ProFrac Holding Corp. (NASDAQ: ACDC) ("ProFrac", or the "Company") today announced financial and operational results for its 2023 full year and fourth quarter ended December 31, 2023.
2023 Full Year Results
- Total revenue was $2.63 billion in 2023 compared to $2.43 billion in 2022
- Net loss in 2023 was $59 million compared to net income of $343 million in 2022
- Adjusted EBITDA(1) was $688 million
- Net cash provided by operating activities was $554 million
- Capital expenditures totaled $267 million
- Free cash flow was $293 million, an increase of 173% from 2022
- Net debt was $1.08 billion as of December 31, 2023
2023 Fourth Quarter Results
- Total fourth quarter revenue was $489 million compared to $574 million in the third quarter of 2023
- Net loss was $97 million compared to a net loss of $18 million in the third quarter of 2023
- Adjusted EBITDA(1) was $110 million
- Net cash provided by operating activities was $43 million
- Capital expenditures totaled $33 million
- Free cash flow was $13 million
Matt Wilks, ProFrac's Executive Chairman, stated, "Our fourth quarter results were challenged, as we expected, due to softness that persisted throughout the second half of the year. Despite lower commodity prices and decreased activity levels, we meaningfully grew our free cash flow generation by 173% for the year and took important steps to position ProFrac for success in 2024 and beyond.
Mr. Wilks added that, "We have been deliberate and intentional with the actions we've taken, both in the second half of 2023 and early in 2024, to enhance ProFrac's position as a leader in the oilfield services industry. Beginning in 2023, we believed it was important to simplify our approach and focus on three key strategic priorities: providing safe, superior services and improving the overall experience for our customers; improving utilization in every aspect of our business; and achieving the lowest operating costs per unit in the industry.
"I am pleased that we have started seeing the impact of this targeted focus in 2024 as we have increased our fleet count for the start of the year with improved pumping efficiencies across all active fleets. To start the year, in January we surpassed our highest pumping efficiency since the fourth quarter of 2022 and in February we pushed the bar even higher as we increased our pumping hours per active fleet to the highest level ever recorded at ProFrac, nearly 20% over our 2023 average. This positive momentum gives us strong confidence that 2024 will be significantly improved over 2023," concluded Mr. Wilks.
Outlook
In the Stimulation Services segment, the Company has activated 10 fleets since the start of the fourth quarter. The higher fleet count, combined with higher expected pumping hours and the cost actions that have been put into place will help offset any pricing pressures and allow for increased profitability levels for 2024.
In the Proppant Production segment, the Company expects modest improvement to mine utilization in the first quarter of 2024 with pricing per ton in the $25 - $30 dollar range, based on metrics to-date. In the second quarter of 2024, the Company expects to further improve utilization to 65-75%.
Business Segment Information
The Stimulation Services segment generated revenues of $2.29 billion for full year 2023, which resulted in $480 million of Adjusted EBITDA. The segment generated revenues of $403 million in the fourth quarter of 2023, which resulted in $58 million of Adjusted EBITDA. Capital expenditures in the Stimulation Services segment totaled $222 million for full year 2023.
The Proppant Production segment generated revenues of $383 million for full year 2023, which resulted in $196 million of Adjusted EBITDA. The segment generated revenues of $93 million in the fourth quarter of 2023, which resulted in $45 million of Adjusted EBITDA. Approximately 30% and 25% of the Proppant Production segment's full year and fourth quarter revenue was intercompany, respectively. Capital expenditures in the Proppant Production segment totaled $41 million for full year 2023.
The Manufacturing segment generated revenues of $176 million for full year 2023, which resulted in $15 million of Adjusted EBITDA. The segment generated revenues of $34 million in the fourth quarter of 2023, which resulted in $2 million of Adjusted EBITDA. Approximately 89% and 83% of the Manufacturing segment's full year and fourth quarter revenue was intercompany, respectively. Capital expenditures in the Manufacturing segment totaled $3 million for full year 2023.
Our Other Business Activities generated revenues of $193 million for the full year 2023, which resulted in ($1.6) million of Adjusted EBITDA. Other Business Activities generated revenues of $44 million in the fourth quarter of 2023, which resulted in $5 million of Adjusted EBITDA. Capital expenditures in the Other Business Activities segment totaled $1 million for full year 2023. The Other Business Activities solely relate to the results of Flotek.
Capital Expenditures and Capital Allocation
Cash capital expenditures in the fourth quarter and full year 2023 totaled $33 million and $267 million, respectively. On a full year basis, this was a reduction of 25% when compared to 2022, which reflects the deferral of the previously announced fleet upgrade program and other growth expenditures due to the market softness experienced in the second half of 2023.
For the full year 2024, the Company expects cash capital expenditures to be between $150 million and $200 million in maintenance related expenditures and roughly an additional $100 million in growth initiatives across all segments. Currently, growth capital expenditures for 2024 are expected to be related to mine improvements and frac fleet upgrades. The Company will continue monitoring market conditions, industry dynamics and customer demand to appropriately align spending levels and growth initiative timelines.
Balance Sheet and Liquidity
Total net debt outstanding as of December 31, 2023 was $1.08 billion, an increase of approximately $27 million from the third quarter primarily due to fees and expenses related to the refinancing that occurred in December.
Total cash and cash equivalents as of December 31, 2023 was $25 million, of which $6 million was related to Flotek.
As of December 31, 2023 the Company had $103 million of liquidity, including $19 million in cash and cash equivalents, excluding Flotek, and $83 million of availability under its asset-based credit facility.
