ProFrac Holding Corp.

Ladies and gentlemen, thank you for your patience. Please remain on the line. Your conference will begin momentarily. Again, we do appreciate your patience. Please remain on the line. Your Thank you. Thank you. Thank you. Good day, ladies and gentlemen, and welcome to the Profact Holding Corp. Second Quarter Earnings Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Michael Messina, Director of Finance. Sir, the floor is yours.

Thank you, Operator. Good morning, everyone. We appreciate you joining us for ProFrac Holding Corp's conference call and webcast to review our second quarter 2024 results. With me today are Matt Wilkes, Executive Chairman, Ladd Wilkes, 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 second quarter before opening the call up to your questions. There will be a replay of today's call available by webcast on the company's website at pfholdingscorp.com, as well as a telephonic recording available until August 15, 2024. More information on how to access these replay features is included in the company's earnings release. Please note that information reported on this call speaks only as of today, August 8, 2024, and therefore, you are advised that any time-sensitive information may no longer be accurate as of the time of any 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 Profrex 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 Profract'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 Flowtech. 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 on the company's website. And now, I would like to turn the call over to Profract's Executive Chairman, Mr. Matt Wilkes.

Thank you, Michael, and good morning, everyone. After my prepared remarks, Ladd will comment further on the performance of our subsidiaries, and Austin will walk through our financial performance. In the second quarter, we continued to set operating efficiency records, delivering strong performance for our customers. We were able to achieve this performance despite the rollover of multiple fleets to new customers during the quarter, resulting in additional calendar white space. Overall, the market for our services has been challenged by operators having reduced drilling and completion activity, particularly in natural gas regions. However, we successfully executed our commercial strategy to partner with customers that value integrated solutions. As we've conveyed in prior quarters, we firmly believe that consolidation by upstream operators will benefit Profract. Larger operators driving consolidation prefer to collaborate with service companies that deliver efficiency at scale. Given Profract's leading position throughout the completion's value chain, we were able to take advantage of opportunities in a rapidly evolving marketplace. For example, the majority of our customers have completed a transaction in the last two years. Additionally, we successfully increased market share in our largest operating region, West Texas, which has witnessed material operator consolidation post-COVID and is the leading U.S. land market for unconventional completions activity and spending. In the second quarter, we generated $136 million of adjusted EBITDA, on $579 million of revenue. Of note, we generated $74 million in free cash flow in the second quarter. These results illustrate that at scale, ProFrac is built to navigate market headwinds while generating free cash flow. Furthermore, our recent efforts to align with customers that prefer integrated offerings should enable ProFrac to continue to take advantage of opportunities through the cycle. Our performance in the second quarter is underpinned by record-setting efficiency per active fleet, a direct result of our team's successful execution in the field. Additionally, Profract's internal manufacturing and service capabilities enable us to rapidly repair, maintain, upgrade, and redeploy fleets. We believe that in basin scale, particularly in the most active basins, is a critical differentiating factor for Profract. We not only continued to invest in oil-weighted regions, but also purposely maintained our positions in gas-weighted markets. This strategy enables us to strengthen our customer relationships with operators based on a track record of delivering service quality and operational performance. Further, we believe we will benefit from increased levels of activity as recovery in natural gas basins materializes. In mid-June, we executed on an opportunity to strategically add scale at an attractive entry point through the acquisition of Advanced Stimulation Technologies, or AST. Importantly, AST enhances Profract's earnings profile and improves our market position in the most active region in the lower 48. AST's core values of best-in-class service and efficiency align extremely well with Profract's culture. Looking forward, We will continue to invest in next-generation equipment that enables diesel substitution, utilizing natural gas as the primary fuel source. Demand for our E-Fleets and our dual-fuel or dynamic gas blending assets remains strong, and we continue to make progress on fleet deployments. Today, 70% of our active fleets include E-Fleet or natural gas-capable equipment. Our ability to provide customers with significant fuel savings, high reliability, and efficient operations have made our next-generation assets highly sought after and a critical part of our service offerings. In line with our vertically integrated customer-centric strategy, we are actively evaluating alternatives related to power generation. there has been a significant surge in demand for power generation across a number of end markets, driven at least in part by grid constraints and failures, AI-driven computing power requirements, and broader industrial-scale electrification trends. In particular, our customers are increasingly requiring solutions that enable diesel substitution coupled with on-demand power generation at the wellhead, As a leader in next-generation E-fleets and diesel substitution solutions, we are well-positioned to organically diversify to provide power generation. Turning to Alpine, weakness in natural gas regions and general activity softness impacted our results. Although volumes and pricing were negatively impacted during the second quarter and into the third quarter, We are encouraged by the recent uptick in commercial opportunities and potential additional volumes that could materialize as we move through Q3. As a company, we continue to make progress on our priorities, and I'm proud of our team's execution and commitment to excellence. In summary, we continue to field new inbound requests for additional integrated fleet deployments with the highest demand for electric and Tier IV dual fuel, or DGB, technologies, As of today, approximately 70% of our active fleets utilize next-generation technology. We achieved a new record for efficiencies based on pump hours per active fleet, a testament to best-in-class execution by our employees in the field and in our repair and maintenance and manufacturing capabilities. Although we witnessed a slight decrease in overall utilization during the second quarter, we expect continued improvement in efficiencies as we progress through the third quarter. Strengthened by our vertically integrated model, we generated $74 million of free cash flow despite market headwinds. We increased in-basin scale in the most active region for completions in the lower 48, West Texas, through both organic and inorganic investments. We improved alignment with operators, driving consolidation. The majority of our customers have executed M&A. We've positioned Profract to deliver long-term value for our stakeholders by delivering the most efficient solutions through vertically integrated in-basin scaled offerings, best-in-class service, and the relentless focus on free cash flow generation through the cycle. With that, I'll turn the call over to Ladd.