Greetings, and welcome to the ProFrac Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Michael Messina, Vice President of Finance. Please go ahead.

Thank you, operator. Good morning, everyone. Thank you for joining us for ProFrac Holding Corp.'s conference call and webcast to review our results for the third quarter ended September 30, 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 a 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 made 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, November 10, 2025, and therefore, you are advised that 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's 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.

Thanks, Michael, and good morning, everyone. I'll kick things off with some brief comments, then hand it to Lad to dive into segment performance and Austin will follow with our third quarter financials. Q3 began with the modest market improvements we highlighted during our August earnings call, where we noted that conditions had stabilized compared to our Q2 exit levels, with some crews returning to work mid-quarter. During August, we experienced a sequential improvement in both activity levels and pump hours as customer programs continue to materialize. However, September witnessed a sharp deterioration as customers implemented program deferrals resulting in increased calendar white space. This volatility reflects the broader challenges facing the U.S. onshore completions market where operators continue to exhibit cautious capital deployment. In response to market conditions, we have recently taken meaningful steps to adjust our strategy to build a sustainable, resilient business model poised to perform through the cycle. We are prioritizing dedicated fleets paired with operators conducting more robust, less volatile programs. Moreover, we are optimizing our cost structure with a focus on operational and capital efficiency. In addition to a renewed focus on efficiency, the company has identified initial COGS, SG&A and capital expenditure savings of $100 million at the midpoint on an annualized basis by the end of the second quarter 2026. The savings are comprised of $35 million to $45 million, driven by both COGS and SG&A labor reductions that have already been implemented an additional $30 million to $40 million identified across nonlabor items. In addition to $20 million to $30 million of reduced CapEx primarily driven by optimizing the utilization of active assets. The company believes that this is the first step in its business optimization plan. and that additional savings are possible. Turning briefly to Q4. We have not experienced…

Thank you, Matt, and good morning, everyone. I'll provide more granular detail on several things Matt touched on, starting with our operational performance during the quarter. But first, I'd like to join Matt in thanking our employees, their dedication and teamwork are what keep us moving forward. In Stim Services, we experienced the market dynamics Matt described with Q3 presenting a tale of very different periods that drove operational challenges. As Matt noted, we entered Q3 with the modest market improvements we highlighted during our August earnings call. July has represented what we believe to be the trough period. August built on this foundation, delivering solid sequential improvement in both activity levels that some operators resume executing on their completion schedules. We saw increases in activities that reinforce our view that market conditions were stabilizing. However, September presented us with some surprising headwinds. What has appeared to be strengthening calendar coming into the month deteriorated as customers implemented project delays and deferrals. What made September acutely difficult was the nature of the activity disruption. Unlike a gradual decline that allows for systematic cost adjustments, we experienced several head fakes, programs that were delayed with minimal notice, this created substantial operational inefficiencies as we carried semi-variable costs. The pricing environment during the quarter reflected more customer and geographic mix and broader market pressures with revenue per pump hour declining temporarily into the end of Q3. Combined with activity volatility, this created a meaningful margin compression in the quarter. From a fleet deployment perspective, we maintained our selective approach with an average fleet count in the 20s, though effective utilization was impacted by white space issues just mentioned, especially in September. Looking ahead to Q4, we're encouraged by signs of stabilization we observed in October with some of the activity that was…

Thank you, Ladd. In the third quarter, revenues were $403 million compared to $502 million in the second quarter. We generated $41 million of adjusted EBITDA with an adjusted EBITDA margin of 10% compared to $79 million in the second quarter or 16% of revenue. Free cash flow was negative $29 million in the third quarter versus $54 million in the second quarter. The volatility in activity throughout the quarter created inefficiencies and negatively impacted results. While the third quarter presented challenges, we've taken decisive actions to build a resilient platform poised to perform through the cycle. As Matt outlined, we have adjusted our strategy to prioritize dedicated fleets paired with customers that provide the more stable programs. In concert, we are implementing comprehensive cost and capital saving initiatives, which we believe will result in $100 million of annualized cash savings by the end of the second quarter of 2026. In October, we completed a thorough review of our labor costs across COGS and SG&A and executed a headcount reduction. We believe this initiative rightsizes our business to align with our revised commercial and operating strategy. Ultimately, we estimate $35 million to $45 million of annualized savings. Additionally, we have identified $30 million to $40 million of COGS and SG&A nonlabor expenses with a streamlined focus on nonlabor operating expenses. We are improving the cost profile of our fleet with stricter enforcement of our centralized streamlined control of equipment through our asset management program which will reduce maintenance performed at districts. Lastly, we are optimizing the mix of equipment assigned to each fleet to further limit nonproductive time, mitigating interruptions to field operations. We are confident that these actions will also improve the efficiency and effectiveness of our maintenance capital expenditures where we have identified $20 million to $30 million…

[Operator Instructions] Our first question is from Stephen Gengaro with Stifel.

Thanks. Good morning, everybody. I think the first question and one of the things we hear a lot about is just the various pressure pumpers and their pricing strategy in the market. And when we hear from some of the bigger players, they complain about some others who are more aggressive on the spot pricing side. How do you approach? And I know you talked a little bit about this in your business optimization discussion, but how do you approach the pricing side? And what do you see in the overall market as far as the way the market is behaving right now?

So it's been relatively consistent. But whenever you look at spot pricing compared to longer programs, they've been pretty in line relative to each other for about the last year. But I think with the availability of equipment and as we look out into 2026, our approach has been to focus more on reliable, consistent programs. And as we continue to fill out our entire schedule and our outlook on 2026, we would expect to see spot work and its pricing to start returning to where it was historically where typically you would see spot pricing higher than committed dedicated work.

Okay. And when you talk about the outlook for the segments and you talk about profitability maybe picking up despite kind of a lower fleet count and softer pricing, how do we reconcile those?

Yes. So we're looking at holding in at the mid-20s and focusing on our cost controls, our processes to make sure that what we've run into in the past is going and adding a bunch of fleets for Q1 and then by April, it rolls over. And so we owe more to our workforce to maintain consistent fleet count. And so given the opportunity to ramp up and increase fleet count, we would rather focus on using the increase in activity to build out a better book and focus on reliable consistent work so that we can maintain our headcount, also maintain our equipment and better condition more reliably for the dedicated customers that we're focusing on. All of this delivers better revenue, higher revenues per fleet and an overall lower cost structure per fleet.

Okay. So that's sort of the step-up because when you say in Stimulation Services, that activity flattish fleet count, pricing lower, but profitability higher. That's what I was trying to reconcile.

I mean, really. Pricing is relatively flat, but we're seeing some green shoots here and there related to ancillary items and not specifically horsepower rates. But when you look at the additional services that are built around your base horsepower, we're seeing some really positive signs there. And really, it's -- this is utilization game, getting consistent customers with a reliable schedule and being able to benefit from the operating leverage is tremendous.

Our next question is from John Daniel of Daniel Energy Partners.

I might violate protocol and ask a bunch of questions, so I apologize in advance, you can always kick me off. But the dedicated versus spot math, that's interesting. You mentioned mid-20s today active. Would you be willing to share what portion of those are dedicated right now?

Let's see, about 80%. And it's quickly shifting to where we think we'll be in the high 90s as we roll into 2026.

When you referenced or maybe this lot referenced the head fake, was that on spot work? And is that kind of what prompted this sort of reassessment?

It's mostly on spot, but there were some well issues and things like that, that pushed the schedule back a little bit. But these weren't changes to programs, but it was just a delay to existing programs. So we saw the stuff that pushed in September started up in October.

Okay. And then eventually, spot pricing should, in theory, come back. Would you hazard a guess as to what type of recovery and spot pricing would you want to see where you might sort of revisit the incremental spot mix in your business?

Well, the main thing is that we're just not as interested in chasing. And so I think it would have to be pretty material for us to want to go in and look at activating fleets, as well as taking on more employees to cover temporary work. It's -- a lot of it comes down to how reliable is the spot work and do we have the ability to fill in any white space that comes with it by finding other customers that can fill in those gaps. As far as like exactly what that pricing is, the assumptions you have to make on utilization, it's it would have to be much higher than it is today and we think that we'll see that at some point in 2026. And so we'll revisit this at the appropriate time to see if this is something that makes sense for us to take on the additional operational burden the complexity that it creates for the business and as well as the challenges it creates for your workforce.

Okay. Two more, and I promise to hang up. the cost savings are significant. If we have a steady state environment over the next several quarters, would you then characterize all these cost cuts is permanent, if you will. I mean I know how costs can creep back if the business is ramping, but how would you characterize that?

Now these -- every one of these cuts are sustainable. So we went in and we looked at historical levels where we had Q1 of each year and then also going back in and looking at 2022, what was our headcount, what was our utilization on assets, and how tightly did we manage that? So we went back in and looked at what are the sustainable levels where we know that where our cost structure should be, where should our head count be and making sure that we don't come in and bring these to a level that's unsustainable. We wanted to make sure that we had the right number of people on location that we didn't have extras, but we didn't have too few. Also, going in and looking at the cycle counts and the efficiency of our maintenance programs on how quickly we turn assets when they do go down, so that we can get them back in line and getting higher utilization rates. And so it's going to a fixed number of fleets and maintaining that level improves our ability to go through and look at every single discipline, every vertical in our business to really refine our cost structure and our processes so that the equipment on location is more reliable. It's in better condition. And if you take care of it on the back side, then when it's at the wellhead, it performs much, much better. And because of the utilization, you get to dilute any associated costs in a much more reliable way.

Okay. And the final one, and I apologize if I'm sitting here to guess it. I don't have on my data, but I want to say it's -- the question is around continuous pumping, Diamondback referenced that on its earnings calls. And I want to say they talked about 30% efficiency gain or something to that end. Can you talk to us about what you're seeing in terms of customer interest and continuous pumping and just elaborate on that trend and what it entails?

It requires a lot more horsepower as you go in and look at how -- you still have to maintain this equipment. You still have to build in maintenance windows. And so you can do that with additional equipment so that you can cycle through banks where at any one time, one of your banks will be in a maintenance period while the other banks continue pumping. So it's -- we've seen some situations where the benefits outweigh the costs. But I think each operator is different, how they lay out their they're well inventory, how they line up the schedules, there's a different solution for each operator. So we've we constructively work with every one of our customers to give them the most efficient program. And it really comes down to making sure we have those appropriate maintenance windows.

Our next question is from Dan Kutz with Morgan Stanley.

I was hoping maybe somewhat similar line of questions to the last two, but just focusing on the Pro Production segment. Just thinking about your outlook, I was hoping maybe we could kind of unpack the comments. So higher volumes and throughput but still some pricing pressure. Is -- are you guys kind of thinking about flat revenues in the fourth quarter for Proppant production? And I guess, specifically on the higher volumes comment, could you kind of unpack where that's coming from? Is it internal or external? Or is it? It would be great if you could just give us figure out a little bit deeper on those comments.

Yes. So on the Proppant Segment, we've been more exposed to the spot environment, more so than what some of our peers have experienced. I think when you look at the spot environment, it's been relatively consistent. Haven't really seen pricing pressures as much within individual markets. Where we saw a reduction in ASP was more so from a mix shift as we had an increase of volumes in West Texas and a dip in volumes in South Texas. When we look at the South Texas and the Haynesville and then also the Haynesville market, pricing is much stronger than what we see in West Texas. And so as we look into Q4, we're seeing an increase in volumes in those areas where we see better pricing. But we also see an improvement going into 2026, where increase in volumes in South Texas as well as in the Haynesville will have a material impact to our ASP and the revenue for our Proppant Segment.

Great. That's helpful. And then just staying with Proppant. So the improved sequential profitability results could you kind of quantify in the fourth quarter, could you help us think through how much of that is the early benefits of this cost-out program? Or I guess, even taking a step back, we appreciate all the color in terms of where the components of the cost out program will kind of hit the P&L and color statement. But maybe could you talk through any kind of breakout of the cost-out initiatives by segment. Yes. So just how much of cost out is driving the 4Q outlook for improved profitability and Proppant Production? And then maybe a little color on the segment breakdown of the cost-out initiatives.

No, it's a great question. We typically don't break out the split between the two, but the majority of it is on the Stimulation Services business. When we look at the Proppant Segment, we've had it running pretty lean for quite a while. But most of the improvement there will come from operating leverage and a substantial increase in utilization, which we're already seeing.

Great. Understood. And maybe if I could just sneak one more in. Could you just talk about where fracs kind of nameplate capacity is on the frac side right now, any kind of attrition you're expecting? And I think that you guys said that the e-frac new build has kind of come to has stopped or paused. But I know that you guys were still doing some Tier 4 DGB upgrades. And yes, just wondering if you could give us a lay on where you're capacity is at now by technology and where you kind of see it trending over the next couple of quarters?

Certainly. So when we look at the premium fleets and essentially fleets that can give the best fuel economy the e-fleets as well as the dual fuel fleets have shown to have the highest demand and have the best opportunities to see the highest utilization. That continues to be the -- it continues to be the case. However, diesel pricing is the cost of diesel is pretty low right now. So the degree of the savings isn't quite what it has been in the past. But -- it's still a huge driver for operators as they look at how much it cost to run a program and what configuration they need on locations. So we continue to see that. We've got very high utilization on our e fleets as well as our dual fuel program and especially as we roll into '26, we're we expect to -- we're already seeing it. We're seeing full uptake of those platforms.

Our next question is from Don Crist with Johnson Rice.

Thanks for letting me Matt, I wanted to get your thoughts on the Haynesville kind of as we go into '26. I mean, obviously, there's a lot of industry chatter on LNG and all the things. And given your position, surrounding that basin. Kind of what are customer conversations from your standpoint around the Haynesville as we kind of move through '26?

There's a great deal of excitement. We're seeing activity increase. We're seeing the number of players, the number of operators starting to round out operators that have been have had slower programs or no program have started bringing activity back and putting plans together. The overall chatter around the gas market is very encouraging as well as. We're just seeing a lot more conversations and a lot more certainty to the programs. And it's good to see, it's good to see. We're pretty encouraged by what we're hearing from operators and how much more sticky their programs look?

And do you think that the timing is kind of earlier or later in the year or kind of a steady ramp-up through the year?

A great start to 2026. Some of that stuff is getting pulled into December. And then as we roll through the year, it's I think what we start the year with will carry on throughout the year with potential option to increase activity. Everybody is watching it real closely to see really how it plays out. But nobody wants to ramp up and grow into a head fake. And so, so far, what everybody is seeing they love it, they want to see more of it. But I think, yes, it's been a tricky commodity in previous years. So everybody is cautiously optimistic.

I appreciate that. And my last question and obviously, through my coverage list, I cover Flotek, I fully appreciate the opportunity set there. But have you considered peeling off a few shares there? Because overall, it may help with the liquidity of Flotek in the end and actually boost the share price. Just any curiosity if you've explored selling any shares just to kind of help both companies out?

Look, we evaluate all of our assets, and we think that Flotek is an incredible company with huge prospects, very excited about their data services business. And look, we a healthy ProFrac is a healthy Flotek. And so we watch that real close. Our caution is if you did look at that, how do you do it in a way where it provides a book in so that we're not perceived as a continued seller.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Matt Wills for any closing comments.

Thank you, everyone. We appreciate your time today. Our vertically integrated platform, advanced asset management capabilities and technology leadership to continue differentiating us competitively. Our recent strategic initiatives and transactions demonstrate our focus on operational discipline, efficiency and building a resilient platform poised for success through the cycle. We look forward to speaking with you again when we report our fourth quarter 2025 results.

This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time.