Greetings and welcome to the ProFrac Holding Corp First Quarter 2024 earnings 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 conference is being recorded. It is now my pleasure to introduce your host, Mr. Michael Messina, Director of Finance for ProFrac Holding Corp. Thank you. 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 our first quarter 2024 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 operational and financial highlights of the first quarter before opening the call up to your questions. There will be a replay of today's call available by webcast on the company's website at pfholdingscorp.com, as well as a telephonic recording available until May 16, 2024. More information on how to access these replay features is included in the company's earnings release. Please note that information reported on this call speaks only as of today, May 9th, 2024, and 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. 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 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 quarterly earnings release, which can be found on the company's website. And now I would like to turn the call over to ProFrac's Executive Chairman, Mr. Matt Wilks. Thanks, Michael, and good morning, everyone. After my prepared remarks, Ladd will comment further on the performance of our subsidiaries, and Lance will go through our financial performance. We are very pleased with our first quarter results. We made progress on what we told you last quarter and are now seeing the results. We are focused on getting back to our foundations to provide an incredible customer experience, increased utilization throughout all of our subsidiaries, and better cost control to ensure we are the lowest-cost operator in the industry. In the first quarter, we generated $160 million of Adjusted EBITDA and $582 million of revenue. Our costs were down and our efficiencies were up. We deployed 9 fleets since our most recent low in the fourth quarter. As we scale, we were able to absorb costs and deliver greater returns per fleet, and we saw benefits of that in the first quarter. In addition, ProFrac has expanded its portfolio of highly efficient customers. In the quarter, we generated substantial cash flow that we used to fund the growth of fleets and working capital. The underlying results demonstrate the earnings capabilities of our assets and our people. We believe our cash conversion is the best in the industry. Looking forward, we continue to see opportunity in this market. Our average fleet count for the second quarter will grow based on the timing of activations during the first quarter. We continue to pursue opportunities to increase our fleet count in a disciplined manner. Similar to the activity outlook for the industry, we also expect pricing to remain relatively stable. Overall, we remain on track with what we laid out for Pressure Pumping last quarter, and I am confident we will continue to have wins as the year progresses, even in a flat rig count scenario. Turning to Alpine, weakness in the gas markets and weather have impacted our results. However, we are seeing an uptick in volumes and anticipate demand increases starting later this year that should further boost output. We continue to expect the Proppant division to achieve our 60%-70% utilization target, but we recognize that we will likely need to see continued improvement in natural gas prices to get utilization where we want it. We view this as upside opportunity, and we believe that this inflection point is getting closer. Another one of our largest opportunities continues to be our E-fleet deployment. Recently, we completed a pad in the city limits of Midland and demonstrated the versatility, reliability, and quiet nature of our E-fleet, which was actually our most efficient fleet in West Texas last month. These E-fleets are a meaningful component of our value proposition to our customers. Our ability to provide customers with significant fuel savings, maintain high reliability, and demonstrate efficient operations has made our E-fleets highly sought after and a critical part of our service offerings. We are building our E-fleet backlog and expect to have all E-fleets deployed later in 2024. I'm proud of the execution of our teams across the organization on the priorities we outlined during our last call, and I am proud of our momentum. We are heading in the right direction on each of our initiatives. At the customer level, we have successfully acquired a diverse customer base with approximately 70% of fleets operating for large efficient customers on a dedicated basis. We also continue to fill new inbound requests for additional deployments, with the highest demand being for electric and Tier 4 Dual Fuel technologies. Regarding utilization, we saw a significant step up with our Pressure Pumping assets driven partly by our focus on working with highly efficient customers, but also the team's relentless focus on minimizing downtime at every opportunity. Finally, strengthened by our vertical integration, our firm grip on cost is yielding improved results and margin across the company. This focus allowed us to achieve high incrementals quarter-over-quarter. As an example, in Q1, we made significant progress towards our goal, and by March, we were able to dilute what we call controllable costs by 25% from our Q4 average. As a leader in the oilfield services industry, we are maintaining these priorities front and center for all of our teams. We will continue to execute on our strategic goals and maintain focus on our key priorities to create long-term value for our stakeholders and provide best-in-class services to our customers. We believe the industry is on a solid footing, and we are well positioned to ensure that our standing within the market continues to improve. With that, I'll turn the call over to Ladd. Thank you, Matt. I'll begin with an overview of our performance in each segment, starting with pressure pumping. I'm proud to report we achieved record efficiency levels in the first quarter for our pressure pumping segment. We generated roughly an 11% sequential improvement in pumping hours per fleet, and that makes Q1 the most efficient quarter in ProFrac's history. We continue to set numerous records for our customers. One of the most recent examples occurred in March when one of our fleets hit an all-time record for a customer by pumping 675 hours. Efficiency across all our fleets was up nearly 30% in March over Q1 of 2023. A large portion of this is a product of the focus on efficiency for the entire industry, but this really demonstrates the commercial strategy that we employed by focusing on dedicated through-cycle customers. This also highlights how amazing our team is. We have the best crews in the industry and are consistently putting up the best numbers for our customers. In the first quarter, we activated nine fleets, increasing our scale considerably. I'd like to reiterate that. At scale, we believe we have the lowest costs in the industry. On our last call, we laid out a path to generate mid- to high-teens EBITDA per fleet exclusive of the proppant division, and we achieved that. More importantly, in Q2, we expect to continue at that level, and our average fleet count should be higher due to the full quarter impact of activated fleets. We believe this will lead to incremental improvement in Adjusted EBITDA quarter-over-quarter. We have a unique vertically integrated business that benefits from lower costs at scale, yielding superior returns, and we will continue to demonstrate that in our results. The Proppant segment is also making progress. We are a little behind schedule on the transformation our team has embarked on, primarily due to the weakness in natural gas activity and the impacts of weather. Overall, our objective remains the same. While our sales pipeline expanded rapidly in Q4 heading into Q1, weather and operational disruptions impacted results. To address this, we have implemented a number of initiatives that will improve the utilization of our mines to ensure we can service the volumes we have in the pipeline. For example, our plant improvement in Lamesa completed in mid-March has enabled us to double the output and achieve 70% utilization. In South Texas, we are working on a similar plant improvement as demand there remains very strong. This transformation has led to some minor growing pains that we quickly overcame, and we are getting back on track. Despite the lower sequential results, we are seeing improved utilization each month in the second quarter. Based on current visibility, we expect total volumes to recover to be at or above fourth quarter levels. In summary, we are positioning Alpine to produce higher throughput, higher utilization, and lower cost per ton. Looking at our marketplace, we continue to believe our business segments are well positioned to be the preferred providers for large multi-base operators. These operators require service providers with sufficient scale that have custody over the supply chain of materials. This is exactly what we were built for at ProFrac. We believe there is a massive growing need for natural gas for a variety of end purposes, both domestically and abroad. So we continue to maintain a strong presence and reputation with customers in the gassier plays, and we believe this will benefit us in the long run. I want to thank our outstanding team for their hard work, dedication, and commitment to safety. Throughout our organization, our people are executing on the three areas of focus that Matt outlined in his remarks. We firmly believe we have the right plans and initiatives in place with the best team in the industry. I'll now hand it over to Lance to provide more detail on our consolidated financial results. Thank you, Ladd. Our first quarter revenues of $582 million represent a 19% sequential increase. We generated $160 million of adjusted EBITDA in the first quarter for an overall EBITDA margin of 27%. First quarter EBITDA represents a 46% improvement sequentially with incrementals of approximately 54%. The cash we generated in the quarter went primarily toward working capital and CapEx in conjunction with the scale-up of our fleets and mine improvements, as well as to pay down approximately $23 million of outstanding debt. Stimulation services revenues were up 28% to $517 million in the first quarter, driven primarily by the higher number of active fleets and improved efficiencies, partially offset by a single-digit reduction in pricing as we migrated toward highly efficient through-cycle customers. Adjusted EBITDA for the segment was $125 million, which was up approximately 116% sequentially. Margins also improved to the segment's highest level seen since the first quarter of last year. The results of the Stimulation segment, in particular, stand as evidence that our strategy and cost structure are working for us, with incrementals in excess of 50% demonstrated in the quarter. This segment was also impacted by approximately $5 million of reactivation costs and approximately $9 million in shortfall expense related to our supply agreement with Flotek. The proppant production segment generated revenues of $78 million during the quarter. Total revenue was down sequentially due to lower tonnage sold on the heels of weaker natural gas activity and the impacts of weather and certain operational limitations. Average pricing per ton also came down slightly, but pricing appears to be stable going forward. Approximately 70% of the volumes in the Proppant segment were sold to third-party customers during the first quarter, which is in line with our commercial strategy to focus on customers where we can add the most value. Adjusted EBITDA for the segment totaled $28 million. The lower EBITDA was driven by lower volume and prices coupled with a predominantly fixed cost structure. The manufacturing segment generated revenues of $43.5 million, up approximately 28% from the fourth quarter. Approximately 78% of this segment was intercompany. The increased sales in the first quarter were a result of increased fleets and hours pumped at the stimulation services segment, resulting in higher consumable usage. Adjusted EBITDA for the manufacturing segment was $4.4 million, which was up compared to $1.8 million in the fourth quarter. Margins improved in the first quarter, largely due to the absorption of costs through higher output and lower cost per unit as we start to see the benefits of our initiative to reduce third-party reliance for certain production activities. Selling general administrative costs were $51 million in the first quarter compared to $59 million last quarter. No one category of spending drove the sequential decline, but rather our general focus on cost-conscious behavior is yielding results. Cash capital expenditures totaled $59.9 million in the first quarter, a sequential increase driven by our higher fleet count and other growth-related initiatives related to fleet upgrades and mine improvements. Approximately $22 million was incurred in prior periods and held in accounts payable but later paid in the first quarter of this year. We continue to expect to incur between $150 million-$200 million in maintenance CapEx for the year, along with approximately $100 million on growth-related CapEx. Despite the 23% increase in fleet count and 11% improvement in efficiencies, cash used for working capital was only $24 million. We continue our focus on right-sizing the inventory, which provided a $16 million benefit to working capital this quarter. In addition, we were able to reduce our DSOs by approximately four days to help offset the AR build required for the ramp-up in activity levels. Total cash and cash equivalents at March 31st was $28 million, including $5 million attributable to Flotek. Total liquidity at quarter end was approximately $167 million, and borrowings under the ABL ended the quarter with $138 million. While the emphasis on our strategic initiatives has already begun to bear fruit in 2024, we see opportunity for improvement ahead. We remain focused on operational execution, efficiencies, and providing best-in-class services to our customers. We believe we will continue to improve our relative positioning to drive shareholder value in 2024 and beyond. That concludes our formal remarks. Operator, please open the line for questions. Thank you. We will now be conducting a question-and-answer session. If you'd 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'd 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 comes from the line of Blake McLean with Daniel Energy Partners. Please proceed with your question. Hi. Good morning. Thank you for taking my call. Morning. Thank you. Yeah. I was hoping maybe you guys could just speak to maybe some of the market dynamics on the frac side. I mean, obviously, you guys saw really nice sequential improvement in EBITDA per fleet. How do you see that progressing over the course of the year? Maybe any more color you can provide on that increase in profitability and the split between cost cuts and absorption. Just any more color you could share around that and on the market sort of generally. Definitely. So when you look at the right when the gas market was falling off, you had budgets reset on the oily side. And so we saw a nice migration there and a relatively stable fleet count for the industry. And we expect it to be relatively stable for the remaining part of the year, with the exception to that being a bounce back in natural gas prices. If we see that, then you'll see fleet count grow. Right. And then on the profitability side, the improvements there, you talked about absorption, you talked about cost cuts. How should we think about the weight of each of those and the additional opportunities for kind of Q2, Q3, Q4 on that front? Definitely. Yeah. Most of it was through absorbing the costs. The operating leverage that we have in this business is tremendous. Vertical integration gives us a very more fixed nature to our cost structure relative to our peers, that some of them have more variable cost structure. So when we pump more, we're more efficient, and we have more fleets out there running, we're able to absorb those costs in a much broader way. And I think Q1 showcases that. Good. And then, maybe, thank you. Maybe just one more. I was hoping to ask you guys have, obviously, a lot of insight into the gassier basins. I was wondering if you could share any color on conversations you're having with operators, things they're focused on, things they're looking at, anything that might give just some more insight into how they're thinking about the world for the back half of this year or into 2025. Yeah. Certainly. So there's several operators that we're talking to where we see some opportunities in Q3, Q4. It's still early on, but what we're seeing on the forward curve is encouraging. But we're remaining very conservative with it, sticking to our guns. And we don't want to get overly bullish and lean into it too much or too soon. But we're in constant communication with these operators and think that they're doing a phenomenal job of being disciplined with the market that they have. And we look forward to their activity picking up towards the back half of this year. Okay. Thank you guys very much for the time this morning. Thank you. Thank you. Our next question comes from the line of Stephen Gengaro with Stifel. Please proceed with your question. Thanks. Good morning, everybody. Good morning. Two things from me. One is on the fleet count, are we right that it's probably in the low- to mid-30s right now? Is that approximately how many active fleets you have? Yes. Okay. Thanks. And when we look at the current makeup of your fleet between electric, dual fuel, and sort of older diesel, can you give us a rough breakdown and maybe even sort of talk about I assume it's the lower emission assets, which are basically close to fully utilized. Can you give us any details around that? We won't get too detailed with it, but without a doubt, customers prefer fuel efficiency. I think that the value that's provided by dual fuel fleets as well as E-fleets and the overall fuel savings I mean, it displaces a lot of diesel. And this is an area that we focused on because this allows us to lower the cost for our customers, but without it having a detrimental impact to our financials. So this is a trend that we expect to continue seeing. However, there are many customers that prefer diesel, all diesel fleets. And that's really driven by the associated gas associated with some of these oily basins and the costs of bringing these other options to the field. Okay. Great. And then. I think you see that I think you really see that across the industry as well. This is where the majority of the growth capital in this space is going. It's almost all of it's going to upgrading equipment to a more fuel-efficient configuration. Great. And then just one final from me. You've been involved in this in the past, but when we think about industry dynamics and potential for future consolidation, how do you think about allocating capital between either building new assets to replace older assets or potentially M&A? I mean, we're in the market. We see things that are out there, and we're interested in value, but that value is few and far between. I think the best way to think about us is just we take a very patient approach to the market and would generally avoid a transaction unless we see a tremendous amount of value coming with it. Great. Thanks for the color. Thank you. Thank you. Our next question comes from the line of Saurabh Pant with Bank of America. Please proceed with your question. Hi. Good morning, Matt, Ladd, and Lance. Maybe I'll start with a follow-up. I think, Matt, you said in your prepared remarks you expanded your portfolio with highly efficient customers, which is obviously commendable, and that's what you should be doing. Can you give us a little color, Matt or Ladd, maybe on how much visibility do you have as we look forward for the next three to six months? I'm especially thinking in light of the completion deferrals that we are seeing in the gas basins. How much should we worry about the potential white space in the gas-heavy basins in the next three to six months? Yeah. There's a lot to unpack there. And good morning, and thank you for joining our call. We've got some availability, but we look at the market in a very disciplined way and won't put fleets to work unless it fits in our overall strategy. There's certainly benefits to scale and our ability to absorb costs. And so when we look at opportunities, we want to make sure that when we deploy these, we deploy it in a very disciplined way. And one of the things that also comes with our vertical integration is that if we get into a situation where there's no fleets available, it becomes tight, really tight from gas markets coming back. Well, we can respond to that quickly too and solve any issues and meet the needs of our customers, even if that means that we end up with an undersupplied market in 2025. Okay. Okay. I got it. Just a quick clarification. I think, Lance, you mentioned I think you said $9 million in shortfall cost payable to Flotek. Should we expect that to continue in the second quarter and in the foreseeable future, just given the volume expectation you have right now? We're working to expand our chemical profile with our customers and get that to where we need to be. We expect to reduce it, but it'll take a little bit of time as we ramp that up. Okay. Perfect. And then just one last one from me. I think this was, Matt, you said in your prepared remarks that you expect to have all e-fleets deployed by I think you said later in 2024 or you said by the end of 2024. But just a quick clarification on that. Is that a comment on your deployed electric fleets? Because I think you have a couple of electric fleets that were partially completed. Are you talking about those as well? Yes. We're talking about those as well. So when we look at the remainder of this year and the recent success that we've set the most efficient fleet we had in West Texas was in the city limits of Midland, where there's a great deal of sensitivity toward noise. And it's right there in front of everybody's offices. So it was on full display for the industry. And so I think what we're seeing from that is a great deal of excitement and really showcasing for the overall market what these things are capable of, that you should expect the same efficiencies from an E-fleet with fuel savings, and that there's not really any compromises. These are as good or better than a conventional fleet, and they'll deliver you the results that you need. That's fuel savings and a quieter profile so that you can work in these sensitive areas where people are trying to sleep and live. So we're very excited about that. We're seeing a lot of inbounds and expect to have every e-pump that we have in an active status working for customers. Yeah. And I'll just add to that. When we're talking about fleet growth, it will not come from pricing reductions. It's going to come from these differentiated offerings that we have, whether it's E-fleets, hybrid fleets, or dual fuel. It's not going to come from slugging it out over pricing over conventional diesel fleets. It's going to come from these offerings that the market wants. Yeah. Essentially, creating value and offering value to our customers, where our customers see savings, but it comes from the value proposition that we bring. Right. Right. Right. No, that's very helpful. Always good to see demand pull versus just a pricing-based supply push. So fantastic. Okay. Matt, Ladd, Lance, thank you. I'll turn it back. Thank you. Thank you. Our next question comes from the line of Don Crist with Johnson Rice. Please proceed with your question. Good morning, guys. I wanted to ask a more macro question. Given the horsepower requirements of today to pump 20+ hours, a traditional fleet is no longer 45,000 or 50,000 horsepower. And, Matt, I'm curious just your opinion as to if that premise is true, where you're needing 50,000+ horsepower just to service and pump those amount of hours per day, where we are from a macro perspective, are we pretty balanced in the fleet today, just given those extra horsepower requirements? Yeah. So, I mean, it really depends which basin you're in. I think the higher pressure puts a higher requirement on your fleet, where you need more redundancy and because this is about managing around equipment failures. And when they fail, how do we solve for that so there's not an interruption in the service quality at all? And so, typically, you would see anywhere really, to pump 100 barrels a minute, you'd really only need 14 pumps. But one of your pumps is going to fail while you're pumping. So you should probably have 18 in line and then 2 on standby and then 4 in a maintenance rotation. So that's on typical zipper frac. And you should be able to pump 21-22 hours a day doing that with that configuration. But when you get into higher pressure, you're going to need a little bit more redundancy. Or when you see simul-fracs, some of these simul-fracs are 180 barrels a minute if you've got both sides running. And so that puts a higher requirement on the number of pumps. The number of pumps you have in line has more to do with how many barrels a minute you're pumping. And then the pressure has to do with how much redundancy you need to keep that number of pumps pumping. So I think you'll hear you'll probably see a pretty wide scale of how much horsepower is required. Some people have higher failure rates. When you take care of your equipment and you have maintenance redundancy, incredible cycle times, we run our business, our maintenance team, like it's pit row. If you can get your cycle times down really quick and see a pit stop in 2 seconds we love looking at the IndyCar. In the 1990s, it took almost 10 seconds for a pit stop to get a full set of tires and fuel. But nowadays, they're under two seconds in some instances. So that's what we focus on. We want to get the highest utilization out of our assets. We want the tightest cycle times in maintenance and to consistently deliver the best performance without cutting corners or putting ourselves in a bind. Under no circumstance do we want to see rate fall below the designed rate for our customers. It's not just pump time. It's service quality and delivering the customer the spec that they require. I appreciate that. Just from a macro perspective, given the excess horsepower that's required to swap pumps out for valves and seats replacement, etc., do you think we're fairly balanced today? I ask that in the terms of if we get a 15 or 20 fleet uplift in demand from gas basins, could we see a significant tightening across the industry in a matter of a couple of fleets going back to work? Or is there enough slack horsepower in the industry today to where we can absorb an uplift of a few fleets but not maybe 15 or 20? I definitely think that's fair. It's pretty nasty out there if you don't have scale and if you don't have the vertical integration that we do. I think our vertical integration allows us to absorb costs, dilute the costs on a per-pump-hour basis. It also means that we don't have to cut corners or defer Maintenance CapEx or anything like that. And I think this is the type of environment where you'll see that with various players across the space where they're deferring maintenance and potentially seeing a higher level of attrition than the historical norm. You add to that a bounce back in gas prices, and you could see a tightening of the market that goes a bit beyond the available horsepower. And with that, you do also see more simul-fracs. When you look at the fleet count on a year-over-year basis, how many of those fleets are simul-frac, pumping at higher rates, requiring more redundancy? And I think your line of questioning is exactly right. It's set up for a tighter market. But what we focus on is working with customers to make sure that they don't feel that squeeze and making sure that they're able to accommodate any issues that come along and that they're not on the wrong end of that trend. I appreciate the color. I agree. I think if we add a minimal amount of fleets here, we could see a significant uplift in pricing going forward. But I'll turn it back in queue. Thank you. Yeah. I'll say one thing to that as well. What we focus on and what's so important for our customers is that they see some certainty to their capex and that they're working with partners that can deliver them a reliable product at a great price with no surprises. And when you see supply constraints, it's easy for us to look at that and get really excited about prices going up. But like our customers, stability and reliable cash flows are the most important thing for us. And so when we look at the path forward, we see these as opportunities to create long-lasting partnerships with our customers and deliver them reliable pricing that they can count on. And maybe that takes some of the spike out of the upswing, but it certainly takes a little bit of the bite out of any pullbacks in the cycle. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Wilks for any final comments. Thank you, everybody. We appreciate your time today. Very excited about this quarter, but more excited about what this year brings. We just thank you for your time. We look forward to carrying on and continuing these results. Thank you. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.