Lower Frac Spreads Reduce Revenue: Quarter-over-quarter, ProFrac Holding’s (ACDC) revenues decreased by 19% in Q3, while its adjusted EBITDA shrank by 18%. “Right-sizing” active frac spread count and lower associated sales led to a revenue decline in Q3. However, the adjusted EBITDA margin remained unchanged from Q2 to Q3. Based on increased agreements under contract terms, the company expects an increase in fleet count by Q1 2024. A more significant change is expected in its Proppant Production segment, where higher RFP (request for proposal) can improve ACDC’s utilization of mining assets.
Lower Capex For FY2023: ProFrac decided to lower its capex to maintain its target return thresholds on capital investments. In FY2023, it plans to incur ~$280 million-$290 million of capex, which would be 20% lower than FY2022. Read more about this in our recent article here.
Cash Flows Rise 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 long-term debt by 23% by September 2023 compared to FY2022.
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.
