ProFrac Holding Corp. (ACDC)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included in this Quarterly Report, as well as our Annual Report.

Overview

We are a vertically integrated and innovation-driven energy services holding company providing hydraulic fracturing, proppant production, other completion services and other complementary products and services to leading upstream oil and natural gas companies engaged in the exploration and production (“E&P”) of North American unconventional oil and natural gas resources.

We operate in four reportable business segments: Stimulation Services, Proppant Production, Manufacturing and Flotek. 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. Flotek is a leading chemistry and data technology company focused on servicing the E&P industry.

Summary Financial Results

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Total revenue for the three months and six months ended June 30, 2026 was $498.1 million and $947.7 million, respectively, which represented decreases of $3.8 million and $154.5 million, respectively, from the same periods in 2025.

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Net loss attributable to ProFrac Holding Corp. for the three months and six months ended June 30, 2026 was $79.7 million and $163.2 million, respectively, which represented a decrease in net loss of $28.3 million and an increase of net loss of $37.7 million, respectively, from the same periods in 2025.

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Cash provided by operating activities for the six months ended June 30, 2026, was $32.2 million, a decrease of $103.2 million from the same period in 2025.

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Total principal amount of long-term debt was $1,102.4 million at June 30, 2026, an increase of $54.3 million from December 31, 2025.

2026 Developments

In January 2026, ProFrac Holdings II, LLC issued an additional $25.0 million aggregate principal amount of its 2029 Senior Notes at par to Beal Bank USA in a private placement to fund capital expenditures with any remaining proceeds used for general corporate purposes. These notes were issued as additional notes pursuant to the original indenture as amended. These new notes and the notes previously issued under the indenture are treated as a single series of securities under the indenture and the new notes have substantially identical terms, other than the issue date, issue price and first payment date, as the existing notes and are secured by a security interest in the same collateral.

On March 3, 2026, we entered into an amendment to the 2022 ABL Credit Facility pursuant to which, among other changes, (a) the maximum availability under the facility was reduced to $275.0 million, (b) the scheduled maturity date of the facility was extended six months to September 3, 2027, (c) the applicable margin for SOFR rate loans was revised to range from 1.75% to 2.25%, subject to step-ups of 0.25% at three month intervals following the amendment effective date, up to a range from 3.00% to 3.50%, (d) the unused line fee was revised to 0.375% at all times, (e) certain negative covenant exceptions were curtailed or removed and (f) the $15.0 million minimum liquidity covenant was replaced with a $45.0 million minimum availability covenant.

On July 1, 2026, we entered into a new credit agreement with Eclipse Business Capital LLC, as agent, collateral agent, swingline lender, lead arranger and bookrunner, providing for a $300 million asset-based revolving credit facility, which refinanced and replaced our 2022 ABL Credit Facility. See “Note 14. Subsequent Events” in the notes to our unaudited condensed consolidated financial statements for more information regarding our new revolving credit facility.

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On August 6, 2026, the Company announced that Ladd Wilks has resigned as Chief Executive Officer of the Company, effective Friday, August 7, 2026. He will continue to serve the Company as a newly appointed member of the Board of Directors, replacing Mr. Sergei Krylov. The Company also announced that Matt Wilks has been named Chief Executive Officer of the Company, effective August 7, 2026. He will continue to serve as Executive Chairman. Mr. Krylov’s resignation is not the result of any disagreement with the Company on any matter.

Recent Trends and Outlook

Our business depends on the willingness of E&P companies to make expenditures to explore for, develop, and produce oil and natural gas in the United States. The willingness of E&P companies to undertake these activities is predominantly influenced by current and expected future prices for oil and natural gas. Adverse weather impacted our results early in the first quarter of 2026. In the second quarter of 2026, oil commodity prices were higher than their average in the first quarter of 2026 with increased volatility.

We currently expect increased pricing for our Stimulation Services business in the third quarter of 2026, compared to the second quarter of 2026. We have observed increased customer demand for hydraulic fracturing equipment that can operate with fuel other than diesel as well as a reduced supply of this equipment due to industry attrition. While we have limited visibility for future demand for our products and services, we are encouraged by current market dynamics and increasing customer engagement around 2027 planning.

In the second half of 2025, we implemented initiatives to enhance the resiliency of the platform resulting in lower cash operating expenses and capital expenditures. We remain focused on financial and operational discipline and optimizing our asset base.

We actively monitor the effects of inflation and tariffs on our business; however, the potential effects of inflation and tariffs on our business remain uncertain at this time.

Results of Operations

Revenues

Revenues by reportable segment are as follows:

Stimulation Services. Stimulation Services revenues for the three and six months ended June 30, 2026 decreased $2.5 million and $120.0 million, or 1% and 13%, respectively, from the same periods in 2025. The decreases were primarily due to decreases in average active fleets and lower average pricing for our services in 2026 compared to the same periods in 2025. The decreases were also due to cold weather related work disruptions in January 2026. These decreases were partially offset by an increase in jobs where we supplied proppant and chemistry.

Proppant Production. Proppant Production revenues for the three and six months ended June 30, 2026 increased $43.8 million and $96.1 million, or 57% and 66%, respectively, from the same periods in 2025. The increase was primarily due to higher average pricing for our proppant in 2026 compared to the same periods last year, which was due to a shift in intercompany sales mix from mine-gate pricing to wellsite pricing that began in the second quarter of 2025.

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Additionally, revenue recognized for the amortization of acquired off-market contracts for the three and six months ended June 30, 2026 was zero, compared to $1.9 million and $7.6 million in the same periods in 2025. Refer to Item 8 "Financial Statements and Supplementary Data" in our Annual Report for information about our acquired contract liabilities. During the three and six months ended June 30, 2026, approximately 87% and 88%, respectively, of the Proppant Production segment's revenues were intercompany, compared with 58% and 48% in the same periods in 2025.

Manufacturing. Manufacturing revenues for the three and six months ended June 30, 2026 decreased by $8.0 million and $25.4 million, or 14% and 21% respectively from the same periods in 2025. The decrease was due to decreased intercompany demand for manufacturing products. During the three and six months ended June 30, 2026, approximately 82% and 84%, respectively, of the Manufacturing segment's revenues were intercompany, compared with 78% and 83% in the same periods in 2025.

Flotek. Flotek revenues for the three and six months ended June 30, 2026 increased by $42.0 million and $57.5 million, or 70% and 49%, from the same periods in 2025. The increase was primarily due to increased volume of intercompany sales to the Stimulation Services segment and increased sales to external customers. Flotek recorded contract shortfall revenue for the three and six months ended June 30, 2026 of $1.2 and $3.9, compared to $7.7 million and $15.2 million in the same periods in 2025, related to contract shortfalls with the Stimulation Services segment. During the three and six months ended June 30, 2026, approximately 58% and 65% of Flotek revenues were intercompany, compared with 58% and 58% in the same periods in 2025.

Other. Other revenues for the three and six months ended June 30, 2026 decreased by $1.6 million and $4.1 million from the same periods in 2025. The decrease was due to lower intercompany sales for Livewire. During the three and six months ended June 30, 2026, approximately 100% and 100%, respectively, of other revenues were intercompany, compared with 100% and 99% in the same periods in 2025.

Cost of Revenues

Cost of revenues by reportable segment is as follows:

Stimulation Services. Stimulation Services cost of revenues for the three and six months ended June 30, 2026 increased by $15.5 million and decreased $23.0 million, or 4% and 3%, respectively, from the same periods in 2025. These changes were due to a decrease in average active fleets in 2026 compared to the same periods last year. These decreases were offset by an increase in jobs where we supplied proppant and chemistry. Cost of revenues for this segment included intercompany supply commitment charges of $1.2 million and $7.7 million for the three months ended June 30, 2026 and 2025, respectively, and $3.9 milli

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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, 2024, for discussion of our financial condition and results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, which is incorporated by reference herein.

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.”

Overview

We are a vertically integrated and innovation-driven energy services holding company providing hydraulic fracturing, proppant production, other completion services and other complementary products and services to leading upstream oil and natural gas companies engaged in the exploration and production ("E&P") of North American unconventional oil and natural gas resources.

We operate in four reportable business segments: Stimulation Services, Proppant Production, Manufacturing and Flotek. 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. Flotek is a leading chemistry and data technology company focused on servicing the E&P industry.

Summary Financial Results

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Total revenue for 2025 was $1,941.8 million compared to $2,190.9 million in 2024.

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Net loss for 2025 was $355.5 million compared to net loss of $207.8 million in 2024.

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Cash provided by operating activities for 2025 was $189.5 million compared to $367.3 million in 2024.

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Total principal amount of long-term debt was $1,048.1 million at December 31, 2025 compared to $1,138.9 million at December 31, 2024.

2025 Developments

In April 2025, Flotek acquired certain gas conditioning equipment from our Stimulation Services segment for total consideration of $107.5 million and our Stimulation Services segment leased these assets back from Flotek for a six year term. We believe this Flotek partnership provides ownership exposure to a highly-scalable gas quality and asset integrity business. The effects of this sale-leaseback transaction have been eliminated from our consolidated financial statements. Part of the $107.5 million consideration was a $40.0 million intercompany note payable from Flotek to our Stimulation Services segment (“Flotek PWRtek Note”). In November 2025, the Stimulation Services segment agreed to assign this note receivable to PC Energy Credit I, LLC, a related party to the Company controlled by the Wilks Parties, in exchange for cash consideration of $40.4 million, which represented the sum of the unpaid principal amount of the note and all accrued and unpaid interest on the note through the closing date.

In June and December 2025 ProFrac Holdings II, LLC issued a total $60 million aggregate principal amount of its 2029 Senior Notes at par to Beal Bank USA and Wilks Brothers, LLC, which is a Wilks Party, in a private placement to fund capital expenditures with any remaining proceeds used for general corporate purposes.

In June 2025, we amended the Alpine 2023 Term Loan. Under the terms of the amendment, the amortization payments required to be made on June 30, 2025, September 30, 2025 and December 31, 2025 were reduced from $15.0 million to $5.0 million and we will pay an exit fee of $3.4 million when the term loan is repaid. In December 2025, we amended the Alpine 2023 Term Loan. Under the terms of the amendment, the amortization payments required to be made on March 31, 2026 and June 30, 2026 were reduced from $15.0 million to $7.5 million. Additionally, the Alpine 2023 Term Loan contained a covenant commencing with the fiscal quarter ending March 31, 2026, 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 covenant was amended to commence testing compliance with the Total Net Leverage Ratio with the fiscal quarter ending on March 31, 2028.

In June 2025, we disposed of our EKU Power Drives subsidiary in our Manufacturing Segment. We recorded a loss of $10.5 million in connection with this disposal.

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In August 2025, we issued 20.6 million shares of Class A common stock, par value $0.01 per share at an offering price of $4.00 per share. The issuance of these shares generated net proceeds of $79.0 million, after deducting underwriter discounts and commissions and offering costs. The Wilks Parties bought 5.0 million shares of these Class A common stock, generating $20.0 million of gross proceeds. We used the net proceeds from this offering to repay borrowings outstanding under our 2022 ABL Credit Facility, for working capital and for other general corporate purposes.

2024 Developments

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.

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 $173.4 million in cash.

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.

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.

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.

Recent Trends and Outlook

Our business depends on the willingness of E&P companies to make expenditures to explore for, develop, and produce oil and natural gas in the United States. The willingness of E&P companies to undertake these activities is predominantly influenced by current and expected future prices for oil and natural gas. Beginning in April 2025, oil commodity prices decreased from their near-term average through the first quarter of 2025 with increased volatility. As a result, many of our customers began reducing their activity levels and our results of operations and operating cash flows correspondingly declined compared to 2024. As described below, we have taken a number of actions to improve our liquidity. Also, as we anticipated, our results of operations in the fourth quarter 2025 increased relative to the third quarter 2025 with improved demand in Stimulation Services and Proppant Production. Although adverse weather impacted our results early in the first quarter of 2026, activity has recently increased into February and early March on a relative basis. . In the second half of 2025, we implemented initiatives to enhance the resiliency of the platform resulting in lower cash operating expenses and capital expenditures. We remain focused on financial and operational discipline and optimizing our asset base. While we have limited visibility for future demand for our products and services and continue to focus on liquidity management, we are encouraged by recent customer engagement.

We also actively monitor the effects of inflation and tariffs on our business; however, the potential effects of inflation and tariffs on our business remain uncertain at this time.

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Results of Operations

Revenues

The following table summarizes revenues by reportable segment:

Stimulation Services revenues in 2025 decreased $231.5 million, or 12%, from 2024. The decrease was primarily due to a decrease in average active fleets and lower average pricing for our services in 2025.

Proppant Production revenues in 2025 increased $89.5 million, or 36%, from 2024. The increase was primarily due to higher average pricing for our proppant in 2025, which was due to a shift in intercompany sales mix from mine-gate pricing to wellsite pricing that began in the second quarter of 2025. Exclusive of this mix shift, revenues also increased due to higher sales volumes in 2025. Revenue recognized for the amortization of acquired off-market contracts was $7.6 million and $43.7 million in 2025 and 2024, respectively. Intersegment revenues for the Proppant Production segment were 64% and 26% in 2025 and 2024, respectively.

Manufacturing revenues in 2025 decreased $10.5 million, or 5%, from 2024. The decrease was primarily due to decreased intercompany demand for manufacturing products in the last nine months of 2025, which was partially offset by increased demand in the first quarter of 2025. Additionally, the acquisition of BPC and NRG contributed revenue starting in April 2024 and June 2024, respectively. Intersegment revenues for the Manufacturing segment were 82% and 77% in 2025 and 2024, respectively.

Flotek revenues in 2025 increased $51.2 million, or 27%, from 2024. This increase was primarily due to increased intercompany and third-party revenue. Flotek recorded $27.4 million and $32.5 million of revenue in 2025 and 2024, respectively, related to contract shortfalls with the Stimulation Services segment. Intersegment revenues for the Flotek segment were 63% in 2025 and 2024, respectively.

Other revenues in

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