EBITDA Margin Recovered In Q1, Can Grow Further: Quarter-over-quarter, ProFrac Holding’s (ACDC) revenues increased by 19% in Q1 2024, while its adjusted EBITDA margin inflated by 510 basis points. Increased activity level positively impacted utilization and increased its topline. On top of higher efficiency, lower costs caused the EBITDA margin to improve in Q1. ACDC expects profitability per fleet to improve in the  Stimulation Services segment as pricing stabilizes. It also expects volume to increase in the Proppant Production segment.

Segment Performance In Q1: From Q4 2023 to Q1 2024, ACDC’s revenues from the Manufacturing and Stimulation services segments improved (28% up, respectively), while its revenue from Proppant Production (16% down) fell. The adjusted EBITDA margins moved in tandem with the revenue growth in these segments. Read more about ACDC in our recent article here.

Cash Flows Fell But Capex Guidance Unchanged: The company’s year-over-year free cash flow decreased significantly in Q1 2024 following a substantial cash flow from operations decline. In Q1, it spent $60 million on capex because of fleet deployments, upgrades, and mine optimization. Its capex plans for FY2024 remain unchanged from the previous quarter (34% lower than FY2023 capex), which will be primarily spent on mine improvements and frac fleet upgrades.

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.