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What changed in ProFrac Holding Corp.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ProFrac Holding Corp.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+571 added−606 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-15)

Top changes in ProFrac Holding Corp.'s 2024 10-K

571 paragraphs added · 606 removed · 430 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

65 edited+19 added−18 removed127 unchanged
Biggest changeMine Mine Type Mining Method Nameplate Annual Processing Capacity 2023 Production (tons 000) 2022 Production (tons 000) 2021 Production (tons 000) 42 Table of Contents (tons 000) Kermit Surface Excavator/Truck 3,000 927 1,477 1,646 Lamesa Surface Excavator/Truck 2,500 924 – – Monahans Surface Excavator/Truck 3,000 1,631 1,513 781 San Antonio Surface Excavator/Truck 3,000 1,162 1,186 1,156 River Ridge Surface Dredge 3,200 2,019 2,558 2,458 Hat Creek Surface Dredge 2,000 1,548 1,631 1,780 Sunny Point Surface Dredge 3,000 1,660 – – Merryville Surface Excavator/Truck 1,800 910 800 – Total 21,500 10,781 9,165 7,821 Description of Mining and Processing Facilities The following provides an overview of our mining and processing facilities: Kermit Sand Mine, Winkler County, TX We operate a sand mine and processing facility located in Winkler County, Texas, strategically located in the Permian that we refer to as our “Kermit Sand Mine.” The Kermit Sand Mine is a surface sand mine and a production stage property located approximately 14 miles north-northeast of Kermit, Texas and approximately 58 miles west-northwest of the Midland-Odessa, Texas metropolitan area.
Biggest changeBoyd, our independent mining engineers and geologists. 42 Table of Contents Mine Mine Type Mining Method Nameplate Annual Processing Capacity (tons 000) 2024 Production (tons 000) 2023 Production (tons 000) 2022 Production (tons 000) Kermit Surface Excavator/Truck 3,000 766 927 1,477 Lamesa Surface Excavator/Truck 2,500 470 924 – Monahans Surface Excavator/Truck 3,000 1,079 1,631 1,513 San Antonio Surface Excavator/Truck 3,000 859 1,162 1,186 River Ridge Surface Dredge 3,200 1,114 2,019 2,558 Hat Creek Surface Dredge 2,000 1,281 1,548 1,631 Sunny Point Surface Dredge 3,000 1,300 1,660 – Merryville Surface Excavator/Truck 1,800 217 910 800 Total 21,500 7,086 10,781 9,165 * Our Merryville Sand Mine was idled in April 2024 and is anticipated to remain idle until market conditions improve.
Lamesa Sand Mine, Dawson County, TX We operate a sand mine and processing facility located in Dawson and Gaines Counties, Texas, strategically located in the Permian Basin that we refer to as our “Lamesa Sand Mine.” Our Lamesa Sand Mine is a surface sand mine and a production stage property located approximately 55 miles north of Midland, Texas, 60 miles south of Lubbock, Texas, and 13 miles northwest of Lamesa, Texas.
Lamesa Sand Mine, Dawson and Gaines County, TX We operate a sand mine and processing facility located in Dawson and Gaines Counties, Texas, strategically located in the Permian Basin that we refer to as our “Lamesa Sand Mine.” Our Lamesa Sand Mine is a surface sand mine and a production stage property located approximately 55 miles north of Midland, Texas, 60 miles south of Lubbock, Texas, and 13 miles northwest of Lamesa, Texas.
Boyd’s efforts to judge the appropriateness and reasonability of the source exploration data included reviewing provided drilling logs, sampling procedures, frac sand quality testing results, examining archival sample intervals and discussing the foregoing information with us. Before acquiring new mineral reserves, we or third-party engineers such as John T.
Boyd’s efforts to judge the appropriateness and reasonability of the source exploration data included reviewing provided drilling logs, sampling procedures, frac sand quality testing results, examining archival sample intervals and discussing the foregoing information with us. Before acquiring new mineral reserves or resources, we or third-party engineers such as John T.
Summary Overview of Our Mining and Processing Facilities The following table sets forth certain information about our mining properties required to be included in our mining operations as of December 31, 2023 pursuant to Item 1303(a) of Regulation S-K: Mine Location Size Owned/Leased Stage Kermit Winkler County, Texas 641 acres Owned Production 630 acres Leased Production Lamesa Dawson County, Texas 6,700 acres Owned Production Monahans Ector, Ward and Winkler Counties, Texas 2,723 acres Leased Production San Antonio Bexar County, Texas 735 acres Owned Production River Ridge Lafayette and Miller Counties, Arkansas 1,928 acres Owned Production Hat Creek Bossier and Caddo Parishes, Louisiana 706 acres Leased Production Sunny Point Bossier and Caddo Parishes, Louisiana 783 acres Leased Production Merryville Beauregard Parish, Louisiana 810 acres Leased Production All of our mines are operated by our subsidiary, Alpine Silica, LLC.
Summary Overview of Our Mining and Processing Facilities The following table sets forth certain information about our mining properties required to be included in our mining operations as of December 31, 2024 pursuant to Item 1303(a) of Regulation S-K: Mine Location Size Owned/Leased Stage Kermit Winkler County, Texas 641 acres Owned Production 630 acres Leased Production Lamesa Dawson County, Texas 6,700 acres Owned Production Monahans Ector, Ward and Winkler Counties, Texas 2,723 acres Leased Production San Antonio Bexar County, Texas 735 acres Owned Production River Ridge Lafayette and Miller Counties, Arkansas 1,928 acres Owned Production Hat Creek Bossier and Caddo Parishes, Louisiana 706 acres Leased Production Sunny Point Bossier and Caddo Parishes, Louisiana 783 acres Leased Production Merryville Beauregard Parish, Louisiana 810 acres Owned Production All of our mines are operated by our subsidiary, Alpine Silica, LLC.
Boyd perform or review surveying, drill core analysis and other tests to confirm the quantity and quality of the acquired mineral reserves. For all properties, resource and reserve estimates are based on our mine planning efforts. Mine planning decisions are determined and agreed upon by our management based on information prepared by our personnel and third-party consultants.
Boyd perform or review surveying, drill core analysis and other tests to confirm the quantity and quality of the acquired mineral reserves or resources. For all properties, resource and reserve estimates are based on our mine planning efforts. Mine planning decisions are determined and agreed upon by our management based on information prepared by our personnel and third-party consultants.
Our wealthier competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer requirements. The amount of equipment available may exceed demand, which could result in active price competition. In addition, depressed commodity prices lower demand for hydraulic fracturing equipment, which results in excess equipment and lower utilization rates.
Our competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer requirements. The amount of equipment available may exceed demand, which could result in active price competition. In addition, depressed commodity prices lower demand for hydraulic fracturing equipment, which results in excess equipment and lower utilization rates.
Boyd certain operating and financial information for each of our mines to assist them in opining as to the economic viability of our mineral reserves. John T. Boyd did not verify historic drill hole data by conducting independent drilling in areas already explored.
Boyd certain operating and financial information for each of our mines to assist them in opining as to the economic viability of our mineral reserves and resources. John T. Boyd did not verify historic drill hole data by conducting independent drilling in areas already explored.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of our Class A Common Stock, as they have with the currently outstanding Series A Preferred Stock. 36 Table of Contents If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of our Class A Common Stock, as they have with the currently outstanding Series A Preferred Stock. 35 Table of Contents If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
S-K 1300”). The terms “mineral resources,” “mineral reserve,” “proven mineral reserve,” and “probable mineral reserve,” whether singular or plural, are defined and used in accordance with Reg. S-K 1300. Under Reg.
The terms “mineral resources,” “mineral reserve,” “proven mineral reserve,” and “probable mineral reserve,” whether singular or plural, are defined and used in accordance with Reg. S-K 1300. Under Reg.
Any increase in the development and utilization of in-house fracturing capabilities by our customers could decrease the demand for our services and have a material adverse impact on our business. 38 Table of Contents If we are unable to employ a sufficient number of skilled and qualified workers, our capacity and profitability could be diminished and our growth potential could be impaired.
Any increase in the development and utilization of in-house fracturing capabilities by our customers could decrease the demand for our services and have a material adverse impact on our business. 37 Table of Contents If we are unable to employ a sufficient number of skilled and qualified workers, our capacity and profitability could be diminished and our growth potential could be impaired.
The Hat Creek Sand Mine comprises approximately 706 acres of leased surface and mineral rights. All frac sand production from the Hat Creek Sand Mine is subject to a royalty payable to the lessors in an amount equal to the greater of $1.00 per ton or 2.5% of the selling price for finished frac sand products sold.
The Hat Creek Sand Mine comprises approximately 706 acres of leased surface and mineral rights. All frac sand production from the Hat Creek Sand Mine is subject to a royalty payable to the lessor in an amount equal to the greater of $1.00 per ton or 2.5% of the selling price for finished frac sand products sold.
Other limiting criteria, such as minimum mining thicknesses or maximum stripping ratios (the ratio of waste to sand excavated) are generally not considered in the estimation of frac sand resources. Set forth in the table below are estimates of our frac sand mineral reserves as of December 31, 2023.
Other limiting criteria, such as minimum mining thicknesses or maximum stripping ratios (the ratio of waste to sand excavated) are generally not considered in the estimation of frac sand resources. Set forth in the table below are estimates of our frac sand mineral reserves as of December 31, 2024.
Unfavorable ESG ratings and recent activism directed at shifting funding away 39 Table of Contents from companies with fossil fuel-related assets could lead to increased negative investor sentiment toward us, our customers and our respective industries and to the diversion of investment to other industries, which could have a negative impact on the price of our Class A Common Stock and our or our customers’ access to and cost of capital.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with fossil fuel-related assets could lead to increased negative investor sentiment toward us, our customers and our respective industries and to the diversion of investment to other industries, which could have a negative impact on the price of our Class A Common Stock and our or our customers’ access to and cost of capital.
Since the beginning of the war between Russia and Ukraine, sanctions imposed by Ukraine’s allies that seek to limit Russia’s ability to profit from oil and gas exports, and certain of the retaliatory measures taken by Russia in response (such as the ban on sales to certain countries), have created conditions resulting in an 37 Table of Contents increased demand for our services.
Since the beginning of the war between Russia and Ukraine, sanctions imposed by Ukraine’s allies that seek to limit Russia’s ability to profit from oil and gas exports, and certain of the retaliatory measures taken by Russia in response (such as the ban on sales to certain countries), have created conditions resulting in an increased demand for our services.
General Risk Factors Our business could be adversely affected by a decline in general economic conditions or a weakening of the broader energy industry, and inflation may adversely affect our financial position and operating results.
General Risk Factors Our business could be adversely affected by a decline in general economic conditions or a weakening of the broader energy industry, and inflation or the imposition of tariffs may adversely affect our financial position and operating results.
Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us, including our business strategy, results of operations or financial condition, and we do not believe that such risks are reasonably likely to have such an effect over the long term. I t em 2.
Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us, including our business strategy, results of operations or financial condition, and we do not believe that such risks are reasonably likely to have such an effect over the long term. 40 Table of Contents I t em 2.
The Audit Committee discusses with such members of our management team our information technology systems and procedures and will report to the Board on any 40 Table of Contents material cybersecurity risks identified. We have protocols by which certain cybersecurity incidents are escalated within the Company and, where appropriate, reported to the Board and Audit Committee in a timely manner.
The Audit Committee discusses with such members of our management team our information technology systems and procedures and will report to the Board on any material cybersecurity risks identified. We have protocols by which certain cybersecurity incidents are escalated within the Company and, where appropriate, reported to the Board and Audit Committee in a timely manner.
Aggregate annual production of frac sand from our mines for the fiscal years ended on December 31, 2023, 2022 and 2021 was approximately 10.8 million tons, 9.2 million tons and 7.8 million tons, respectively, which includes production data for periods prior to our acquisition of the respective sand mines and is based on information provided by prior operators.
Aggregate annual production of frac sand from our mines for the fiscal years ended on December 31, 2024, 2023 and 2022 was approximately 7.1 million tons, 10.8 million tons and 9.2 million tons, respectively, which includes production data for periods prior to our acquisition of the respective sand mines and is based on information provided by prior operators.
(h) Mineral reserves are reported at a selling price of $25.90 per ton, representing the expected weighted-average sales price over the expected life of the reserves based on our historical operating results, our short-term budget forecasts, and John T. Boyd’s knowledge of frac sand markets.
Mineral resources are reported at a selling price of $25.90 per ton, representing the expected weighted-average sales price over the expected life of the resources based on our historical operating results, our short-term budget forecasts, and John T. Boyd’s knowledge of frac sand markets.
Our Merryville Sand Mine is a dredging and processing operation located approximately 7 miles north-northeast of Merryville, LA and 10 miles west of DeRidder, LA along the southern bank of the Bayou Anacoco. The Merryville Sand Mine produces 30/100-mesh frac sand, which we process into various mesh-size frac sand products.
We acquired the Merryville Sand Mine in February 2023. Our Merryville Sand Mine is a dredging and processing operation located approximately 7 miles north-northeast of Merryville, LA and 10 miles west of DeRidder, LA along the southern bank of the Bayou Anacoco. The Merryville Sand Mine produces 30/100-mesh frac sand, which we process into various mesh-size frac sand products.
Our cybersecurity team also works with our Chief Legal Officer to oversee compliance with legal, regulatory and contractual security requirements. Our cybersecurity processes include automated tools and technical safeguards managed and monitored by our cybersecurity team. We regularly conduct penetration and vulnerability testing and security audits.
Our cybersecurity team also works with our Chief Legal Officer to oversee compliance with legal, regulatory and contractual security requirements. 39 Table of Contents Our cybersecurity processes include automated tools and technical safeguards managed and monitored by our cybersecurity team. We regularly conduct penetration and vulnerability testing and security audits.
For more information, see “Note 11 – Income Taxes” in the notes to our consolidated financial statements for more information. 35 Table of Contents In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the Tax Receivable Agreement.
Income Taxes” in the notes to our consolidated financial statements for more information. 34 Table of Contents In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the Tax Receivable Agreement.
The mining recovery factor was estimated to be 95%, and the processing yield was estimated to be 78.9%. Overall product yield was estimated to be 75.0% after mining and processing losses. The minimum economic processing yield is approximately 30.7% based on the Sunny Point Sand Mine’s historical and forecasted economics.
Boyd’s knowledge of frac sand markets. The mining recovery factor was estimated to be 95%, and the processing yield was estimated to be 78.9%. Overall product yield was estimated to be 75.0% after mining and processing losses. The minimum economic processing yield is approximately 30.7% based on the Sunny Point Sand Mine’s historical and forecasted economics.
Production data is included for periods prior to our acquisition of the respective sand mines and is based on information provided by prior operators and as included in technical report summaries related to such properties prepared by John T. Boyd.
Production data is included for periods prior to our acquisition of the respective sand mines and is based on information provided by prior operators and as included in reports related to such properties prepared by John T.
Summary of Resources There are no reportable mineral resources in addition to those converted to mineral reserves. Quantities of frac sand controlled by us within the defined boundaries of the mining properties set forth above which are not reported as mineral reserves are not considered to have potential economic viability; as such, they are not reportable as mineral resources.
Summary of Resources Quantities of frac sand controlled by us within the defined boundaries of the mining properties set forth above which are not reported as mineral reserves are not considered to have potential economic viability; as such, they are not reportable as mineral resources.
Russia is one of the main players in the global oil markets. Accordingly, any events that can impair or enhance its ability to compete in such markets are likely to have an impact on the industry in which we operate, the business decisions of our customers, and the level of demand for our services.
Accordingly, any events that can impair or enhance its ability to compete in such markets are likely to have an impact on the industry in which we operate, the business decisions of our customers, and the level of demand for our services.
For example, if we were to experience a change of control or the Tax Receivable Agreement had otherwise been terminated at December 31, 2023, the estimated termination payments could range up to more than $70 million. The foregoing amount is merely an estimate and the actual payment could differ materially.
For example, if we were to experience a change of control or the Tax Receivable Agreement had otherwise been terminated at December 31, 2024, the estimated termination payments could range up to approximately $86 million. The foregoing amount is an estimate and the actual payment could differ materially.
Unresolved Staff Comments. None. Item 1C . Cybersecurity. We have implemented a cybersecurity program to assess, identify, and manage risks from cybersecurity threats that may result in material adverse effects on the confidentiality, integrity, and availability of our information systems.
We have implemented a cybersecurity program to assess, identify, and manage risks from cybersecurity threats that may result in material adverse effects on the confidentiality, integrity, and availability of our information systems.
The leased property agreement, held between Alpine and Bruce and Barr Ltd., is valid until the year 2052 with a stipulated production start deadline of January 1, 2032, and a royalty rate of 2% of gross sales revenue.
The leased property agreement, is valid until the year 2052 with a stipulated production start deadline of January 1, 2032, and a royalty rate of 2% of gross sales revenue.
Our Monahans Sand Mine operates under four permits and complies with other state and federal regulations that do not require a specific permit. The Monahans Sand Mine operates under an Air Quality Permit, which is renewable in 2029.
Our Kermit Sand Mine operates under five operating permits and complies with other state and federal regulations that do not require a specific permit. The Kermit Sand Mine operates under an Air Quality Permit, which is renewable in 2028.
Once the frac sand is appropriately processed and classified, it is stored in one of three storage silos until it is transported by truck to its destination. Additional onsite facilities include an office complex that supports the mining and processing activities. Approximately 45 employees are located at the Merryville Sand Mine to facilitate the processing and storage of frac sand.
Once the frac sand is appropriately processed and classified, it is stored in one of three storage silos until it is transported by truck to its destination. Additional onsite facilities include an office complex that supports the mining and processing activities.
Other permits for the mine include Water Quality Certification—Sand Mining Operations, Water Quality Certification—Commercial Dredging, Section 404/ Section 10 Permit for dredging, and a General Permit for Discharges Related to Extraction, Mining or Dredging of Dirt, Sand, Gravel, Shell or Similar Materials. There are no formal state or federal reclamation plans or permits required for the operation.
Other permits for the mine include Water Quality Certification—Sand Mining Operations, Water Quality Certification—Commercial Dredging, Section 404/ Section 10 Permit for dredging, and a General Permit for Discharges Related to Extraction, Mining or Dredging of Dirt, Sand, Gravel, Shell or Similar Materials.
We currently own or lease the following additional principal properties: Location Size Leased or owned Purpose Segment Willow Park, TX 8,244 sq ft Leased Corporate Headquarters - Smithfield, PA 47,800 sq ft Leased Field Operations Stimulation services Asherton, TX 48,797 sq ft Leased Sales Office Stimulation services Odessa, TX 50,634 sq ft Leased Field Operations Stimulation services Odessa, TX 61,540 sq ft Leased Field Operations Stimulation services Elk City, OK 42,330 sq ft Leased Field Operations Stimulation services Washington County, PA 41,660 sq ft Leased Field Operations Stimulation services Pleasanton, TX 62,950 sq ft Leased Field Operations Stimulation services Longview, TX 36,000 sq ft Leased Field Operations Stimulation services Vernal, UT 18,827 sq ft Leased Field Operations Stimulation services Aledo, TX 94,050 sq ft Leased Manufacturing Manufacturing Hobbs, NM 12,000 sq ft Leased Field Operations Stimulation services Ozona, TX 21,292 sq ft Leased Field Operations Stimulation services Marshall, TX 21,800 sq ft Leased Field Operations Stimulation services Pleasanton, TX 421,443 sq ft Leased Field Operations Stimulation services El Reno, OK 507,202 sq ft Leased Field Operations Stimulation services Fort Worth, TX 109,823 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 79,346 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 11,193 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 89,522 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 22,604 sq ft Leased Corporate Office - Houston, TX 19,865 sq ft Leased Corporate Office - Jane Lew, WV 70,500 sq ft Leased Field Operations Stimulation services Gillette, WY 139,580 sq ft Leased Field Operations Stimulation services Vernal, UT 13,188 sq ft Leased Field Operations Stimulation services San Angelo, TX 18,200 sq ft Leased Field Operations Stimulation services Cisco, TX 377,186 sq ft Owned Field Operations Stimulation services Denver, CO 4,286 sq ft Leased Corporate Office - Dickinson, ND 226,222 sq ft Leased Field Operations Stimulation services Hennessy, OK 435,600 sq ft Leased Field Operations Stimulation services Zanesville, OH 60,935 sq ft Owned Manufacturing Manufacturing Bossier City, LA 3,400 sq ft Leased Corporate Office - 41 Table of Contents Our Mining Properties As of December 31, 2023, our mining properties included eight sites (Kermit, Lamesa, Monahans, San Antonio, Hat Creek, River Ridge, Sunny Point and Merryville), which span the Permian, Eagle Ford and Haynesville as illustrated in the map that follows.
We currently own or lease the following additional principal properties: Location Size Leased or owned Purpose Segment Willow Park, TX 8,244 sq ft Leased Corporate Headquarters - Smithfield, PA 47,800 sq ft Leased Field Operations Stimulation Services Asherton, TX 48,797 sq ft Leased Sales Office Stimulation Services Odessa, TX 50,634 sq ft Leased Field Operations Stimulation Services Odessa, TX 61,540 sq ft Leased Field Operations Stimulation Services Midland, TX 104,592 sq ft Leased Field Operations Stimulation Services Elk City, OK 42,330 sq ft Leased Field Operations Stimulation Services Washington County, PA 41,660 sq ft Leased Field Operations Stimulation Services Pleasanton, TX 62,950 sq ft Leased Field Operations Stimulation Services Longview, TX 36,000 sq ft Leased Field Operations Stimulation Services Vernal, UT 18,827 sq ft Leased Field Operations Stimulation Services Aledo, TX 94,050 sq ft Leased Manufacturing Manufacturing Ozona, TX 21,292 sq ft Leased Field Operations Stimulation Services Marshall, TX 21,800 sq ft Leased Field Operations Stimulation Services Pleasanton, TX 421,443 sq ft Leased Field Operations Stimulation Services Waller, TX 94,424 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 109,823 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 79,346 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 11,193 sq ft Leased Manufacturing Manufacturing Fort Worth, TX 89,522 sq ft Leased Manufacturing Manufacturing Houston, TX 19,865 sq ft Leased Corporate Office - Vernal, UT 13,188 sq ft Leased Field Operations Stimulation Services Cisco, TX 377,186 sq ft Owned Field Operations Stimulation Services Denver, CO 4,286 sq ft Leased Corporate Office - Fruita, CO 124,448 sq ft Leased Manufacturing Manufacturing Marietta, OH 20,000 sq ft Leased Manufacturing Manufacturing Cibola, TX 29,140 sq ft Leased Manufacturing Manufacturing Dickinson, ND 226,222 sq ft Leased Field Operations Stimulation Services Zanesville, OH 50,045 sq ft Owned Manufacturing Manufacturing 41 Table of Contents Our Mining Properties As of December 31, 2024, our mining properties included eight sites (Kermit, Lamesa, Monahans, San Antonio, Hat Creek, River Ridge, Sunny Point and Merryville), which span the Permian, Eagle Ford and Haynesville as illustrated in the map that follows.
Other permits for the mine include an annual Aggregate Production Operation Registration, an Industrial Hazardous Waste Solid Waste Registration, and a Stormwater Multi- Sector General Permit. There are no formal state or federal reclamation plans or permits required for the operation.
The Monahans Sand Mine operates under an Air Quality Permit, which is renewable in 2029. Other permits for the mine include an annual Aggregate Production Operation Registration, an Industrial Hazardous Waste Solid Waste Registration, and a Stormwater Multi- Sector General Permit. There are no formal state or federal reclamation plans or permits required for the operation.
Internal Controls The quantity and nature of our mineral reserves are estimated by third-party engineers. John T. Boyd independently prepared an estimate of our mineral reserves as of December 31, 2023, and we intend to continue retaining third party engineers to prepare estimates of our mineral reserves on an annual basis. We provided John T.
Boyd independently prepared an estimate of our mineral reserves and resources as of December 31, 2024, and we intend to continue retaining third party engineers to prepare estimates of our mineral reserves and resources on an annual basis. We provided John T.
Because the Wilks Parties beneficially own 134,458,994 shares of our Class A Common Stock, representing approximately 84.4% of the voting power of ProFrac as of December 31, 2023, we are a controlled company under Sarbanes-Oxley and rules of Nasdaq.
Because the Wilks Parties beneficially own 139,573,147 shares of our Class A Common Stock, representing approximately 87.2% of the voting power of ProFrac as of December 31, 2024, we are a controlled company under Sarbanes-Oxley and rules of Nasdaq.
The Monahans Sand Mine comprises approximately 2,723 acres of surface and subsurface (i.e., mineral) rights leased from Lazy R Ranch, LP and Nina Resources LP.
The Monahans Sand Mine comprises approximately 2,723 acres of leased surface and subsurface (i.e., mineral) rights.
All frac sand production from the Sunny Point Sand Mine is subject to a royalty payable to the lessors of $1.00 per ton sold.
Frac sand produced from the leased property is subject to a royalty payable to the lessors of $1.00 per ton sold.
Additional onsite facilities include an office complex that supports the mining and processing activities. Approximately 65 employees are located at the Hat Creek Sand Mine to facilitate the processing and storage of frac sand. Our Hat Creek Sand Mine operates under five permits and complies with other state and federal regulations that do not require a specific permit.
Additional onsite facilities include an office complex that supports the mining and processing activities. Our Hat Creek Sand Mine operates under five permits and complies with other state and federal regulations that do not require a specific permit. The Hat Creek Sand Mine operates under a state of Louisiana Minor Source Air Permit that expires in 2027.
Our San Antonio Sand Mine operates under five permits and complies with other state and federal regulations that do not require a specific permit. The San Antonio Sand Mine operates under an air quality Permit by Rule, which does not have an expiration date, while we apply for an Air Quality Permit.
Our River Ridge Sand Mine operates under five permits and complies with other state and federal regulations that do not require a specific permit. The River Ridge Sand Mine operates under a state of Arkansas Minor Source Air Permit, which does not have an expiration date.
The property is owned in fee by one of our wholly owned indirect subsidiaries and there are no associated lease agreements or royalty payments. 44 Table of Contents River Ridge Sand Mine , Lafayette and Miller Counties, AR We operate a sand mine and processing facility located in Miller and Lafayette Counties, Arkansas, strategically located in the Haynesville that we refer to as our “River Ridge Sand Mine.” We acquired the River Ridge Sand Mine in February 2023.
River Ridge Sand Mine , Lafayette and Miller Counties, AR 44 Table of Contents We operate a sand mine and processing facility located in Miller and Lafayette Counties, Arkansas, strategically located in the Haynesville that we refer to as our “River Ridge Sand Mine.” We acquired the River Ridge Sand Mine in February 2023.
There is no assurance that such conditions will continue to exist, and even if they do, that we will continue to be able to benefit from them.
There is no assurance that such conditions will continue to exist, and even if they do, that we will continue to be able to benefit from them. We may be adversely affected by disputes regarding intellectual property rights of third parties.
(g) Mineral reserves are reported at a selling price of $39.53 per ton, representing the expected weighted-average sales price over the expected life of the reserves based on our historical operating results, our short-term budget forecasts, and John T. Boyd’s knowledge of frac sand markets.
The minimum economic processing yield is approximately 36.8% based on the Hat Creek Sand Mine’s historical and forecasted economics. 47 Table of Contents (g) Mineral reserves are reported at a selling price of $39.53 per ton, representing the expected weighted-average sales price over the expected life of the reserves based on our historical operating results, our short-term budget forecasts, and John T.
Moreover, to the extent ESG matters negatively impact our or the fossil fuel industry’s reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our operations. We are subject to cyber-security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.
Moreover, to the extent ESG matters negatively impact our or the fossil fuel industry’s reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our operations. 38 Table of Contents We are subject to cyber-security risks.
The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats.
At the same time, cyber incidents, including deliberate attacks or unintentional events, have increased. The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats.
Merryville Sand Mine , Beauregard Parish, LA We operate a sand mine and processing facility located in Beauregard Parish, Louisiana, strategically located in the Haynesville that we refer to as our “Merryville Sand Mine.” We acquired the Merryville Sand Mine in February 2023.
Merryville Sand Mine , Beauregard Parish, LA We operate a sand mine and processing facility located in Beauregard Parish, Louisiana, strategically located in the Haynesville that we refer to as our “Merryville Sand Mine.” Our Merryville Sand Mine was idled in April 2024 and is anticipated to remain idle until market conditions improve.
The Sunny Point Sand Mine comprises approximately 783 acres of leased surface and mineral rights. The property comprises two noncontiguous parcels. The processing plant and associated facilities are located on the west side of the Red River along Louisiana Highway 1. The dredging area comprises an oxbow lake located east of the Red River.
There are no formal state or federal reclamation plans or permits required for the operation. 45 Table of Contents The Sunny Point Sand Mine comprises approximately 783 acres of leased surface and mineral rights. The property comprises two noncontiguous parcels. The processing plant and associated facilities are located on the west side of the Red River along Louisiana Highway 1.
The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain processing activities. For example, we depend on digital technologies to perform many of our services and process and record operational and accounting data. At the same time, cyber incidents, including deliberate attacks or unintentional events, have increased.
A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss. The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain processing activities. For example, we depend on digital technologies to perform many of our services and process and record operational and accounting data.
The Sunny Point Sand Mine operates under a state of Louisiana Minor Source Air Permit that expires in 2032.
Our Sunny Point Sand Mine operates under five permits and complies with other state and federal regulations that do not require a specific permit. The Sunny Point Sand Mine operates under a state of Louisiana Minor Source Air Permit that expires in 2032.
Inflationary factors, such as increases in the labor costs, material costs, and overhead costs, may also adversely affect our financial position and operating results. Developments related to the ongoing wars between Russia and Ukraine and between Israel and Hamas, and the global response thereto, could adversely affect our business, financial condition and results of operations.
Developments related to the ongoing wars between Russia and Ukraine and between Israel and Hamas, and the global response thereto, could adversely affect our business, financial condition and results of operations. Russia is one of the main players in the global oil markets.
The mining recovery factor was estimated to be 95%, and the processing yield was estimated to be 66.6%. Overall product yield was estimated to be 63.3% after mining and processing losses. The minimum economic processing yield is approximately 36.8% based on the Hat Creek Sand Mine’s historical and forecasted economics.
The mining recovery factor was estimated to be 95%, and the processing yield was estimated to be 66.6%. Overall product yield was estimated to be 63.3% after mining and processing losses.
The River Ridge Sand Mine operates under a state of Arkansas Minor Source Air Permit, which does not have an expiration date. Other permits for the mine include Industrial Stormwater General Permit, Wastewater Discharge Permit, Section 404 Permit for dredging, and an Open-Cut Mining Permit. There are no formal state or federal reclamation plans or permits required for the operation.
Other permits for the mine include Industrial Stormwater General Permit, Wastewater Discharge Permit, Section 404 Permit for dredging, and an Open-Cut Mining Permit. There are no formal state or federal reclamation plans or permits required for the operation. The River Ridge Sand Mine comprises approximately 1,928 acres owned in fee by one of our wholly owned indirect subsidiaries.
Approximately 50 employees are located at the Lamesa Sand Mine to facilitate the processing and storage of frac sand. 43 Table of Contents Our Lamesa Sand Mine operates under five operating permits and complies with other state and federal regulations that do not require a specific permit.
Additional onsite facilities include an office building, shipping office and shop that support the mining and processing activities, and onsite housing for up to 36 employees. 43 Table of Contents Our Lamesa Sand Mine operates under five operating permits and complies with other state and federal regulations that do not require a specific permit.
As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents. Our insurance coverage for cyberattacks may not be sufficient to cover all the losses we may experience as a result of such cyberattacks. I t em 1B.
As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.
Once the frac sand is appropriately processed and classified, it is stored in one of four storage silos until it is transported by truck to its destination. Additional onsite facilities include an office building, shipping office and shop that support the mining and processing activities, and onsite housing for up to 36 employees.
Once the frac sand is appropriately processed and classified, it is stored in one of four storage silos until it is transported by truck to its destination.
The Merryville Sand Mine lease is in effect from September 1, 2021 to August 31, 2024 and includes an “option to purchase” providing us the opportunity to purchase the property during the initial lease term for $4.8 million with annually prorated credit for royalties paid Summary of Reserves Information concerning our mining properties and mineral reserves has been prepared in accordance with the requirements of Subpart 1300 of Regulation S-K (“Reg.
The Merryville Sand Mine was previously leased, which lease was in effect from September 1, 2021 to August 31, 2024 and included an “option to purchase” providing us the opportunity to purchase the property during the initial lease term for $4.8 million with annually prorated credit for royalties paid. We exercised the option to purchase in August 2024.
Additionally, the San Antonio Sand Mine has more than six acres of wet sand storage. Additional onsite facilities include an office/control room and extensive conveyor systems that support intra-plant product movement. Approximately 60 employees are located at the San Antonio Sand Mine to facilitate the processing and storage of frac sand.
Additionally, the San Antonio Sand Mine has more than six acres of wet sand storage. Additional onsite facilities include an office/control room and extensive conveyor systems that support intra-plant product movement. Our San Antonio Sand Mine operates under five permits and complies with other state and federal regulations that do not require a specific permit.
S-K 1300. 46 Table of Contents Summary Frac Sand Mineral Reserves at End of the Fiscal Year December 31, 2023 (in thousands of product tons) By Classification By Tenure Mesh-Size Total Proven Probable Owned Leased Permian Kermit(a) 40/200 45,446 38,262 7,184 25,871 19,575 Lamesa(b) 40/200 57,494 57,494 - 57,494 - Monahans(c) 40/140 115,050 - 115,050 - 115,050 Subtotal 217,990 95,756 122,234 83,365 134,625 Eagle Ford San Antonio(d) 35/140 22,461 - 22,461 22,461 - Haynesville River Ridge(e) 30/140 42,652 42,652 - 42,652 - Hat Creek(f) 30/140 6,637 6,040 597 - 6,637 Sunny Point(g) 30/200 40,016 - 40,016 - 40,016 Merryville(h) 30/100 9,355 - 9,355 - 9,355 Subtotal 98,660 48,692 49,968 42,652 56,008 Total 339,111 144,448 194,663 148,478 190,633 (a) Mineral reserves are reported at a selling price of $29.29 per ton, representing the expected weighted-average sales price over the expected life of the reserves based on our historical operating results, our short-term budget forecasts, and John T.
S-K 1300. 46 Table of Contents Summary Frac Sand Mineral Reserves at End of the Fiscal Year December 31, 2024 (in thousands of product tons) By Classification By Tenure Mesh-Size Total Proven Probable Owned Leased Permian Kermit(a) 40/200 44,680 37,496 7,184 25,105 19,575 Lamesa(b) 40/200 57,024 57,024 - 57,024 - Monahans(c) 40/140 113,971 - 113,971 - 113,971 Subtotal 215,675 94,520 121,155 82,129 133,546 Eagle Ford San Antonio(d) 35/140 21,602 - 21,602 21,602 - Haynesville River Ridge(e) 30/140 41,538 41,538 - 41,538 - Hat Creek(f) 30/140 5,356 4,759 597 - 5,356 Sunny Point(g) 30/200 38,716 - 38,716 - 38,716 Subtotal 85,610 46,297 39,313 41,538 44,072 Total 322,887 140,817 182,070 145,269 177,618 (a) Mineral reserves are reported at a selling price of $29.29 per ton, representing the expected weighted-average sales price over the expected life of the reserves based on our historical operating results, our short-term budget forecasts, and John T.
Any distributions made by ProFrac LLC to ProFrac in order to enable us to make payments under the Tax Receivable Agreement, as well as any corresponding pro rata distributions made to the Unit Holders, could have an adverse impact on our liquidity.
Any distributions made by ProFrac LLC to ProFrac in order to enable us to make payments under the Tax Receivable Agreement could have an adverse impact on our liquidity. The payments under the Tax Receivable Agreement are not conditioned upon a TRA Holder having a continued ownership interest in ProFrac or ProFrac LLC. For more information, see “Note 12.
As of December 31, 2023, we did not have any individually material mining properties.
Our Merryville Sand Mine was idled in April 2024 until market conditions improve. As of December 31, 2024, we did not have any individually material mining properties.
Additional onsite facilities include an office building, various control rooms, a shop/warehouse and a quality laboratory that support the mining and processing activities. Approximately 55 employees are located at the Monahans Sand Mine to facilitate the processing and storage of frac sand.
Additional onsite facilities include an office building, various control rooms, a shop/warehouse and a quality laboratory that support the mining and processing activities. Our Monahans Sand Mine operates under four permits and complies with other state and federal regulations that do not require a specific permit.
The San Antonio Sand Mine comprises approximately 735 acres of surface and subsurface (i.e., mineral) rights controlled by us.
The Merryville Sand Mine comprises approximately 810 acres of owned surface and mineral rights.
Other permits for the mine include an Aggregate Production Operation Registration, an Industrial Hazardous Waste Solid Waste Registration, a Petroleum Storage Tank Registration and a Stormwater Multi-Sector General Permit. There are no formal state or federal reclamation plans or permits required for the operation.
The San Antonio Sand Mine operates under an air quality Permit by Rule, which does not have an expiration date, while we apply for an Air Quality Permit. Other permits for the mine include an Aggregate Production Operation Registration, an Industrial Hazardous Waste Solid Waste Registration, a Petroleum Storage Tank Registration and a Stormwater Multi-Sector General Permit.
The mining recovery factor was estimated to be 95%, and the processing yield was estimated to be 71.2%. Overall product yield was estimated to be 67.7% after mining and processing losses. The minimum economic processing yield is approximately 39.1% based on the Merryville Sand Mine’s historical and forecasted economics.
The minimum economic processing yield is approximately 39.1% based on the Merryville Sand Mine’s historical and forecasted economics. Internal Controls The quantity and nature of our mineral reserves and resources are estimated by third-party engineers. John T.
The Merryville Sand Mine comprises approximately 810 acres of leased surface and mineral rights. All frac sand production from the Merryville Sand Mine is subject to a royalty payable to the lessors of $1.00 per ton sold.
Prior to our purchase of the property, all frac sand production from the Merryville Sand Mine was subject to a royalty payable to the lessor of $1.00 per ton sold. Summary of Reserves Information concerning our mining properties and mineral reserves has been prepared in accordance with the requirements of Subpart 1300 of Regulation S-K (“Reg. S-K 1300”).
Removed
The payments under the Tax Receivable Agreement are not conditioned upon a TRA Holder having a continued ownership interest in ProFrac or ProFrac LLC.
Added
Inflationary factors, such as increases in the labor costs, material costs, and overhead costs, may also adversely affect our financial position and operating results.
Removed
The potential effects of the ongoing war between Israel and Hamas could also impact the industry in which we operate, the business decisions of our customers, and the level of demand for our services. We may be adversely affected by disputes regarding intellectual property rights of third parties.
Added
Potential changes in U.S. trade policy, including the imposition of tariffs and the consequences thereof have contributed to economic uncertainty in the global economy, which could precipitate an economic slowdown and adversely affect our supply chain, which could adversely materially impact our cost of operations.
Removed
Voluntary disclosures regarding ESG matters, as well as any ESG disclosures mandated by law, could result in private litigation or government investigation or enforcement action regarding the sufficiency or validity of such disclosures.
Added
There is significant uncertainty about trade relationships between the U.S. and numerous other countries, including, for example, as a result of changes in U.S. trade policies, and the imposition of tariffs and taxes.
Removed
In addition, failure or a perception (whether or not valid) of failure to implement ESG strategies or achieve ESG goals or commitments, including any GHG reduction goals or commitments, could result in governmental investigations or enforcement, private litigation and damage our reputation, cause our investors or consumers to lose confidence in our Company, and negatively impact our operations.
Added
If the economic climate of the U.S. remains uncertain, demand for oil and 36 Table of Contents natural gas could diminish, which could affect our customers’ continued operations and adversely affect our results of operations, liquidity and financial condition.
Removed
While we may create and publish disclosures regarding ESG matters, many of the statements in those disclosures may be based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Added
We are not able to anticipate, detect or prevent all cyber-attacks because the methods used by cyber-attackers frequently change or may be unrecognizable until an attack is already underway (or even significantly thereafter). Cyber-attackers are increasingly employing technologies that are specifically designed to circumvent cybersecurity measures and avoid detection.
Removed
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying and measuring many ESG matters. Such disclosures may also be partially reliant on third-party information that we have not or cannot independently verify.
Added
Cyber-attacks are expected to continue to become more sophisticated with prevalence of ransomware, credential stuffing, spear phishing, social engineering, use of deepfakes, artificial intelligence, and other methods of attempting to gain unauthorized access to data.
Removed
Additionally, we expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters, and increased regulation will likely to lead to increased compliance costs as well as scrutiny that could heighten all of the risks identified in this risk factor.
Added
A cyberattack or security breach could result in significant liability from data privacy or cybersecurity claims and regulation, regulatory penalties, damage to our reputation, loss of confidence in us, all of which could have a material and adverse effect on our business, financial condition and results of operations.
Removed
Approximately 45 employees are located at the Kermit Sand Mine to facilitate the processing and storage of frac sand. Our Kermit Sand Mine operates under five operating permits and complies with other state and federal regulations that do not require a specific permit. The Kermit Sand Mine operates under an Air Quality Permit, which is renewable in 2028.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

66 edited+4 added−7 removed214 unchanged
Biggest changeIf we violate any of the restrictions, covenants, ratios or tests in our credit agreements, a significant portion of our indebtedness may become immediately due and payable. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. Any subsequent replacement of our debt agreements or any new indebtedness could have similar or greater restrictions.
Biggest changeWe might not have, or be able to obtain, sufficient funds to make these accelerated payments. Any subsequent replacement of our debt agreements or any new indebtedness could have similar or greater restrictions. An increase in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability, decrease our liquidity and impact our solvency.
We base our frac sand mineral reserve and resource estimates on engineering, economic and geological data assembled and analyzed by our mining engineers, which are reviewed periodically by outside firms. However, frac sand reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable.
We base our frac sand mineral reserve and resource estimates on engineering, economic and geological data assembled and analyzed by our mining engineers, which are reviewed periodically by outside firms. However, frac sand reserve and resource estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable.
A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to commence or continue related operations.
A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to commence or continue related operations.
These provisions include, for example, the following: • from and after such time as the parties to the ProFrac Stockholders’ Agreement (including their permitted transferees) cease to beneficially own more than 50% of our then-outstanding shares of common stock (which we refer to as the Trigger Date), dividing our board of directors into three classes of directors, with each class serving staggered three-year terms; • from and after the Trigger Date, allowing the members of our board of directors designated by the parties to the ProFrac Stockholders’ Agreement to have a majority of the voting power of our board of directors; • from and after the Trigger Date, and subject to the terms of our ProFrac Stockholders’ Agreement, providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum (prior to such time, vacancies may also be filled by stockholders holding a majority of the outstanding shares); • from and after the Trigger Date, permitting any action by stockholders to be taken only at an annual meeting or special meeting rather than by a written consent of the stockholders, subject to the rights of any series of preferred stock with respect to such rights; • from and after the Trigger Date, permitting special meetings of our stockholders to be called only by our Chief Executive Officer, our Executive Chairman and our board of directors pursuant to a resolution adopted by the 33 Table of Contents affirmative vote of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships; • from and after the Trigger Date, and subject to the rights of the holders of shares of any series of our preferred stock and the terms of our ProFrac Stockholders’ Agreement, requiring the affirmative vote of the holders of at least 66 2/3% in voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, to remove any or all of the directors from office at any time, and directors will be removable only for “cause”; • prohibiting cumulative voting in the election of directors; • establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders; and • providing that the board of directors is expressly authorized to adopt, or to alter or repeal our bylaws.
These provisions include, for example, the following: • from and after such time as the parties to the ProFrac Stockholders’ Agreement (including their permitted transferees) cease to beneficially own more than 50% of our then-outstanding shares of common stock (which we refer to as the Trigger Date), dividing our board of directors into three classes of directors, with each class serving staggered three-year terms; • from and after the Trigger Date, allowing the members of our board of directors designated by the parties to the ProFrac Stockholders’ Agreement to have a majority of the voting power of our board of directors; • from and after the Trigger Date, and subject to the terms of our ProFrac Stockholders’ Agreement, providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum (prior to such time, vacancies may also be filled by stockholders holding a majority of the outstanding shares); • from and after the Trigger Date, permitting any action by stockholders to be taken only at an annual meeting or special meeting rather than by a written consent of the stockholders, subject to the rights of any series of preferred stock with respect to such rights; • from and after the Trigger Date, permitting special meetings of our stockholders to be called only by our Chief Executive Officer, our Executive Chairman and our board of directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships; 32 Table of Contents • from and after the Trigger Date, and subject to the rights of the holders of shares of any series of our preferred stock and the terms of our ProFrac Stockholders’ Agreement, requiring the affirmative vote of the holders of at least 66 2/3% in voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, to remove any or all of the directors from office at any time, and directors will be removable only for “cause”; • prohibiting cumulative voting in the election of directors; • establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders; and • providing that the board of directors is expressly authorized to adopt, or to alter or repeal our bylaws.
As a result of these arrangements, our operations are subject to a number of risks, some of which are outside our control and may negatively affect our operations and financial results, including: • reduced control over those aspects of operations which are the responsibility of the contractor; • failure of a contractor to perform under its agreement; • interruption of operations or increased costs in the event that a contractor ceases its business due to insolvency or other unforeseen events; 23 Table of Contents • failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; • problems of a contractor with managing its workforce, labor unrest or other employment issues; • liability to third parties as a result of the actions of our contractors; • the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement; and negotiating renewal terms or new agreements with contractors on acceptable terms.
As a result of these arrangements, our operations are subject to a number of risks, some of which are outside our control and may negatively affect our operations and financial results, including: • reduced control over those aspects of operations which are the responsibility of the contractor; • failure of a contractor to perform under its agreement; • interruption of operations or increased costs in the event that a contractor ceases its business due to insolvency or other unforeseen events; • failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; • problems of a contractor with managing its workforce, labor unrest or other employment issues; • liability to third parties as a result of the actions of our contractors; and 19 Table of Contents • the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement; and negotiating renewal terms or new agreements with contractors on acceptable terms.
Any further disruptions or continuing volatility in the global financial markets (including as a result of a potential U.S. government default) may lead to additional increases in interest rates, or to a contraction in credit availability that could impair our ability to finance our operations and acquisitions.
Any disruptions or continuing volatility in the global financial markets (including as a result of a potential U.S. government default) may lead to additional increases in interest rates, or to a contraction in credit availability that could impair our ability to finance our operations and acquisitions.
The Series A Preferred Stock is entitled to 8% dividends per annum, paid-in-kind and compounded quarterly on the then outstanding Liquidation Preference (as defined in the Series A Certificate of Designation). See “Note 8 – Preferred Stock” in the notes to our consolidated financial statements for additional information.
The Series A Preferred Stock is entitled to 8% dividends per annum, paid-in-kind and compounded quarterly on the then outstanding Liquidation Preference (as defined in the Series A Certificate of Designation). See “Note 9. Preferred Stock” in the notes to our consolidated financial statements for additional information.
Our business could be affected by moratoriums or increased regulation of other companies in the supply chain, such as sand mining by our proppant suppliers, or our chemical suppliers, which could limit our access to supplies and increase the costs of raw materials.
Our business could be affected by tariffs, moratoriums or increased regulation of other companies in the supply chain, such as sand mining by our proppant suppliers, or our chemical suppliers, which could limit our access to supplies and increase the costs of raw materials.
In the event that the Tax Receivable Agreement is not terminated, the payments under the Tax Receivable Agreement are anticipated to commence in 2023 and to continue for 15 years after the date of the last redemption of the Units, which occurred in April 2023, see “
In the event that the Tax Receivable Agreement is not terminated, the payments under the Tax Receivable Agreement are anticipated to commence in 2025 and to continue for 15 years after the date of the last redemption of the Units, which occurred in April 2023, see “
In addition, the determination of future tax reporting positions, the structuring of future transactions and the handling of any challenge by any taxing authority to our tax reporting positions may take into consideration tax or other considerations of the Wilks Parties which may differ from the considerations of us or our other stockholders. 32 Table of Contents Furthermore, in connection with our IPO, ProFrac entered into a Stockholders’ Agreement, dated as of May 17, 2022, with certain of the Wilks Parties (as amended on January 13, 2023, the “ProFrac Stockholders’ Agreement”), which addresses the right to designate nominees for election to the ProFrac board of directors.
In addition, the determination of future tax reporting positions, the structuring of future transactions and the handling of any challenge by any taxing authority to our tax reporting positions may take into consideration tax or other considerations of the Wilks Parties which may differ from the considerations of us or our other stockholders. 31 Table of Contents Furthermore, in connection with our IPO, ProFrac entered into a Stockholders’ Agreement, dated as of May 17, 2022, with certain of the Wilks Parties (as amended on January 13, 2023, the “ProFrac Stockholders’ Agreement”), which addresses the right to designate nominees for election to the ProFrac board of directors.
To the extent that ProFrac Holding Corp. is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid. 30 Table of Contents Conflicts of interest could arise between us, on the one hand, and Dan Wilks and Farris Wilks and entities owned by or affiliated with them (collectively, the “Wilks Parties”), on the other hand, concerning among other things, business transactions, competitive business activities or business opportunities.
To the extent that ProFrac Holding Corp. is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid. 29 Table of Contents Conflicts of interest could arise between us, on the one hand, and Dan Wilks and Farris Wilks and entities owned by or affiliated with them (collectively, the “Wilks Parties”), on the other hand, concerning among other things, business transactions, competitive business activities or business opportunities.
The impact of the changing demand for oil and natural gas services and products, and proposed laws and regulations, may have a material adverse effect on our business, financial condition, results of operations and cash flows. 28 Table of Contents The commercial development of economically viable non-fossil fuel energy sources and related products (such as electric vehicles, wind, solar, geothermal, tidal, fuel cells and biofuels) could have a similar effect.
The impact of the changing demand for oil and natural gas services and products, and proposed laws and regulations, may have a material adverse effect on our business, financial condition, results of operations and cash flows. 27 Table of Contents The commercial development of economically viable non-fossil fuel energy sources and related products (such as electric vehicles, wind, solar, geothermal, tidal, fuel cells and biofuels) could have a similar effect.
We have incurred and will continue to incur substantial indebtedness to finance acquisitions. We have also issued equity and may issue additional equity, or convertible securities in connection with such acquisitions.
We have incurred and may continue to incur substantial indebtedness to finance acquisitions. We have also issued equity and may issue additional equity, or convertible securities in connection with such acquisitions.
Such third party could take legal action to restrict or suspend the access or easement or could refuse to renew such rights or easements upon their contractual expiration, which could be materially adverse to our business, results of operations or financial condition. 24 Table of Contents We may be subject to claims for personal injury and property damage, which could materially adversely affect our financial condition and results of operations.
Such third party could take legal action to restrict or suspend the access or easement or could refuse to renew such rights or easements upon their contractual expiration, which could be materially adverse to our business, results of operations or financial condition. 20 Table of Contents We may be subject to claims for personal injury and property damage, which could materially adversely affect our financial condition and results of operations.
In addition, because the historical utilization rates of any acquired assets may be lower than ours in recent periods, our utilization ratio could decrease during the course of an initial integration period. Accordingly, there can be no assurance the utilization for acquired assets will align with the utilization of our existing fleet or on our anticipated timeline or at all.
In addition, because the historical utilization rates of any acquired assets may be lower than ours, our utilization ratio could decrease during the course of an initial integration period. Accordingly, there can be no assurance the utilization for acquired assets will align with the utilization of our existing fleet or on our anticipated timeline or at all.
Disclosure of our proprietary chemical information to third parties or to the public, even if inadvertent, could diminish the value of our trade secrets or those of our chemical suppliers and could result in competitive harm to us, which could have an adverse impact on our business, financial condition, prospects and results of operations. 26 Table of Contents Supply chain issues, moratoriums, and increased regulatory requirements on our suppliers may impact the cost and availability of raw materials necessary to our operations.
Disclosure of our proprietary chemical information to third parties or to the public, even if inadvertent, could diminish the value of our trade secrets or those of our chemical suppliers and could result in competitive harm to us, which could have an adverse impact on our business, financial condition, prospects and results of operations. 25 Table of Contents Supply chain issues, tariffs, moratoriums, and increased regulatory requirements on our suppliers may impact the cost and availability of raw materials necessary to our operations.
Consequently, unless we revise our dividend policy, receive permission from the holders of our Series A Preferred Stock pursuant to the Series A Certificate of Designation, and are released of the provisions in our loan agreements that restrict the payment of dividends, your only opportunity to achieve a return on your investment in us will be if you sell 34 Table of Contents your Class A Common Stock at a price greater than the price that you paid for it.
Consequently, unless we revise our dividend policy, receive permission from the holders of our Series A Preferred Stock pursuant to the Series A Certificate of Designation, and are released of the provisions in our loan agreements that restrict the payment of dividends, your only opportunity to achieve a return on your investment in us will be if you sell your Class A Common Stock at a price greater than the price that you paid for it.
Numerous factors beyond our control affect our customers’ decisions regarding their level of exploration and production activity at any given time and, therefore, have an impact on the level of demand for our services at such time, including: • the global supply of, and demand for, oil and natural gas; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the supply of and demand for drilling and hydraulic fracturing equipment; • the expected decline of rates of current oil and gas production; • any actual or perceived difficulty or inability to acquire or maintain necessary permits or mining or water rights; • the social, political and economic conditions in oil and natural gas producing countries and regions, including developments related to the ongoing wars between Russia and Ukraine and Israel and Hamas; • any actions by the members of OPEC+ and other oil-producing countries with respect to oil production levels and announcements of potential changes in such levels; • the level of consumer acceptance of and demand for fossil fuel products; • negative shifts in investor sentiment of the oil and gas industry; • contractions in the credit market; • the strength or weakness of the U.S. dollar; • inflationary factors, such as increases in the labor costs, material costs and overhead costs; • the availability of pipeline and other transportation capacity; • the levels of oil and natural gas storage; • any adverse weather conditions or natural disasters; • any technological advances affecting energy consumption; • the price and availability of alternative fuels and energy sources; • merger and divestiture activity among oil and natural gas producers, including consolidation activity that may eliminate some of our customers or increase their leverage in negotiations with us; • competition among oilfield service and equipment providers; • changes in transportation regulations that result in increased costs or administrative burdens; and • overall domestic and global economic conditions.
Numerous factors beyond our control affect our customers’ decisions regarding their level of exploration and production activity at any given time and, therefore, have an impact on the level of demand for our services at such time, including: • changes in U.S. energy policy; 16 Table of Contents • the global supply of, and demand for, oil and natural gas; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the supply of and demand for drilling and hydraulic fracturing equipment; • the expected decline of rates of current oil and gas production; • the uncertainty in capital and commodities markets and the ability of oil and gas producers to access capital; • any actual or perceived difficulty or inability to acquire or maintain necessary permits or mining or water rights; • the social, political and economic conditions in oil and natural gas producing countries and regions, including developments related to the ongoing wars between Russia and Ukraine and Israel and Hamas; • any actions by the members of OPEC+ and other oil-producing countries with respect to oil production levels and announcements of potential changes in such levels; • the level of consumer acceptance of and demand for fossil fuel products; • negative shifts in investor sentiment of the oil and gas industry; • contractions in the credit market; • the strength or weakness of the U.S. dollar; • inflationary factors, such as increases in the labor costs, material costs and overhead costs; • the availability of pipeline and other transportation capacity; • the levels of oil and natural gas storage; • any adverse weather conditions or natural disasters; • any technological advances affecting energy consumption; • the price and availability of alternative fuels and energy sources; • merger and divestiture activity among oil and natural gas producers, including consolidation activity that may eliminate some of our customers or increase their leverage in negotiations with us; • competition among oilfield service and equipment providers; • changes in transportation regulations that result in increased costs or administrative burdens; and • overall domestic and global economic conditions.
For example, our credit agreements restrict or limit our ability to: • grant liens; • incur additional indebtedness; • engage in a merger, consolidation or other fundamental transactions; • enter into transactions with affiliates or amend material agreements; • sell or otherwise dispose of assets, businesses and operations; • make acquisitions, investments and capital expenditures; and 19 Table of Contents • declare and pay distributions and dividends.
For example, our credit agreements restrict or limit our ability to: • grant liens; • incur additional indebtedness; • engage in a merger, consolidation or other fundamental transactions; • enter into transactions with affiliates or amend material agreements; • sell or otherwise dispose of assets, businesses and operations; • make acquisitions, investments and capital expenditures; and • declare and pay distributions and dividends.
We may experience difficulties in integrating acquired assets into our business and in realizing the expected benefits of an acquisition. The success of an acquisition, if achieved, will depend in part on our ability to realize anticipated business opportunities and benefits from combining the acquired assets with our business in an effective and efficient manner.
We may experience difficulties in integrating acquired assets into our business and in realizing the expected benefits of an acquisition. 22 Table of Contents The success of an acquisition, if achieved, will depend in part on our ability to realize anticipated business opportunities and benefits from combining the acquired assets with our business in an effective and efficient manner.
For a company of our size and resources, the pace and volume of the deal-making activity described above may create risks and uncertainties that can have a material adverse effect on the daily conduct of our business, and negatively impact our cash flows, financial condition and results of operations.
For a company of our size and resources, the rapid pace and volume of deal-making activity may create risks and uncertainties that can have a material adverse effect on the daily conduct of our business, and negatively impact our cash flows, financial condition and results of operations.
Such third party could take legal action to restrict or suspend the access or easement or could refuse to renew such rights or easements upon their contractual expiration, which could be materially adverse to our business, results of operations or financial condition.
Such third party could take legal action to restrict or suspend the access or easement or could refuse to renew such rights or 18 Table of Contents easements upon their contractual expiration, which could be materially adverse to our business, results of operations or financial condition.
There is no guarantee that the price of our Class A Common Stock that will prevail in the market will ever exceed the amount that you paid for it. The price of our Class A Common Stock may decline as a result of the large number of shares available for sale.
There is no guarantee that the price of our Class A Common Stock that will prevail in the market will ever exceed the amount that you paid for it. 33 Table of Contents The price of our Class A Common Stock may decline as a result of the large number of shares available for sale.
Following the first anniversary of the first issuance of shares of Series A Preferred Stock, our Series A Preferred Stock is convertible into our Class A Common Stock at a conversion ratio that is the quotient of: (i) the liquidation preference as of the date of the conversion and (ii) the then applicable conversion price (which is initially set at $20.00, but may be adjusted from time to time, in accordance with the terms of the Series A Certificate of Designation).
Our Series A Preferred Stock is convertible into our Class A Common Stock at a conversion ratio that is the quotient of: (i) the liquidation preference as of the date of the conversion and (ii) the then applicable conversion price (which is initially set at $20.00, but may be adjusted from time to time, in accordance with the terms of the Series A Certificate of Designation).
Any inaccuracy in our estimates related to our mineral reserves and non-reserve mineral deposits, or our title to such deposits, could result in our inability to mine the deposits or require us to pay higher than expected costs.
Any inaccuracy in our estimates related to our mineral reserves and resource mineral deposits, or our title to such deposits, could result in our inability to mine the deposits or require us to pay higher than expected costs.
As of December 31, 2023, approximately 75% of our pumps rely on electric frac or natural gas burning engine technology (which we consider to be currently the most environmentally friendly available technologies used in our industry).
As of December 31, 2024, approximately 70% of our pumps rely on electric frac or natural gas burning engine technology (which we consider to be currently the most environmentally friendly available technologies used in our industry).
Contractors provide us mining, wet and dry loading and hauling services at our Kermit Sand Mine, Lamesa Sand Mine, Monahans Sand Mine, San Antonio Sand Mine and Merryville Sand Mine, and provide us certain related equipment.
Contractors provide us mining, wet and dry loading and hauling services at our Kermit Sand Mine, Lamesa Sand Mine, Monahans Sand Mine, San Antonio Sand Mine, and Merryville Sand Mine (when not idled), and provide us certain related equipment.
Section 404 of Sarbanes-Oxley requires that, upon satisfaction of certain conditions, our management assess the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm issue an attestation report on those internal controls.
Section 404 of Sarbanes-Oxley requires that our management assess the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm issue an attestation report on those internal controls.
However, as discussed above, a decision by the FWS to list the Dunes Sagebrush Lizard as endangered could subject us and our customers to operating restrictions and/or limit areas of our current or future operations.
As discussed above, the decision to list the Dunes Sagebrush Lizard as endangered could subject us and our customers to operating restrictions and/or limit areas of our current or future operations.
Furthermore, our debt agreements contain certain other operating and financial covenants. Our ability to comply with the covenants and restrictions contained in our debt agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired.
Furthermore, our debt agreements contain certain other operating and financial covenants. Our ability to comply with the covenants and restrictions contained in our debt agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions.
See “Note 6 – Debt” in the notes to our consolidated financial statements for more details on our debt including the portion of our outstanding principal that matures in the year ending December 31, 2024.
Debt” in the notes to our consolidated financial statements for more details on our debt including the portion of our outstanding principal that matures in the year ending December 31, 2025.
The Wilks Parties have the ability to direct the voting of a majority of our voting stock, and their interests may conflict with those of our other stockholders. As of December 31, 2023, the Wilks Parties controlled approximately 84.4% of our total voting power.
The Wilks Parties have the ability to direct the voting of a majority of our voting stock, and their interests may conflict with those of our other stockholders. As of December 31, 2024, the Wilks Parties controlled approximately 87.2% of our total voting power.
MSHA reports that silica dust affects thousands of miners each year and, without adequate protection, miners face risks of serious illnesses, many of which can be fatal. On July 13, 2023, the MSHA issued a proposed rule amending its existing standards and setting a permissible exposure limit of respirable crystalline silica.
MSHA reports that silica dust affects thousands of miners each year and, without adequate protection, miners face risks of serious illnesses, many of which can be fatal. In April 2024, the MSHA issued a final rule amending its existing standards and setting a permissible exposure limit of respirable crystalline silica.
Our indebtedness could adversely affect our financial flexibility and competitive position and make us more vulnerable to adverse economic conditions. As of December 31, 2023, we had outstanding principal indebtedness of $1,107.9 million.
Our indebtedness could adversely affect our financial flexibility and competitive position and make us more vulnerable to adverse economic conditions. As of December 31, 2024, we had outstanding principal indebtedness of $1,138.9 million. See “Note 7.
In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.
In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition. 30 Table of Contents Our stock price may be volatile, which could lead to losses by investors.
For example, on July 3, 2023, the FWS proposed that the Dunes Sagebrush Lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where we and our customers operate), be listed as endangered under the ESA.
For example, on June 20, 2024, the FWS issued a final rule that the Dunes Sagebrush Lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where we and our customers operate), be listed as endangered under the ESA.
Even if we can obtain capital from alternative sources, the terms of such fundings may not be favorable to us. In particular, the terms of any debt financing may include covenants that significantly restrict our operations.
Even if we can obtain capital from alternative sources, the terms of such fundings may not be favorable to us. In particular, the terms of any debt financing may include covenants that significantly restrict our operations. Our inability to grow as planned may reduce our chances of maintaining and improving profitability.
The term of the agreement expires on December 1, 2024 and renews automatically for successive one year terms unless earlier terminated.
The initial term of the agreement expired on December 1, 2024, but it renews automatically for successive one year terms unless earlier terminated.
For example, since we consummated our IPO, the closing sales price of our Class A Common 31 Table of Contents Stock has fluctuated from a high of $25.72 per share on November 22, 2022, to a low of $6.73 per share on February 14, 2024.
For example, since we consummated our IPO, the closing sales price of our Class A Common Stock has fluctuated from a high of $25.72 per share on November 22, 2022, to a low of $5.34 per share on October 23, 2024.
Our stock price may be volatile, which could lead to losses by investors. The market price of our Class A Common Stock could vary significantly as a result of a number of factors, some of which are beyond ProFrac’s control.
The market price of our Class A Common Stock could vary significantly as a result of a number of factors, some of which are beyond ProFrac’s control.
For mines where the operator has not timely abated hazards, MSHA will issue a withdrawal order until the silica overexposure hazard has been abated. • Expanded silica sampling at mines to ensure inspectors’ samples represent the mines, commodities and occupations known to have the highest risk for overexposure. • A focus on sampling during periods of the mining process that present the highest risk of silica exposure for miners. 29 Table of Contents • Reminding miners about their rights to report hazardous health conditions, including any attempt to tamper with the sampling process.
For mines where the operator has not timely abated hazards, MSHA will issue a withdrawal order until the silica overexposure hazard has been abated. • Expanded silica sampling at mines to ensure inspectors’ samples represent the mines, commodities and occupations known to have the highest risk for overexposure. • A focus on sampling during periods of the mining process that present the highest risk of silica exposure for miners. • Reminding miners about their rights to report hazardous health conditions, including any attempt to tamper with the sampling process. 28 Table of Contents In addition, the DOL’s Educational Field and Small Mine Services staff will provide compliance assistance and outreach to mine operators, unions and other mining community organizations to promote and advance protections for miners.
A prolonged reduction in oil and gas prices would generally depress the level of oil and natural gas exploration, development, production, and well completion activity and would result in a corresponding decline in the demand for the hydraulic fracturing services that we provide.
A prolonged reduction in oil and gas prices would generally depress the level of oil and natural gas exploration, development, production, and well completion activity and would result in a corresponding decline in the demand for the hydraulic fracturing services that we provide. If prices decline, similar declines in our customers’ spending would have an adverse effect on our revenue.
These efforts have included significant public investment in zero-carbon energy production and storage, consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources. The risk of these continued efforts to drive down carbon emissions may result in reduced business opportunities and profitability.
These efforts have included significant public investment in zero-carbon energy production and storage, consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources.
Compliance with these provisions is onerous, and there is no assurance that we will be in a position to meet these legal requirements when they become applicable to us, or that we or our independent registered public accounting firm will not identify material weaknesses in our internal control over financial reporting.
Compliance with these provisions is onerous, and there is no assurance that we will continue to meet the applicable legal requirements of Section 404 of Sarbanes-Oxley, or that we or our independent registered public accounting firm will not identify material weaknesses in our internal control over financial reporting.
Our inability to grow as planned may reduce our chances of maintaining and improving profitability. 18 Table of Contents We may have difficulty managing growth in our business, which could adversely affect our financial condition and results of operations. Growth in accordance with our business strategy, if achieved, could place a significant strain on our financial, operational and management resources.
We may have difficulty managing growth in our business, which could adversely affect our financial condition and results of operations. Growth in accordance with our business strategy, if achieved, could place a significant strain on our financial, operational and management resources.
Such regulation of methane emission for new sources and the promulgation of further requirements for existing oil and gas customers could result in increased operational costs and adversely affect demand for our products and services.
Such regulation of methane emission for new sources and the promulgation of further requirements for existing oil and gas customers could result in increased operational costs and adversely affect demand for our products and services. The regulations are likely to be reevaluated under the current Trump administration and subject to legal challenges.
An increase in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability, decrease our liquidity and impact our solvency. We have exposure to increases in interest rates under certain of our debt agreements, some of which accrue interest at a variable rate.
We have exposure to increases in interest rates under certain of our debt agreements, some of which accrue interest at a variable rate. As a result, increases in interest rates could increase the cost of servicing such indebtedness and materially reduce our profitability, financial condition and cash flows.
If we do not generate sufficient cash flows from operations, and additional borrowings, refinancings or proceeds of asset sales are not available to us, we may not have sufficient cash to enable us to meet all of our obligations.
Debt” in the notes to our consolidated financial statements for discussion of our debt financing. 24 Table of Contents If we do not generate sufficient cash flows from operations, and additional borrowings, refinancings or proceeds of asset sales are not available to us, we may not have sufficient cash to enable us to meet all of our obligations.
Legal challenges claiming that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals without 22 Table of Contents compensation for our prior expenditures relating to such property.
Legal challenges claiming that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals without compensation for our prior expenditures relating to such property. Our business may suffer a material adverse effect in the event that any such claims are successful.
In addition, we do not have the ability to access or deploy Flotek’s cash or liquidity in our operations, which may limit our ability to mitigate the impact of the inclusion of Flotek’s financial statements in our consolidated financial statements. 25 Table of Contents Risks Related to Environmental and Regulatory Matters Our operations and the operations of our customers are subject to environmental, health and safety laws and regulations, and future compliance, claims, and liabilities relating to such matters may have a material adverse effect on our results of operations, financial position or cash flows.
Risks Related to Environmental and Regulatory Matters Our operations and the operations of our customers are subject to environmental, health and safety laws and regulations, and future compliance, claims, and liabilities relating to such matters may have a material adverse effect on our results of operations, financial position or cash flows.
Additional risks and uncertainties not currently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition, results of operations, or cash flows. 17 Table of Contents Risks Related to our Growth Strategy To achieve our growth and vertical integration objectives, our management relies on a rapid succession of strategic acquisitions, investments and procurement arrangements the pace and scope of which may have the potential to adversely affect the day-to-day operation of our business, and our cash flows, financial condition and results of operations.
In addition, we do not have the ability to access or deploy Flotek’s cash or liquidity in our operations, which may limit our ability to mitigate the impact of the inclusion of Flotek’s financial statements in our consolidated financial statements. 21 Table of Contents Risks Related to our Growth Strategy To achieve our growth and vertical integration objectives, our management relies on a rapid succession of strategic acquisitions, investments and procurement arrangements the pace and scope of which may have the potential to adversely affect the day-to-day operation of our business, and our cash flows, financial condition and results of operations.
Risks Related to our Business Our business and financial performance depends on the level of capital spending by oil and gas companies operating within the areas we service. Demand for our services depends on the level of capital expenditures in the United States by companies in the oil and natural gas industry.
Demand for our services depends on the level of capital expenditures in the United States by companies in the oil and natural gas industry.
Since the beginning of 2022, before the May 17 th closing of our initial public offering and the start of trading of our Class A Common Stock on the Nasdaq Global Select Market (“Nasdaq”), we have aggressively pursued our growth and vertical integration strategies through a series of acquisitions, investments and procurement arrangements that increased our total assets from $664.6 million at December 31, 2021, to $3.1 billion at the end of fiscal year 2023.
Since the beginning of 2022, we have aggressively pursued our growth and vertical integration strategies through a series of acquisitions, investments and procurement arrangements that increased our total assets from $664.6 million at December 31, 2021, to $3.0 billion at the end of fiscal year 2024.
Federal, state, and local legislative and regulatory initiatives relating to hydraulic fracturing, as well as governmental reviews and investment practices for such activities, may serve to limit future oil and natural gas E&P activities and could have a material adverse effect on our results of operations and business.
Finally, many scientists have concluded that increasing concentrations of GHG in the atmosphere may have significant physical climate effects, such as increased frequency and severity of storms, droughts, and floods and other climate events that could have an adverse effect on our and our customers’ operations. 26 Table of Contents Federal, state, and local legislative and regulatory initiatives relating to hydraulic fracturing, as well as governmental reviews and investment practices for such activities, may serve to limit future oil and natural gas E&P activities and could have a material adverse effect on our results of operations and business.
Additionally, if we were to lose any material customer, we may not be able to redeploy our equipment at similar utilization or pricing levels and such loss could have an adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels.
Additionally, if we were to lose any material customer, we may not be able to redeploy our equipment at similar utilization or pricing levels and such loss could have an adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels. 17 Table of Contents As a vertically integrated company, our Proppant Production segment and power generation business make significant intercompany sales to our Stimulation Services segment and could be adversely affected if our Stimulation Services segment fails to perform as expected.
As of December 31, 2023, we had 159,388,841 shares of our Class A Common Stock outstanding, and approximately 2,542,708 shares of Class A Common Stock remained available for issuance under our long-term incentive plan. The Wilks Parties owned 134,458,994 shares of our outstanding Class A Common Stock at March 11, 2024.
As of December 31, 2024, we had 160,146,602 shares of our Class A Common Stock outstanding, and approximately 1,180,220 shares of Class A Common Stock remained available for issuance under our long-term incentive plan. The Wilks Parties owned 139,573,147 shares of our outstanding Class A Common Stock at March 3, 2025.
GHGs to about 40 percent lower than 2005 levels by 2030. Such significant public investment in non-fossil fuel energy production may reduce demand for traditional fossil fuel electricity production which could negatively impact prices of natural gas and profitability of our operations.
Such significant public investment in non-fossil fuel energy production may reduce demand for traditional fossil fuel electricity production which could negatively impact prices of natural gas and profitability of our operations. The regulation of methane from oil and gas facilities stands to become more lenient under the current federal administration.
Our business may suffer a material adverse effect in the event that any such claims are successful. In some instances, we have received access rights or easements from third parties, which allow for more efficient operations.
In some instances, we have received access rights or easements from third parties, which allow for more efficient operations.
If a major customer fails to pay us, cash flow from operations would be impacted and our operating results and financial condition could be harmed.
It is likely that we will depend on a relatively small number of customers for a significant portion of our revenue in the future. If a major customer fails to pay us, cash flow from operations would be impacted and our operating results and financial condition could be harmed.
As a result, increases in interest rates could increase the cost of servicing such indebtedness and materially reduce our profitability, financial condition and cash flows. We may not be able to generate sufficient cash flow to service all of our obligations, including our obligations under our credit and other financing facilities.
We may not be able to generate sufficient cash flow to service all of our obligations, including our obligations under our credit and other financing facilities.
As a vertically integrated company, our proppant production segment makes significant intercompany sales to our stimulation services segment and could be adversely affected if our stimulation services segment fails to perform as expected. Oil and natural gas companies’ operations using hydraulic fracturing are substantially dependent on the availability of water, as are our frac sand mining and processing operations.
Oil and natural gas companies’ operations using hydraulic fracturing are substantially dependent on the availability of water, as are our frac sand mining and processing operations.
We also have limited ability to provide Alpine with liquidity to satisfy its obligations. See “Note 6 – Debt” in the notes to our consolidated financial statements for discussion of our debt financing.
We also have limited ability to provide Alpine with liquidity to satisfy its obligations. See “Note 7.
In addition, the DOL’s Educational Field and Small Mine Services staff will provide compliance assistance and outreach to mine operators, unions and other mining community organizations to promote and advance protections for miners. The MSHA initiative is intended to take immediate action to reduce the risks of silica dust exposure as the DOL’s development of a mining industry standard continues.
The MSHA initiative is intended to take immediate action to reduce the risks of silica dust exposure as the DOL’s development of a mining industry standard continues.
The majority of our revenue is generated from the provision of hydraulic fracturing services to a discrete number of recurring customers.
The majority of our revenue is generated from the provision of hydraulic fracturing services to a discrete number of recurring customers. During the fiscal years ended on December 31, 2024, 2023 and 2022, our top ten customers represented 37%, 41% and 35% of our consolidated revenues, respectively.
As a result of increased attention to combating climate change, various governmental and non-governmental groups have pledged to achieve reductions to GHG emissions. One recent development in this area, the 2022 IRA, discussed above, involves significant investment over the next 10 years into solar and wind energy production and battery storage infrastructure in an effort to reduce U.S.
One development in this area, under the 2022 Inflation Reduction Act, involves significant investment over the next 10 years into solar and wind energy production and battery storage infrastructure in an effort to reduce U.S. GHGs to about 40 percent lower than 2005 levels by 2030.
One or more of these developments could have a material adverse effect on our business, financial condition and results of operation. 27 Table of Contents Finally, many scientists have concluded that increasing concentrations of GHG in the atmosphere may have significant physical climate effects, such as increased frequency and severity of storms, droughts, and floods and other climate events that could have an adverse effect on our and our customers’ operations.
One or more of these developments could have a material adverse effect on our business, financial condition and results of operation.
Removed
These acquisitions, investments and transactions include: • Our $29.5 million procurement arrangements with, and investments in, Flotek Industries, Inc. in February and June of 2022, • Our $46.0 million additional investment in Basin Production and Completion LLC in February 2022, • Our $405.7 million acquisition of FTSI in March 2022, • Our $97.4 million acquisition of SP Silica of Monahans, LLC and SP Silica Sales, LLC in July 2022, • Our $479.1 million acquisition of USWS in November 2022, • Our $164.6 million acquisition of Monarch Silica, LLC and related real estate in December 2022, • Our $145.2 million acquisition of REV in December 2022, • Our $36.5 million acquisition of Producers Service Holdings LLC in January 2023, and • Our $462.8 million acquisition of Performance Proppants, LLC, Red River Land Holdings, LLC, Performance Royalty, LLC, Performance Proppants International, LLC and Sunny Point Aggregates, LLC in February 2023.
Added
Additional risks and uncertainties not currently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition, results of operations, or cash flows. Risks Related to our Business Our business and financial performance depends on the level of capital spending by oil and gas companies operating within the areas we service.
Removed
For example, the significant decline in oil and natural gas prices that followed the outset of the COVID pandemic in 2020 caused a reduction in our customers’ spending and associated drilling and 20 Table of Contents completion activities, all of which had an adverse effect on our revenue.
Added
For example, in October 2024, Livewire commenced operations as a new line of our business intended to provide onsite power generation services for oilfield and non-oilfield customers that require off-grid power solutions.
Removed
While oil and natural gas prices have since increased, should prices decline again, similar declines in our customers’ spending would have an adverse effect on our revenue.
Added
If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. 23 Table of Contents If we violate any of the restrictions, covenants, ratios or tests in our credit agreements, a significant portion of our indebtedness may become immediately due and payable.
Removed
During the fiscal years ended on December 31, 2023, 2022 and 2021, our top ten customers represented, respectively, 41%, 35% and 63% of our consolidated revenues. 21 Table of Contents It is likely that we will depend on a relatively small number of customers for a significant portion of our revenue in the future.
Added
Although, under the Trump administration, we expect less GHG regulation, the risk of these continued efforts to drive down carbon emissions may result in reduced business opportunities and profitability. As a result of increased attention to combating climate change, various governmental and non-governmental groups have pledged to achieve reductions to GHG emissions.
Removed
The regulation of methane from oil and gas facilities stands to become more restrictive under the current federal administration.
Removed
In 2021, President Biden signed an executive order calling for the development of a “climate finance plan” and, separately, the Federal Reserve announced that it had joined the Network for Greening the Financial System, a consortium of financial regulators focused on addressing climate-related risks in the financial sector.
Removed
The comment period on the proposed rule ended on October 2, 2023. At this time, we cannot be sure of the precise potential effects of such proposed listing, if it is finalized, on our or our customers’ operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+0 added−0 removed7 unchanged
Biggest changeHolders of our Class A Common Stock As of March 11, 2024, there were 58 holders of record of our Class A Common Stock.
Biggest changeHolders of our Class A Common Stock As of March 3, 2025, there were 52 holders of record of our Class A Common Stock.
Item 3. Legal P r oceedings. Information with respect to this Item is incorporated herein by reference to “Note 13 – Commitments and Contingencies” included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report. I t em 4. Mine Safety Disclosures.
Item 3. Legal P r oceedings. Information with respect to this Item is incorporated herein by reference to “Note 14. Commitments and Contingencies” included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report. I t em 4. Mine Safety Disclosures.
Issuer Purchases of Equity Securities During the quarter ended December 31, 2023, we did not repurchase any of our equity securities. I t em 6. [Reserved] 50 Table of Contents
Issuer Purchases of Equity Securities During the quarter ended December 31, 2024, we did not repurchase any of our equity securities. I t em 6. [Reserved] 50 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

296 edited+118 added−151 removed205 unchanged
Biggest changeNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) Summarized financial information for our reportable segments is as follows: Stimulation Services Proppant Production Manufacturing Other Eliminations Total Year Ended December 31, 2023: Revenue External customers — services $ 2,274.2 $ — $ — $ — $ — $ 2,274.2 External customers — product sales (1) — 270.2 19.0 66.6 — 355.8 Intercompany (2) 17.0 113.1 157.1 126.4 ( 413.6 ) — Total Revenue $ 2,291.2 $ 383.3 $ 176.1 $ 193.0 $ ( 413.6 ) $ 2,630.0 Adjusted EBITDA (3) (4) $ 479.9 $ 195.6 $ 14.5 $ ( 1.6 ) $ — $ 688.4 Depreciation, depletion and amortization 363.0 68.1 4.2 3.1 — 438.4 Investment in property, plant & equipment 221.8 40.9 3.3 1.0 — 267.0 As of December 31, 2023: Cash and cash equivalents $ 1.3 $ 17.7 $ 0.4 $ 5.9 $ — $ 25.3 Total current assets 445.8 181.2 164.7 70.6 ( 224.2 ) 638.1 Property, plant, and equipment, net 881.6 859.8 19.8 17.8 — 1,779.0 Total assets (5) 2,483.9 1,160.1 243.9 188.7 ( 1,005.9 ) 3,070.7 Current portion of long-term debt 46.2 71.6 1.0 7.6 — 126.4 Long-term debt 611.1 328.2 2.7 0.1 — 942.1 Total liabilities 1,404.5 225.7 201.5 55.5 ( 145.1 ) 1,742.1 Year Ended December 31, 2022: Revenue External customers — services $ 2,341.5 $ — $ — $ — $ — $ 2,341.5 External customers — product sales (1) — 33.9 13.1 37.1 — 84.1 Intercompany 7.2 56.1 153.6 74.7 ( 291.6 ) — Total Revenue $ 2,348.7 $ 90.0 $ 166.7 $ 111.8 $ ( 291.6 ) $ 2,425.6 Adjusted EBITDA (3) $ 771.4 $ 49.8 $ 14.3 $ ( 24.3 ) $ — $ 811.2 Depreciation, depletion and amortization $ 246.4 $ 14.2 $ 4.7 $ 2.0 $ — $ 267.3 Investment in property, plant & equipment $ 297.8 $ 52.5 $ 5.5 $ 0.4 $ — $ 356.2 As of December 31, 2022: Cash and cash equivalents $ 15.4 $ 2.9 $ 4.5 $ 12.3 $ — $ 35.1 Total current assets 740.9 33.9 99.5 74.0 ( 82.9 ) 865.4 Property, plant, and equipment, net 943.6 413.3 19.6 19.9 — 1,396.4 Total assets (5) 2,722.3 477.1 140.3 193.7 ( 599.8 ) 2,933.6 Current portion of long-term debt 79.6 32.8 — 15.2 — 127.6 Long-term debt 749.7 44.3 1.1 2.7 — 797.8 Total liabilities 1,481.3 126.8 108.1 102.2 ( 235.5 ) 1,582.9 Year Ended December 31, 2021: Revenue External customers — services $ 744.2 $ — $ — $ — $ — $ 744.2 External customers — product sales — 16.3 7.9 — — 24.2 Intercompany 1.2 10.9 68.5 — ( 80.6 ) — Total Revenue $ 745.4 $ 27.2 $ 76.4 $ — $ ( 80.6 ) $ 768.4 Adjusted EBITDA (3) $ 122.6 $ 10.7 $ 1.4 $ — $ — $ 134.7 Depreciation, depletion and amortization $ 128.0 $ 8.9 $ 3.8 $ — $ — $ 140.7 Investment in property, plant & equipment $ 82.8 $ 1.4 $ 3.2 $ — $ — $ 87.4 (1) Our proppant production segment recognized noncash revenue associated with acquired contract liabilities of $ 57.5 million and $ 6.6 million in 2023 and 2022, respectively.
Biggest changeNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) Stimulation Services Proppant Production Manufacturing Other Eliminations Total Year Ended December 31, 2023: Revenue External customers — services $ 2,274.2 $ — $ — $ — $ — $ 2,274.2 External customers — product sales (1) — 270.2 19.0 66.6 — 355.8 Intercompany (2) 17.0 113.1 157.1 126.4 ( 413.6 ) — Total Revenue $ 2,291.2 $ 383.3 $ 176.1 $ 193.0 $ ( 413.6 ) $ 2,630.0 Cost of revenues, exclusive of depreciation, depletion, and amortization 1,668.9 171.6 147.0 166.2 ( 413.6 ) 1,740.1 Selling, general and administrative, excluding stock-based compensation 147.0 13.8 14.6 28.4 — 203.8 Other expense (income) ( 2.1 ) ( 0.2 ) — 0.0 — ( 2.3 ) Adjusted EBITDA (3) $ 477.4 $ 198.1 $ 14.5 $ ( 1.6 ) $ — $ 688.4 Depreciation, depletion and amortization 363.0 68.1 4.2 3.1 — $ 438.4 Investment in property, plant & equipment 221.8 40.9 3.3 1.0 — $ 267.0 As of December 31, 2023: Cash and cash equivalents $ 1.3 $ 17.7 $ 0.4 $ 5.9 $ — $ 25.3 Total current assets 445.8 181.2 164.7 70.6 ( 224.2 ) 638.1 Property, plant, and equipment, net 881.6 859.8 19.8 17.8 — 1,779.0 Total assets (4) 2,483.9 1,160.1 243.9 188.7 ( 1,005.9 ) 3,070.7 Current portion of long-term debt 46.2 71.6 1.0 7.6 — 126.4 Long-term debt 611.2 328.2 2.6 0.1 — 942.1 Total liabilities 1,404.5 225.7 201.5 55.5 ( 145.1 ) 1,742.1 Year Ended December 31, 2022: Revenue External customers — services $ 2,341.5 $ — $ — $ — $ — $ 2,341.5 External customers — product sales (1) — 33.9 13.1 37.1 — 84.1 Intercompany (2) 7.2 56.1 153.6 74.7 ( 291.6 ) — Total Revenue $ 2,348.7 $ 90.0 $ 166.7 $ 111.8 $ ( 291.6 ) $ 2,425.6 Cost of revenues, exclusive of depreciation, depletion, and amortization 1,451.3 40.7 137.9 118.5 ( 291.6 ) 1,456.8 Selling, general and administrative, excluding stock-based compensation 122.6 3.2 14.4 17.4 — 157.6 Other expense (income) ( 0.7 ) 0.4 0.1 0.2 — ( 0.0 ) Adjusted EBITDA (3) $ 775.5 $ 45.7 $ 14.3 $ ( 24.3 ) $ — $ 811.2 Depreciation, depletion and amortization $ 246.4 $ 14.2 $ 4.7 $ 2.0 $ — $ 267.3 Investment in property, plant & equipment $ 297.8 $ 52.5 $ 5.5 $ 0.4 $ — $ 356.2 (1) Our Proppant Production segment recognized noncash revenue associated with acquired contract liabilities of $ 43.7 , $ 57.5 million and $ 6.6 million in 2024, 2023 and 2022, respectively.
Goodwill Goodwill is evaluated for impairment annually in the fourth quarter or whenever events or circumstances indicate the carrying value may not be recoverable. The impairment test involves a comparison of the fair value of each reporting unit with its carrying value.
Goodwill Impairment Goodwill is evaluated for impairment annually in the fourth quarter or whenever events or circumstances indicate the carrying value may not be recoverable. The impairment test involves a comparison of the fair value of each reporting unit with its carrying value.
Adjustments to the fair values of assets acquired and liabilities assumed are made until we obtain all relevant information regarding the facts and circumstances that existed as of the acquisition date (the “measurement period”), not to exceed one year from the date of the acquisition.
Adjustments to the fair values of assets acquired and liabilities assumed are made until we obtain all relevant information regarding the facts and circumstances that existed as of the acquisition date (the “measurement period”), not to exceed one year from the date of the acquisition.
Income Taxes Before May 17, 2022, the ProFrac Predecessor entities were organized as limited liability companies or a limited partnership and were treated as either a disregarded entity or a partnership for U.S. federal income tax purposes, whereby the ordinary business income or loss and certain deductions were passed-through and reported on the members’ income tax returns.
Income Taxes Before May 17, 2022, the ProFrac Predecessor entities were organized as limited liability companies or a limited partnership and were treated as either a disregarded entity or a partnership for U.S. federal income tax purposes, whereby the ordinary business income or loss and certain deductions were passed-through and reported on the members’ income tax returns.
INCOME TAXES Before May 17, 2022, the ProFrac Predecessor entities were organized as limited liability companies or a limited partnership and were treated as either a disregarded entity or a partnership for U.S. federal income tax purposes, whereby the ordinary business income or loss and certain deductions were passed-through and reported on the members’ income tax returns.
INCOME TAXES Before May 17, 2022, the ProFrac Predecessor entities were organized as limited liability companies or a limited partnership and were treated as either a disregarded entity or a partnership for U.S. federal income tax purposes, whereby the ordinary business income or loss and certain deductions were passed-through and reported on the members’ income tax returns.
If we continue to generate income before income taxes in future periods, we may be able to recognize a portion of our net deferred tax assets in future periods. We will adjust the valuation allowance based on our evaluation of new information as it becomes available and new circumstances as they occur.
If we generate income before income taxes in future periods, we may be able to recognize a portion of our net deferred tax assets in future periods. We will adjust the valuation allowance based on our evaluation of new information as it becomes available and new circumstances as they occur.
The difference between the U.S. statutory tax rate of 21% and the effective tax rate was due to the income that was earned within the financial statement consolidated group that was not subject to tax within the financial statement consolidated group and changes in the valuation allowance on our net deferred tax assets.
The difference between the U.S. statutory tax rate of 21% and the effective tax rate was due to the income that was earned within the financial statement consolidated group that was not subject to tax within the financial statement consolidated group and changes in the valuation allowance on our deferred tax assets.
CONSOLIDATED STATEMEN TS OF CHANGES IN EQUITY (in millions) Class A Common Stock Class B Common Stock Additional Paid-in (Accumulated Deficit) Retained Accumulated Other Comprehensive Noncontrolling Total Stockholders' (Deficit) Shares Amount Shares Amount Capital Earnings Income Interests Equity Balance, December 31, 2022 53.9 $ 0.5 104.2 $ 1.0 $ — $ ( 1,185.9 ) $ - $ 72.2 $ ( 1,112.2 ) Class A shares issued to acquire Producers 0.4 — — — 6.2 — — — 6.2 Class A shares issued to acquire Performance Proppants 0.3 — — — 3.4 — — — 3.4 Net loss — — — — — ( 97.7 ) — ( 3.3 ) ( 101.0 ) Stock-based compensation — — — — 7.8 — — 0.3 8.1 Stock-based compensation related to deemed contribution — — — — 12.4 — — — 12.4 Flotek common stock issued to satisfy convertible notes held by third parties — — — — — — — 12.7 12.7 Adjustment of redeemable noncontrolling interest to redemption amount — — — — ( 67.1 ) 1,277.4 — — 1,210.3 Conversion of Class B shares to Class A shares 104.2 1.0 ( 104.2 ) ( 1.0 ) 1,313.3 — — — 1,313.3 Foreign currency translation adjustments — — — — — — 0.3 ( 0.1 ) 0.2 Class A shares issued for vested stock awards 0.6 — — — — — — — — Tax withholding related to net share settlement of equity awards — — — — ( 0.8 ) — — — ( 0.8 ) Additional paid-in capital related to tax receivable agreement — — — — ( 67.6 ) — — — ( 67.6 ) Change in equity ownership of Flotek — — — — 23.1 — — ( 23.1 ) — Adjustment of convertible preferred stock to redemption amount — — — — — ( 9.8 ) — — ( 9.8 ) Change in accrued distribution related to income taxes — — — — ( 5.3 ) — — — ( 5.3 ) Balance, December 31, 2023 159.4 $ 1.5 — $ — $ 1,225.4 $ ( 16.0 ) $ 0.3 $ 58.7 $ 1,269.9 The accompanying notes are an integral part of these consolidated financial statements. 71 Table of Contents ProFrac Holding Corp.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in millions) Class A Common Stock Class B Common Stock Additional Paid-in (Accumulated Deficit) Retained Accumulated Other Comprehensive Noncontrolling Total Stockholders' (Deficit) Shares Amount Shares Amount Capital Earnings Income Interests Equity Balance, December 31, 2022 53.9 $ 0.5 104.2 $ 1.0 $ — $ ( 1,185.9 ) $ — $ 72.2 ( 1,112.2 ) Class A shares issued to acquire Producers 0.4 — — — 6.2 — — — 6.2 Class A shares issued to acquire Performance Proppants 0.3 — — — 3.4 — — — 3.4 Net loss — — — — — ( 97.7 ) — ( 3.3 ) ( 101.0 ) Stock-based compensation — — — — 7.8 — — 0.3 8.1 Stock-based compensation related to deemed contribution — — — — 12.4 — — — 12.4 Flotek common stock issued to satisfy convertible notes held by third parties — — — — — — — 12.7 12.7 Adjustment of redeemable noncontrolling interest to redemption amount — — — — ( 67.1 ) 1,277.4 — — 1,210.3 Conversion of Class B shares to Class A shares 104.2 1.0 ( 104.2 ) ( 1.0 ) 1,313.3 — — — 1,313.3 Foreign currency translation adjustments — — — — — — 0.3 ( 0.1 ) 0.2 Class A shares issued for vested stock awards 0.6 — — — — — — — — Tax withholding related to net share settlement of equity awards — — — — ( 0.8 ) — — — ( 0.8 ) Additional paid-in capital related to tax receivable agreement — — — — ( 67.6 ) — — — ( 67.6 ) Change in equity ownership of Flotek — — — — 23.1 — — ( 23.1 ) — Adjustment of convertible preferred stock to redemption amount — — — — — ( 9.8 ) — — ( 9.8 ) Change in accrued distribution related to income taxes — — — — ( 5.3 ) — — — ( 5.3 ) Balance, December 31, 2023 159.4 $ 1.5 $ — $ — $ 1,225.4 $ ( 16.0 ) $ 0.3 $ 58.7 $ 1,269.9 The accompanying notes are an integral part of these consolidated financial statements. 70 Table of Contents ProFrac Holding Corp.
The contract assets are tested for recoverability on a recurring 66 Table of Contents basis and the Company will recognize an impairment loss to the extent that the carrying amount of the contract assets exceeds the amount of revenue the Company expects to receive in the future for the transfer of goods under the long-term supply agreement and the amendment to that agreement (collectively, the ProFrac Agreement) less the direct costs that relate to providing those goods in the future.
The contract assets are tested for recoverability on a recurring 64 Table of Contents basis and the Company will recognize an impairment loss to the extent that the carrying amount of the contract assets exceeds the amount of revenue the Company expects to receive in the future for the transfer of goods under the long-term supply agreement and the amendment to that agreement (collectively, the ProFrac Agreement) less the direct costs that relate to providing those goods in the future.
(“ProFrac Corp.”) and its consolidated subsidiaries, including ProFrac Holdings, LLC (“ProFrac LLC”), is a vertically integrated and innovation-driven energy services company providing hydraulic fracturing, completion services and other complementary products and services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American unconventional oil and natural gas resources.
(“ProFrac Corp.”) and its consolidated subsidiaries, including ProFrac Holdings, LLC (“ProFrac LLC”), is a vertically integrated and innovation-driven energy 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.
Rule 10b5-1 Trading Plans During the three months ended December 31, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” I t em 9C.
Rule 10b5-1 Trading Plans During the three months ended December 31, 2024, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” I t em 9C.
The replacement warrants consist of public warrants and private warrants exercisable into 153,613 and 106,857 shares, respectively, of our Class A Common Stock. In connection with the USWS Acquisition, we borrowed approximately $ 164.0 million under our 2022 ABL Credit Facility. See “Note 6 - Debt” for additional discussion regarding the 2022 ABL Credit Facility.
The replacement warrants consist of public warrants and private warrants exercisable into 153,613 and 106,857 shares, respectively, of our Class A Common Stock. In connection with the USWS Acquisition, we borrowed approximately $ 164.0 million under our 2022 ABL Credit Facility. See “Note 7. Debt” for additional discussion regarding the 2022 ABL Credit Facility.
Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the fourth quarter of 2023, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the fourth quarter of 2024, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We assessed the reasonableness of forecasted revenue and costs by considering whether such amounts were consistent with evidence obtained in other areas of the audit. /s/ KPMG LLP We have served as the Company’s auditor since 2021. Houston, Texas March 22, 2023 67 Table of Contents ProFrac Holding Corp.
We assessed the reasonableness of forecasted revenue and costs by considering whether such amounts were consistent with evidence obtained in other areas of the audit. /s/ KPMG LLP We have served as the Company’s auditor since 2021. Houston, Texas March 22, 2023 65 Table of Contents ProFrac Holding Corp.
Notwithstanding this three-year cumulative income, we concluded that a valuation allowance was still required at December 31, 2023, because it is more likely than not that the deferred tax assets will not be realized. We based this conclusion on the positive and negative evidence discussed below.
Notwithstanding this three-year cumulative income, we concluded that a valuation allowance was still required at December 31, 2024, because it is more likely than not that the deferred tax assets will not be realized. We based this conclusion on the positive and negative evidence discussed below.
Opinion on internal control over financial reporting We have audited the internal control over financial reporting of ProFrac Holding Corp. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Opinion on internal control over financial reporting We have audited the internal control over financial reporting of ProFrac Holding Corp. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK At December 31, 2023, we held no derivative instruments that materially increased our exposure to market risks for interest rates, foreign currency rates, commodity prices or other market price risks. We are subject to interest rate risk on our variable-rate debt.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK At December 31, 2024, we held no derivative instruments that materially increased our exposure to market risks for interest rates, foreign currency rates, commodity prices or other market price risks. We are subject to interest rate risk on our variable-rate debt.
We record uncertain tax positions, if any, in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
We record uncertain tax positions, if any, in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest 59 Table of Contents amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
Performance Proppants is a frac sand provider in the Haynesville basin . The Performance Proppants acquisition contributed revenues of $ 204.9 million and pretax income of $ 99.9 million, before intercompany eliminations, to our consolidated statement of operations for the year ended December 31, 2023.
Performance Proppants was a frac sand provider in the Haynesville basin . The Performance Proppants acquisition contributed revenues of $ 204.9 million and pretax income of $ 99.9 million, before intercompany eliminations, to our consolidated statement of operations for the year ended December 31, 2023.
In the three year period ended December 31, 2023, the Company had related party transactions with the following related party entities: • Automatize, LLC (“Automatize”) is a logistics broker that facilitates the last-mile delivery of proppants on behalf of its customers, including the Company.
In the three year period ended December 31, 2024, the Company had related party transactions with the following related party entities: • Automatize, LLC (“Automatize”) is a logistics broker that facilitates the last-mile delivery of proppants on behalf of its customers, including the Company.
Our system of internal control over financial reporting is designed to provide reasonable assurance to our management and to our board of directors regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles in the United States of America.
Our system of internal control over financial reporting is designed to provide reasonable assurance to our management and to our board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013).
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013).
Pro f orma amounts presented below are for illustrative purposes only and do not reflect future events that occurred after December 31, 2023 or any operating efficiencies or inefficiencies that may result from these significant acquisitions.
Pro f orma amounts presented below are for illustrative purposes only and do not reflect future events that occurred after December 31, 2024, or any operating efficiencies or inefficiencies that may result from these significant acquisitions.
The total income tax benefit for all stock-based compensation was $0 .2 million and $ 0.4 million in 2023 and 2022 respectively; however, such benefit was substantially offset by the valuation allowance against our deferred tax assets.
The total income tax benefit for all stock-based compensation was $ 0.3 million, $ 0.2 million and $ 0.4 million in 2024, 2023, and 2022 respectively; however, such benefit was substantially offset by the valuation allowance against our deferred tax assets.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We believe that disaggregating our revenue by reportable segment (see “Note 15 – Business Segments”) provides the information necessary to understand the nature, amount, timing and uncertainty of our revenues and cash flows.
We believe that disaggregating our revenue by reportable segment (see “Note 16. Business Segments”) provides the information necessary to understand the nature, amount, timing and uncertainty of our revenues and cash flows.
Also in September 2023, Flotek's shareholders approved the issuance of 4.2 million shares (post-split) of common stock to the Company to settle a prefunded warrant related to the February 2022 Flotek convertible notes held by the Company that matured in February 2023. As of December 31, 2023, we owned approximately 50.8 % of Flotek's outstanding common stock.
Also in September 2023, Flotek's shareholders approved the issuance of 4.2 million shares (post-split) of common stock to the Company to settle a prefunded warrant related to the February 2022 Flotek convertible notes held by the Company that matured in February 2023. As of December 31, 2024, we owned approximately 50.5 % of Flotek's outstanding common stock.
Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, our Executive Chairman and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our Executive Chairman and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
The Company was in compliance with all covenants, and there were no existing defaults or events of default related to the 2022 ABL Credit Facility as of December 31, 2023.
The Company was in compliance with all covenants, and there were no existing defaults or events of default related to the 2022 ABL Credit Facility as of December 31, 2024.
We also have limited ability to provide Alpine with liquidity to satisfy its obligations. See “Note 6 – Debt” in the notes to our consolidated financial statements for more information.
We also have limited ability to provide Alpine with liquidity to satisfy its obligations. See “Note 7. Debt” in the notes to our consolidated financial statements for more information.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 15, 2024 expressed an unqualified opinion.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 10, 2025 expressed an unqualified opinion.
The Wilks Parties hold a controlling interest in ProFrac Holding Corp. and certain Wilks Parties also owned certain securities of USWS. Upon consummation of the USWS Acquisition, certain Wilks Parties received approximately 4.1 million shares of our Class A Common Stock which was included as part of equity consideration.
The Wilks Parties hold a controlling interest in ProFrac Holding Corp. and certain Wilks Parties also owned certain securities of USWS. Upon consummation of the USWS Acquisition, certain Wilks Parties received approximately 4.1 million shares of our Class A Common Stock which was included as part of equity consideration. 88 Table of Contents ProFrac Holding Corp.
See “Note 4 – Business Combinations” in the notes to our consolidated financial statements for discussion of our ownership of Flotek. Our Alpine 2023 Term Loan requires us to segregate collateral associated with Alpine and limits our ability to use Alpine's cash or assets to satisfy our obligations or the obligations of our other subsidiaries.
Business Combinations” in the notes to our consolidated financial statements for discussion of our ownership of Flotek. Our Alpine 2023 Term Loan requires us to segregate collateral associated with Alpine and limits our ability to use Alpine's cash or assets to satisfy our obligations or the obligations of our other subsidiaries.
In September 2023, we entered into a purchase agreement with THRC Holdings, LP and FARJO Holdings, LP, both Wilks Parties, whereby we issued and sold 50,000 shares of Preferred Stock for gross proceeds of $50.0 million. For more information, see “Note 8 – Preferred Stock” and “Note 16 – Related Party Transactions” in the notes to our consolidated financial statements.
In September 2023, we entered into a purchase agreement with THRC Holdings, LP and FARJO Holdings, LP, both Wilks Parties, whereby we issued and sold 50,000 shares of Preferred Stock for gross proceeds of $50.0 million. For more information, see “Note 9. Preferred Stock” and “Note 17. Related Party Transactions” in the notes to our consolidated financial statements.
These include long-lived assets and liabilities acquired through our business combination activities and purchase consideration in the form of seller-financed long-term notes payable, the fair values of which were determined using applicable valuation models based on significant unobservable inputs classified as Level 3 in the fair value hierarchy. See “Note 4 – Business Combinations” for additional information.
These include long-lived assets and liabilities acquired through our business combination activities and purchase consideration in the form of seller-financed long-term notes payable, the fair values of which were determined using applicable valuation models based on significant unobservable inputs classified as Level 3 in the fair value hierarchy. See “Note 4.
While Flotek is included in our consolidated financial statements, we do not have the ability to access or use Flotek’s cash or liquidity in our operations and, accordingly, have excluded Flotek’s cash and other sources of liquidity from the following discussion of our liquidity and capital resources.
While Flotek is included in our consolidated financial statements, we do not have the ability to access or use Flotek’s cash or liquidity in our operations and, accordingly, have excluded Flotek’s cash and other sources of liquidity from the following discussion of our liquidity and capital resources. See “Note 4.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in millions) Members' Class A Common Stock Class B Common Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Noncontrolling Total Stockholders' Equity Equity Shares Amount Shares Amount Capital Deficit Income Interests (Deficit) Balance, December 31, 2020 $ 175.0 — $ — — $ — $ — $ — $ — $ 1.8 $ 176.8 Net loss ( 42.4 ) — — — — — — — ( 1.1 ) ( 43.5 ) Member contribution by debt retirement 18.0 — — — — — — — — 18.0 Purchase of noncontrolling interests ( 3.6 ) — — — — — — — ( 0.9 ) ( 4.5 ) Noncontrolling interest of acquired business — — — — — — — — 1.2 1.2 Foreign currency translation — — — — — — — 0.1 — 0.1 Balance, December 31, 2021 $ 147.0 — $ — — $ — $ — $ — $ 0.1 $ 1.0 $ 148.1 Net income (loss) 73.6 — — — — — 91.5 — ( 28.4 ) 136.7 Member contribution 5.0 — — — — — — — — 5.0 Deemed distribution ( 3.7 ) — — — — — — — — ( 3.7 ) THRC related equity 72.9 — — — — — — — — 72.9 Issuance of Class A shares in IPO — 18.2 0.2 — — 227.5 — — — 227.7 Issuance of Class B shares at par value for cash — — — 101.1 1.0 — — — — 1.0 Effect of corporate reorganization and reclassification to redeemable noncontrolling interest ( 294.8 ) 20.9 0.2 — — ( 82.9 ) — — — ( 377.5 ) Adjustment of redeemable noncontrolling interest to redemption amount at inception — — — — — ( 146.4 ) ( 1,291.9 ) — — ( 1,438.3 ) Class A shares issued to settle asset purchase — 2.1 — — — 16.7 — — — 16.7 Noncontrolling interest of consolidated business — — — — — — — — 99.0 99.0 Purchase of noncontrolling interest — — — — — — — — ( 1.7 ) ( 1.7 ) Class A shares issued to acquire USWS — 12.9 0.1 — — 134.6 — — — 134.7 Class A shares issued for vested stock awards — — — — — 0.1 — — — 0.1 Tax withholding related to net share settlement of equity awards — ( 0.2 ) — — — ( 2.0 ) — — — ( 2.0 ) Class B shares issued to acquire REV — — — 3.1 — 20.4 — — — 20.4 Additional paid-in capital related to tax receivable agreement — — — — — 0.6 — — — 0.6 Stock-based compensation — — — — — 1.9 — — 2.2 4.1 Stock-based compensation related to deemed contribution — — — — — 17.7 — — — 17.7 Foreign currency translation adjustments — — — — — — — ( 0.1 ) 0.1 — Other — — — — — 0.1 — — — 0.1 Adjustment of redeemable noncontrolling interest to redemption amount — — — — — ( 188.3 ) 14.5 — — ( 173.8 ) Balance, December 31, 2022 $ — 53.9 $ 0.5 104.2 $ 1.0 $ — $ ( 1,185.9 ) $ — $ 72.2 $ ( 1,112.2 ) The accompanying notes are an integral part of these consolidated financial statements. 72 Table of Contents ProFrac Holding Corp.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in millions) Members' Class A Common Stock Class B Common Stock Additional Paid-in (Accumulated Deficit) Retained Accumulated Other Comprehensive Noncontrolling Total Stockholders' (Deficit) Equity Shares Amount Shares Amount Capital Earnings Income (loss) Interests Equity Balance, December 31, 2021 $ 147.0 — $ — — $ — $ — $ — $ 0.1 $ 1.0 148.1 Net income (loss) 73.6 — — — — — 91.5 — ( 28.4 ) 136.7 Member contribution 5.0 — — — — — — — — 5.0 Deemed distribution ( 3.7 ) — — — — — — — — ( 3.7 ) THRC related equity 72.9 — — — — — — — — 72.9 Issuance of Class A shares in IPO — 18.2 0.2 — — 227.5 — — — 227.7 Issuance of Class B shares at par value for cash — — — 101.1 1.0 — — — — 1.0 Effect of corporate reorganization and reclassification to redeemable noncontrolling interest ( 294.8 ) 20.9 0.2 — — ( 82.9 ) — — — ( 377.5 ) Adjustment of redeemable noncontrolling interest to redemption amount at inception — — — — — ( 146.4 ) ( 1,291.9 ) — — ( 1,438.3 ) Class A shares issued to settle asset purchase — 2.1 — — — 16.7 — — — 16.7 Noncontrolling interest of consolidated business — — — — — — — — 99.0 99.0 Purchase of noncontrolling interest — — — — — — — — ( 1.7 ) ( 1.7 ) Class A shares issued to acquire USWS — 12.9 0.1 — — 134.6 — — — 134.7 Class A shares issued for vested stock awards — — — — — 0.1 — — — 0.1 Tax withholding related to net share settlement of equity awards — ( 0.2 ) — — — ( 2.0 ) — — — ( 2.0 ) Class B shares issued to acquire REV — — — 3.1 — 20.4 — — — 20.4 Additional paid-in capital related to tax receivable agreement — — — — — 0.6 — — — 0.6 Stock-based compensation — — — — — 1.9 — — 2.2 4.1 Stock-based compensation related to deemed contribution — — — — — 17.7 — — — 17.7 Foreign currency translation adjustments — — — — — — — ( 0.1 ) 0.1 — Other — — — — — 0.1 — — — 0.1 Adjustment of redeemable noncontrolling interest to redemption amount — — — — — ( 188.3 ) 14.5 — — ( 173.8 ) Balance, December 31, 2022 $ — 53.9 $ 0.5 $ 104.2 $ 1.0 $ — $ ( 1,185.9 ) $ — $ 72.2 $ ( 1,112.2 ) The accompanying notes are an integral part of these consolidated financial statements. 71 Table of Contents ProFrac Holding Corp.
Commencing with the fiscal quarter ending September 30, 2024, the Alpine 2023 Term Loan contains a covenant requiring us not to exceed a maximum Total Net Leverage Ratio (as defined in the Alpine Term Loan Credit Agreement) of 2.00 to 1.00 . This ratio is generally the consolidated total debt of Alpine divided by an adjusted EBITDA calculation.
The Alpine 2023 Term Loan originally contained a covenant commencing with the fiscal quarter ending September 30, 2024, requiring Alpine not to exceed a maximum Total Net Leverage Ratio (as defined in the Alpine Term Loan Credit Agreement) of 2.00 to 1.00 . This ratio is generally the consolidated total debt of Alpine divided by an adjusted EBITDA calculation.
A significant decrease in the price of oil has historically resulted in a decrease in our customers’ activity levels and a corresponding decrease in our earnings. • We do not have prudent and feasible tax-planning strategies available to us to realize deferred tax assets.
A significant decrease in the price of oil or natural gas has historically resulted in a decrease in our customers’ activity levels and a corresponding decrease in our earnings. • We do not have prudent and feasible tax-planning strategies available to us to realize deferred tax assets.
Based on its evaluation under this framework, our management concluded that, as of December 31, 2023, our internal control over financial reporting was effective.
Based on its evaluation under this framework, our management concluded that, as of December 31, 2024, our internal control over financial reporting was effective.
STOCK-BASED COMPENSATION The compensation cost charged against income for all stock-based compensation was $ 29.8 million and $ 67.4 million in 2023 and 2022, respectively and was classified as selling, general, and administrative expenses in our consolidated statements of operations.
STOCK-BASED COMPENSATION The compensation cost charged against income for all stock-based compensation was $ 7.3 million, $ 29.8 million, and $ 67.4 million in 2024, 2023, and 2022, respectively and was classified as selling, general, and administrative expenses in our consolidated statements of operations.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Dallas, Texas March 15, 2024 I t em 9B. Other Information.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Dallas, Texas March 10, 2025 I t em 9B. Other Information.
We expect these areas of focus, combined with our strategic initiatives, to improve our relative commercial positioning and financial results during 2024.
We expect these areas of focus, combined with our strategic initiatives, to improve our relative commercial positioning and financial results during 2025.
At December 31, 2023, the Preferred Stock was convertible into 2.5 million common shares. The Preferred Stock is redeemable at the Company's option at any time. The redemption price per share is an amount in cash equal to the Liquidation Preference as of the date of redemption multiplied by 1.15 (“Redemption Amount”).
At December 31, 2024, the Preferred Stock was convertible into 2.8 million common shares. The Preferred Stock is redeemable at the Company's option at any time. The redemption price per share is an amount in cash equal to the Liquidation Preference as of the date of redemption multiplied by 1.15 (“Redemption Amount”).
Monarch Note In connection with our acquisition of Monarch in December 2022 , $ 87.5 million of the purchase price was financed through a seller-financed note (the “Monarch Note”, see “Note 4 - Business Combinations” for additional information). The Monarch Note matures in December 2024 and bears interest at an annual rate of 2.5 %.
Monarch Note In connection with our acquisition of Monarch in December 2022 , $ 87.5 million of the purchase price was financed through a seller-financed note (the “Monarch Note”, see “Note 4. Business Combinations” for additional information). The Monarch Note matured in December 2024 and bore interest at an annual rate of 2.5 %.
Stock-based compensation expense related to Flotek awards was $ 0.3 million and $ 2.1 million in 2023 and 2022, respectively. As of December 31, 2023, there was $ 2.2 million of unrecognized compensation cost for Flotek equity awards, which is expected to be recognized over a weighted-average period of 2 years. 11.
Stock-based compensation expense related to Flotek awards was $ 0.8 million, $ 0.3 million and $ 2.1 million in 2024, 2023 and 2022, respectively. As of December 31, 2024, there was $ 3.1 million of unrecognized compensation cost for Flotek equity awards, which is expected to be recognized over a weighted-average period of 1.9 years.
We recognize measurement-period adjustments in the period in which we determine the amounts, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had been completed at the acquisition date.
We recognize measurement-period adjustments in the period in which we determine the 58 Table of Contents amounts, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had been completed at the acquisition date.
Dallas, Texas March 15, 2024 65 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors Flotek Industries, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Flotek Industries, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).
Dallas, Texas March 10, 2025 63 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors Flotek Industries, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Flotek Industries, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).
Expenditures for renewals and betterments that extend the lives of our equipment, which may include the replacement of significant 60 Table of Contents components of equipment, are capitalized and depreciated. Other repairs and maintenance costs are expensed as incurred.
Expenditures for renewals and betterments that extend the lives of our equipment, which may include the replacement of significant components of equipment, are capitalized and depreciated. Other repairs and maintenance costs are expensed as incurred.
If the carrying amount of an asset or asset group is not recoverable, we recognize an impairment loss equal to the amount by which the carrying amount exceeds fair value. We estimate fair value based on the income, market, or cost valuation techniques.
If the carrying amount is not recoverable, we recognize an impairment loss equal to the amount by which the carrying amount exceeds fair value. We estimate fair value based on the income, market or cost valuation techniques.
ProFrac Holding Corp and its U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. Our income tax returns, along with income tax returns for our acquired subsidiaries, are currently subject to examination in federal and state jurisdictions primarily for tax years from 2019-2022.
ProFrac Holding Corp and its U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. Our income tax returns, along with income tax returns for our acquired subsidiaries, are currently subject to examination in federal and state jurisdictions primarily for tax years from 2020-2023.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) 6.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) 7.
CONSOLIDATED STATE MENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) Year Ended December 31, 2023 2022 2021 Net income (loss) $ ( 59.2 ) $ 342.7 $ ( 43.5 ) Other comprehensive income: Foreign currency translation adjustments 0.3 0.1 0.1 Comprehensive income (loss) ( 58.9 ) 342.8 ( 43.4 ) Less: comprehensive (income) loss attributable to ProFrac Predecessor — ( 73.5 ) 42.3 Less: comprehensive loss attributable to noncontrolling interest 3.4 28.3 1.1 Less: comprehensive income attributable to redeemable noncontrolling interest ( 41.9 ) ( 206.1 ) — Comprehensive income (loss) attributable to ProFrac Holding Corp. $ ( 97.4 ) $ 91.5 $ — The accompanying notes are an integral part of these consolidated financial statements. 70 Table of Contents ProFrac Holding Corp.
CONSOLIDATED STATE MENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) Year Ended December 31, 2024 2023 2022 Net income (loss) $ ( 207.8 ) $ ( 59.2 ) $ 342.7 Other comprehensive income: Foreign currency translation adjustments — 0.3 0.1 Comprehensive income (loss) ( 207.8 ) ( 58.9 ) 342.8 Less: comprehensive income attributable to ProFrac Predecessor — — ( 73.5 ) Less: comprehensive (income) loss attributable to noncontrolling interest ( 7.5 ) 3.4 28.3 Less: comprehensive income attributable to redeemable noncontrolling interest — ( 41.9 ) ( 206.1 ) Comprehensive income (loss) attributable to ProFrac Holding Corp. $ ( 215.3 ) $ ( 97.4 ) $ 91.5 The accompanying notes are an integral part of these consolidated financial statements. 68 Table of Contents ProFrac Holding Corp.
We operate in three reportable business segments: stimulation services, proppant production and manufacturing. Our stimulation services segment owns and operates a fleet of mobile hydraulic fracturing units and other auxiliary equipment that generates revenue by providing stimulation services to our customers. Our proppant production segment provides proppant to oilfield service providers and E&P companies.
ProFrac Corp. operates in three business segments: Stimulation Services, Proppant Production, and Manufacturing. Our Stimulation Services segment owns and operates a fleet of mobile hydraulic fracturing units and other auxiliary equipment that generates revenue by providing stimulation services to our customers. Our Proppant Production segment provides proppant to oilfield service providers and E&P companies.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated March 15, 2024 expressed an unqualified opinion on those financial statements.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated March 10, 2025 expressed unqualified opinion on those financial statements.
The Monte Carlo simulation is affected by a number of variables, including the fair value of our underlying common shares ($ 18.00 at grant date), the expected common share price volatility over the expected term ( 79.2 %), the expected dividend yield of our common shares over the expected term ( 0.0 %), the risk-free interest rates over the expected term ( 2.86 %), and the performance period of the award ( five years ).
The Monte Carlo simulation is affected by a number of variables, including the fair value of our underlying common shares ($ 18.00 at grant date), the expected common share price volatility over the expected term ( 79.2 %), the expected dividend yield of our common shares over the expected term ( 0.0 %), the risk-free interest rates over the expected term ( 2.86 %), and the performance period of the award ( five years ). 101 Table of Contents ProFrac Holding Corp.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which is intended to enhance the transparency and decision usefulness of income tax disclosures. This ASU provides for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.
Recently Issued Standards Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which is intended to enhance the transparency and decision usefulness of income tax disclosures. This ASU provides for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.
Financial Statements and Supplementary Data.” In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect the Company’s plans, estimates, or beliefs. Actual results could differ materially from those discussed in the forward-looking statements.
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.
As a result, we have classified the Preferred Stock as temporary equity on our consolidated balance sheets and have measured its carrying value at its maximum redemption value with a corresponding charge to retained earnings. 9.
As a result, we have classified the Preferred Stock as mezzanine equity on our consolidated balance sheets and have measured its carrying value at its maximum redemption value with a corresponding charge to retained earnings. 10.
Our audit procedures related to the estimation of fair value of the Stimulation Services and Haynesville Proppant Production reporting units included the following, among others. • We evaluated the design and tested the operating effectiveness of the Company’s controls associated with developing the estimated fair value of the reporting units. • We evaluated the qualifications of valuation specialists engaged by the Company to assist in developing the estimated fair value of the reporting units. • We tested the clerical accuracy of the fair value models utilized by the valuation specialists and by management in estimating the fair value of the reporting units. 64 Table of Contents • We identified significant inputs and assumptions applied in the estimation of fair value of the reporting units to determine whether the inputs and assumptions were relevant in the circumstances and applied appropriately in the development of the fair value estimates. • We evaluated forecasted financial performance of the reporting units by comparing the projected amounts of revenues and cash flows to actual historical performance or relevant industry data. • We utilized valuation specialists to assist in evaluating the methodologies used and whether they were acceptable for the underlying fair value determinations and whether such methodologies had been applied correctly; the appropriateness of the discount rate used by developing an independent expectation for each reporting unit; and to identify and test other significant inputs to the estimation of fair value of the reporting units. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2018.
Our audit procedures related to the estimation of fair value of the Stimulation Services reporting unit included the following, among others. • We evaluated the design and tested the operating effectiveness of the Company’s controls associated with developing the estimated fair value of the reporting unit. • We evaluated the qualifications of valuation specialists engaged by the Company to assist in developing the estimated fair value of the reporting unit. • We tested the clerical accuracy of the fair value models utilized by the valuation specialists and by management in estimating the fair value of the reporting unit. • We identified significant inputs and assumptions applied in the estimation of fair value of the reporting unit to determine whether the inputs and assumptions were relevant in the circumstances and applied appropriately in the development of that fair value estimate. • We evaluated forecasted financial performance of the reporting unit by comparing the projected amounts of revenues and cash flows to actual historical performance or relevant industry data. • We utilized valuation specialists to assist in evaluating the methodologies used and whether they were acceptable for the underlying fair value determination and whether such methodologies had been applied correctly; the appropriateness of the discount rate and valuation multiples used by developing an independent expectation; and to identify and test other significant inputs to the estimation of the fair value of the reporting unit. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2018.
In connection with the IPO in May 2022, the Company reorganized and ProFrac LLC became partially owned by ProFrac Corp., a C-Corporation. ProFrac Corp. is a taxable entity and is required to account for income taxes under the asset and liability method for periods subsequent to May 17, 2022. 100 Table of Contents ProFrac Holding Corp.
In connection with the IPO in May 2022, the Company reorganized and ProFrac LLC became partially owned by ProFrac Corp., a C-Corporation. ProFrac Corp. is a taxable entity and is required to account for income taxes under the asset and liability method for periods subsequent to May 17, 2022.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) The following table summarizes the fair value of consideration transferred in the FTSI Acquisition and the allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the FTSI Acquisition Date: Total purchase consideration $ 405.7 Cash and cash equivalents 53.8 Accounts receivable 89.3 Prepaid expense and other assets 4.0 Inventories 42.3 Property, plant and equipment 307.1 Operating lease right-of-use asset 2.7 Intangible assets 1.2 Other assets 1.6 Total identifiable assets acquired 502.0 Accounts payable 63.0 Accrued expenses 19.3 Operating lease liability current 1.2 Current portion of debt 10.1 Other current liabilities 0.3 Operating lease liability non-current 1.5 Other non-current liabilities 0.9 Total liabilities assumed 96.3 Goodwill — Total purchase consideration $ 405.7 For the three months ended March 31, 2022, revenues and pretax earnings associated with the FTSI acquired operations were $ 48.6 million and a $ 0.1 million loss, respectively.
The following table summarizes the fair value of consideration transferred in the FTSI Acquisition and the allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the FTSI Acquisition Date: Total purchase consideration $ 405.7 Cash and cash equivalents 53.8 Accounts receivable 89.3 Prepaid expense and other assets 4.0 Inventories 42.3 Property, plant and equipment 307.1 Operating lease right-of-use asset 2.7 Intangible assets 1.2 Other assets 1.6 Total identifiable assets acquired 502.0 Accounts payable 63.0 Accrued expenses 19.3 Operating lease liability current 1.2 Current portion of debt 10.1 Other current liabilities 0.3 Operating lease liability non-current 1.5 Other non-current liabilities 0.9 Total liabilities assumed 96.3 Goodwill — Total purchase consideration $ 405.7 For the three months ended March 31, 2022, revenues and pretax earnings associated with the FTSI acquired operations were $ 48.6 million and a $ 0.1 million loss, respectively.
The following table summarizes the fair value of consideration transferred in the USWS Acquisition and the allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the USWS Acquisition Date: Total purchase consideration $ 479.1 Cash and cash equivalents 19.4 Accounts receivable 34.3 Prepaid expense and other assets 9.9 Inventories 15.1 Property, plant and equipment 278.4 Operating lease right-of-use assets 40.9 Intangible assets 136.3 Other assets 0.4 Total identifiable assets acquired 534.7 Accounts payable 68.3 Accrued expenses and other current liabilities 19.9 Current portion of debt 13.1 Current portion of operating lease liabilities 24.0 Current portion of finance lease liabilities 1.8 Warrant liabilities 15.6 Long-term debt 27.7 Long-term operating lease liabilities 16.9 Long-term finance lease liabilities 4.9 Total liabilities assumed 192.2 Goodwill 136.6 Total purchase consideration $ 479.1 For the acquired property, plant and equipment, the valuation technique utilized was the cost approach, which adjusted estimates of replacement cost for the age, condition and utility of the associated assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) The following table summarizes the fair value of consideration transferred in the USWS Acquisition and the allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the USWS Acquisition Date: Total purchase consideration $ 479.1 Cash and cash equivalents 19.4 Accounts receivable 34.3 Prepaid expense and other assets 9.9 Inventories 15.1 Property, plant and equipment 278.4 Operating lease right-of-use assets 40.9 Intangible assets 136.3 Other assets 0.4 Total identifiable assets acquired 534.7 Accounts payable 68.3 Accrued expenses and other current liabilities 19.9 Current portion of debt 13.1 Current portion of operating lease liabilities 24.0 Current portion of finance lease liabilities 1.8 Warrant liabilities 15.6 Long-term debt 27.7 Long-term operating lease liabilities 16.9 Long-term finance lease liabilities 4.9 Total liabilities assumed 192.2 Goodwill 136.6 Total purchase consideration $ 479.1 For the acquired property, plant and equipment, the valuation technique utilized was the cost approach, which adjusted estimates of replacement cost for the age, condition and utility of the associated assets.
SP Silica of Monahans, LLC and SP Silica Sales, LLC (“Monahans”) On July 25, 2022 (the “Monahans Acquisition Date”), we acquired 100 % of the issued and outstanding membership interests of each of SP Silica of Monahans, LLC and SP Silica Sales, LLC (collectively “Monahans”), the West Texas subsidiaries of Signal Peak Silica, for a final purchase price of $ 97.4 million in cash (the “Monahans Acquisition”).
SP Silica of Monahans, LLC and SP Silica Sales, LLC (“Monahans”) On July 25, 2022 (the “Monahans Acquisition Date”), we acquired 100 % of the issued and outstanding membership interests of each of SP Silica of Monahans, LLC and SP Silica Sales, LLC (collectively “Monahans”), the West Texas subsidiaries of Signal Peak Silica, for a final purchase price of $ 97.4 million in cash (the “Monahans Acquisition”). 87 Table of Contents ProFrac Holding Corp.
The goodwill in this acquisition was primarily attributable to REV’s organized workforce and potential or expected synergies. We recognized this goodwill in the stimulation services segment. A portion of the recorded goodwill is tax deductible. Our consolidated results included an immaterial amount of revenue and pretax earnings from this acquisition in 2022. 90 Table of Contents ProFrac Holding Corp.
The goodwill in this acquisition was primarily attributable to REV’s organized workforce and potential or expected synergies. We recognized this goodwill in the Stimulation Services segment. A portion of the recorded goodwill is tax deductible. Our consolidated results included an immaterial amount of revenue and pretax earnings from this acquisition in 2022.
We base these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ materially from those estimates. 76 Table of Contents ProFrac Holding Corp.
We base these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ materially from those estimates.
The allocation of the purchase price to Flotek’s net tangible assets and liabilities and identifiable intangible assets is final. Our consolidated results included revenue of $ 37.2 million and a pretax loss of $ 29.4 mil lion from Flotek in 2022. The entire pretax loss was allocated to noncontrolling interests.
No portion of the recorded goodwill is tax deductible. The allocation of the purchase price to Flotek’s net tangible assets and liabilities and identifiable intangible assets is final. Our consolidated results included revenue of $ 37.2 million and a pretax loss of $ 29.4 mil lion from Flotek in 2022. The entire pretax loss was allocated to noncontrolling interests.
The Monarch Acquisition was completed on December 23, 2022 (the “Monarch Acquisition Date”) for (i) consideration in the form of a long-term secured note payable to Monarch Capital (the “Monarch Note”) valued at its estimated fair value of $ 79.0 million, and (ii) cash consideration of $ 87.5 million.
The Monarch Acquisition was completed on December 23, 2022 (the “Monarch Acquisition Date”) for (i) consideration in the form of a long-term secured note payable to Monarch Capital (the “Monarch Note”) valued at its estimated fair value of $ 79.0 million, and (ii) cash consideration of $ 87.5 million. 89 Table of Contents ProFrac Holding Corp.
As of December 31, 2023, there was $ 5.1 million of total unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted average period of 0.6 years. Pursuant to the 2022 Plan, the Company authorized performance-based vesting RSUs (“PRSU”) to certain company executives.
As of December 31, 2024, there was $ 2.7 million of total unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted average period of 1.0 years. Pursuant to the 2022 Plan, the Company authorized performance-based vesting RSUs (“PRSU”) to certain company executives.
We may assess our goodwill for impairment initially using a qualitative approach to determine whether conditions exist that indicate it is more likely than not that a reporting unit’s carrying value is greater than its fair value, and if such conditions are identified, then a quantitative analysis will be performed to determine if there is any impairment.
We may assess our goodwill for impairment initially using a qualitative approach to determine whether conditions exist that indicate it is more likely than not that a reporting unit’s carrying value is greater than its fair value, and if such conditions are identified, then a quantitative analysis will be performed to determine if there is any impairment. 77 Table of Contents ProFrac Holding Corp.
Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Flotek Industries, Inc., is based solely on the report of the other auditors. Basis for opinion These financial statements are the responsibility of the Company’s management.
Those statements were audited by KPMG LLP, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Flotek Industries, Inc. and subsidiaries, is based solely on the report of KPMG LLP. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management.
The goodwill in this acquisition was primarily attributable to Monarch’s organized workforce and potential or expected synergies, and is tax deductible. We recognized this goodwill in the proppant production segment. Our consolidated results included an immaterial amount of revenue and pretax earnings from this acquisition in 2022. 89 Table of Contents ProFrac Holding Corp.
The goodwill in this acquisition was primarily attributable to Monarch’s organized workforce and potential or expected synergies, and is tax deductible. We recognized this goodwill in the Proppant Production segment. Our consolidated results included an immaterial amount of revenue and pretax earnings from this acquisition in 2022.
This Make Whole provision is accounted for as a written put option with a fair value of $ 7.5 million as of December 31, 2023 and is presented within other current liabilities in our consolidated balance sheet. The fair value of the Munger make-whole provision was estimated using a Black-Scholes model.
This Make Whole provision is accounted for as a written put option with a fair value of $ 8.6 million as of December 31, 2024 and is presented within other current liabilities in our consolidated balance sheet. The fair value of the Munger make-whole provision was estimated using a Black-Scholes model.
In our opinion, based on our audits and the report of the other auditors, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, based on our audits and the report of KPMG LLP, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) The following table represents our allocation of total purchase consideration of Producers and Performance Proppants to the identifiable assets acquired and liabilities assumed based on the fair values on their acquisition dates: Producers Performance Proppants Cash and cash equivalents $ 0.3 $ 2.0 Accounts receivable 6.6 17.1 Prepaid expenses and other assets 1.1 0.6 Inventories 2.0 7.5 Property, plant and equipment 29.5 476.9 Intangible assets — 5.6 Total identifiable assets acquired 39.5 509.7 Accounts payable 10.9 16.7 Accrued expenses 2.8 3.3 Current portion of long-term debt 0.2 2.1 Other current liabilities — 49.6 Non-current portion of debt 0.1 0.6 Other non-current liabilities — 42.3 Total liabilities assumed 14.0 114.6 Goodwill 11.0 67.7 Total purchase consideration $ 36.5 $ 462.8 We generally used the cost approach to value acquired property, plant and equipment adjusted for the age, condition and utility of the associated assets.
The following table represents our allocation of total purchase consideration of Producers and Performance Proppants to the identifiable assets acquired and liabilities assumed based on the fair values on their acquisition dates: Producers Performance Proppants Cash and cash equivalents $ 0.3 $ 2.0 Accounts receivable 6.6 17.1 Prepaid expenses and other assets 1.1 0.6 Inventories 2.0 7.5 Property, plant and equipment 29.5 476.9 Intangible assets — 5.6 Total identifiable assets acquired 39.5 509.7 Accounts payable 10.9 16.7 Accrued expenses 2.8 3.3 Current portion of long-term debt 0.2 2.1 Other current liabilities — 49.6 Non-current portion of debt 0.1 0.6 Other non-current liabilities — 42.3 Total liabilities assumed 14.0 114.6 Goodwill 11.0 67.7 Total purchase consideration $ 36.5 $ 462.8 We generally used the cost approach to value acquired property, plant and equipment adjusted for the age, condition and utility of the associated assets.
The 2022 ABL Credit Facility bears an unused line fee ranging from 0.250 % to 0.375 %. The effective interest rate was 9.5 % as of December 31, 2023. We are required by the 2022 ABL Credit Facility to maintain minimum liquidity of $ 15.0 million at all times.
The 2022 ABL Credit Facility bears an unused line fee ranging from 0.250 % to 0.375 %. The effective interest rate was 8.25 % as of December 31, 2024. We are required by the 2022 ABL Credit Facility to maintain minimum liquidity of $ 15.0 million at all times.
The following table summarizes the fair value of consideration transferred in the REV Acquisition and the allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the REV Acquisition Date: Total purchase consideration $ 140.6 Cash and cash equivalents 0.2 Accounts receivable 10.0 Prepaid expense and other assets 1.5 Inventories 0.7 Property, plant and equipment 75.0 Intangible assets 53.0 Other assets 0.1 Total identifiable assets acquired 140.5 Accounts payable 14.1 Accrued expenses 2.4 Current portion of debt 1.9 Long-term debt 3.6 Total liabilities assumed 22.0 Goodwill 22.1 Total purchase consideration $ 140.6 For the acquired property, plant and equipment, the valuation technique utilized was the cost approach, which adjusted estimates of replacement cost for the age, condition and utility of the associated assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in millions, except per share amounts, or where otherwise noted) The following table summarizes the fair value of consideration transferred in the REV Acquisition and the allocation of the purchase price to the fair values of assets acquired and liabilities assumed at the REV Acquisition Date: Total purchase consideration $ 140.6 Cash and cash equivalents 0.2 Accounts receivable 10.0 Prepaid expense and other assets 1.5 Inventories 0.7 Property, plant and equipment 75.0 Intangible assets 53.0 Other assets 0.1 Total identifiable assets acquired 140.5 Accounts payable 14.1 Accrued expenses 2.4 Current portion of debt 1.9 Long-term debt 3.6 Total liabilities assumed 22.0 Goodwill 22.1 Total purchase consideration $ 140.6 For the acquired property, plant and equipment, the valuation technique utilized was the cost approach, which adjusted estimates of replacement cost for the age, condition and utility of the associated assets.
The 2022 Plan originally allocated 3,120,708 shares of our Class A Common Stock in the form of incentive stock options, non-qualified stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, or other stock-based awards. As of December 31, 2023, up to 2,542,708 shares were available for future grants under the 2022 Plan.
The 2022 Plan originally allocated 3,120,708 shares of our Class A Common Stock in the form of incentive stock options, non-qualified stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, or other stock-based awards. As of December 31, 2024, up to 1,180,220 shares were available for future grants under the 2022 Plan.
Our contract liabilities consist of deferred revenues from advance consideration received from customers related to future performance of service or delivery of products and off-market contract liabilities from unfavorable contracts recognized in connection with our business acquisitions in the Proppant Production segment.
Our contract liabilities consist of deferred revenues from advance consideration received from customers related to future performance of service or delivery of products and off-market contract liabilities from unfavorable contracts recognized in connection with our business acquisitions in the Proppant Production segment. In the accounting for prior business combinations, we recorded off-market contract liabilities.
The fair value of customer relationship was determined using the with-and-without method which is an income approach and considers the time needed to rebuild the customer base. The allocation of the purchase price to USWS’s net tangible assets and liabilities and identifiable intangible assets is final. 88 Table of Contents ProFrac Holding Corp.
The fair value of customer relationship was determined using the with-and-without method which is an income approach and considers the time needed to rebuild the customer base. The allocation of the purchase price to USWS’s net tangible assets and liabilities and identifiable intangible assets is final.

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