ProFrac Holding: Q4 TAKE THREE

ProFrac’s (ACDC) Stimulation Services and Proppant production segments experienced a lean performance in Q4 as completion activity and frac efficiencies took a hit. However, the situation has begun to turn around, as early indications show in Q1 2025. The company’s management is optimistic of a recovery as it launched a power generation solution venture in Q4.

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Improved Expectations for 2025 : In 2025, ProFrac (ACDC) expects hydraulic fracturing activity to witness a “flattish to modestly improving market.” The Proppant Production segment, which was severely hit in Q4, can see a much better result due to improved operating efficiencies and increased opportunities. In Q4, the company’s hydraulic fracturing efficiency suffered. But early 2025, efficiency appears to have recovered rapidly, and pricing stabilized, which would allow the company to return frac spreads to services.

ACDC’s revenues and profitability can improve in the Stimulation Services and Proppant Production segments in Q1 2025. Also, in Q4, ACDC launched Livewire Power to cater to power generation solutions in remote locations, following its advances in electric frac technology. An increased demand for power can open up opportunities for pricing improvement.

Segment Performance In Q4: From Q3 to Q4, ACDC's revenues from the Stimulation Services and Proppant production saw steep declines (24% and 12% down, respectively), while its revenues from Manufacturing remained nearly unchanged. Quarter-over-quarter, the company's adjusted EBITDA margin contracted by 790 basis points in Q4. The adverse impact of seasonality on weather, the year-end budget exhaustion, and pricing pressure resulted in the topline and margin pressure in Q4. Read more about ACDC in our recent article here .

Cash Flows Fell In FY2024 : The company's free cash flow declined by 61% in FY2024 over a year ago due to a substantial cash flow from operations decline. In FY2024, its capex also fell. Its projected growth capex for FY2024 is $100-$125 million, which it plans to spend on frac fleet upgrades, investments in next-generation technologies, and sand mine improvements.

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.

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