discipline and approach to managing our asset portfolio and capital allocation by prioritizing economic returns, shoring up free cash flow, safeguarding liquidity and prudently managing both debt, service and working capital.
Matt Wilks: Further, in response to the evolving market conditions, we're implementing strategic adjustments to our capital allocation plan to maximize cash flow generation while ensuring our customers continue to receive the highest quality equipment and service enabled by our vertical integration.
Speaker Change: Lab will elaborate on these two points shortly, but before turning the call over to him, I'd like to wrap up with the following summary remarks.
Matt Wilks: We delivered strong Q1 and Zolls, exceeding consensus estimates with reverend growth of 32% and increased adjusted EBITDA by 83% compared to the fourth quarter.
Speaker Change: We achieved a new record in operating efficiency thanks to our best-in-class crews and differentiated business model utilizing in-house R&D manufacturing and maintenance capabilities and our asset management platform.
Matt Wilks: We completed a strategic transaction with flow tech, enabling a platform for growth.
Leveraging Cutting Edge Gas Quality Assurance and Asset Integrity Solutions [inaudible]
Matt Wilks: We are observing very customer responses to economic uncertainty and ultimately what operators want to see is more clarity on the trajectory of commodity prices, reliability of cost inputs and tariffs and less uncertainty regarding supply and demand dynamics.
Matt Wilks: Natural gas remains a relatively bright spot, which we believe could provide some upside in the second half of the year.
Matt Wilks: We saw positive momentum in profit with significant volume gains in Q1.
Matt Wilks: And finally, we remain prudent and diligent in capital allocation and are actively evaluating expenditures across the organization with flexibility to adjust without compromising service quality.
Glad, over to you.
Ladin: Thank you, Matt, and good morning, everyone. I'll provide more color on several things Matt touched on as I elaborate on the segments, starting with the performance and our pressure pumping business.
Ladin: In the first quarter, we experienced a significant improvement in our active fleet count, with six fleet returning to service early in the period.
Ladin: The increase in activity was most pronounced in our Equal Food and Permian operations, though all active regions saw improvement.
Ladin: So far, through the second quarter, we've experienced more resilient demand for our next gin natural gas burning equipment than our diesel assets.
Ladin: As Matt discussed, the uncertain macroeconomic environment triggered by tariff announcements in early April and the opaque production increase has prompted operators to reassess their drilling and completions activity and spending.
Ladin: During such periods, operators typically shift focus toward operational expenditures rather than capital investments.
Ladin: This often means prioritizing production over it from active wells, over bringing new wells online.
Ladin: Regarding their capital expenditure programs, this may translate to deliberately limiting activity, building dugs and temporarily suspending activity on marginal assets.
Speaker Change: Since the beginning of the second quarter, a few of the programs we were on have seen delays are been paused due to the dynamics mat laid out.
Speaker Change: This is resulting in more light space on the Pratt calendar and creating some inefficiencies that we're managing.
The encouraging news is that DNC programs can resume quickly.
Speaker Change: In addition, the tariff induced disruption to the industry's supply chain could result in a substantial glut of imported products as a result activity could rebound just as rapidly as it slowed.
Speaker Change: While we're being prudent with spending a mid current uncertainty, our business model and fleet are well positioned and stand ready to capitalize on a ramp up in completion's activity.
Speaker Change: In addition, we remain optimistic about the potential upside and natural gas directed activity, particularly in the Hainesville. We're actively building inbound interest for work in the backhap of this year and into the next.
Now to our profit segment.
Speaker Change: We saw a substantial increase in volumes early in the year with January levels rising 45% above December . However, ramp up cost and plan monitoring improvements early in the quarter weight on segment performance.
Speaker Change: As a reminder, we conducted a strategic leadership review of the Provinc segment in Q4 2024 across both mind operations and executive levels and implemented targeted changes to enhance commercial execution and operational efficiency.
By improving throughput, we began to see encouraging results.
Speaker Change: Looking at our operations today, segment volumes are anticipated to slightly decline relative to the first quarter, but with some favorable offsets as Matt laid out.
Speaker Change: Finally, I'd like to reiterate our optimism around the Hainesville, particularly as it relates to our profit business and the potential for increased natural gas activity in the region.
Speaker Change: As mentioned previously, we hold an industry-leading position in a hands-ville profit market, supported by three invasive minds with a combined annual production capacity of 8.2 million tons.
Switching gears now to other important items.
Speaker Change: Regarding our recent blood tech transaction in April , we completed a $105 million transaction that included our gas conditioning solutions under a six-year leaseback arrangement.
Speaker Change: Austin will talk more about the deal consideration, but I'd like to take a brief moment to talk about the innovative capability that seems internally developed assets provide.
Speaker Change: Essentially, there are two distinct units that can be paired together on each natural gas burning fleet, one emergency shutdown unit, which we call an ESD, and one natural gas distribution unit, or NGB.
Speaker Change: At a high level, this equipment solves one of the biggest operational challenges out in spate gas impact on asset integrity.
Speaker Change: which can result in outcomes ranging from increased wear and tear to catastrophic failure.
Speaker Change: Additional features include emergency shutdown capabilities, pressure regulation, overpressure protection, liquids carry-over protection, and managing out-of-spec gas, which includes mitigating variations in BTU and H2S levels.
Speaker Change: While the core tangible components of the equipment are fairly ubiquitous in the oil film, the real differentiator is in the intellectual property associated with flow text JP3 gas analyzer.
Speaker Change: On board the ESD is proprietary technology that analyzes the chemical makeup of the gas in real time and adjust the BTU levels of the gas supplied to the power generation unit or any natural gas burning equipment for that matter.
Speaker Change: without any disruptions to operations. Profrac, this is not only helps us avoid non-productive time associated with dual related issues at the pad, but also improves our ability to substitute
Speaker Change: On capital allocation, we've identified approximately 70 to 100 million in potential cap ex-reductions to flexibly align with evolving market conditions. Our efficient fleet management approach enables us to maintain service quality standards for optimizing spending.
Speaker Change: Regarding Terrace, we continue to take a proactive approach to supply chain management. Through our in-house capabilities, strategic sourcing, and diverse supplier relationships, we've managed direct cost impacts to date.
Speaker Change: While we continuously monitor and adjust the market conditions, our business model positions as well to navigate the current environment.
Speaker Change: I'll now hand the call over to Austin to cover our financial results in more detail.
Austin Harbour: Thanks, lad. And the first quarter revenues were 600 million as compared with 455 million in the fourth quarter. We generated 130 million of adjusted EBITDA with an adjusted EBITDA margin of 22% compared with 71 million in the fourth quarter or 16% of revenue.
Austin Harbour: Top line and margins improved on increased activity levels, higher efficiencies and cost control in the stimulation services segment and higher sales volumes in our propant production segment.
Austin Harbour: Free Cash Flow was a net use of cash of approximately 14 million in the first quarter, a decline of approximately 68 million versus the fourth quarter, driven primarily by investments in working capital, as we scaled our activity levels in Frank and Sand, while also effectively balancing liquidity and debt service.
Austin Harbour: Turning to our segments, stimulation services revenues were $525 million in the first quarter versus $384 million in the fourth quarter with both fleet count and efficiency driving the increase in the quarter.
Austin Harbour: Adjusted EBITDA in Q1 was 105 million versus 54 million in Q4, with margins coming in at 20% versus 14% respectively.
Austin Harbour: This segment was impacted by approximately 8 million in shortfall expense related to our supply agreement with flow tech compared to 9 million in the prior quarter.
Austin Harbour: Approximately 63% of volumes were sold to third party customers during the first quarter versus 73% in Q4.
Austin Harbour: Adjusted EBITDA for the profit production segment was 18 million for the first quarter versus 14 million in Q4.
Austin Harbour: While we grew volumes of revenues in the quarter, on a margin basis, even on margins came in at 27% in the first quarter versus 31% in Q4, with the dip largely attributable to ramp up costs to increase throughput at the mines.
Austin Harbour: Our manufacturing segment generated first quarter revenues of $66 million, up 6% sequentially. Approximately 87% of segment revenues were generated via inter-company sales. Adjusted even off for the manufacturing segment, improved to approximately $4 million in Q1.
Austin Harbour: Selling General and Administrative Expenses, were 54 million in the first quarter, up from 48 million in the fourth quarter driven by increased labor costs.
Austin Harbour: Cash Capital expenditures decreased to 53 million in the first quarter from 63 million in the fourth quarter, as expenditures were front loaded in Q4 to reactivate fleets.
Austin Harbour: This is exactly what our newly formed asset management platform is all about.
Austin Harbour: maintaining our active equipment to the highest standards while also positioning our ready line of equipment and alignment with market dynamics and growth expectations while keeping a firm grip on costs through the cycle.
Austin Harbour: At this time, we want to make clear that we have the ability to respond very rapidly and compose or otherwise reduce capital expenditures by 70 to 100 million.
Austin Harbour: Total cash and cash equivalence as of March 31st, 2025, were approximately 16 million, including approximately 7 million attributable to flow tax.
Austin Harbour: Total liquidity at quarter-end was approximately $76 million, including $66 million available under the AVL. Barring's under the AVL credit facility ended at quarter at $205 million, up approximately $65 million from the prior quarter.
Austin Harbour: At March 31, we had approximately 1.15 billion of debt outstanding with the majority not due until 2029.
Speaker Change: We repaid approximately 43 million of long-term debt in the first quarter and intend to continue to use free cash flow and future periods to de-leverage. To close out, I'll provide some additional detail on the transaction with flow tech that Matt and Lad highlighted earlier.
Speaker Change: An exchange for the conveyance of digitally enhanced mobile natural gas conditioning and distribution units.
Speaker Change: which will provide us with increased exposure to flow tech equity, as well as an offset of outstanding 2024 order shortfall payments and a mechanism to offset potential future order shortfall payments.
Speaker Change: related to Profrac's chemical supply agreement with flow tech. Further, Profrac issued a $40 million seller note. The note is a five-year non-amortizing note with a 10% interest rate.
Speaker Change: That concludes our prepared remarks. Operator, please open the line for questions.
Speaker Change: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue.
Speaker Change: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the
Speaker Change: We do ask you to please them yourself to one question and one follow up. Again, that is star one to register a question at this time.
Speaker Change: Today's first question is coming from Dan Kutz of Morgan Stanley . Please go ahead.
Hey, thanks. Good morning, guys.
John .
So I
I appreciate that it's a really-
Gif Colt Reim, Um...
Speaker Change: and there's a ton of uncertainty, and we appreciate the kind of directional recolor that you guys share in the press release for some of the puts and takes in the prop and segment and in the STEM services segment, I guess.
Speaker Change: Is there anything more specific that you could share with us on the second quarter outlook, you know, however you guys would like to frame it, I'm looking at
Consensus has
Speaker Change: Revenues and EBITDA on a consolidated basis down around 10% for you guys. Is that in the ballpark? Based on, you know, what you know now. Yeah, just just any any amount of color you could share on the second quarter would be awesome. Thank you.
Good morning and thanks for your question.
Speaker Change: We continue to evaluate the market and the situation. I think it's on a customer-by-customer basis.
Um, um,
Speaker Change: There is going to be some pullback in Q2, but to what degree we're not exactly sure at this point. We've got a lot of momentum and are positioned incredibly well for this year and continue to take care of our customers.
Speaker Change: We're still gaining ground on bundling and including sand and logistics with each bar active fleets but
Speaker Change: You know, the uncertainty and the visibility that we're getting from, especially the West Texas customers is, you know, it's, it's on a customer by customer basis. So we're still watching it close.
I hope to have some further colors soon.
Speaker Change: Yeah, fair enough, and completely understand and appreciate that. Maybe just on your electric frack assets, could you remind us whether it's in horsepower or number of fleets how much capacity you have deployed, and I guess, appreciating that those kind of have some of the most robust.
Contracting Terms, and would be, you know...
Speaker Change: for those. Is it, you know, still a couple of years or is there, kind of, but...
Speaker Change: A period where a lot of those electric pleas roll off of contracts, sometimes in the near future just anything you could share
on the Deployee Frack, Fleetwood would be really helpful. Thanks.
Speaker Change: As far as our fuel efficient fleets across the board, there's still tremendous demand for all of them.
Speaker Change: and that remains, you know, one of the focal points with our customer retention and focus is, you know, look, there's a lot of demand for those. They're easy to market, easy to sell, and easy to give work any time.
Speaker Change: Great, thanks. And sorry, there's like eight or nine or is that the right ballpark of how many electric
Deployed.
Speaker Change: So there's seven in total got it but we've got we've got a couple of them that are
Speaker Change: You know, you can got it as far as the horse power on horse power and be the equivalent time.
Speaker Change: Got it. Understood. Really helpful. Thanks, one. I'll turn it back.
Speaker Change: Thank you. The next question is coming from John Daniel of Daniel Energy Partners. Please go ahead.
Hey guys. Thanks for having me.
Speaker Change: Mattos, you know, goofing off looking at LinkedIn, and I saw all of you guys had two fleets, flea keen 35 that seemingly crushed it with in terms of hours pumped.
Speaker Change: Can you say if those wells were done in April and if so, like how that compares to the performance in Q1 and then the second question is just...
Speaker Change: You know, what have you done differently recently to sort of allow you to hit those types of numbers?
Speaker Change: I'll touch on this briefly and hand it off the lead. Most of those pads started in Q1.
You know, how much of that is Q2 or April ?
and how much she won. You know, I don't have...
Speaker Change: I don't have that information right about your tips, but, you know, really, we continue to see...
Speaker Change: Standard processes, permaintments, or asset quality, and more importantly, the standardization of our fleets or equipment, our parks and components.
Speaker Change: Standardizing this equipment makes it easier for training, makes your maintenance procedures more reliable and consistent from basin to basin, and it also means that every time a fleet rolls on the location. Thank you.
Speaker Change: that there's no question that that's Profrac's standard of the highest quality, highest efficiency and that customers know exactly what they're getting every single time. It also allows us to control our throughput, our costs.
Speaker Change: and to manage our inventory to much very degree. And I think that's one of the things that we saw in Q1. We deployed six pleads.
Speaker Change: and saw a reduction in and cost associated with our per fleet on per fleet bases.
Speaker Change: As we move forward, we expect to see, we're not deploying six fleets in Q2, so we expect the operating leverage and the impact to our cost structure to improve without the burden of deploying six fleets.
Yeah, John , you know Matt said that he's going to...
John Daniel: say a couple of comments and hand it off to me, but he really said it. That's that management is what's all about. And we're just so proud of our team, our guys out in the field. We have the best in the business and. And.
what they continue to do, and just the...
John Daniel: The work that they're performing for our customers, we couldn't be happier .
John Daniel: But it's really about asset management and we're still in the early innings of that as we work through more and more of our equipment and run it through the asset management program. We feel like we're going to continue to see those results with with. [inaudible]
John Daniel: Morpheus, and then it's an exciting, exciting time and we think that we're going to see even improvement on that so as we go forward.
That's a great site.
Speaker Change: And just a sort of a basic and probably a dumb question, but I'll ask it anyways. Q4 seasonality typically has been a sort of a pain on the industry, but you guys have a good presence in the Marcellus and Hainesville. Can you remind me what you saw Q4 versus Q3 and 24 high level, of course, and then. Q4 seasonality, but you guys have a good presence in the Marcellus and Hainesville.
John Daniel: What would you expect for this year? All lost and equal.
for just those areas.
John Daniel: Yes, I mean, there's always seen anality in Q4, what we're watching closely this year with
A Stronger Gas [inaudible]
You know, uh, you know.
John Daniel: a stronger gas price going forward and a supply and demand. Fundamentally, we've got a much stronger gas market and so.
John Daniel: Last year, going from Q3 to Q4, there was a pretty good slowdown, and now with all this tariff stuff, most of this stuff is isolated to West Texas.
John Daniel: Right, as we look at the gas pockets, even South Texas, the Hainesville, the Northeast.
John Daniel: We're watching real close to see what kind of activity ramps that we see in the full back half of this year.
John Daniel: I think the seasonal down, the seasonal slowdown in Q4 is likely to be muted, but we continue to mop it to wash and monitor that closely.
John Daniel: The number of in-bounds and conversations we've had with customers about their plans. It's all in the back half of the year, and so far we're not seeing any indication that they're going to be slowing down in Q4.
Okay.
So I got thanks for that.
Speaker Change: Another thing I would say with Q2 and all this tariffs.
Speaker Change: You know, nonsense that's going on. You know, it's, it's a forcing in this as being a West Texas thing. It's not really as prevalent and anywhere else.
Speaker Change: But with that being said, the type of slowdown we saw in Q4 from Q3, you know, we're not seeing
You know, this tariff
Speaker Change: You know, what's going on with tariffs and the uncertainty and the impact of the business? We don't see this this so
Speaker Change: Being as material as the type of slowdown you see from seasonality, from Q3 to Q4 of last year.
Speaker Change: So hopefully that kind of gives some context into kind of what we're seeing in the near term, but we also believe that this should be pretty short lived.
Craig, thank you for having me.
David, thank you.
Speaker Change: Once again, ladies and gentlemen, that is star one, if you would like to register a question at this time.
Speaker Change: Our next question is coming from Alex, she will offer a steeple, please go ahead.
Alex Schiebelhofer: Hi, thanks, and good morning, everyone, and thanks for taking my question.
Speaker Change: I just want to follow up on your comments there, regarding, uh...
Speaker Change: Maybe the pricing dynamics in the Hainesville versus West Texas and just kind of the balancing effect that you might see coming out of the Hainesville versus maybe some softness in West Texas.
Speaker Change: Yeah, I mean, each of these, each of these markets are pretty isolated from a pricing standpoint.
Our focus is making sure that we've got the
Speaker Change: You know, the best value for our customers and finding that right spot to, you know, to balance out the right volumes for operating leverage as well as, you know, get the right price from an ASB standpoint for us. I think there's
Speaker Change: The huge opportunity for us in the Hainesville of getting that balance right, you know, we've
Big lab.
You know, we've recently opened up [inaudible]
Speaker Change: The Damped Product at all three of our minds, increasing damp volumes to 13 million tons a year.
Speaker Change: of availability. And I think that that damn market has become a, these aren't mobile minds. These are fixed infrastructure, permanent minds.
Speaker Change: You know, that, that basin is a little bit different than what you see with these mobile minis and some of these other basins, but in the hands of every, every damp sand provider as a. Thank you.
Speaker Change: a fixed infrastructure mine, and they've been relatively successful on growing that damp damp market. And, you know, we've we've got 13 million tons and are the single largest producer of damp and dry.
Speaker Change: and as well as redundancy so that there's no interruption on their end for any reason.
Speaker Change: I'm excited to be to be actually really pursuing that side of it and hope to be updating you guys with some positive news going forward.
Speaker Change: in South Texas. South Texas has always been a pretty robust market. They're still reeling sand in.
Speaker Change: And so, you know, anytime you see a market that's that's still rail sand and
Speaker Change: You know, it provides a pretty good backdrop and really capturing just how strong the demand is in that market. If demand exceeds near time or local supply.
Speaker Change: You know, he gives you a lot of drones to sell into attractive pricing and then also to build those partnerships because...
Speaker Change: We've got a lot of capacity down there. It gives us the opportunity to go in and really deliver phenomenal operating results and we've seen our production at our South Texas mine.
Speaker Change: You know, continue to improve, put up record, record production and
Speaker Change: in March and you know it continues to get better and April was better than March and then in May or run race or or um
Speaker Change: It's substantially better than what we saw even in April . So we're really excited about what we're doing in South Texas. Again, you know this, this, the uncertainty around the straight war and the tariffs and its impact on activity levels and in the Permian. Thank you.
Speaker Change: We do expect it to impact some of our volumes out there but continue to find a market, find a spot for that so that we can focus on growing those volumes and benefiting from the operating leverage of diluting fixed costs.
Speaker Change: and so, hope that provides a little bit of color on how to think about it, but...
Speaker Change: South Texas and East Texas, or we expect big things from them and then navigating through a challenging market in West Texas.
Speaker Change: Yeah, I think I think to summarize maybe a little bit favorable makeshift.
Speaker Change: from a relative perspective, from West Texas to South Texas and East Texas, North Louisiana. In addition to that, we're going to see increased volumes that include logistics and storage as well, as we move into Q2 and then into the back half of the year we think.
So that's what's really driving those differences.
Austin Harbour: Yeah, thanks Austin, the logistics and storage piece, and combining that with the, you know, sand volumes.
Austin Harbour: provides a lot of flexibility in how you manage your customer or your backlog and maintain reliable conflicting service to your customers.
Austin Harbour: These assets, you have issues here and there, but being able to control and manage the logistics especially when you've got multiple assets nearby ensures that your service quality is top notch and that every ton shows up on time every ton.
Speaker Change: Got it. Got to appreciate the excellent color there. That's all for me actually, so I'll turn it back. Thanks again.
Thank you. Thanks.
Thank you.
Speaker Change: Thanks, everybody. We appreciate your participation today while market dynamics present some near-term uncertainty, our vertically integrated model in-house capabilities and strategic asset position, positioned us uniquely to navigate current conditions. Our leverage to both oil and natural gas markets coupled with our operational flexibility and innovative solutions enables us to adapt while maintaining readiness for market improvements.
We look forward to connecting our second quarter call.
Thank you.
Speaker Change: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.