ProFrac Holding Corp. (NASDAQ:ACDC) Q4 2023 Earnings Call Transcript

Ladd Wilks: Yes, we’ve got about 1/3 of our business exposed to gas markets. And — we don’t have a crystal ball. We don’t know when the gas market is going to come back. We don’t know how deep or why this gap is going to be, but we’re committed to be patient and — or big believers and the demand drivers that are coming later this decade. So we’re staying committed to our customer base there, staying committed to these basins and welcome a huge increase to duck inventory. And hope for improving commodity.

Operator: Our next question comes from the line of Dan Kutz with Morgan Stanley.

Dan Kutz: Maybe just another one on the Proppant business. You guys have kind of touched on some of these points already, but just wondering if you can expand at all on some of the drivers that are contemplated in the utilization upside that you guys flagged in terms of will it be external particular basins where a lot of potential customer types, tailwind from more Proppant per well from a well design perspective. Just wondering if you could give us any more color on the drivers of that I think it’s 65% to 75% utilization target out later this year?

Ladd Wilks: Yes. We continue to see improved demand on our Permian assets, specifically and increasing utilization there. And it’s a combination of third-party and internal — the focus right now is making sure that all of our customers are provided great service and great products, and we’re continuing to focus on those areas. And South Texas and the Permian or the greatest utilization drivers for increase.

Dan Kutz: Great. Thanks. Appreciate that color. And then apologies if I missed this, but wondering if you could give us an update on efrac? Kind of what your nameplate capacity is now? How many of those fleets are working? What plans are for or some of the new builds that were maybe paused last year? And also more broadly, what plans are for dual fuel upgrades maybe in your 2024 budget?

Ladd Wilks: Yes. Fuel efficiency continuing to be a major theme in the — in this industry, and it’s become a really strong demand driver for us. We’re not at full utilization on our e-fleet, but expect to be this year again, this goes into how much operators spend on diesel and being able to eliminate as much of that cost as possible and grow margins alongside it so that everybody wins. On the e-fleet front, we expect to be fully utilized this year, working with operators they’re very interested in a turnkey solution that’s everything from gas, power gen, along with your e-fleet. And so — we’ve begun to fund a high degree of success in bundling that as a turnkey solution and expect that to get us to full utilization this year.

Operator: Our next question comes from the line of John Daniel with Daniel Energy.

John Daniel: Matt, in the press release, when you note the big step-up in the pumping hours in January and February, is that a function of just less white space on the calendar? Or is there something from a job design, which is letting you get more hours per day? Or both?

Matt Wilks: It’s more associated with calendar efficiency. I mean our crews are amazing. We get out regardless of customer type, we’re usually pumping 20, 20-plus hours every single day that they have available to pump. But the question is, is that 18 days per month? Or is it 28 days per month? Right. And so going in working with customers on their program, making sure that we’re aligning our interest with the right customers. And when you look at our revenue per pump hour, we recognize that we have to be a little bit more competitive with customers that can give us 28 or 30 days a month pumping. But what we see from getting more pump hours per month and the dilutive effect on our cost structure, it’s more than worth it for us to come in and provide some top line concession.

John Daniel: Okay. So I’m trying to translate here. It sounds like you would think you’ve got a better customer mix today than maybe 4 to 5 months ago. Is that a fair statement?

Matt Wilks: Well, we love all of our customers. But as far as customers that can give us a high percentage of pumping days per fleet. It’s the highest it’s ever been. This is the highest account — this is the highest calendar efficiency that we’ve ever seen from our customer base.

John Daniel: Okay. I got another one here, and this is not meant to be a gotch you question, but when you talk about full utilization later this year, are you assuming the U.S. working frac crew count for the whole industry is growing? Or is this more of an increased market share?

Matt Wilks: So when you look at the industry, I think we suffered from our own failures in 2023. And we come in — we’ve come into 2024 with a deficit of our own that when we overcome that deficit will outperform our peer class just from stabilizing the business to where it should have been the whole time. And this — we expect this to happen regardless of what the total market does.

John Daniel: Okay. All right. And then one final one for me. This is probably more for Matt on the sand side. But can you speak to any inquiries in terms of — not looking for price point here, but just the level of inquiries for sand maybe back half of the year out of the Haynesville mines? Are they starting to talk about that? Or is it too early?

Matt Zinn: We’re constantly talking to our customers about their timing. I don’t know that there’s necessarily an RFP season for that region, so to speak, but we are closely aligned with all the major operators in that basin, and we’re talking to them regularly about their upcoming programs and where they think their activity may shift based on gas pricing.

Operator: Our next question comes from the line of Tom Curran with Seaport Research Partners.

Tom Curran: Matt Zinn, thank you for joining the call. Good to know you a little bit better. Opening question for you. Could you share some color on the nature of where the CapEx spend will be going for Alpine this year when it comes to your own budget?