ProFrac Holding Corp.

Greetings and welcome to the ProFRAC Third Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. 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 30th, 2025. With me today are Matt Wilkes, Executive Chairman, Ladd Wilkes, Chief Executive Officer, and Austin Harper, 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 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 pro-frax 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 flow tech. 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 Profract's Executive Chairman, Mr. Matt Wilkes.

Thanks, Michael, and good morning, everyone. I'll kick things off with some brief comments, then hand it to Ladd 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 continued 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 deployments. 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 to $40 million identified across non-labor items. In addition to $20 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 further calendar deterioration. With improved activity in October versus our Q3 exit, in fact, We saw certain programs that had been deferred from September returned to the calendar in addition to deploying assets under a new contract with a large operator. Although we typically witnessed Q4 seasonality, we were proactively implementing measures to mitigate the impact. Zooming out, we believe maintenance, drilling, and completion activity is below necessary levels to sustain flat-shell production in U.S. land. Consequently, assuming the macroeconomic backdrop is supportive, we expect global supply imbalances to normalize in 2026 as operators will need to gradually accelerate completion activity to overcome natural production decline. The natural gas sector's outlook remains favorable, driven by expanding LNG export capacity and rising power demand, both factors that should support improved completion fundamentals in 2026. As such, We continue to believe that hydraulic fracturing market dynamics create a compelling setup for the future. With industry-wide sustained capital discipline, increased equipment attrition, and more disciplined new equipment additions, we see the potential for meaningful supply-demand tightening should drilling and completion activity accelerate. I'd like to thank our employees for their continued hard work and focus as we position the company for success through the cycle. Against current market conditions, we are controlling what we can control by executing a comprehensive cost management strategy that positions ProFrac for both near-term operational flexibility and long-term value creation. 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 right-sizes our business for near- and medium-term demand and estimate 35 to 45 million of annualized savings. Additionally, we have identified 30 to 40 million of non-labor expenses with a streamlined focus on non-labor operating expenses. We're improving the cost profile of our fleet with stricter enforcement of our centralized control of equipment through our asset management program, which will reduce maintenance performed at districts. Additionally, we are optimizing the mix of equipment assigned to each fleet to further limit non-productive 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 to 30 million of additional cash savings. In August, we completed an equity offering that netted us nearly 80 million in proceeds. We deployed a portion of these funds to pay down the ABL and for general corporate purposes, including working capital. We are also being thoughtful and deliberate in how we use the levers at our disposal from the innovative transaction we entered into with Flowtech in April. As a reminder, this strategic partnership involves the sell-leaseback of our mobile power generation solutions for $105 million in total consideration, structured to provide both immediate liquidity and long-term value participation. The transaction gave us approximately 60% of the pro forma fully diluted equity ownership of Flowtech Industries, positioning us to benefit from what we estimate to be a $3 to $6 billion market opportunity for gas conditioning solutions across diverse end markets, including data infrastructure, petrochemical facilities, upstream energy, and broader natural gas utilization sectors. Now, we're strategically utilizing the financial flexibility this partnership provides. Specifically on Friday, November 7th, we completed the sale of the $40 million seller note that formed part of the original consideration structure. As we noted when announcing the original transaction, the deal represented an evolutionary step forward in our business relationship with Flowtech. And these current actions allow us to realize value from the strategic partnership while maintaining our collaborative relationship and ongoing lease arrangements. We remain very excited about our continued exposure to the gas conditioning and power generation markets through our Flowtech ownership. Beyond Flowtech, we are also planning to proceed with our previously announced Senior Secured Notes program, which we established in the second quarter as part of our strategic liquidity enhancement initiative. As a reminder, In June, we successfully executed a series of transactions expected to provide approximately $60 million in incremental liquidity through 2025, including an initial $20 million issuance of additional 2029 senior notes completed in Q2 and commitments for two additional $20 million tranches at our discretion. We deferred the September tranche to December and now anticipate closing the remaining $40 million in December. Lastly, we are currently pursuing up to an additional $40 million of capital in the form of new notes. In total, the completed and planned capital raises could provide as much as $200 million in cash. While market conditions remain volatile, we believe these proactive measures coupled with our cost savings initiatives demonstrate our commitment to maintaining financial flexibility and building a resilient platform. Looking ahead, we maintain incremental flexibility to access additional sources of capital in response to evolving market conditions. However, I want to be clear that as we execute our business optimization and cost management initiatives, I believe that the potential need for additional capital will diminish or become unnecessary. Beyond these financial initiatives, it's important to highlight that our vertically integrated platform and technology leadership continue setting ProFrac apart. controllable factors that strengthen our competitive position regardless of market conditions. Our vertically integrated platform remains a fundamental advantage, combining sophisticated asset management with in-house manufacturing capabilities that deliver both strategic flexibility and cost benefits. These unique attributes position us to capitalize on market recovery while maintaining our strong position in dual fuel and electric fracturing capabilities, technologies that garner the highest demand. Our technology leadership through ProPILOT 2.0 and our strategic partnership with Seismos announced during the quarter continues to deliver measurable outcomes during this challenging environment. ProPILOT 2.0 is providing its value as a cost optimization tool. For example, realizing fuel economy improvements as high as 26%. Our Seismos collaboration introduces closed loop fracturing capabilities. that represent the next evolution and completion solutions. Vlad will provide more detail on how these technological differentiators are driving improvements across our operations. In Q3, we generated revenues of $403 million, adjusted EBITDA of $41 million, and free cash flow of negative $29 million. This compares with revenues of $502 million, adjusted EBITDA of $79 million, and free cash flow of $54 million in Q2. reflects the volatile market we experienced during the quarter. In summary, we are adjusting 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, resulting in higher efficiency and improved control over our operations. Our proactive execution of a comprehensive cost and capital management strategy positions ProFrac for both near-term operational flexibility and long-term value creation with $100 million of structural cash savings identified across operating and capital expenditures. We have raised or plan to raise up to approximately $200 million of incremental capital, raised nearly $80 million of net proceeds related to the equity offering in August, executed on the sale of the $40 million Flotec seller note sale at par to a Wilkes affiliate. We plan to issue the remaining $40 million balance of the $60 million total commitment of senior secured notes to CSG and Wilkes affiliates, pursuing capital in the form of incremental debt targeting up to $40 million. Upon full realization of our cost management initiatives, we believe we have built a full cycle model reducing or eliminating the need for further capital raises. We maintain selective fleet utilization and customer focus, driving higher efficiency and improved asset allocation. And finally, we remain confident that market dynamics may create a compelling setup for the future, including maintenance drilling and completion activities below necessary levels to sustain flat-shell production in U.S. land. Natural gas sector's outlook remains favorable. driven by expanding LNG export capacity and rising power demand. In hydraulic fracturing, sustained capital discipline, natural attrition, and limited new equipment additions could result in supply-demand tightening. When fully realized, our cost and capital management measures should deliver much of what we would hope for from a market recovery. Now, I'll hand the call over to Lad.