ProFrac Holding Corp. Class A Common Stock 2026 Q2 Earnings Call

Thank you, operator. Good morning, everyone. We appreciate you joining us for ProFrac Holding Corp's conference call and webcast to review our results for the second quarter ended June 30, 2026. With me today are Matt Wilks, Executive Chairman, Ladd Wilks, 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 2026 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, August 6th, 2026. 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 ProFrac's 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 better 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 Flotek.

Additional details and reconciliations to the most directly comparable consolidated and GAAP financial measures are included in the earnings press release, which can be found on the company's website. Now over to Mr. Matt Wilks, Executive Chairman of ProFrac.

Thank you, Michael, and hello, everyone. I'll kick off with some remarks on our overall performance, the broader market environment, and progress on our strategic priorities. I'll then hand it over to Austin, who will take you through the segment results in more detail. We're pleased to report that our Q2 results improved over Q1 results and again came in ahead of expectations. April carried forward the operational momentum we discussed on our last call, and while these levels moderated somewhat as we moved through May and June, utilization remained strong. As I'll discuss in a moment, the market backdrop remains constructive, and we continue to see an open window for more favorable pricing dynamics. Consistent with what we said on our last call, the majority of that benefit is layering in through the back half of the year rather than the second quarter itself.

Looking ahead to the Q3 and the back half of the year, our approach to pricing is to be constructive, not aggressive. We do not plan to deploy incremental fleets speculatively, and any gains we capture from here are about building toward a stronger 2027 rather than chasing a near-term spike. Given the constructive activity backdrop, RFP season conversations are already underway sooner than usual. We intend to be well-positioned through that process into 2027. To the extent we see incremental demand show up in the spot market later in the year, our preference is not to chase it with additional equipment, but rather to capture that value more durably through the RFP process. We expect efficiency to continue improving on a quarterly basis as calendar white space tightens further, and we're encouraged by the consistency building through the back half of the year.

During the quarter, we experienced incremental competitive pricing pressure in sand in the West Texas region. While supply remains tight in both the South Texas and East Texas, North Louisiana markets, we remain focused on translating more of our order book into long-term commitments and improving throughput. As we've spoken about in the past, the operating leverage inherent in our ProFrac business becomes increasingly evident as we drive higher utilization, and we continue to believe this business is capable of improved free cash flow as the efficiencies are realized. We continue to evaluate ways to further strengthen this business over time. From a regional perspective, South Texas continues to be our strongest performing market, both from a sell-through and a throughput standpoint. We did see some minor weather-related disruption in the quarter from flooding activity, though it was manageable.

Looking ahead, we continue to see the Haynesville as an attractive growth market for us, both on the frack side and on the sand side. As gas-directed activity builds in support of LNG export capacity and power demand, we expect to see continued opportunity to increase activity across both of our core service lines. Zooming out to review the broader market environment, if there's one word that captures the last several months, it's volatility, and we think that volatility itself is the signal worth paying attention to. Oil prices this year have ranged from a low in the first days of January to an April peak that was precisely double that trough. Within the second quarter alone, prices fell roughly 40% from their peak to a subsequent low, only to rally back nearly 40% off that low in the following weeks.

That is not the behavior of a market that has found its footing. We point to the underlying cause. The conflict in the Middle East has continued to defy expectations of a long-term resolution. What is looked at various points like a path forward toward de-escalation has repeatedly given way to renewed military action, and recent weeks have brought further strikes and further retaliation. We continue to believe, as we've said on our prior calls, that this is not a transient supply shock, but a structural shift in available global capacity. If anything, this extended period of uncertainty has only reinforced the case for domestic energy security. When global supply can swing this violently on geopolitical developments, the value of reliable, lower risk North American production only becomes more apparent to operators, policy makers, and importers. We continue to see this dynamic as a structural tailwind for our business.

Turning to our cost structure, we remain committed to the $100 million of annualized savings program we outlined at the start of the year. That program has three components. Labor-related reductions that we have targeted at $35 million-$45 million annualized. Non-labor operating expense reductions that include SG&A, repair and maintenance, and asset level OpEx that together we have targeted at $30 million-$40 million. Lastly, capital expenditure efficiency that we've targeted at $20 million-$30 million. We continue to work through each of these initiatives, and we remain confident in the full program as these efforts mature over the balance of the year. Our vertically integrated model and asset management platform remain central to how we think about our competitive position, not just this quarter, but across the cycle.

Our in-house manufacturing capability allows us to build, upgrade, and standardize equipment at a cost basis that's simply not available to others who rely on third parties. Our asset management program continues to be a meaningful driver of fleet reliability and uptime. These aren't new initiatives, but they remain foundational to how we compete, and we continue to see them as a durable source of advantage as the cycle evolves. Irrespective of where we are in the market cycle, we execute on a routine upgrade program converting diesel equipment to dual fuel and natural gas-capable configurations. This quarter, we made the decision to accelerate a portion of that program while maintaining our disciplined approach to capital allocation. We are moving forward with additional engine orders ahead of our original schedule, given the continued strong demand we're seeing from operators for this higher specification equipment.

We view this as an investment decision rather than a departure from our cost discipline. Upgrading this equipment now, while demand for high spec dual fuel capacity remains strong, reduces our repair and maintenance exposure over time, extends the useful life of these assets, and supports our strong positioning as we discuss 2027 plans with our customers. I want to touch briefly on our eBlender program that we introduced on our last call. Deployment continues to progress. With a few additional units placed into service since our last call, we're seeing the efficiency benefits we expected on the units we have deployed, including lower repair and maintenance spend, as well as improved uptime relative to legacy equipment. By the end of the year, we expect to have deployed our new eBlender technology across our fleet.

On technology, Machina continues to be central to how we think about our competitive positioning. Machina is our Closed Loop Fracturing solution. It combines ProPilot 2.0 surface automation with real-time subsurface data providers like Seismos. The platform doesn't just measure the frac, it acts on it while we're pumping. The near-term focus is uniformity, getting every cluster and every stage to take fluid the way it was designed to, rather than accepting the wide variance the industry has historically treated as normal. That's the foundation for prescriptive completions, designs that adjust in real-time based on what the rock is telling us, rather than through a static pump schedule. We remain in active price discovery on the commercial model, and customer feedback from deployments continues to be encouraging as we structure value share going forward.

We also continue to see real promise in Machina's application to acreage that operators have effectively set aside. In many cases, nearby offset wells, wastewater infrastructure where legacy completions create execution risk that leads operators to defer or shelve otherwise attractive locations. Machina's real-time subsurface intelligence and closed loop control are designed to reduce that risk, which we believe can shift the economic calculus on certain locations and bring stranded inventory back into play without requiring the kind of upfront offset well infrastructure investment that sometimes runs as much as $1 million-$2 million. We'll continue to share more as our commercial discussions with customers progress. Wrapping up my opening comments, we delivered solid second quarter results, building on that momentum from earlier in the year despite a volatile macro backdrop.