ProFrac Holding Corp
For the period ended Dec 31, 2024. Filed Mar 10, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 10, 2025
ACDC$3.01+10.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-15.
0000950170-24-032170
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-10.
0000950170-25-036251
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 134 previous paragraphs and 131 current paragraphs.
64 unchanged; 33 reworded; 32 added; 34 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
2024 Developments
Current report
In April 2024, we acquired all of the remaining equity interests of Basin Production and Completion LLC (“BPC”). BPC is the parent company of FHE USA LLC, which manufactures equipment used in the hydraulic fracturing industry. The total purchase consideration was $39.8 million, consisting of cash consideration of $14.9 million and our pre-existing investment of $24.9 million.
Current report
In June 2024, we acquired 100% of the issued and outstanding capital stock of Advanced Stimulation Technologies, Inc. (“AST”), a pressure pumping services provider serving the Permian Basin, for total purchase consideration of $174.0 million in cash.
Current report
In June 2024, we acquired 100% of the issued and outstanding common stock of NRG Manufacturing, Inc., which manufactures equipment used in the hydraulic fracturing industry, and its affiliate, AMI US Holdings, Inc., which develops commercial software used in hydraulic fracturing industry (collectively, “NRG”), for total purchase consideration of $6.0 million in cash.
Current report
In May 2024, the Company formed a new entity, Livewire Power, LLC (“Livewire”), which began operations in October 2024. Livewire enables onsite power generation services for oilfield and non-oilfield customers that require off-grid power solutions. Livewire’s power generation equipment is comprised of owned and leased natural gas reciprocating engines and turbine assets. Livewire’s results of operations were immaterial for 2024.
Current report
In December 2024, we sold certain stimulation service equipment to the Wilks Parties in exchange for cash consideration of approximately $40.0 million. We now lease such equipment from the Wilks Parties in exchange for aggregate monthly lease payments totaling $44.8 million through December 2028. The cash consideration received was $26.5 million more than the carrying value of these assets. Because this sale was to an affiliate under common control, we accounted for the $26.5 million as an equity transaction recorded as a deemed contribution within our consolidated statements of changes in equity.
Current report
2023 Developments
Current report
While the 2024 year was challenging for the Company, we continued to provide outstanding service quality to customers and recorded multiple company records in hydraulic fracturing efficiencies as we progressed through 2024. In 2025, we have seen improvement in our Stimulation Services segment activity levels driven by increased customer demand for our services. Additionally, we believe the industry’s activity levels will allow for growth in our Proppant Production segment primarily driven by expected improved utilization and that business’s significant degree of operating leverage. We are focused on improving our performance in 2025 through three areas: providing superior customer service, improved utilization of our assets, and firm cost control. We expect these areas of focus, combined with our strategic initiatives, to improve our relative commercial positioning and financial results during 2025.
Current report
Proppant Production revenues in 2024 decreased $136.8 million, or 36%, from 2023. This decrease was attributable to lower average prices for products sold and a reduction in volumes sold in 2024. Revenue recognized for the amortization of acquired off-market contracts was $43.7 million and $57.5 million in 2024 and 2023, respectively. Intersegment revenues for the Proppant Production segment were 26% and 30% in 2024 and 2023, respectively.
Current report
Manufacturing revenues in 2024 increased $46.7 million, or 27%, from 2023. This increase was attributable to higher intercompany demand for manufacturing products. Additionally, the acquisition of BPC and NRG contributed revenue starting in April 2024 and June 2024, respectively. Intersegment revenues for the Manufacturing segment were 77% and 89% in 2024 and 2023, respectively.
Current report
Proppant Production cost of revenues in 2024 decreased $34.0 million, or 20%, from 2023. This reduction was primarily attributable to lower volumes sold in 2024.
Current report
Manufacturing cost of revenues in 2024 increased $43.5 million, or 30%, from 2023. This increase was primarily attributable to higher volumes of products sold to intercompany and third-party customers in 2024. Additionally, the acquisition of BPC and NRG contributed costs beginning in April 2024 and June 2024, respectively.
Current report
Other cost of revenues in 2024 decreased $13.7 million, or 8%, from 2023. This decrease was primarily attributable to Flotek’s decreased product sales and lower freight costs.
Current report
Depreciation, depletion, and amortization was $442.2 million in 2024, which was consistent with $438.4 million in 2023.
Current report
Goodwill Impairment
Current report
In 2024, a decline in natural gas prices reduced our customers’ activity levels in the Haynesville basin, which is heavily concentrated with natural gas wells. This activity downturn has significantly reduced the operating results of our Haynesville Proppant reporting unit. In the second quarter of 2024, we noted that our customers’ activity levels were not expected to significantly recover in the short-term. The reduced operating results of our Haynesville Proppant reporting unit therefore resulted in a triggering event and, accordingly, we performed an interim quantitative impairment test in the second quarter of 2024. Based upon the results of our interim quantitative impairment test, we concluded that the carrying value of the Haynesville Proppant reporting unit exceeded its estimated fair value, which resulted in a goodwill impairment charge of $67.7 million in 2024. This goodwill impairment charge represented all of the goodwill recorded on the Haynesville Proppant reporting unit. If overall market conditions deteriorate, or if we are unable to achieve our forecasted results, future non-cash impairment charges may result in other reporting units which could be material.
Current report
In 2024, we experienced a decline in our operating results for our Permian Proppant reporting unit and our Eagle Ford Proppant reporting unit. In the third quarter of 2024, we noted that our operating results for these reporting units were not expected to significantly recover in the short-term. The reduced operating results for these reporting units resulted in triggering events and, accordingly, we performed interim quantitative impairment tests in the third quarter of 2024. Based upon the results of our interim quantitative impairment tests, we concluded that the carrying values of the Permian Proppant and Eagle Ford Proppant reporting units exceeded their estimated fair values, which resulted in goodwill impairment charges of $2.4 million and $4.4 million, respectively, in 2024, which represented all of the goodwill recorded on these reporting units.
Current report
Gain on insurance recoveries consists of insurance proceeds received for accidentally damaged or destroyed equipment in excess of its carrying value.
Current report
The transaction costs for 2024 represent deferred costs incurred for Alpine's initial public offering that were charged to earnings as a result of its postponement.
Current report
Supply commitment charges for 2024 represent charges related to contractual inventory purchase commitments to certain proppant suppliers. These charges were attributable to our decreased volume of purchases from these suppliers due to certain customers decreasing their activity levels. If future customer demand differs from our contracted supply, we may incur additional supply commitment charges in future periods.
Current report
Income tax benefit in 2024 was $7.0 million for an effective tax rate of 3.3%. Our income tax provision included a benefit of $25.6 million related to the release of a portion of the valuation allowance on our deferred tax assets. This item was caused by the assumption of a $25.6 million net deferred tax liability in our acquisition of AST, which made it more likely than not that we would be able to utilize a corresponding amount of our deferred tax assets. Excluding this item, the difference between our effective tax rate and the federal statutory rate related to changes in the valuation allowance on our deferred tax assets.
Current report
Investing Activities. Net cash used in investing activities was $372.3 million and $715.8 million in 2024 and 2023, respectively. The change was primarily due to decreased cash used for acquisitions and $40 million of proceeds received in an equipment sale-leaseback related-party transaction.
Current report
Related party debt agreements.
Current report
Both the 2029 Senior Notes and the ABL Credit Facility contain certain customary representations and warranties and affirmative and negative covenants. As of December 31, 2024, we were in compliance with these covenants.
Current report
The Alpine 2023 Term Loan originally contained a covenant commencing with the fiscal quarter ending September 30, 2024, requiring Alpine not to exceed a maximum Total Net Leverage Ratio (as defined in the Alpine Term Loan Credit Agreement) of 2.00 to 1.00. This ratio is generally the consolidated total debt of Alpine divided by Alpine's adjusted EBITDA. This covenant was amended to commence testing compliance with the Total Net Leverage Ratio with the fiscal quarter ending on March 31, 2026. As a result of Alpine’s lower than expected operating results in 2024, Alpine is closely monitoring its forthcoming compliance obligation with this covenant. While there can be no assurance, Alpine believes that it will be able to meet, modify, or further defer this debt covenant.
Current report
In 2024 our capital expenditures were $255.0 million, consisting of maintenance capital expenditures for our fleet, upgrades to legacy pumps, expenditures to maintain efficient operations at our sand mines, and investments in next generation technology.
Current report
Acquisitions of Strategic Businesses
Current report
Our growth strategy includes potential acquisitions and other strategic transactions. From time to time, we enter into non-binding letters of intent as well as binding agreements to make investments or acquisitions. These arrangements may provide for purchase consideration including cash, notes payable by us, equity or some combination, the use of which could impact our liquidity needs. These letters of intent typically are subject to the completion of satisfactory due diligence, the negotiation and resolution of significant business and legal issues, the negotiation, documentation and completion of mutually satisfactory definitive agreements among the parties, the consent of our lenders, our ability to finance any cash payment at closing, and approval of our board of directors. Any binding agreements we may enter typically include customary closing conditions. We cannot guarantee that any such actual or potential transaction will be completed on acceptable terms, if at all.
Current report
We have historically funded our acquisitions through issuances of our equity securities, borrowings under our credit agreements, and issuance of debt securities. For any future acquisitions, we may utilize borrowings under our revolving credit facility and various financing sources available to us, including the issuance of equity or debt securities through public offerings or private placements, to fund these acquisitions. Our ability to complete future offerings of equity or debt securities and the timing and terms of these offerings will depend on various factors including prevailing market conditions and our financial condition.
Current report
Goodwill Impairment
Current report
Impairment of Long-Lived Assets
Current report
We evaluate property, plant, and equipment, operating lease right-of-use assets, and definite-lived intangible assets for impairment when events or changes in circumstances indicate that the carrying value of a long-lived asset may not be recoverable, such as insufficient cash flows or plans to dispose of or sell long-lived assets before the end of their previously estimated useful lives. Recoverability is assessed based on the undiscounted future cash flows generated by the asset or asset group. Estimates of future undiscounted cash flows take into account possible outcomes and probabilities of their occurrence, which require us to apply judgment. If the carrying amount is not recoverable, we recognize an impairment loss equal to the amount by which the carrying amount exceeds fair value. We estimate fair value based on the income, market or cost valuation techniques. Our fair value calculations for long-lived assets contain uncertainties because they require us to apply judgment and estimates concerning future cash flows, strategic plans, useful lives and assumptions about market performance. We also apply judgment in the selection of a discount rate that reflects the risk inherent in our current business model.
Removed paragraphs (34)
Previous report
Before our corporate reorganization on May 17, 2022, our consolidated financial statements presented herein consisted of the accounts of our predecessor as discussed below. Subsequent to May 17, 2022, our consolidated financial statements presented herein include our accounts and those of our subsidiaries that are wholly-owned, controlled by us, or a VIE where we are the primary beneficiary.
Previous report
Our Predecessor and ProFrac Holding Corp.
Previous report
Our predecessor consists of ProFrac LLC and its subsidiaries, Best Pump & Flow LP (“Best Flow”) and Alpine Silica, LLC (“Alpine”), (which we refer to as “ProFrac Predecessor”) on a consolidated basis. Historical periods for ProFrac Predecessor had been presented on a consolidated and combined basis given the common control ownership of the Wilks Parties. On December 21, 2021, all of the then-outstanding membership interests in Best Flow and Alpine were contributed to ProFrac LLC in exchange for membership interests in ProFrac LLC. Unless otherwise indicated, the historical consolidated financial information included in this Annual Report presents the historical financial information of ProFrac Predecessor. Historical consolidated financial information is not indicative of the results that may be expected in any future periods.
Previous report
2023 Significant Events
Previous report
2022 Significant Events
Previous report
In the second quarter of 2022, we completed an IPO of 18.2 million shares of its Class A common stock, par value $0.01 per share at a public offering price of $18.00 per share, which generated combined net proceeds of $301.7 million, after deducting underwriter discounts and commissions and estimated offering costs.
Previous report
On March 4, 2022, we acquired FTS International, Inc. for total purchase consideration of approximately $405.7 million. FTSI was one of the largest providers of hydraulic fracturing services in North America, with 1.3 million HHP as of December 31, 2021. FTSI operated in the Permian Basin, Eagle Ford Shale, Midcontinent, Haynesville Shale and Uinta Basin.
Previous report
Through a series of transactions in the first half of 2022, we entered into a supply agreement with Flotek Industries, Inc. (“Flotek”) to provide full downhole chemistry solutions for 30 of our hydraulic fracturing fleets for a period of ten years starting on April 1, 2022. In connection with this transaction, we determined that Flotek was a variable interest entity and that we were the primary beneficiary. As a result, subsequent to May 17, 2022, the date that Flotek shareholders approved the supply agreement, we have included Flotek in our consolidated financial statements.
Previous report
On July 25, 2022, we acquired the West Texas subsidiaries of Signal Peak Silica, for total purchase consideration of approximately $97.4 million. This acquisition expanded our in-basin frac sand mining operations in the Permian Basin.
Previous report
In November 2022, we acquired U.S. Well Services, Inc. (“USWS”) for total purchase consideration of approximately $479.1 million. USWS was a technology-driven oilfield service company focused on electric-powered pressure pumping services in the United States. The USWS fleets consisted mostly of all-electric hydraulic fracturing equipment. The USWS electric fleets replace the engines, transmissions, and radiators used in conventional diesel fleets with electric motors.
Previous report
In December 2022, we completed the acquisition of the Eagle Ford sand mining operations of Monarch Silica, LLC, for total purchase consideration of approximately $166.5 million. This acquisition added the Eagle Ford Shale to our in-basin frac sand mining operations.
Previous report
In December 2022, we acquired REV Energy Holdings, LLC (“REV”), for total purchase consideration of approximately $140.6 million. REV was a hydraulic fracturing service provider with 204,500 HHP. REV operated in the Rocky Mountains and Eagle Ford Shale.
Previous report
Our customers’ focus on capital discipline and shareholder returns has reduced volatility in the rig count, which has reduced the volatility of demand for our services relative to historical trends. This has allowed us to maintain activity levels and pricing levels that contribute to an attractive return on our assets. We believe the industry’s activity levels will be maintained during 2024 allowing for continued cash flow generation. Our entire organization is focused on improving our performance in 2024 through three areas of focus: providing superior customer service, improved utilization of our assets, and continuously reducing our cost per unit. We expect these areas of focus, combined with our strategic initiatives, to improve our relative commercial positioning and financial results during 2024.
Previous report
Results of Operations
Previous report
Proppant production revenues in 2023 increased $293.3 million, or 326%, from 2022. This increase was due to our acquisitions which increased the number of mines operated and the related tonnage mined. Revenue recognized for the amortization of acquired off-market contracts was $57.5 million and $6.6 million in 2023 and 2022, respectively. Proppant production revenues in 2022 increased $62.8 million, or 231%, from 2021. This increase was due to an increase in proppant volumes and pricing resulting from increased proppant demand primarily in the Permian basin. Additionally, Monahans contributed revenue to this segment from its acquisition date. Intersegment revenues for the proppant production segment were 30%, 62% and 40%, in 2023, 2022, and 2021, respectively.
Previous report
Manufacturing revenues in 2023 increased $9.4 million, or 6%, from 2022. This increase was primarily attributable to increased activity in our stimulation services segment. Manufacturing revenues in 2022 increased $90.3 million, or 118%, from 2021. This increase was primarily attributable to increased activity in our stimulation services segment. Intersegment revenues for the manufacturing segment were 89%, 92% and 90%, in 2023, 2022, and 2021, respectively.
Previous report
Proppant production cost of revenues in 2023 increased $128.9 million, or 318%, from 2022. This increase was due to acquisitions which increased the number of mines operated and the related tonnage mined. Proppant production cost of revenues in 2022 increased $26.4 million, or 187%, from 2021. This increase was due to an increase in proppant production to meet increased customer demand in 2022. Additionally, Monahans contributed costs to this segment from its acquisition date.
Previous report
Manufacturing cost of revenues in 2023 increased $9.1 million, or 7%, from 2022. This increase was due to increased activity in our stimulation services segment in 2023. Manufacturing cost of revenues in 2022 increased $71.7 million, or 109%, from 2021. This increase was due to increased activity in our stimulation services segment as well as higher prices for the cost of raw materials in 2022.
Previous report
Other cost of revenues in 2023 increased $47.8 million, or 40%, from 2022. This increase was due to Flotek’s increased volumes from performing under the supply contract with our stimulation services segment. Flotek was acquired in 2022 and therefore contributed no cost of revenues in 2021.
Previous report
Selling, general and administrative (“SG&A”) expenses in 2023 increased $25.4 million, or 10%, from 2022. Excluding stock-based compensation expense, SG&A expenses increased $63.0 million, or 36%. This increase was due to higher labor and non-labor costs associated with our acquisitions. Subsequent to June 30, 2023, we adjusted our cost structure to right size our organization, through the acceleration of acquisition synergies and headcount reductions. In the fourth quarter of 2023, our SG&A expenses, excluding stock-based compensation, decreased 5% from the same period last year.
Previous report
Depreciation, depletion, and amortization in 2023 increased $171.1 million, or 64%, from 2022. This increase was due to increased depreciation in 2023 from our acquisitions and increased capital expenditures in recent periods as well as increased amortization from customer relationship intangible assets acquired in 2023. The increase in depletion was due to our acquired sand mines. Depreciation, depletion, and amortization in 2022 increased $126.6 million, or 90%, from 2021. This increase was due to increased depreciation in 2022 from increased capital expenditure in 2022 and the depreciation related to the assets acquired from FTSI and USWS acquisition in 2022.
Previous report
The acquisition earnout adjustments represent a decrease in the fair value of the contingent consideration related to our acquisition of REV in December 2022.
Previous report
Other income, net in 2022 was $16.5 million. This balance included a gain of $10.2 million related to the change in fair value of the Flotek Convertible Notes before we obtained control of Flotek. This balance also contained an unrealized gain of $4.2 million on the Munger make-whole provision.
Previous report
Income tax benefit in 2021 was $0.2 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate was due to the Company’s partnership tax status in 2021.
Previous report
Historically, our primary sources of liquidity have been borrowings under our debt agreements and cash flows from operations. In 2023, the Company raised $50.0 million from the sale of its Series A preferred stock to THRC Holdings and FARJO Holdings. The Company presently does not expect any further funds from this source. THRC Holdings and FARJO Holdings are Wilks Parties. See “Note 16 – Related Party Transactions” in the notes to our consolidated financial statements.
Previous report
Flotek Liquidity
Previous report
In Flotek’s Form 10-Q filed on November 8, 2023, Flotek concluded that there was substantial doubt about its ability to continue as a going concern due to limited sources of liquidity. Flotek is evaluating strategies to obtain additional funding to improve its liquidity position and believes it will be able to continue to fund its operations. We believe that substantial doubt about Flotek’s ability to continue as a going concern does not materially adversely affect our business, financial condition or results of operations as we do not guarantee any Flotek liabilities and we have access to other chemical suppliers.
Previous report
Net cash used in investing activities was $715.8 million, $1,028.6 million and $78.4 million in 2023, 2022 and 2021, respectively. The change from 2022 to 2023 was primarily due to decreased cash used for acquisitions, capital expenditures and other investments. The change from 2021 to 2022 was primarily due to $640.7 in net cash paid for acquisitions and higher capital expenditures of $268.8 million related to dual fuel engine upgrades, engine standby controller installations, and our electric frac fleet build program. These uses of cash were partially offset by cash proceeds from a sale-leaseback of real property.
Previous report
In 2023 our capital expenditures were $267.0 million, consisting of maintenance capital expenditures for our fleet, building four electric-powered hydraulic fracturing fleets, and engine upgrades to convert legacy pumps to next generation technology. During the second quarter of 2023, we decided to reduce capital expenditures for the remainder of the year to more closely align with our customers’ activity levels and our reduced number of active fleets as well as to maintain target return thresholds on capital investments.
Previous report
Commitments and Contingencies
Previous report
We are currently litigating multiple patent infringement lawsuits against Halliburton. The outcomes of these cases are uncertain and the ultimate resolution of them could have a material adverse effect on our liquidity in the periods in which these matters are resolved. See “Note 13 - Commitments and Contingencies” in the notes to our consolidated financial statements for further discussion.
Previous report
Goodwill
Previous report
Due to the decrease in our consolidated financial results and the decrease in our market capitalization in 2023, we elected to test the goodwill for our Stimulation Services reporting unit and our Haynesville Proppant Production reporting unit using a quantitative impairment assessment, which required us to estimate the fair values of these reporting units.
Previous report
Based on our quantitative and qualitative assessments, we determined that none of the goodwill for our reporting units was impaired at December 31, 2023. The excess fair value as a percentage of book value for our Stimulation Services reporting unit was more than 20%. The fair value of our Haynesville Proppant Production reporting unit was marginally in excess of its book value at December 31, 2023, which we concluded was reasonable considering that the acquisition of Performance Proppants was nine months before the measurement date. When estimating the future cash flows for these reporting units, we generally assumed revenue and operating margins in future years would increase as we implement new commercial strategies for these reporting units and increase the utilization of our assets. However, if overall market conditions deteriorate, or if we are unable to achieve our forecasted results, future non-cash impairment charges may result which could be material. The fair value of our Flotek reporting unit was marginally in excess of its book value at December 31, 2023. The fair value for the Flotek reporting unit is derived from the observable trading price of its publicly-traded common stock. If the price of Flotek’s common stock has a sustained decline, a future non-cash impairment charge may result which could be material.
Reworded paragraphs (33)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included within “Item 8. Financial Statements and Supplementary Data.” In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect the Company’s plans, estimates, or beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, including, without limitation, those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A “Risk Factors.”
Current wording
In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect the Company’s plans, estimates, or beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, including, without limitation, those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A “Risk Factors.”
Previous wording
We operate in three reportable business segments: stimulation services, proppant production and manufacturing. Our stimulation services segment owns and operates a fleet of mobile hydraulic fracturing units and other auxiliary equipment that generates revenue by providing stimulation services to our customers. Our proppant production segment provides proppant to oilfield service providers and E&P companies. Our manufacturing segment sells highly engineered, tight tolerance machined, assembled, and factory tested products such as high horsepower pumps, valves, piping, swivels, large-bore manifold systems, and fluid ends.
Current wording
We operate in three reportable business segments: Stimulation Services, Proppant Production and Manufacturing. Our Stimulation Services segment, which primarily relates to ProFrac LLC, owns and operates a fleet of mobile hydraulic fracturing units and other auxiliary equipment that generates revenue by providing stimulation services to our customers. Our Proppant Production segment, which primarily relates to Alpine, provides proppant to oilfield service providers and E&P companies. Our Manufacturing segment sells products such as high horsepower pumps, valves, piping, swivels, large-bore manifold systems, and fluid ends.
Previous wording
Total revenue for 2023 was $2,630.0 million; an increase of $204.4 million from 2022.
Current wording
Total revenue for 2024 was $2,190.9 million compared to $2,630.0 million in 2023.
Previous wording
Net loss for 2023 was $59.2 million; a decrease of $401.9 million from 2022.
Current wording
Net loss for 2024 was $207.8 million compared to net loss of $59.2 million in 2023.
Previous wording
Cash provided by operating activities for 2023 was $553.5 million, an increase of $138.3 million from 2022.
Current wording
Cash provided by operating activities for 2024 was $367.3 million compared to $553.5 million in 2023.
Previous wording
Total principal amount of long-term debt was $1,107.9 million at December 31, 2023, an increase of $148.5 million from December 31, 2022.
Current wording
Total principal amount of long-term debt was $1,138.9 million at December 31, 2024 compared to $1,107.9 million at December 31, 2023.
Previous wording
In December 2023, we completed the refinancing of our existing senior secured term loan and other debt with two new financings totaling $885 million, which will both mature in 2029. As a result of these transactions, we extended our significant debt maturities to 2029, and obtained the financial flexibility to take advantage of the expected increase in activity levels in 2024. For more information, see “Note 6 – Debt” in the notes to our consolidated financial statements.
Current wording
In December 2023, we completed the refinancing of our existing senior secured term loan and other debt with two new financings totaling $885 million, which will both mature in 2029. As a result of these transactions, we extended our significant debt maturities to 2029. For more information, see “Note 7. Debt” in the notes to our consolidated financial statements.
Previous wording
Stimulation services revenues in 2023 decreased $57.5 million, or 2%, from 2022. This decrease was due to a decrease in average active fleets and lower fleet utilization in 2023. These decreases were substantially offset by the full year effect of our acquisitions when compared with last year. Stimulation services revenues in 2022 increased $1,603.3 million, or 215%, from 2021. This increase was due to an increase in customer activity and an increase in active fleets, pumping hours and pricing in 2022. FTSI and USWS contributed revenue to this segment from their acquisition dates in 2022.
Current wording
Stimulation Services revenues in 2024 decreased $376.8 million, or 16%, from 2023 This decrease was due to a decrease in average active fleets and lower fleet utilization in 2024. This decrease was primarily attributable to a lower number of average active fleets in 2024, lower average pricing for our services, and an increase in the portion of customers who provided their own proppant and chemistry. These decreases were partially offset by increased utilization of our active fleets in 2024 and the acquisition of AST, which contributed revenue starting in June 2024.
Previous wording
Other revenues in 2023 increased $81.2 million, or 73%, from 2022. This increase was due to Flotek’s increased revenues from the supply contract with our stimulation services segment. Flotek recorded $20.1 million of revenue related to contract shortfalls because the stimulation services segment did not purchase the minimum contractual commitment of chemistry products from Flotek. Intersegment revenues for Flotek were 65% and 67%, in 2023 and 2022, respectively. Flotek was acquired in 2022 and therefore contributed no revenues in 2021.
Current wording
Other revenues in 2024 increased $2.5 million, or 1%, from 2023. Flotek recorded $32.5 million and $20.1 million of revenue in 2024 and 2023, respectively, related to contract shortfalls with the Stimulation Services segment. Intersegment revenues for Flotek were 63% and 65% in 2024 and 2023, respectively.
Previous wording
The following table summarizes our cost of revenues by reportable segment:
Current wording
The following table summarizes our cost of revenues, exclusive of depreciation, depletion, and amortization, by reportable segment:
Previous wording
Stimulation services cost of revenues in 2023 increased $202.9 million, or 14%, from 2022. This increase was due to the full year effect of our acquisitions when compared with last year and was partially offset by our decrease in average active fleets in 2023. Cost of revenues for this segment included an intercompany supply commitment charge of $20.1 million because the stimulation services segment did not purchase the minimum contractual commitment of chemistry products from Flotek. Stimulation services cost of revenues in 2022 increased $862.8 million, or 151%, from 2021. This increase was due to an increase in customer activity levels and increased prices for proppant and chemicals used in the fracturing process. Additionally, FTSI and USWS contributed costs to this segment from their acquisition dates.
Current wording
Stimulation Services cost of revenues in 2024 decreased $274.1 million, or 16%, from 2023. This decrease was primarily attributable to a decrease in average active fleets and decreased volume of proppant and chemistry in 2024. Cost of revenues for this segment included an intercompany supply commitment charge of $32.5 million in 2024 and $20.1 million in 2023 because the Stimulation Services segment did not purchase the minimum contractual commitment of chemistry products from Flotek.
Previous wording
SG&A expenses in 2022 increased $178.9 million, or 279%, from 2021. Excluding stock-based compensation expense, SG&A expenses increased $111.5 million, or 174%. This increase was due to increased headcount, incentive compensation and non-labor costs in 2022 associated with our increased activity levels and 2022 acquisitions. In 2022 we also recognized stock-based compensation associated with certain deemed shareholder contributions. See “Note 10 – Stock-based Compensation” in the notes to our consolidated financial statements for discussion of our stock-based compensation related to deemed contributions.
Current wording
Selling, general and administrative (“SG&A”) expenses in 2024 decreased $29.0 million, or 12%, from 2023. Excluding stock-based compensation expense, SG&A expenses decreased $6.5 million, or 3%. This decrease was due to cost savings initiatives, which was partially offset by higher labor and non-labor costs associated with our 2024 acquisitions. See “Note 11. Stock-based Compensation” in the notes to our consolidated financial statements for a discussion of our stock-based compensation.
Previous wording
Acquisition and integration costs consist of professional and advisory fees, acquisition related severance expenditures, and other costs associated with acquisition and integration activities. Acquisition related expenses were $21.8 million, $48.8 million and zero in 2023, 2022 and 2021, respectively. These costs related to our acquisition and integration activities in 2023 and 2022. We expect for these expenses to significantly decrease in 2024 due to reduced acquisition and integration related activities.
Current wording
Acquisition and integration costs consist of professional and advisory fees, acquisition related severance expenditures, and other costs associated with acquisition and integration activities. Acquisition related expenses were $7.8 million and $21.8 million in 2024 and 2023, respectively. These costs related to our acquisition and integration activities in the respective periods.
Previous wording
Litigation expenses and accruals for legal contingencies generally represent legal and professional fees incurred in litigation as well as estimates for loss contingencies with regards to certain vendor disputes and litigation matters. In 2023 more than half of these costs are related to litigation costs incurred in connection with multiple patent infringement lawsuits against Halliburton. See “Note 13 - Commitments and Contingencies” in the notes to our consolidated financial statements for further discussion.
Current wording
Litigation expenses and accruals for legal contingencies generally represent legal and professional fees incurred in significant litigation as well as estimates for loss contingencies with regards to certain vendor disputes and litigation matters. In 2024, substantially all of these costs represent litigation costs incurred in connection with certain patent infringement lawsuits with Halliburton, which were settled in September 2024. See "Note 14. Commitments and Contingencies" in the notes to our consolidated financial statements for a discussion of significant litigation matters. In 2023 more than half of these costs were related to litigation costs incurred in connection with the lawsuits against Halliburton.
Previous wording
Severance charges in 2023 related to the departure of two executives.
Current wording
Severance charges related to the departure of certain highly-compensated employees.
Previous wording
Loss on disposal of assets, net consists of gains or losses on excess property, early equipment failures, and other asset dispositions.
Current wording
Gain or loss on disposal of assets, net consists of gains or losses on excess property, early equipment failures, and other asset dispositions.
Previous wording
Interest expense, net in 2023 increased by $95.4 million from 2022. This increase was primarily due to a higher average debt balance in 2023 and higher average interest rates in 2023. Interest expense, net in 2022 increased by $33.7 million from 2021. This increase was primarily due to a higher average debt balance in 2022 and higher average interest rates in 2022. We are subject to interest rate risk on our variable-rate debt. A 1% increase in interest rates on our variable-rate debt as of December 31, 2023, would increase the annual interest expense for this debt by approximately $10.0 million. See “Note 6 – Debt” in the notes to our consolidated financial statements for additional discussion related to our debt.
Current wording
Interest expense, net in 2024 was $156.6 million, which was consistent with $154.9 million in 2023. We are subject to interest rate risk on our variable-rate debt. A 1% increase in interest rates on our variable-rate debt as of December 31, 2024, would increase the annual interest expense for this debt by approximately $10.7 million. See “Note 7. Debt” in the notes to our consolidated financial statements for additional discussion related to our debt.
Previous wording
As a result of debt refinancing transactions and debt repayments in 2023, we recognized a loss on extinguishment of debt in 2023 of $33.5 million compared with $17.6 million and $0.5 million in 2022 and 2021, respectively.
Current wording
As a result of debt refinancing transactions and debt repayments in 2023, we recognized a loss on extinguishment of debt of $33.5 million in 2023.
Previous wording
Other expense, net in 2023 was $36.2 million. This balance was primarily due to an unrealized loss on our investment in BPC of $30.2 million. See “Note 5 - Investments” in the notes to our consolidated financial statements for discussion of our investment in BPC. This balance was also due to and a loss of $8.5 million on our Munger make-whole provision. See “Note 14 - Fair Value Measurements” in the notes to our consolidated financial statements for discussion of the Munger make-whole provision.
Current wording
Other income, net in 2024 was $3.0 million. Other expense, net in 2023 was $36.2 million. This balance was primarily due to an unrealized loss on our investment in BPC of $30.2 million. See “Note 6. Investments” in the notes to our consolidated financial statements for discussion of our investment in BPC. This balance was also due to a loss of $8.5 million on our Munger make-whole provision. See “Note 15. Fair Value Measurements” in the notes to our consolidated financial statements for discussion of the Munger make-whole provision.
Previous wording
Income tax expense in 2023 was $1.2 million for an effective tax rate of negative 2.1%. The difference between the U.S. statutory tax rate of 21% and the effective tax rate was due to the income that was earned within the financial statement consolidated group that was not subject to tax within the financial statement consolidated group and changes in the valuation allowance on our net deferred tax assets.
Current wording
Income tax expense in 2023 was $1.2 million for an effective tax rate of negative 2.1%. The difference between the U.S. statutory tax rate of 21% and the effective tax rate was due to the income that was earned within the financial statement consolidated group that was not subject to tax within the financial statement consolidated group and changes in the valuation allowance on our deferred tax assets.
Previous wording
While Flotek is included in our consolidated financial statements, we do not have the ability to access or use Flotek’s cash or liquidity in our operations and, accordingly, have excluded Flotek’s cash and other sources of liquidity from the following discussion of our liquidity and capital resources. See “Note 4 – Business Combinations” in the notes to our consolidated financial statements for discussion of our ownership of Flotek.
Current wording
Our primary sources of liquidity are cash flows from operations and availability under our revolving credit facility. While Flotek is included in our consolidated financial statements, we do not have the ability to access or use Flotek’s cash or liquidity in our operations and, accordingly, have excluded Flotek’s cash and other sources of liquidity from the following discussion of our liquidity and capital resources. See “Note 4. Business Combinations” in the notes to our consolidated financial statements for discussion of our ownership of Flotek.
Previous wording
At December 31, 2023, we had $19.3 million of cash and cash equivalents, excluding Flotek, and $83.4 million available for borrowings under our revolving credit facility which resulted in a total liquidity position of $102.7 million. Refer to “Note 6 – Debt” in the notes to our consolidated financial statements for more information regarding our revolving credit facility.
Current wording
At December 31, 2024, we had $10.4 million of cash and cash equivalents, excluding Flotek, and $70.7 million available for borrowings under our revolving credit facility which resulted in a total liquidity position of $81.1 million. Refer to “Note 7. Debt” in the notes to our consolidated financial statements for more information regarding our revolving credit facility.
Previous wording
We believe that our cash and cash equivalents, cash provided by operations, and the availability under our revolving credit facility will be sufficient to fund our capital expenditures, satisfy our obligations, and remain in compliance with our existing debt covenants for at least the next 12 months. If we pursue additional acquisitions during 2024 we will likely need to raise additional debt and/or equity financing to fund them. There is no assurance we could do that on favorable terms, if at all.
Current wording
We believe that our cash and cash equivalents, cash provided by operations, and the availability under our revolving credit facility will be sufficient to fund our capital expenditures, satisfy our obligations, and remain in compliance with our existing debt covenants for at least the next 12 months. Alpine is closely monitoring its forthcoming debt covenant compliance obligation that commences in the fiscal quarter ending March 31, 2026. While there can be no assurance, Alpine believes that it will be able to meet, modify, or further defer this debt covenant. See “Note 7. Debt” in the notes to our consolidated financial statements for more information about this forthcoming debt covenant.
Previous wording
Net cash provided by operating activities was $553.5 million, $415.2 million, and $43.9 million in 2023, 2022 and 2021, respectively. Cash flows from operating activities consists of net income or loss adjusted for non-cash items and changes in operating assets and liabilities.
Current wording
Net cash provided by operating activities was $367.3 million and $553.5 million 2024 and 2023, respectively. Cash flows from operating activities consists of net income or loss adjusted for non-cash items and changes in net working capital.
Previous wording
Net income or loss adjusted for non-cash items in 2023 resulted in a cash increase of $423.5 million compared with a cash increase of $679.5 million in 2022 and a cash increase of $108.4 million in 2021. The change from 2022 to 2023 was primarily due to lower earnings in 2023. The change from 2021 to 2022 was primarily due to higher earnings in 2022.
Current wording
Operating Activities. Net income or loss adjusted for non-cash items in 2024 resulted in a cash increase of $278.8 million compared with a cash increase of $423.5 million in 2023. The change was primarily due to lower earnings in 2024.
Previous wording
The net change in operating assets and liabilities in 2023 resulted in a cash increase of $130.0 million compared with a cash decrease of $264.3 million in 2022 and a cash decrease of $64.5 million in 2021. The change from 2022 to 2023 was primarily due to an increase in cash provided by accounts receivable in 2023, when compared with 2022, resulting from our decreased activity levels and lower working capital needs in 2023. The change from 2021 to 2022 was primarily due to increased working capital needs to fund our increased activity levels in 2022.
Current wording
The net change in working capital in 2024 resulted in a cash increase of $88.5 million compared with a cash increase of $130.0 million in 2023. The change was primarily due to a decrease in cash provided by accounts receivable in 2024, which was partially offset by an increase in cash provided by inventory in 2024 and a decrease in cash used in accounts payable in 2024.
Previous wording
Net cash provided by financing activities was $149.7 million, $645.9 million, and $36.9 million in 2023, 2022, and 2021, respectively. In 2023 cash borrowed net of debt repayments was $101.6 million and we received $48.9 million in net proceeds from our preferred stock offering. In 2022 cash borrowed net of debt repayments was $413.8 million and we also received $228.8 million of proceeds from our IPO and related transactions. In 2021 cash borrowed net of debt repayments was $39.4 million.
Current wording
Financing Activities. Net cash provided by financing activities was $5.5 million in 2024. Net cash used in financing activities was $149.7 million in 2023. In 2024 debt repayments net of cash borrowed was $4.0 million. In 2023 cash borrowed net of debt repayments was $101.6 million, and we received $48.9 million in net proceeds from our preferred stock offering.
Previous wording
debt service obligations, including interest,
Current wording
debt service obligations, including interest and principal;
Previous wording
See “Note 6 – Debt” and “Note 7 - Leases” in the notes to our consolidated financial statements for the discussion of our various debt agreements and capital leases, respectively.
Current wording
See “Note 7. Debt” and “Note 8. Leases” in the notes to our consolidated financial statements for the discussion of our various debt agreements and finance leases, respectively.
Previous wording
In 2024 we estimate capital expenditures will range from $150 million to $200 million in maintenance related expenditures and an additional $100.0 million for growth initiatives across all segments. Currently, growth capital expenditures for 2024 are expected to be related to sand mine improvements and upgrades to our hydraulic fracturing fleet.
Current wording
In 2025 we estimate capital expenditures will range from $150 million to $175 million in maintenance related expenditures and an additional $100 million to $125 million for growth initiatives across all segments. Currently, growth capital expenditures for 2025 are expected to be related to upgrades to our hydraulic fracturing fleet, investments in next generation technology, and sand mine improvements.
Previous wording
As of December 31, 2023, we had purchase commitments of $29.8 million in 2024 for hydraulic fracturing equipment components.
Current wording
As of December 31, 2024, we had purchase commitments of $55.8 million in 2025 for hydraulic fracturing equipment components and proppant.
Previous wording
In 2023 the TRA Holders converted all of their Class B common stock to Class A common stock. See “Note 1 – Organization and Description of Business” in the notes to our consolidated financial statements for further discussion of this common stock conversion and related transactions. The tax effect of our IPO and this transaction resulted in an estimated $68.1 million noncurrent TRA liability. As of December 31, 2023, the current liability for our TRA obligation was an additional $2.8 million. The TRA liability will generally be paid under the TRA as ProFrac Corp. realizes actual cash tax savings from the tax benefits covered by the TRA in future tax years. We do not expect a significant increase in the estimate of this liability in future periods.
Current wording
In 2023 the TRA Holders converted all of their Class B common stock to Class A common stock. See “Note 1. Organization and Description of Business” in the notes to our consolidated financial statements for further discussion of this common stock conversion and related transactions. The tax effect of our IPO and this transaction resulted in an estimated $82.9 million noncurrent TRA liability. As of December 31, 2024, the current liability for our TRA obligation was an additional $3.3 million. The TRA liability will generally be paid under the TRA as ProFrac Corp. realizes actual cash tax savings from the tax benefits covered by the TRA in future tax years. We do not expect a significant increase in the estimate of this liability in future periods.
Previous wording
Goodwill is evaluated for impairment annually in the fourth quarter or whenever events or circumstances indicate the carrying value may not be recoverable. The impairment test involves a comparison of the fair value of each reporting unit with its carrying value. Fair value reflects our estimate of the price a potential market participant would be willing to pay for the reporting unit in an arms-length transaction. Reporting units with significant goodwill balances at December 31, 2023, include our Stimulation Services reporting unit, Flotek reporting unit, and our Haynesville Proppant Production reporting unit, which represents our Performance Proppants acquisition.
Current wording
Goodwill is evaluated for impairment annually in the fourth quarter or whenever events or circumstances indicate the carrying value may not be recoverable. The impairment test involves a comparison of the fair value of each reporting unit with its carrying value. Fair value reflects our estimate of the price a potential market participant would be willing to pay for the reporting unit in an arms-length transaction. Reporting units with significant goodwill balances at December 31, 2024, include our Stimulation Services reporting unit and our Flotek reporting unit.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included within “Item 8. Financial Statements and Supplementary Data.” Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K for the fiscal year ended December 31, 2023, for discussion of our financial condition and results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, which is incorporated by reference herein.
Current report — wording carried from elsewhere
If we pursue additional acquisitions during 2025, we will likely need to raise additional debt and/or equity financing to fund them. There is no assurance we could do that on favorable terms, if at all.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous report — wording carried elsewhere
See Note 4 – Business Combinations” and “Note 16 – Related Party Transactions” in the notes to our consolidated financial statements for additional discussion related to our acquisitions.
Previous report — wording carried elsewhere
Income tax expense in 2022 was $9.1 million for an effective tax rate of 2.6%. The difference between the U.S. statutory tax rate of 21% and the effective tax rate was due to the income that was earned within the financial statement consolidated group that was not subject to tax within the financial statement consolidated group after the Company’s corporate reorganization to a taxable entity subsequent to the IPO and changes in the valuation allowance on our net deferred tax assets.