Q3 2025 ProFrac Holding Corp Earnings Call
More information on how to access the replay is included in the company's earnings release. Please note that information reported on this call speaks only as of today, November 10, 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 reading.
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 views of profrac 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 statements.
The Listener or reader is encouraged to read ProForm 10K 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 onto the SEC filings 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 flowtech.
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 at sec.gov and on the company's website.
And now, I would like to turn the call over to ProFrac.
Thanks, Michael, and good morning, everyone. I'll kick things off with some brief comments, then hand it to Ladd to dive into segments, performance, and often will follow with our Q3 financials.
Q3 began with modest market improvements. We highlighted this during our August earnings call, where we noted that conditions had stabilized compared to our Q2 exit levels.
With some crews returning to work mid-quarter during August, we experienced sequential improvement in both activity levels and pump hours as customer programs continue to materialize.
However, September witnessed the sharp deterioration, as customers implemented program, deferrals, resulting in increased calendar, white space.
this volatility reflects the broader challenges facing the US onshore completions Market where operators continue to exhibit cautious Capital deployment
Through the cycle.
We are prioritizing dedicated fleets paired with operators, conducting more robust, less volatile programs.
Moreover, we are optimizing our cost structure with a focus on operational and capital efficiency.
In addition to A Renewed focus on efficiency, the company is identified initial cogs.
SDNA and capital expenditure savings of $100 million at the midpoint on an annualized basis by the end of the second quarter 2026.
The savings are comprised of $35 million to $45 million, driven by both COGS and SG&A labor reductions that have already been implemented.
An additional $30 to $40 million identified across non-labor items.
In addition to $20 to $30 million of reduced CapEx, primarily driven by optimizing the utilization of active assets,
the company believes that this is the first step in its business optimization plan and that additional savings are possible.
Turning briefly to Q4, we have not experienced further, calendar, deterioration.
With improved activity in October versus our Q3 exit. In fact,
We saw certain programs that had been deferred from September returned to the calendar. In addition to deploying assets under a new contract with a large operator.
Although we typically witnessed
We typically witness Q4 seasonality, we are proactively implementing measures to mitigate the impact.
Zooming out.
We Believe maintenance Drilling and completion activity is below necessary levels to sustain flat shell production in US land. Consequently, assuming the macroeconomic backdrop is supportive. We expect Global Supply imbalances to normalize in 2026 as operators will need to gradually accelerate completion activity to overcome natural production decline.
The natural gas sectors. Outlook remains favorable driven by expanding LNG, export capacity, and Rising power demand.
Both factors.
That should support improved completions fundamentals in 2026.
As such we continue to believe that hydraulic fracturing market dynamics. Create a compelling setup for the future with industry-wide sustained, Capital discipline, increased equipment attrition and more disciplined to new equipment additions we see the potential for Meaningful Supply, demand tightening, should Drilling and completion activity, accelerate.
I'd like to thank our employees for their continued, hard work and focus as we position the company for Success Through the cycle.
Against current market conditions, we are controlling what we can control by executing a comprehensive cost management strategy that positions ProFrac for both near-term operational flexibility and long-term value creation. In October, we completed a thorough review of our labor costs across COGS and SG&A and executed a headcount reduction. We believe that this initiative right-sizes our business for near and medium-term demand and estimate $35 to $45 million of annualized savings.
Additionally, we have identified $30 to $40 million of non-labor expenses, with a streamlined focus on non-labor operating expenses.
We're improving the cost profile of our fleets. With stricter enforcement of our centralized control of equipment through our asset management program.
Which will reduce maintenance performed at districts. Additionally,
we are optimizing the mix of equipment assigned to each Fleet further limit non-productive time, mitigating interruptions to field operations.
We are confident that these actions will also improve the efficiency and effectiveness of our maintenance capital and capital expenditures, where we have identified $20 to $30 million of additional cash savings.
In August, we completed an equity offering that netted us nearly 80 million. In proceeds, we deployed a portion of these funds to pay down the abl
And for General Corporate purposes, including working capital.
We are also being thoughtful and deliberate in how we use the levers at our disposal from the Innovative transaction. We entered into with flowtech in April.
As a reminder, this strategic partnership involves the cell lease back of our mobile power generation solutions for 105 million in total consideration structure.
To provide both immediate liquidity and long-term value participation.
Sectors.
Now we're strategically utilizing the financial flexibility. This partnership provides specifically. On Friday, November 7th, we completed the sales of the Forty million dollar seller, note that formed part of the original consideration structure.
As we noted when announcing the original transaction, the deal represented an evolutionary step forward in our business relationship with Flowtech.
And these current actions allow us to realize value from the Strategic partnership while maintaining our collaborative relationship and ongoing lease Arrangements.
We remain very excited about our continued. Exposure to the gas, conditioning and power generation, markets through our flowtech ownership.
Beyond Flowtech, we are also planning to proceed with our previously announced senior secured notes program, which we established in the second quarter as part of our strategic liquidity enhancement initiative.
As a reminder, in June, we successfully executed a series of transactions expected to provide approximately $60 million in incremental liquidity through 2025.
Including an initial 20 million issuance.
Of additional 2029 senior notes.
Completed in Q2 and commitments for 2 additional 20 million dollar tanches at our discretion.
We deferred the September tranche to December and now anticipate closing the remaining $40 million in December.
Lastly, we are currently pursuing up to an additional 40 million of capital in the form of new notes.
In total to complete it and planned Capital raises could provide as much as 200 million in cash while market conditions, remain volatile. We believe these proactive measures coupled with our cost-savings initiatives, demonstrate our commitment to maintaining Financial flexibility and building a resilient platform.
Looking ahead, we maintain incremental flexibility to access additional sources of capital and response to evolving market conditions. However, however I want to be clear
that as we execute our business optimization and cost management initiatives, I believe that the potential need for additional Capital will diminish or become unnecessary.
Beyond these Financial initiatives. It's important to highlight that our vertically integrated platform and Technology leadership. Continue setting propri apart controllable factors that strengthen our competitive position regardless of market conditions.
Our vertically integrated platform remains a fundamental Advantage. Combining sophisticated Asset Management within the house. Manufacturing capabilities, that deliver both strategic flexibility and cost benefits.
These unique attributes position us to capitalize on market recovery while maintaining our strong position in dual fuel and electric fracturing capabilities technologies that garner the highest demand.
Our technology leadership through ProPilot 2.0 and our strategic partnership with Seismos, announced during the quarter, continues to deliver measurable outcomes.
During these challenging environments, propilot 2.0 is providing its value. As a cost optimization tool, for example, realizing fuel economy, improvements as high as 26%.
Our size, most collaboration introduces closed-loop fracturing capabilities that represent the next evolution in completion solutions.
Flag will provide more detail on how these technological differentiators are driving improvements across our operations.
In Q3 we generated revenues of 403 million adjusted, evida 41 million, and pre-cast flow of negative -29 million. This Compares with revenues of 502 million adjusted ebit of 79 million, and pre-cast flow of 54 million in Q2
These results reflect the volatile Market. We experienced during the quarter.
In summary, we are adjusting our strategy to build a sustainable resilient business model poised to perform through the cycle.
We are prioritizing dedicated fleets paired with operators, conducting more robust, less volatile programs resulting in higher efficiency and improved control over our operations.
Our proactive execution of a comprehensive cost and Capital Management strategy positions profrac for both near-term. Operational flexibility and long-term value Creation with a 100 million of structure. Structural cash savings identified across operating and capital expenditures.
We have raised or planned to raise up to approximately $200 million of incremental capital.
Raised nearly $80 million of net proceeds related to the equity offering in August.
Executed on the sale of the 40 million dollar flotex seller note sale at par to a Wilks affiliate.
Million-dollar balance of the $60 million total commitment of senior secured notes to CSG and Wilks affiliates.
Pursuing capital in the form of incremental debt Target targeting up to 40 million.
Upon full realization of our cost management initiatives, we believe we have built a full-cycle model, reducing or eliminating the need for further capital raises.
we maintain selective Fleet utilization and customer focus, driving higher efficiency and improve that, that allocation
and finally,
we remain confident that market dynamics. May create a compelling setup for the future. Including
Maintenance drilling and completion activity is below necessary levels to sustain flat shell production in U.S. land.
Natural gas, sectors, outlook remains favorable, driven by expanding LNG export capacity and rising power demand.
In hydraulic fracturing sustained. Capital discipline, natural attrition and limited new equipment, editions could result in Supply demand tightening.
When fully realized, our costs and capital management measures should deliver much of what we would hope for from a market recovery.
Now, I'll hand the call over to Lad.
Thank you, Matt, and good morning everyone.
I'll provide more granular detail on several themes. Matt touched on starting with our operational performance during the quarter.
But first, I'd like to join Matt and thanking our employees. Their dedication and teamwork, are what? Keep us moving forward.
Instead Services, we experienced the market dynamics, M described with 23, presenting a tail, a very different period that drove operational challenges.
As noted, we entered Q3 with modest market improvements. We highlighted this during our August earnings call. July represented what we believed to be the trial period.
August built on this foundation, delivering solid sequential improvement in both activity levels, as some operators resumed executing on their completion schedules.
We saw increases in activity that reinforced their views that market conditions were stabilizing.
however,
September presented us with some surprising headwinds.
What has appeared to be strengthening calendar, coming into the month. Deteriorated as customers implemented, project, delays, and deferrals.
What mid-September acutely difficult was the nature of the activity disruption.
Unlike a gradual decline that allows for systemic cost adjustments. We experienced several head fakes programs that were delayed with minimal. Notice
This creates substantial operational inefficiencies as we carry semi-variable costs.
The pricing environment during the quarter reflected more customer and GE geographic mix, along with broader market pressures, with revenue per pump declining temporarily into the end of Q3.
Combined with activity volatility. This created a meaningful margin compression in the quarter.
From a fleet deployment perspective, we maintained our selective approach.
With an average fleet count in the 20s.
Though effective, utilization was impacted by whites, space issues. Just mentioned in September.
Looking ahead to Q4.
We're encouraged by signs of stabilization. We observed in October with some of the activity that was deferred in September returning to the calendar.
Additionally, we executed on a contract for multiple fleets with a large operator that kicked off in early October.
In parallel, we have continued to evaluate and Implement operational adjustments across certain Fields And as administrative functions to optimize our cost structure.
Turn to our profit production segment.
Alpine Silica delivered somewhat resilient performance, despite the market conditions affecting our Stimulation Services business.
Q3 revenues for Alpine remain essentially flat compared to Q2, with volume relatively stable during the quarter.
This demonstrates, the value of our Diversified customer base, and our ability to serve third-party customers beyond our internal operations.
However, we did experience margin compression during the quarter.
Primarily a result of a shift in volume from South Texas to the highly competitive West, Texas Market.
Looking ahead, we maintain a strong Market position in the hanesville region.
Where we've anticipated eventual increased natural gas activity will drive improved performance.
Further our throughput Improvement initiatives in South Texas continued progressing.
Establishing us well to capitalize on ego for demand.
Texas has seen improved volumes in demand, although pricing remains competitive.
in Q4, we anticipate an improvement in results that we remain cautious, giving current market conditions,
Turning now to Capital, allocation.
based on the deterioration in market conditions, we experienced in Lake, Q3
We're again demonstrating the flexibility provided by our comprehensive Asset Management program.
We now expect Capital expenditures to be 160 to 190 million for 2025.
Representing an approximately 25 million reduction at the midpoint from our, previous guidance of 175 to 225 million.
this reduction reflects both the reality of current activity levels and our commitment to maintaining Financial discipline,
our asset management platform enables. These reductions while ensuring we maintain our competitive positioning and Equipment, reliability standards.
This flexible approach to capital deployment, our ability to scale spending up or down based on market conditions while preserving our technological advantages, continues to be a key differentiator in managing through volatile market cycles.
Now, I want to expand on the operational and technological differentiators that Matt mentioned.
These are the detailed execution elements that truly set us apart.
Our asset management program continues generating strong results with our integrated approach to fleet deployment and maintenance optimization, proving incredibly valuable.
Equipment reliability and performance metrics remain at elevated levels despite increased operational demands.
Directly attributable to the quality of our people coupled with proprietary automation systems.
Our manufacturing platform provides substantial cost advantages across fleet construction, legacy equipment, upgrades, and asset standardization, all at costs below the third-party alternatives.
This internal kit cap capability ensures quality control and deployment flexibility while maintaining our competitive mode.
Technology leadership, drives sustainable competitive advantages through assets, such as our Pro pilot automation platform.
Pro pilot 2.0 is proving its value as a cost optimization tool, delivering reductions in labor requirements and maintenance expenses. Through intelligent automation,
The platform's predicted capabilities optimize maintenance intervals and enable more efficient preventive maintenance.
We're also excited about our strategic partnership with seismos announced in August which introduces closed loop fracturing capabilities across all major US basins.
This collaboration represents the next evolution of our technology leadership, combining prop Pilots, proven surface automation with seismos.
Advanced subsurface intelligence to deliver unprecedented operational control and performance optimization.
The partnership offers 2 deployment models.
Supervised mode enables real-time decision-making through continuous subsurface data streams, allowing engineers to optimize stage designs and fluid placement while operations are active.
While unsupervised mode provides fully automated execution based on predefined parameters.
Reducing overhead and increasing operational consistency.
This technology stack integration is designed to scale across our entire fleet.
Preparing us to serve, super majors and leading Independents with measurable performance improvements.
Importantly, seismos acts as an independent auditor for downhole performance.
Allowing for dynamic completion design, and predefined intervention measures to improve well performance.
This partnership, reinforces our dedication to bring customers the most advanced fracturing technology available while maintaining a Competitive Edge through innovation.
I will now hand the call over to Austin to cover our financial results in more detail.
Thank you, lad.
And the third quarter revenues were 403 million compared to 502 million. In the second quarter, we generated 41 million of adjusted, EBA with an adjusted e. But on margin of 10% compared to 79 million in the second quarter or 16% of Revenue. Free cash flow was -29 million in the third quarter versus 54 million in the second quarter.
Well, the third quarter presented challenges, we've taken decisive actions to build a resilient platform poised to perform through the cycle.
As Matt outlined, we have adjusted our strategy to prioritize dedicated fleets paired with customers. That provide the more stable programs in concert, we are implementing comprehensive cost and Capital Saving initiatives, which we believe will result in 100 million of annualized. Cash savings by the end of the second quarter of 2026,
And October, we completed a thorough review of our labor costs across cogs and sgna and executed. A headcount reduction, we believe this initiative right sizes, our business to align with our revised commercial and operating strategies ultimately we estimate 35 to 45 million of annualized savings.
Additionally, we have identified 30 to 40 million of cogs, and sgna non-labor expenses with a streamlined focus on non-labor operating expenses. We are improving the cost profile of our Fleet. With stricter enforcement of our centralized streamlined control of equipment through our asset management program, which will reduce maintenance performed at districts.
Lastly, we are optimizing the mix of equipment assigned to each Fleet to further limit non-productive times, mitigating interruptions to field operations. We are confident that these actions will also approve the efficiency and effectiveness of our maintenance Capital expenditures where we have identified 20 to 30 million of additional cash savings.
Of note, the company believes that this is the first step in its business optimization and that additional savings are possible. We look forward to providing updates on our progress in the future.
In addition to cash savings initiatives, we have executed on or our targeting Capital, raises that can generate up to 200 million key, components include the sale of our 40 million flow. Check seller note, which closed last week
Our plan to issue the remaining 40 million of incremental senior secured notes in mid December.
Our active process is targeting up to an additional $40 million in incremental debt.
79 million of proceeds from the equity offering in mid Q3.
Additionally, we are actively pursuing other sources of capital in the form of non-coed asset sales.
Importantly, upon full realization of our cost management initiatives, we believe we will have built a full cycle model, reducing or eliminating the need for further capital raises.
Turning back to our Q3 performance in our segments, Stimulation Services revenues declined to $343 million in the third quarter from $432 million in the second quarter, primarily due to a reduced fleet count and increased whitespaces adjusted. Even-off fell to $20 million from $51 million in Q2, with margins of 6% versus 12% in the prior quarter.
Operational disruptions created by frequent or sudden changes in customer scheduling resulted in unabsorbed costs and compressed our margins. Additionally, this segment incurred shortfall expenses of $9 million related to our supply agreement with Flowtech, up from the previous quarter.
Our profit production segment generated $76 million in revenues in the third quarter, effectively flat from $78 million in Q2. Approximately 44% of volume was sold to third-party customers during the third quarter versus 48% in Q2.
Adjusted ibid do for the prophet production. Segment was 8 million for the third quarter versus 15 million in Q2 and even on margins were 10% in the third quarter versus 19% in Q2.
The decline in margins during the quarter reflected customer and geographic mix shifts, as well as a slow start to the quarter resulting in lower operating leverage.
Our focus on operational excellence at Alpine, including throughput improvements and quality enhancements. As well as our exposure to Natural Gas regions, including the hanesville and South Texas.
Set us up nicely to capture margin expansion when market activity increases.
Our manufacturing segment generated third quarter, revenues of 48 million versus 56 million in Q2, approximately 82% of segments revenues were generated via intercompany sales compared with 78% in Q2.
Segment, adjusted evidence, $4 million compared with $7 million in Q2.
The decline in segment results reflects decreased volumes of products sold to intercompany customers.
Selling, General and Administrative expenses were $43 million in the third quarter, improving by 17% from $51 million in Q2. This reduction demonstrates our commitment to managing our overhead structure in line with business activity levels, without sacrificing our ability to invest in strategic initiatives.
Decreased to 38 million in the third quarter from 43 million in the second quarter. We now expect capital expenditures to be $160 to $190 million for 2025, representing a further reduction from our previous guidance of $175 to $225 million.
this adjustment reflects both activity levels and our commitment to maintaining Financial discipline,
our asset management platform enables. These reductions while ensuring we maintain our competitive positioning and Equipment, reliability standards.
Total cash and cash equivalents, as of September 30th, 2025 were approximately 58 million including approximately 5 million attributable to flowtech.
Total liquidity at quarter end was approximately 95 million including 41, million available under the ADL.
Borrowings under the ADL credit facility ended, the quarter in of 160 million modestly down from 164 million on June 30th and demonstrating our continued. Focus on balance sheet optimization
As mentioned earlier, we completed an equity raise in August totaling approximately $79 million that enabled us to pay down the ABL and for general corporate purposes, including working capital management.
As of September 30th, we had approximately $1.1 billion of debt outstanding, with the majority not due until 2029. We repaid $32 million of long-term debt in the quarter, as touched on earlier. We deferred the issuance of the second $20 million tranche of 2029 senior notes, moving it from Q2 from September to December. We expect the remaining $40 million to be issued in December.
Wrapping up my section, while the third quarter presented challenges stemming from customer activity adjustments, we've taken decisive actions to position propra to whether the store we are optimizing our strategy, implementing material costs and Capital Savings initiatives and building a resilient model that is poised to generate free cash flow through the cycle.
That concludes our prepared comments operator. Please open the line for questions. Thank you.
Thank you. We will now conduct 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 keys.
1 moment, please while we pull up for questions.
Thank you. Our first question is from Stephen. Gengar with Stifel.
Uh, thanks. Good morning everybody.
Good morning. I think the first question, and one of the things we hear a lot about, is just the various...
Pressure Pumpers and their and their pricing strategy in the market.
And and when we we we hear it from the some of the bigger players they complain about some others who are more aggressive on the spot pricing side. How do you approach? And I know you you talked a little bit about this in your business optimization discussion, but how do you approach the pricing side and and what do you see in the overall Market as far as, uh, the way the market is behaving right now,
Um, so it's, it's been, it's been relatively consistent. But whenever you look at spot spot spot pricing compared to, uh, longer programs, um, you know, they've they've been, you know, pretty
Pretty in line, uh, relative to each other, uh, for about the last year. But I think, I think with the availability of equipment, and as we look out into 2026,
um, you know, our approach has been to focus more on on reliable consistent programs and you know,
As we continue to fill out our entire schedule, and...
You know, our outlook on 2026, we would expect to see spot.
spot work and and its pricing to um, to start returning to
Um, historically, where would you typically see spot pricing higher than committed dedicated work?
Okay, thank you. And when, and when you...
when you talk about the, the outlook for, for the sacraments and you talk about profitability,
Maybe ticking up despite kind of a lower fleet count and softer pricing. How do we reconcile those?
Yeah, so, um, you know, we're looking at holding in at the mid $20s and.
You know, focusing on our cost controls our processes to make sure that that you know what we run into in the past is you know going and adding a bunch of fleets for q1 and then by April it rolls over. And so uh we owe more to our Workforce to maintain consistent, Fleet count, and so um, given the opportunity to ramp up and increase Fleet count, we would rather focus on using the increase in activity to build out a better book and and focus on, uh, reliable consistent work so that we can maintain our head count. Um, also maintain our equipment and better condition more reliably for for the dedicated customers that we're Focus focusing on.
Thanks delivers. Uh, you know, all of this delivers better Revenue, uh, higher revenues per Fleet and an overall lower cost structure per Fleet.
Okay. So that's sort of the step up because when you say in stimulation services that activity flash Fleet count pricing lower, but profitability higher, that's what I was trying to reconcile.
Um, I mean really you know, pricing is is uh, relatively flat. But um, we're we're seeing, we're seeing some green shoots here and their related to ancillary items and um, not not specifically, uh, horsepower rates but
Uh, when you look at the additional services, that that, you know, are built around your base horsepower. Uh, we're seeing some really positive signs there and, you know, really, it's this is utilization game, um, getting, uh, consistent customers with a reliable schedule and being able to benefit from the operating Leverage is, uh, is tremendous
Okay, thank you.
Thank you.
Our next question is from John, Daniel with Daniel Energy Partners
Hey guys, thanks for having me. Um I might violate protocol and ask a bunch of questions, so I apologize in advance. You can always kick me off but the dedicated versus spot map, that's interesting. You mentioned mid 20s today active would you be willing to share what portion of those are dedicated right now.
Let's see about 80%.
Okay.
And, um, you know, it's quickly, it's quickly shifting to where we think we'll be in the
You know, High 90s.
Um, as we roll into 2026.
when when you reference or maybe this lad reference to the the head fake um, was that on spot work and is that
Prompted this sort of reassessment.
Yeah, it was mostly on spot, but, you know, there were some, um,
You know, well, issues and things like that, that that um, that pushed pushed the schedule, you know, back a little bit. But, um, these weren't these weren't changes to programs, but it was just a delay to existing programs. So uh, we saw the stuff that pushed in September started up in October.
Right. Okay, and then eventually spot pricing should in Theory come back.
I would hazard a guess as to what type of recovery and spot pricing you would want to see.
Where you might sort of revisit the uh incremental spot mix in your in your business.
Well, you know, the main thing is, is that, you know, we're we're just not as interested in chasing. And so, I think it would have to be pretty material for us to want to go in and look at activating fleets. Um, as well as taking on, you know, taking on more employees to to cover temporary work. Um it's okay. A lot of it comes down to how reliable is a spot work and do we have the ability to fill in any white space that comes with it by finding other customers that that um, that can fill in those those you know, those gaps.
Um, okay, you know, as far as like exactly what that pricing is, um, the assumptions you have to make on utilization. Um, it's, it's...
you know, it would it would have to be
We'll revisit this at the appropriate time to see if this is something that makes sense for us to to take on the additional operational burden. Uh, the complexity that it creates for the business and and as well as the uh, the challenges it creates for your Workforce.
Okay.
2 more, I promise.
The cost savings are significant. If we have a steady state environment over the next several quarters, would you then characterize all these Cost Cuts as
Permanent if you will obvious. I mean, I know how cost can creep back if the business is ramping, but how would you
Characterize that.
Yeah, these the every, every 1 of these cuts are sustainable. Um, so we went in and we looked at um, historical levels where, you know, we had, uh, you know, you know, q1 and of each year and then also going back in and looking at 2022. You know, what was our headcount? What was our utilization on assets? And how tightly did we manage manage that? So we went back in and looked at what are the sustainable levels? Where we know that um where our cost structures should be, where should our headcount be and uh making sure that we don't come in and and bring these to a level that's that's unsustainable. We wanted to make sure that uh, that we had the right number of people on location that we didn't have extras but we didn't have too few.
um, also
going in looking at the cycle counts and the efficiency of our of our maintenance programs, on how quickly we turn assets when they do go down. Um, so that we can get them back in line and and um, you know, getting higher utilization rates and so um it's, you know, going to a a fixed number of fleets and maintaining that level um improves our ability to go through and look at every single discipline, every vertical in our business to really refine our, our cost structure and our processes. So that the equipment on location is more reliable. It's in better condition. Um, and if you take care of it on the back side, then when it's at the well, head, it performs much much better and because of the utilization you you get to dilute any any Associated costs in a much much more reliable way.
Okay, thank you. And the final 1 and I apologize. I'm sitting here at a gas station. I don't have all my data, but I I want to say it's the question is around, continuous pumping.
Diamond Back.
Reference that on its earnings calls. And I want to say they talked about a 30% efficiency gain or something to that end.
Can you talk to us about what you're seeing in terms of?
Customer interest and continuous pumping, and just elaborate on that trend and what it entails.
Um, it it it requires a lot more horsepower as you go in. And look at at how you you still have to maintain this equipment. You still have to, uh, build in maintenance windows and so you can you can do that with additional equipment so that you can cycle through banks. Uh, where at any 1 Time 1 of your banks will be in a in a, a maintenance period, while the other Banks continue pumping. So it's it's, uh, we we've seen some situations where the the, you know, the benefits outweigh the costs.
Um, but I think each operator is different in how they lay out their well inventory and how they line up their schedules. Um,
You know, there's a different solution for each operator. So we've uh,
You know, we constructively work with every one of our customers to give them the most efficient program. And, um, it really comes down to, uh, making sure we have those appropriate maintenance windows.
Okay.
Fair enough. I'll turn over. Thanks for taking all these questions.
Thank you.
Thank you. Our next question is from Dan Coats with Morgan Stanley.
Hey, thanks. Good morning.
Good morning.
I was hoping maybe someone similar line of questions the last 2, but but just focusing on the prop and production segment, um, just thinking about your outlook was hoping, maybe we could kind of unpack the comments. So, so higher volumes and throughput. But still some pricing pressure is, are you guys kind of thinking about
Flat revenues in the fourth quarter for ProFrac in production, and I guess specifically on the higher volumes.
Um, comment. Could you could you kind of unpack where that's coming from? Is it internal or external or is it
Great. If if you could, just give us if we could have a little bit deeper on those comments, thanks.
Yeah. So on on the prophet segment, we've been more exposed to the to the spot, uh, spot environment more so than than um,
You know what some of our peers have experienced. I, I think when you look at the spot environment, it's been real, relatively consistent, um, haven't really seen pricing pressures as, as much, you know, within individual markets.
Um, where we saw a reduction in ASP was more from a mix shift, as we had an increase in volumes in West Texas and a dip in volumes in South Texas.
Um, when we look at the, the South Texas, and the hanesville, and then also the hanesville market, uh, pricing is, is much stronger than what we see in West Texas. And so, as we look into Q4, we're seeing an increase in volumes in those areas where, where we see better pricing,
Um, but we also see an improvement going into 2026 where an increase in in volumes and South Texas, as well as in the hanesville will, um, have a material impact to our ASP and and the revenue for, uh, for our prop and segment.
Great, thanks, that's helpful. Um, and and then just staying with propping. Um, so the the improved sequential profitability.
Results. Um, could could you kind of quantify and in in the fourth quarter, could you help us think through?
How much of that is the early? Um, benefits of this cost out program? Or I guess even taking a step back, we appreciate all the, all the color in terms of um where the the components of the coastal program will kind of Hit the p&l and and calculate statement. But maybe could you talk through um.
Any kind of breakout of the cost out initiatives by by segment. Um, yeah. So just, you know, the how much of cost out is driving the 4q, I'll look for in 2 profit and profit in production and then maybe a little color on the segment breakdown.
Um, of the cost of initiatives. Thanks.
No, it's a great question. Um, you know, we we typically don't break out the split between between the 2 but the majority of it is on the the uh, stimulation Services business. Um, when we look at the, the prop and segment, you know, we've we've had it running pretty lean for for, you know, for for quite a while. But um, most of the
The improvement will come from operating leverage and a substantial increase in utilization, which we're already seeing.
Great, understood. And maybe if I could just make one more in, could you just talk about where.
Profs how to name plate capacity is on on the Frac side right now. Um, any any kind of attrition you're expecting? Um, and and I I think that you got, you said that, you know, the E, Frac new build has has kind of come to a
Has, has stopped or paused. Um, but I, I know that you guys were still...
Doing some Tier 4 EGB upgrades, and yeah, just wondering if you could give us a later update on where you're at.
Capacity is at, but now by technology, and you know, where you kind of see a trending over the next couple of quarters. Thanks.
Uh, certainly so, when we look at the premium fleets and um, essentially fleets that can give the best fuel economy, um, the E fleets as well as the dual fuel fleets, um, have have shown to have the highest demand and and um, and have the best opportunities to to see the highest utilizations.
Um, that that continues to be the, you know, continues to be the case.
Um however diesel pricing is uh, is is you know?
You know, the cost of diesel is pretty low right now. So the degree of the savings isn't quite what it has been in the past, but.
Um, it's it's still a huge driver for for operators as they look at at how much it costs to run a program and what what configuration they need on location. So we we continue to see that.
Um,
On our East leads, as well as our dual fuel program.
You know, especially as we roll into 2026. We're, you know, we expect to, uh, or we're already seeing it. We're seeing, um.
You know, a full uptake of of those platforms.
so, understood
All right, thanks a lot. I'll turn it back.
Thank you.
Hello, our next question is from Don Chris with Johnson.
Morning guys. Thanks for letting me in um,
Matt, I wanted to get your thoughts on the Haynesville kind of as we go into 26. I mean, obviously, there's a lot of Industry chatter on LNG and, and all the things and giving your position.
Surrounding that Basin kind of what what are customer conversations from your, your standpoint around the Haynesville as we kind of move through 26.
Um, there's a great deal of excitement we're seeing. Um, we're seeing an increase in activity. We're seeing, um,
You know, the number of players, the number of operators, uh, starting to round out, um, operators that have been... been.
Uh, you know, I've had slower programs or or or no program, um, you know, have started bringing activity back and putting plans together. Uh, the overall chatter around around the gas market is is very encouraging as as well as as, um. Well, we're just seeing a lot of of a lot more conversations and a lot more certainty to the programs and
It's uh, it's good to see. It's good to see we're we're pretty.
Pretty encouraged. Um, what we're hearing from operators and how much more sticky their programs look.
And and do you think that the timing is kind of earlier or later in the year or kind of steady ramp up through the year?
Um, it, uh, a great start to 2026. Some of that stuff's getting pulled into December, and then, um, you know, as we roll through the year, it's, uh, you know, I think what we start the year with we'll carry on throughout the year with, um, potential, uh, options.
You know, potential option to increase activity. Everybody's watching it real closely, um, to see really how it plays out. But, uh, nobody wants to ramp up and and, and grow into, you know, a head fake and so so far. What everybody's seeing they love it. They want to see more of it.
Um, but you know, I think, I think, yes, it's been a tricky commodity in previous years, so everybody's cautiously optimistic.
Hi, I appreciate that. And and my last question and and obviously um, through my coverage list, I cover flow tax fully, appreciate the opportunity set there. But have you considered peeling off a few shares there? Because overall it may help with the liquidity of flowtech in the end and and actually boost the share price. Um, just any curiosity. If, if you've explored selling any shares, just to kind of help both companies out
uh, look, we we evaluate all of our all of our assets and and, you know, we we think that flowtech is an incredible company with with uh,
Uh, huge prospects. Very excited about their data services business. And, you know, look, we...
Um, a healthy Pro Frac is a, is a healthy flow Tech and so we watched that real close um our our our caution is, you know if if you did look at that um how do you do it in a way? Where provides a book in so that, you know, we're not perceived as a um, you know, as a continued seller.
Understood. I'll turn it back. Thanks for the call, Matt.
Thank you.
Thank you. There are no further questions at this time. I'd like to hand the floor back over to Matt Wilks for any closing comments.
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