Lower frac spreads bring lower profit: Quarter-over-quarter, ProFrac Holding’s (ACDC) revenues decreased by 17.3% in Q2, while its adjusted EBITDA shrank by 26%. Lower active frac spread count and associated sales led to a revenue decline in Q2. It does not expect to reactivate new frac spreads before 2024. It also plans to lower its cost structures. The benefits of the cost reductions on the margin would reflect in Q3.
Lower capex for 2H 2023: ProFrac will lower its capex in 2H 2023 to maintain its target return thresholds on capital investments. This means it will defer its fleet upgrade program, including Tier 4 upgrades and electric fleet deployments. Read more about this in our recent article here.
Cash flow rises, and debt falls: Excluding the acquisitions, the company’s year-over-year free cash flow improved tremendously following a substantial increase in cash flow from operations. It also reduced gross debt by $85.6 million in Q2 from Q1.
Thanks for reading the ACDC take three, designed to give you three critical takeaways from ACDC’s earnings report. Soon we will present a second update on ACDC earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
