Greetings and welcome to ProFrac's first quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Messina, Director of Finance. Thank you. Please go ahead.

Thank you, operator. Good morning, everyone. Thank you for joining us for ProFrac Holdings Corp's conference call and webcast to review our results for the first quarter and March 31st, 2025. With me today are Matt Wilks, Executive Chairman; Ladd Wilks, Chief Executive Officer; and Austin Harbour, Chief Financial Officer. Following my remarks, management will provide high-level commentary on the operational and financial highlights of the quarter before opening up the call to your questions. A replay of today's call will be available by webcast on the company's website at pfholdingscorp.com. 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, May 7th, 2025, and therefore your advice and 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's 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 ProFrac Form 10-K 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 under 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 Flotek. 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's Executive Chairman, Mr. Matt Wilks.

Thank you, Michael, and good morning to all. I'll begin with brief remarks, turn it to Ladd to elaborate on segment performance, and then Austin will run through our first quarter financials. In the first quarter, ProFrac delivered strong results that significantly exceeded consensus estimates. Compared to the fourth quarter, revenue grew 32% to $600 million, while adjusted EBITDA increased 83% to $130 million. Our results demonstrate the resilience of our differentiated business model, including in-house R&D, manufacturing and maintenance capabilities, our asset management platform, as well as integrated solutions. These differentiators underpin our ability to deliver top-tier, reliable, and safe solutions to our customers. In the first quarter, we hit yet again a new record in total pumping hours, as well as average pumping hours per fleet, as we were able to rapidly redeploy fleets and execute in the field as activity ramped up. Our asset management platform has been a critical factor underpinning our success. Through standardized designs and streamlined operations, we were able to promptly and cost-effectively maintain and upgrade our pressure-pumping fleet to deliver consistent, reliable equipment that meets rigorous safety standards and job-specific requirements. Innovation remains at the core of our business, and we are encouraged by the results of tests conducted during the first quarter on our ProPilot automation software for hydraulic fracturing. Especially unique to our technology is that ProPilot requires zero manual startup for the initial stage. You just hit play. ProPilot is a groundbreaking auto-frac platform that benefits our equipment and crews in various ways. We expect ProPilot to drastically reduce the need for human intervention by automatically recommending courses of action to adhere to job designs. By our measure, ProPilot eliminates the majority of the human decision points involved in track operations. The technology factors in the specific pumps down…

Thank you, Matt. And good morning, everyone. I'll provide more color on several themes Matt touched on as I elaborate on the segments, starting with the performance in our pressure pumping business. In the first quarter, we experienced a significant improvement in our active fleet count, with six fleets returning to service early in the period. The increase in activity was most pronounced in our Eagle Ford and Permian operations, though all active regions saw improvement. So far through the second quarter, we've experienced more resilient demand for our next-gen natural gas earning equipment than our diesel assets. As Matt discussed, the uncertain macroeconomic environment triggered by tariff announcements in early April and the OPEC production increase has prompted operators to reassess their drilling and completions activity and spending. During such periods, operators typically shift focus toward operational expenditures rather than capital investments. This often means prioritizing production from active wells over bringing new wells online. Regarding their capital expenditure programs, this may translate to deliberately limiting activity, building duds, and temporarily suspending activity on marginal assets. Since the beginning of the second quarter, a few of the programs we were on have seen delays or been paused due to the dynamics Matt laid out. This is resulting in more white space on the frac calendar and creating some inefficiencies that we're managing. The encouraging news is that D&C programs can resume quickly. In addition, the tariff-induced disruption to the industry supply chain could result in a substantial glut of imported products. As a result, activity could rebound just as rapidly as it slowed. While we're being prudent with spending amid current uncertainty, our business model and fleet are well-positioned and stand ready to capitalize on a ramp-up in completions activity. In addition, we remain optimistic about the potential upside…

Thanks, Ladd. In the first quarter, revenues were $600 million as compared with $455 million in the fourth quarter. We generated $130 million of adjusted EBITDA with an adjusted EBITDA margin of 22% compared with $71 million in the fourth quarter for 16% of revenue. Top line and margins improved on increased activity levels, higher efficiencies and cost control in the stimulation services segment, and higher sales volumes in our profit production segment. Free cash flow was a net use of cash of approximately $14 million in the first quarter, a decline of approximately $68 million versus the fourth quarter, driven primarily by investments in working capital as we scaled our activity levels in FRAC and SAND, while also effectively balancing liquidity and debt service. Turning to our segments, stimulation services revenues were $525 million in the first quarter versus $384 million in the fourth quarter, with both fleet count and efficiency driving the increase in the quarter. Adjusted EBITDA in Q1 was $105 million versus $54 million in Q4, with margins coming in at 20% versus 14%, respectively. This segment was impacted by approximately $8 million in shortfall expense related to our supply agreement with Flotek, compared to $9 million in the prior quarter. The profit production segment generated $67 million of revenue in the first quarter, compared with $47 million of revenue in the fourth quarter. The increase in revenue was primarily attributable to approximately 53% higher sales volumes in the quarter, offset partially by a slightly lower average selling price per ton. Approximately 63% of volumes were sold to third-party customers during the first quarter versus 73% in Q4. Adjusted EBITDA for the profit production segment was $18 million for the first quarter versus $14 million in Q4. While we grew volumes and revenues in the quarter…

Thank you. The floor is now open for questions. [Operator Instructions] Today's first question is coming from Dan Kutz of Morgan Stanley. Please go ahead.

So, I appreciate that it's a really difficult time, and there's a ton of uncertainty, and we appreciate the kind of directional color that you guys shared in the press release for some of the puts and takes in the prop[ph] segment and in the Stim services segment. And I guess, is there anything more specific that you could share with us on the second quarter outlook, however you guys would like to frame it? I'm looking at consensus has revenues and EBITDA on a consolidated basis down around 10% for you guys. Is that in the ballpark based on what you know now? Yeah, just any incremental color you could share on the second quarter would be awesome. Thank you.

Yeah, good morning, and thanks for your question. We continue to evaluate the market and the situation. I think it's on a customer-by-customer basis. There is going to be some pullback in Q2, but to what degree, we're not exactly sure at this point. We've got a lot of momentum and are positioned incredibly well for this year and continue to take care of our customers. We're still gaining ground on bundling. And including sand and logistics with each bar active fleets, but. The uncertainty and the visibility that we're getting from, especially the West Texas customers is, it's on a customer-by-customer basis. So we're still watching it close and. I hope to have some further color soon.

Maybe just on your electric frac assets. Could you remind us whether it's in horsepower or number of fleets? How much capacity you have deployed and I guess, appreciating that those kind of have some of the most robust contracting terms and would be, the least at risk assets in a more challenging macro environment. Could trying to get an idea of how much I guess term you have left on the existing contracts for those, is it still a couple of years or is there kind of a period where a lot of those electric fleets roll off of contracts sometime in the near future? Just anything you could share on the deployed e-frac fleets would be really helpful. Thanks.

Definitely. Most of our e-fleets are on long term contracts. We remain fully utilized on our e-fleets and -- don't see any changes to that. As far as our fuel efficient fleets across the board, there's still tremendous demand for all of them. And that's that remains one of the focal points with our customer retention and focus is, look, there's a lot of demand for those. They're easy to market and easy to sell and easy to keep working, so.

And sorry, there's like, eight or nine or is that the right ballpark of how many electric frac fleets you have deployed?

So there's seven in total, but we've got a couple of them that are simulfrac. So, you can -- as far as horsepower on horsepower, it'd be the equivalent of time.

The next question is coming from John Daniel of Daniel Energy Partners. Please go ahead.

Matt, I was goofing off looking at LinkedIn, and I saw you guys had two fleets, Fleet 18 and 35, that seemingly crushed it with, in terms of hours, pumped. Can you say if those wells were done in April? And if so, like, how that compares to the performance in Q1? And then, the second question is just, what have you done differently recently to sort of allow you to hit those types of numbers?

Yeah, I'll touch on this briefly and hand it off to Ladd. Most of those pads started in Q1, and how much of that is Q2, or April, and how much is Q1, I don't have that information right at my fingertips. But, really, we continue to see record-breaking pump times on across our entire fleet mix. And one of the big contributors to that is one of our phenomenal operations and team out in the field, as well as our asset management program, where we've gone in and controlled our standard processes for maintenance, for asset quality, and more importantly, the standardization of our fleets, our equipment, our parts and components. Standardizing this equipment makes it easier for training, makes your maintenance procedures more reliable and consistent from basin to basin. And it also means that every time a fleet rolls onto location, that there's no question that that's a ProFrac fleet, that means ProFrac standard of the highest quality, highest efficiency, and that customers know exactly what they're getting every single time. It also allows us to control our throughput, our costs, and to manage our inventory to a much greater degree. I think that's one of the things that we saw in Q1, we deployed six fleets and saw a reduction in costs associated with our per-fleet, on per-fleet basis. As we move forward, we expect to see, we're not deploying six fleets in Q2, so we expect the operating leverage and the impact to our cost structure to improve without the burden of deploying six fleets.

Yeah, John, Matt said that he's going to say a couple comments and then hand it off to me, but he really said it. Asset management is what it's all about, and we're just so proud of our team, our guys out in the field. We have the best in the business, and what they continue to do, and just the work that they're performing for our customers, we couldn't be happier. But it's really about asset management, and we're still in the early innings of that. As we work through more and more of our equipment and run it through the asset management program, we feel like we're going to continue to see those results with more fleets. And it's an exciting time, and we think that we're going to see even improvement on that So, as we go forward, that's a good sign.

And just sort of a basic and probably a dumb question, but I'll ask it anyways, Q4 seasonality typically has been sort of a pain on the industry, but you guys have a good presence in the Marcellus and Haynesville. Can you remind me what you saw Q4 versus Q3 and '24, high level, of course, and then what would you expect for this year? All else being equal for just those areas?

Yeah, I mean, there's always seasonality in Q4. What we're watching closely this year with such a with a stronger gas. A price -- a stronger gas price going forward and supply and demand. Fundamentally, we've got a much stronger gas market. And so, last year, going from Q3 to Q4, there was a pretty good slowdown. And now, with all this tariff stuff, most of this stuff is isolated to West Texas. As we look at the gas markets, even South Texas, the Haynesville, the Northeast, we're watching real close to see what kind of activity ramps that we see in the full back half of this year. I think the seasonal down, the seasonal slowdown in Q4 is likely to be muted, but we continue to watch and monitor that closely. The number of inbounds and conversations we've had with customers about their plans, it's all in the back half of the year and so far, we're not seeing any indication that they're going to be slowing down in Q4. Another thing I would say is, with Q2 and all this tariff, nonsense that's going on. It's foreseeing this as being a West Texas thing. It's not really as prevalent and anywhere else. But with that being said, the type of slowdown we saw in Q4 from Q3, we're not seeing this tariff. What's going on with tariffs and the uncertainty and the impact to the business, we don't see this being as material as the type of slowdown you see from seasonality from Q3 and Q4 of last year. So, hopefully that kind of gives some context into kind of what we're seeing in the near term, but we also believe that this is should be pretty short lived.

[Operator Instructions] Our next question is coming from Alec Scheibelhoffer, Stifel. Please go ahead.

I just want to follow up on your comments regarding a second quarter profit and sales volumes and average selling price as well as your commentary on your, and based in kind of capacity in the Haynesville. I was just wondering if you can provide some color and kind of the, maybe the pricing dynamics in the Haynesville versus West Texas, and just kind of the balancing effect that you might see coming out of the Haynesville versus maybe some softness in West Texas.

Yeah, I mean, each of these markets are pretty isolated from a pricing standpoint. Our focus is making sure that we've got the best value for our customers and finding that right spot to balance out the right volumes for operating leverage as well as get the right price from an ASP standpoint for us. I think there's a huge opportunity for us in the Haynesville of getting that balance right. We've recently opened up the damped product at all three of our mines, increasing damped volumes to 13 million tons a year of availability. And I think that that damped market has become a, these aren't mobile mines, these are fixed infrastructure, permanent mines, that basin is a little bit different than what you've seen with these mobile minis and some of these other basins. But in the Haynesville, every damped sand provider has a fixed infrastructure mine and they've been relatively successful in growing that damp market. And we've got 13 million tons and are the single largest producer of damp and dry and intend to grow those volumes, provide phenomenal pricing for our customers. Hopefully, they'll recognize how much of an impact that'll have for them on a cost per foot. But not only that, we've got three locations, so we can provide the best logistics and as well as redundancy so that there's no interruption on their end for any reason. I'm excited to be actually, really pursuing that side of it and hope to be updating you guys with some positive news going forward. And in South Texas, South Texas has always been a pretty robust market, they're still railing sand in. And so, anytime you see a market that's, that's still rails sand in, it provides a pretty good backdrop and really capturing just…

Yeah, I think to summarize maybe a little bit favorable makeshift from a relative perspective from West Texas to South Texas and East Texas, North Louisiana. In addition to that, we're going to see increased volumes that include logistics and storage as well as we move into Q2 and then into the back half of the year, we think. So that's what's really driving that those differences.

Thanks, Austin. The logistics and storage piece and combining that with the sand volumes provides a lot of flexibility in how you manage your customer, your backlogs, and maintain reliable consistent service to your customers. These assets, you have issues here and there, but being able to control and manage the logistics, especially when you've got multiple assets nearby, ensures that your service quality is top-notch and that every ton shows up on time, every time.

Ladies and gentlemen, at this time, I would like to turn the floor back over to Mr. Wilks for closing comments.

Thanks, everybody. We appreciate your participation today. While market dynamics present some near-term uncertainty, our vertically integrated model, in-house capabilities, and strategic asset position, position us uniquely to navigate current conditions. Our leverage to both oil and natural gas markets, coupled with our operational flexibility and innovative solutions, enables us to adapt while maintaining readiness for market improvements. We look forward to connecting on our second quarter call.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.