Welcome to ProFrac Holding Corp First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this call is being recorded. It is now my pleasure to introduce your host, Rick Black, Investor Relations. Thank you, Rick. You may begin. Thank you, operator. Good morning, everyone. We appreciate you joining us for ProFrac Holding Corp.'s conference call and webcast to review first quarter 2023 results. With me today are Matt Wilks, Executive Chairman, Ladd Wilks, Chief Executive Officer, and Lance Turner, Chief Financial Officer. Following my remarks, management will provide high-level commentary on the financial highlights of the first quarter of 2023, as well as the business outlook before opening the call up to your questions. There will be a webcast of today's call available via webcast on the company's website at pfholdingscorp.com, as well as a telephonic recording available until May 17th, 2023. More information on how to access these financial features is included in the company's earnings press release. Please note that the information reported on this call speaks only as of today, May 10th, 2023. Therefore, you are advised that any time sensitive information may no longer be accurate as of the time of any replay, listening, or transcript reading. Comments on this call may contain forward-looking statements within the meaning of the United States federal securities law, including management's expectations on future financial and business performance. These forward-looking statements reflect the current views of ProFrac management. They're not guarantees of performance. Various risks and uncertainties and contingencies could cause actual results to differ materially, performance or achievements to differ from those expressed in management's forward-looking statements. The listener or reader is encouraged to read ProFrac's Form 10-Q 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 tab to understand those risks and uncertainties and contingencies. The comments today also include certain non-GAAP financial measures as well as other adjustments and 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 quarterly earnings press release, which can be found on the company's website. Now I would like to turn the call over to ProFrac's Executive Chairman, Matt Wilks. Matt? Thanks, Rick, and good morning, everyone. We are pleased to report ProFrac's operational and financial results for the first quarter of 2023. Once again, we generated strong revenues and adjusted EBITDA as we continue to execute on our acquire, retire, replace, and vertical integration strategies. I am proud of what this team has accomplished and excited to realize the full potential of this business as we move forward. Since the end of the third quarter of 2022, ProFrac has closed five transactions, adding 12 fleets and six mines across multiple basins. During the first quarter of 2023, we estimate that we absorbed over $20 million of costs associated with the conversion, optimization, and retirement of acquired assets. To be clear, these costs were not added back to arrive at the $255 million of adjusted EBITDA for the quarter. It is important that we call these costs out as they are non-recurring. Those non-recurring costs were associated with standardizing and upgrading acquired pumps, as well as optimizing efficiencies of the mines we have acquired. We incurred these expenses so that all of our assets are capable of performing to our standards. As our asset base has expanded, we have taken the opportunity to reposition frac fleets so that they would be in position to cross-sell our sand and logistics. A result of these initiatives, we believe our first quarter financial performance was not reflective of the true earning power of our business. Becoming public, we have worked aggressively to build out our platform with several key objectives in mind. The goal remains to position ProFrac to one, deliver the safest, highest and most consistent service quality for our customers. Two, insulate the business from cyclicality as best as possible by vertically integrating the supply chain. Three, maximize and return free cash flow to our stakeholders, which we hope to update soon. We believe we have successfully executed on the first two goals. Our operating efficiencies are best in class, and we offer a portfolio of Tier 4 dual fuel and electric fleets capable of delivering significant cost savings and emissions reductions for our customers and further separating us from our peers. As such, we were able to earn premium margins while still lowering our customers' completion cost per lateral foot, which we believe is the best measure of value for services. On the supply chain side, ProFrac's vertical integration strategy is delivering incredible results. We have the largest in-basin sand footprint with approximately 23 million tons per year of production capacity. This network of sand mines positions ProFrac to capture value from the mine gate all the way to the wellhead, significantly improving the economics of our fleets. By manufacturing our own equipment, ProFrac shortens cycle times and matches the cadence of inventory build and consumption with the activity levels of our customers. We believe this is a critical advantage that will result in improved cash flow throughout market cycles. Our mission is clear. We are focused on demonstrating ProFrac's earnings power and cash flow generation. In our 2+ decades in the frac business, we have never seen a better opportunity to generate free cash flow, all of which we intend to use to pay down debt and return to our stakeholders. Our conviction is underpinned by several factors. The industry's supply and demand fundamentals are as good today as we have ever seen. The majority of workable capacity is held by a small group of disciplined players. We are very encouraged by the industry's reaction to the rapid attrition of legacy equipment. We believe new horsepower entering the market will serve as replacement capacity, and that the measured pace of these replacements will prevent oversupply. At ProFrac, we continuously evaluate our equipment to ensure we are allocating capital to assets that can generate our targeted rates of return. Our decision to retire the equivalent horsepower of three fleets earlier this year demonstrates our commitment to this practice. We believe this process, in one form or another, is taking place throughout the industry. Capital scarcity and supply chain tightness serve as high barriers to entry that did not exist in past cycles. Today's commodity market backdrop is constructive. In the crude market, the combination of OPEC+ production restraint and U.S. shale producers' capital discipline will continue to support the price of oil despite recent volatility. Even with the recent pullback, our customers can generate very attractive returns at current price levels. We believe these conditions will persist, and that the demand for our services will remain strong for an extended period of time. As for natural gas, much has been made of the recent price decline. Although gas prices have been a recent headwind, we anticipate that this situation will prove transitory. We are seeing a disconnect between the current price of gas and the underlying fundamentals for the commodity. We believe the forward curve and the coming growth in LNG export capacity reflects the reality that the world will be short natural gas for the foreseeable future. Global demand for power generation will continue to increase. Natural gas is the best possible solution for meeting the world's energy needs. We believe U.S. natural gas represents a multi-decade opportunity. For this reason, we are committed to gas basins. Our continued presence and leadership in these markets will yield immense benefits to ProFrac. Reinforce critical customer relationships. We are confident in ProFrac's ability to generate free cash in the current environment because of the strategic moves we have made over the last year. ProFrac identified materials integration as being key to enhancing free cash flow generation and capturing margin from selling sand to logistics and providing chemicals is a durable opportunity that can represent as much as $25 million of annualized gross profit for every fleet supplied. ProFrac has control and custody of key supply chains. We manufacture fluid ends, power ends, and high-pressure iron, and we build and refurbish our own pumps, pump units, and blenders. The obvious benefit of vertically integrated manufacturing is reduced maintenance costs. However, we believe the true power of our vertical integration comes from better asset management and cash flow management. With shorter lead times, more of our equipment is available to work and generate revenue. Plus, lower exposure to outstanding purchase orders results in more discretionary cash flow and protects us in a market downturn. Industry discipline has become a welcome narrative. For ProFrac, we believe our disciplined approach will maximize free cash flow. With that, I'll turn the call over to Ladd. Thanks, Matt. First, I wanna thank our team for their hard work and dedication as they continue serving our customers so well. In Q1, ProFrac realized a 7% increase in sequential revenue and generated $255 million of adjusted EBITDA despite the significant one-off costs incurred following our recent acquisitions. Our results for the quarter were impacted by business improvement initiatives associated with these acquisitions. We're prepared to adjust our commercially available resources to respond to industry discipline. During the quarter, we made moves that will enable us to fully execute our strategy of integrating materials and capturing the full earnings potential of our fleets moving forward. We continue to see tightness in the market and stable service pricing. This market backdrop is supportive of our business. We will remain disciplined in the same way that our customers behave, and we will deploy our fleets where they can earn an attractive return and generate cash for us to return to our stakeholders. Following our recent acquisitions, we went to work upgrading and standardizing these assets. Additionally, as we added sand capacity, we've began relocating fleets to be better positioned to integrate our bundled services moving forward. We have consistently seen significantly higher annualized gross profit generated from fleets that pump our sand and use our logistics and chemicals. This earnings potential is what drove our profit acquisitions over the last year. Since the end of the third quarter of 2022, ProFrac added over 16 million tons per year of capacity across key markets. Historically, several of our legacy fleets and all our acquired fleets were working on an equipment-only basis. Our strategic priority has been, and will continue to be, increasing the number of fully integrated fleets we operate. We are already seeing the benefits of this strategy. As a reminder, during the fourth quarter of last year, ProFrac sold approximately 33% of the sand it pumped. Only four fleets were using sand produced by our mines. We exited Q1 averaging 40% and more than tripled the number of fleets using sand mined by ProFrac. We look forward to building on this trend and continuing to grow our profits per fleet. We continued to see a very tight sand market with a strong demand and robust pricing across all of our markets. However, our sand mining operations have yet to demonstrate their full potential. Our Lamesa mine shipped its first load at the end of December and continues to ramp up its utilization. When we closed on the Performance acquisition in February, the Sunny Point mine was just beginning operation. We expect to continue improving utilization across all mines throughout 2023. With 23 million tons per year of production capacity, we believe our mines can serve as many as 46 fleets. This is an immense opportunity that we're only beginning to tap into, as only a fraction of our fleets are currently pulling sand from Alpine mine. As such, the cross-sell opportunities are significant. As Matt mentioned earlier, each fleet that we supply offers the potential to capture as much as $25 million in annualized gross profit. Our position as the leading producer of in-basin sand and one of the largest frac service providers is unique, and we look forward to demonstrating the earnings power of this combination. Demand for our services remains robust. The highest quality customers are seeking service providers with assets and technology that can reliably de-deliver efficiency cost savings. We have responded to this demand by upgrading much of our legacy Tier 2 equipment to Tier 4 dual fuel and building new e-fleets. This strategy continues to pay dividends. We recently deployed an e-fleet with a top-tier customer on a dedicated basis, and we expect to deploy another in the near future as demand for this equipment is strong. With our industry-leading portfolio of next generation equipment, ProFrac is well positioned to deliver best-in-class performance and consistent fuel cost savings. This creates win-win situation that differentiates us from competitors and will ultimately benefit ProFrac and its customers. Furthermore, ProFrac shareholders stand to benefit as well as the increased demand for this next generation equipment translates into improved equipment utilization and superior pricing. Looking forward into the second quarter, we expect continued sequential revenue growth. Activity in the natural gas basins has slowed versus what we saw throughout 2022. As a result, we do expect some white space to persist. However, we believe the depressed price in gas is a temporary phenomenon. Pricing remains very attractive in today's market across all basins. In pursuing commercial opportunities, ProFrac will always prioritize generating returns over winning market share. We continue to work alongside our customers as they update and refine their expected completion schedules with the goal of minimizing gaps in the calendar and integrating more materials into our fleets. We expect to see an improved contribution from our Proppant Production segment during the second quarter, as it will be the first quarter with full contribution from all eight mines operated by ProFrac. This should allow us to further capitalize on the previously mentioned materials opportunity. With the integration of the recently acquired pressure pumping companies behind us, all our fleets are using ProFrac's SOPs, which should enhance efficiencies while reducing R&M expense. These factors should boost profitability moving forward. I'll now hand it over to Lance to provide more detail on our financial results. Thank you, Ladd. On a consolidated basis, revenue for the first quarter totaled $852 million, an increase of 7%. The revenue increase was driven primarily by an improved average active fleet count and an increase in the amount of proppant sold. Adjusted EBITDA, excluding Flotek, was $255 million, a decrease of 5% sequentially. We incurred approximately $20 million of costs related to the conversion, optimization, and retirement of acquired assets during the quarter, for which we did not make an adjustment to EBITDA. These costs were comprised of $12 million related to upgrading acquired fleet pumps to ProFrac's latest technology, $3 million for optimizing certain acquired assets, and $5 million of direct costs associated with fleets that were retired and are no longer being marketed. As expected, our adjusted EBITDA per fleet on an annualized basis, excluding Flotek, decreased due to the diluted utilization along with an increase in costs associated with the company's work to standardize acquired fleets. Selling, general, and administrative costs were $76.3 million in the first quarter. Excluding stock-based compensation and amounts attributable to Flotek, selling, general, and administrative costs totaled $51.8 million. Turning to our business segment, the Stimulation Services segment generated revenues of $790 million in the first quarter, up 3% sequentially. Adjusted EBITDA for the segment was $206 million, compared to $252 million in the previous quarter. Although revenues increased due to a higher average active fleet count, it was offset by lower utilization and elevated costs resulting from the recent acquisitions. As we expand our material integration, we may see profit shift amongst segments based on specific customer agreements and our commercial approach. The Proppant Production segment generated revenues of $82 million in the first quarter, up 132% sequentially. Adjusted EBITDA for the Proppant Production segment totaled $41 million, up 104% from the $20 million reported in the fourth quarter. The improvement was primarily driven by a full quarter contribution from the number of mines in operation and the volume of proppant produced in the quarter. Approximately 39% of this segment's revenue was intercompany compared to 64% in the previous quarter, driven by the newly acquired mines and third-party customer mix. During the quarter, we averaged approximately five mines operating and expect continued growth as we average eight mines in the second quarter. Additionally, as we improve the efficiencies at our plants, we expect to see a lower cost per ton and higher output at each mine. The Manufacturing segment generated revenues of $67 million in the first quarter, up 31% from the previous quarter. Approximately 95% of this segment was intercompany revenue for products and services provided to the Stimulation Services segment. Adjusted EBITDA for the Manufacturing segment was $8 million, a vast improvement from the fourth quarter. In the first quarter, the Other Business Activities segment, which represents Flotek, generated revenue of $49 million and an adjusted EBITDA loss of $7.9 million. Cash capital expenditures totaled $83.2 million in the first quarter, excluding acquisitions. While this is expected to accelerate over the next two quarters, given the anticipated timing of project completions, many of the project materials have already been paid for and are in inventory. During the first quarter, we continued to pursue various growth initiatives, specifically the construction of four e-fleets and the previously announced engine upgrade program. The remainder of our CapEx is mainly used to perform necessary equipment maintenance. We will remain disciplined with our capital allocation plans and expect to reduce capital spend based on total fleet activity levels to ensure that we earn our targeted rates of return on all capital investments. Operating cash flow was $233 million during the first quarter, which was supported by a working capital tailwind of approximately $48 million. We did experience an increase in inventory assumed from our recent acquisitions, along with the additional inventory that is used to standardize the acquired equipment. We expect that these recent inventory builds will reduce our cash requirements over the coming quarters and serve as a tailwind for cash flow generation. At the end of the first quarter, ProFrac had approximately $1.2 billion of net debt. As Matt mentioned, our focus for the remainder of 2023 is generating free cash flow. In the first quarter, we produced free cash flow of roughly $150 million, a significant increase from the $42 million achieved in the previous quarter. We expect our net leverage to decline throughout the year as we pay down debt and continue to grow our earnings. Operator, please open the line for questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Arun Jayaram with J.P. Morgan. Please proceed. Good morning, gentlemen. I was wondering if you could give us maybe some thoughts on how you think, you know, 2Q could kind of play out from a profitability standpoint. Ladd, you mentioned you expect sequential growth in terms of the top line. I was wondering if you could maybe give us a little bit more thoughts on maybe Stimulation Services. You expect, you know, sequential growth on the top line there. How do you think EBITDA could play out, assuming that the $20 million doesn't repeat on a sequential basis? Yeah, we're not gonna provide any guidance on on our path forward, just that sequentially, we expect to see consistent improvement as we digest these transactions and continue to bring each of the the potential for these subsidiaries forward. ProFrac Holdings is a holdings company representative of most multiple service lines, and our focus is maximizing the profitability across each of those service lines. Okay. Fair enough. Fair enough. Maybe for Lance, I was wondering if you can just help us out on just thinking about how CapEx could trend over the next couple of quarters and for the full year. If you can just help us in from a modeling standpoint on the timing for the four, you know, e-fleets that will over the balance of the year, that'd be helpful. Thanks. Yeah. I think, you know, I think that Q2 will probably be a little heavier weighted. Then Q3 will be a little heavier than Q4. I think that at, you know, right now, I think we're gonna adjust the CapEx budget as we think about, you know, how many fleets we offer into the market, and what the customer demand is for those e-fleets. I think that we're not revising the full year outlook at this point. I think that we're taking a disciplined approach to all CapEx including maintenance and growth CapEx as we look forward. Yeah, one thing I'd like to clarify on that, though, is that the timing of CapEx and the capital outlay for that are not on the same timelines. Much of the inventory that we carry now has already been paid for. Whenever we pull that into CapEx, it will already have been paid for. From a cash outlay standpoint, it doesn't have a big impact. Okay. Are we still looking at CapEx sitting about the $350 million range for the full- year? That would be the high end. We expect it to be a lot lower, but we're not looking to provide any visibility into that at this time. Okay. Thanks a lot. Our next question is from Saurabh Pant with Bank of America. Please proceed. Saurabh Pant, please see if your line is muted. Hi. Good morning, guys. Sorry. Yeah, I was on mute. Good morning, Matt, Ladd, and Lance. Morning. Morning. I guess, well, I'll maybe start with, if you can just walk us through the different basins, obviously the gas basin, the oil basins. The underlying dynamics are a little different at this point in time. If you can just walk us through what you're seeing in the gas basins versus the oil basins and how you are repositioning your assets, and maybe talk to your strategy a little bit in the near term across these basins? Yeah. We're seeing a very disciplined approach from our customers and, you know, just really operators as a whole. We've seen a relatively consistent capital deployed by each one of them. They didn't ramp up a whole lot whenever, you know, oil was at $120 and gas was pushing $10. It hadn't really pulled back a whole lot from, You know, now that you have a lower price point. When you look at the forward curve on the gassy markets, you've got a very constructive curve. With your larger players with good hedges, they've maintained a steady CapEx program. We're seeing, you know, pretty good, pretty good outlook. We like, we like where we sit. We like how the overall services space is also remaining disciplined. I think it's that disciplined approach that says go in and make sure that you maximize the profitability of every asset that you have working. We're not gonna go in and focus in on each basin. I think from, you know, for the most part, the industry remains sold out. As we put the digesting these transactions in Q1 behind us, I think that we'll be back on the path that everyone knows and expects from ProFrac. You know, if we had a chance to do it again, we would do it again. We like the opportunities that exist for the business and like the path that we're on, and we'll continue down that path, generating cash flow for our stakeholders. Okay, perfect. No, appreciate that answer. A quick follow-up to what Arun was asking, was trying to dig into the second quarter. I appreciate you can't provide guidance right now, right? Just to make sure we are thinking about the starting point, right? Should we add back the $20 million to the 1Q EBITDA and then think about that as a starting point for second quarter, or is that not the right way to look at it? Yeah, that's the way I look at it. Those were non-recurring items associated with these acquisitions and as well as upgrading the equipment to a standardized format. When we look at that, we look at that as being inclusive. You know, where does that put us at? $275. From there, we see this CQ2 as being sequentially stronger and look forward to delivering on those results. Okay. No, perfect. Thanks for that clarification. Okay, guys, thank you. I'll turn it back. Our next question is from Don Crist with Johnson Rice. Please proceed. Morning, gentlemen. I wanted to ask about the electric fleets as they are built and kind of roll out. Are they gonna displace Tier 2 or kind of lesser quality fleets? i.e., are you gonna keep your fleet count roughly stable with first quarter as those roll out? We certainly believe that they will displace the Tier 2 equipment. In general, across the entire space, we also believe that the next gen equipment that's out there from anything from dual fuel to e-fleets to direct drive will continue to displace the Tier 2 equipment that is has a high degree of consumption of diesel and with that, excessive costs. You know, as we look forward, this is continuing to be a very concentrated market that's very, very healthy, and we believe that it's gonna do a great job all the way through the cycle. As we see that, you know, that consolidation in the space, it's gonna continue to push more and more towards technology because this isn't just that there's fewer players that represent the market. It's that it's fewer players with technology and lower operating costs because ultimately, the number one thing for our customers is reducing their overall cost per lateral foot. Technology allows two things, you know, a number of things to exist at the same time. You know, higher stage rates for your equipment products, while also reducing the overall net cost from the reduction of fuel costs. Okay. Just one more from me, I guess, for Lance on the balance sheet. As you see free cash flow coming across the transom, should we assume that you keep some minimum level of cash and then the rest kinda gets swept over to either the term loan or the revolver going forward? You know, I think our goal is to kind of minimize the revolver as opposed to carry. I mean, we will have some minimum level of cash, but it's gonna be pretty small. I think what you see in March thirty-first is really kinda just a timing of collections or payments in the 24 hours following. I think we wanna minimize interest costs and just keep that ABL kinda going with cash generation or the term loan in the case of the quarterly payments or the sweeps. Yeah, Lance, I think it's a good time to jump on this. As we look at our discretionary cash going forward, we're gonna be paying down our debt. We're also gonna be going presenting to our Board for approval a return of capital program. This proposal will be going to our Board in the very near future, in the next couple weeks, where we outline what we'll be doing with our discretionary cash, either a dividend or a buyback. We'll get that over to them, we'll be updating shareholders as soon as possible. Along with that, one thing I would highlight is that whenever we look at our float here, our inventory is higher than our float. CapEx budget's higher than our float. Our ABL is higher than our float. Our quarterly EBITDA is higher than our float. I honestly don't understand why any energy company out there would want to be a public company. We'll be looking at what we do with our discretionary cash as a very focused effort to make sure that all stakeholders get their proportional share of those discretionary cash flows. I appreciate all the color, and I'll turn it back. We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing comments.