ACDC - NASDAQ

Greetings and welcome to ProFrac's first quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Messina, Director of Finance. Thank you. Please go ahead.

Thank you, operator. Good morning, everyone. Thank you for joining us for ProFrac Holdings Corp's conference call and webcast to review our results for the first quarter and March 31st, 2025. With me today are Matt Wilks, Executive Chairman; Ladd Wilks, Chief Executive Officer; and Austin Harbour, Chief Financial Officer. Following my remarks, management will provide high-level commentary on the operational and financial highlights of the quarter before opening up the call to your questions. A replay of today's call will be available by webcast on the company's website at pfholdingscorp.com. More information on how to access the replay is included in the company's earnings release. Please note that information reported on this call speaks only as of today, May 7th, 2025, and therefore your advice and any time-sensitive information may no longer be accurate at the time of any subsequent replay, listening, or transcript reading. Also, comments on this call may contain forward-looking statements within the meaning of the United States federal securities laws, including management's expectations of future financial and business performance. These forward-looking statements reflect the current views of ProFrac's management and are not guarantees of future performance. Various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in management's forward-looking statements. The listener or reader is encouraged to read ProFrac Form 10-K and other filings with the Securities and Exchange Commission, which can be found at sec.gov or on the company's Investor Relations website section under the SEC filings tab to understand those risks, uncertainties, and contingencies. The comments today also include certain non-GAAP financial measures, as well as other adjusted figures to exclude the contribution of Flotek. Additional details and reconciliations to the most directly comparable, consolidated, and GAAP financial measures are included in the quarterly earnings press release, which can be found at sec.gov and on the company's website. And now, I would like to turn the call over to ProFrac's Executive Chairman, Mr. Matt Wilks.

Thank you, Michael, and good morning to all. I'll begin with brief remarks, turn it to Ladd to elaborate on segment performance, and then Austin will run through our first quarter financials. In the first quarter, ProFrac delivered strong results that significantly exceeded consensus estimates. Compared to the fourth quarter, revenue grew 32% to $600 million, while adjusted EBITDA increased 83% to $130 million. Our results demonstrate the resilience of our differentiated business model, including in-house R&D, manufacturing and maintenance capabilities, our asset management platform, as well as integrated solutions. These differentiators underpin our ability to deliver top-tier, reliable, and safe solutions to our customers. In the first quarter, we hit yet again a new record in total pumping hours, as well as average pumping hours per fleet, as we were able to rapidly redeploy fleets and execute in the field as activity ramped up. Our asset management platform has been a critical factor underpinning our success. Through standardized designs and streamlined operations, we were able to promptly and cost-effectively maintain and upgrade our pressure-pumping fleet to deliver consistent, reliable equipment that meets rigorous safety standards and job-specific requirements. Innovation remains at the core of our business, and we are encouraged by the results of tests conducted during the first quarter on our ProPilot automation software for hydraulic fracturing. Especially unique to our technology is that ProPilot requires zero manual startup for the initial stage. You just hit play. ProPilot is a groundbreaking auto-frac platform that benefits our equipment and crews in various ways. We expect ProPilot to drastically reduce the need for human intervention by automatically recommending courses of action to adhere to job designs. By our measure, ProPilot eliminates the majority of the human decision points involved in track operations. The technology factors in the specific pumps down to their individual components and automatically adjusts recommendations based on mechanical feedback, fleet configuration, OEM ratings, as well as wear and tear on the components, which we believe will enable us to extend the useful lives and further minimize failures of our equipment. This system also enables us to further optimize natural gas substitution rates to deliver fuel savings for our customers. In April, we implemented ProPilot's auto-frac functionality into a fleet in South Texas with great success. Next month, we plan to deploy it to another fleet in West Texas. We remain committed to delivering cutting-edge solutions and setting industry benchmarks that create measurable value for our customers. Last week, we co-announced the completion of a transaction with Flotek that included the sale of innovative mobile power generation solutions. This transaction represents an evolutionary step forward in our business relationship with Flotek. By leveraging cutting-edge intellectual property, these solutions provide industry-leading gas quality assurance and asset integrity to customers while providing a platform for future growth. We believe assets that consume gas can benefit from Flotek's technology, especially applications that consume volatile gas molecules. For example, power generation, compression, refining, chemical plants, and flaring represent a few of the near-term adjacent applications we've identified. We remain focused on proactive customer engagement. Simply put, our priority is partnering with operators who recognize our efficient, scalable, offering-enabling, long-term, margin-enhancing relationships with key customers. Pivoting briefly to profit, on our last call, we spoke constructively about the trends in this segment. The changes we implemented late last year and through the first quarter drove significant volume gains in the first quarter. We expect volumes in the second quarter to slightly decline compared to the first quarter. However, we anticipate that we will be able to partially offset the declines in sales volumes with favorable average sales prices and increased logistics activity. Further, our position in Haynesville is a source of potential upside in the back half of the year. More on this when Ladd speaks. Turning to live wire power, our power generation business continues to make progress. Since its launch in the fourth quarter, the business has been executing on its initial objective of supporting our internal operations while delivering capabilities for future growth. We remain excited about the long-term potential of this business and the industry's power generation needs continue to evolve. To put a fine point on my remarks so far, we leveraged our strengths in an improving North American completions market to deliver first-quarter results that I am proud of and to advance key strategic initiatives. I want to take this moment to thank all of our employees for their dedication and effort in achieving these results. All that said, market dynamics shifted in the early days of the second quarter. Economic uncertainty from tariffs, along with OPEC’s announcement to increase oil production beginning in April, had an immediate impact on commodity prices and, more importantly, on the outlook for prices, activity, and spending. Ladd will provide more detail on how these dynamics are impacting our business, but I'd like to first set the stage with some high-level observations. Importantly, as we entered this period of uncertainty, industry-wide drilling and completions activity was consistent with maintaining relatively flat production, meaning any sharp or prolonged slowdown in activity would lead to production declines. The primary challenge facing operators today is increased cost inputs from tariffs and uncertainty about where commodity prices will trend amid persistent concerns about a potential economic slowdown and softening global demand. Coupled with increased supply from OPEC, we are actively engaging with customers and vendors to navigate through this cycle, including tariff mitigation strategies, in addition to increasing operating efficiency. Of note, we're observing varied responses across the value chain. The responses by operators to current market conditions remain highly individualized and shaped by factors, including acreage portfolios, regional and commodity exposure, cash return commitments, hedge positions, and overall corporate strategy. Early feedback from our customers indicates that activity will decline in the second quarter relative to the first quarter as fleets and earlier programs largely targeting oil production abate. Those that are reducing activity maintain the flexibility to quickly resume operations when market conditions improve. Some operators are maintaining relatively steady activity levels, while others have adopted a more measured wait-and-see approach, particularly with marginal projects that might deliver better returns in an improved pricing environment. Meanwhile, the natural gas market appears to be holding up relatively well. Secular tailwinds driven by growing AI-related power demand and continued strength in LNG demand are supporting the potential for increased activity in the second half of 2025, which Ladd will also expand on shortly. We're optimistic about the opportunity in Haynesville, particularly given our profit position in that region. Regardless of the market backdrop, we continue to take a disciplined approach to managing our asset portfolio and capital allocation by prioritizing economic returns, shoring up free cash flow, safeguarding liquidity, and prudently managing both debt, service, and working capital. Further, in response to the evolving market conditions, we're implementing strategic adjustments to our capital allocation plan to maximize cash flow generation while ensuring our customers continue to receive the highest quality equipment and service enabled by our vertical integration. Ladd will elaborate on these two points shortly, but before turning the call over to him, I'd like to wrap up with the following summary remarks. We delivered strong Q1 results, exceeding consensus estimates with revenue growth of 32% and increased adjusted EBITDA by 83% compared to the fourth quarter. We achieved a new record in operating efficiency, thanks to our best-in-class crews and differentiated business model utilizing in-house R&D, manufacturing, and maintenance capabilities and our asset management platform. We completed a strategic transaction with Flotek, enabling a platform for growth, leveraging cutting-edge gas quality assurance and asset integrity solutions. We are observing varied customer responses to economic uncertainty, and ultimately what operators want to see is more clarity on the trajectory of commodity prices, reliability of cost inputs and tariffs, and less uncertainty regarding supply and demand dynamics. Natural gas remains a relatively bright spot, which we believe could provide some upside in the second half of the year. We saw positive momentum in profit with significant volume gains in Q1. And finally, we remain prudent and diligent in capital allocation and are actively evaluating expenditures across the organization with flexibility to adjust without compromising service quality. Ladd, over to you.

Thank you, Matt. And good morning, everyone. I'll provide more color on several themes Matt touched on as I elaborate on the segments, starting with the performance in our pressure pumping business. In the first quarter, we experienced a significant improvement in our active fleet count, with six fleets returning to service early in the period. The increase in activity was most pronounced in our Eagle Ford and Permian operations, though all active regions saw improvement. So far through the second quarter, we've experienced more resilient demand for our next-gen natural gas earning equipment than our diesel assets. As Matt discussed, the uncertain macroeconomic environment triggered by tariff announcements in early April and the OPEC production increase has prompted operators to reassess their drilling and completions activity and spending. During such periods, operators typically shift focus toward operational expenditures rather than capital investments. This often means prioritizing production from active wells over bringing new wells online. Regarding their capital expenditure programs, this may translate to deliberately limiting activity, building duds, and temporarily suspending activity on marginal assets. Since the beginning of the second quarter, a few of the programs we were on have seen delays or been paused due to the dynamics Matt laid out. This is resulting in more white space on the frac calendar and creating some inefficiencies that we're managing. The encouraging news is that D&C programs can resume quickly. In addition, the tariff-induced disruption to the industry supply chain could result in a substantial glut of imported products. As a result, activity could rebound just as rapidly as it slowed. While we're being prudent with spending amid current uncertainty, our business model and fleet are well-positioned and stand ready to capitalize on a ramp-up in completions activity. In addition, we remain optimistic about the potential upside in natural gas-directed activity, particularly in the Haynesville. We're actively fielding inbound interest for work in the back half of this year and into the next. Now to our profit segment. We saw a substantial increase in volumes early in the year, with January levels rising 45% above December. However, ramp-up costs and planned mine improvements early in the quarter weighed on segment performance. As a reminder, we conducted a strategic leadership review of the profit segment in Q4 of 2024 across both mine operations and executive levels and implemented targeted changes to enhance commercial execution and operational efficiency. By improving throughput, we've begun to see encouraging results. Looking at our operations today, segment volumes are anticipated to slightly decline relative to the first quarter, but with some favorable offsets, as Matt laid out. Finally, I'd like to reiterate our optimism around the Haynesville, particularly as it relates to our profit business and the potential for increased natural gas activity in the region. As mentioned previously, we hold an industry-leading position in the Haynesville profit market, supported by three in-basin mines with a combined annual production capacity of 8.2 million tons. Switching gears now to other important items. Regarding our recent Flotek transaction, in April, we completed a $105 million transaction that included our gas conditioning solutions under a six-year leaseback arrangement. Austin will talk more about the deal consideration, but I'd like to take a brief moment to talk about [Indiscernible] each natural gas burning fleet. One emergency shutdown unit, which we call an ESD, and one natural gas distribution unit, or NGD. At a high level, this equipment solves one of the biggest operational challenges, out-of-spec gas impact on asset integrity, which can result in outcomes ranging from increased wear and tear to catastrophic failure. Additional features include emergency shutdown capabilities, pressure regulation, overpressure protection, liquids carryover protection, and managing out-of-spec gas, which includes mitigating variations in BTU and H2S levels. While the core tangible components of the equipment are fairly ubiquitous in the oil field, the real differentiator is in the intellectual property associated with Flotek's JP3 gas analyzer. Onboard the ESD is proprietary technology that analyzes the chemical makeup of the gas in real time and adjusts the BTU levels of the gas supplied to the power generation unit, or any natural gas burning equipment, for that matter, without any disruptions to operations. At ProFrac, this not only helps us avoid nonproductive time associated with fuel-related issues at the pad, but also improves our ability to substitute natural gas. On capital allocation, we've identified approximately $70 million to $100 million in potential CapEx reductions to flexibly align with evolving market conditions. Our efficient fleet management approach enables us to maintain service quality standards while optimizing spending. Regarding tariffs, we continue to take a proactive approach to supply chain management through our in-house capabilities, strategic sourcing, and diverse supplier relationships. We've managed direct cost impacts to date. While we continuously monitor and adjust the market conditions, our business model positions us well to navigate the current environment. I'll now hand the call over to Austin to cover our financial results in more detail.

Thanks, Ladd. In the first quarter, revenues were $600 million as compared with $455 million in the fourth quarter. We generated $130 million of adjusted EBITDA with an adjusted EBITDA margin of 22% compared with $71 million in the fourth quarter for 16% of revenue. Top line and margins improved on increased activity levels, higher efficiencies and cost control in the stimulation services segment, and higher sales volumes in our profit production segment. Free cash flow was a net use of cash of approximately $14 million in the first quarter, a decline of approximately $68 million versus the fourth quarter, driven primarily by investments in working capital as we scaled our activity levels in FRAC and SAND, while also effectively balancing liquidity and debt service. Turning to our segments, stimulation services revenues were $525 million in the first quarter versus $384 million in the fourth quarter, with both fleet count and efficiency driving the increase in the quarter. Adjusted EBITDA in Q1 was $105 million versus $54 million in Q4, with margins coming in at 20% versus 14%, respectively. This segment was impacted by approximately $8 million in shortfall expense related to our supply agreement with Flotek, compared to $9 million in the prior quarter. The profit production segment generated $67 million of revenue in the first quarter, compared with $47 million of revenue in the fourth quarter. The increase in revenue was primarily attributable to approximately 53% higher sales volumes in the quarter, offset partially by a slightly lower average selling price per ton. Approximately 63% of volumes were sold to third-party customers during the first quarter versus 73% in Q4. Adjusted EBITDA for the profit production segment was $18 million for the first quarter versus $14 million in Q4. While we grew volumes and revenues in the quarter on a margin basis, EBITDA margins came in at 27% in the first quarter versus 31% in Q4, with the dip largely attributable to ramp-up costs to increase throughput at the mines. Our manufacturing segment generated first-quarter revenues of $66 million, up 6% sequentially. Approximately 87% of segment revenues were generated via intercompany sales. Adjusted EBITDA for the manufacturing segment improved to approximately $4 million in Q1. Selling, general and administrative expenses were $54 million in the first quarter, up from $48 million in the fourth quarter, driven by increased labor costs. Cash capital expenditures decreased to $53 million in the first quarter from $63 million in the fourth quarter, as expenditures were front-loaded in Q4 to reactivate fleets. This is exactly what our newly formed asset management platform is all about. Maintaining our active equipment to the highest standards, while also positioning our ready line of equipment in alignment with market dynamics and growth expectations, while keeping a firm grip on costs through the cycle. At this time, we want to make clear that we have the ability to respond very rapidly and can pause our otherwise reduced capital expenditures by $70 million to $100 million. Total cash and cash equivalents as of March 31, 2025, were approximately $16 million, including approximately $7 million attributable to Flotek. Total liquidity at quarter end was approximately $76 million, including $66 million available under the AVL. Borrowings under the AVL credit facility ended the quarter at $205 million, up approximately $65 million from the prior quarter. At March 31, we had approximately $1.15 billion of debt outstanding, with the majority not due until 2029. We repaid approximately $43 million of long-term debt in the first quarter and intend to continue to use free cash flow in future periods to deleverage. To close out, I'll provide some additional detail on the transaction with Flotek that Matt and Ladd highlighted earlier. In exchange for the conveyance of digitally enhanced mobile natural gas conditioning and distribution units, both active and new units under construction, and the associated six-year lease, we received warrants exercisable for 6 million shares, which will provide us with increased exposure to Flotek equity, as well as an offset of outstanding 2024 order shortfall payments and a mechanism to offset potential future order shortfall payments related to ProFrac's chemical supply agreement with Flotek. Further, ProFrac issued a $40 million seller note. The note is a five-year non-amortizing note with a 10% interest rate. That concludes our prepared remarks. Operator, please open the line for questions.

Thank you. The floor is now open for questions. [Operator Instructions] Today's first question is coming from Dan Kutz of Morgan Stanley. Please go ahead.

So, I appreciate that it's a really difficult time, and there's a ton of uncertainty, and we appreciate the kind of directional color that you guys shared in the press release for some of the puts and takes in the prop[ph] segment and in the Stim services segment. And I guess, is there anything more specific that you could share with us on the second quarter outlook, however you guys would like to frame it? I'm looking at consensus has revenues and EBITDA on a consolidated basis down around 10% for you guys. Is that in the ballpark based on what you know now? Yeah, just any incremental color you could share on the second quarter would be awesome. Thank you.

Yeah, good morning, and thanks for your question. We continue to evaluate the market and the situation. I think it's on a customer-by-customer basis. There is going to be some pullback in Q2, but to what degree, we're not exactly sure at this point. We've got a lot of momentum and are positioned incredibly well for this year and continue to take care of our customers. We're still gaining ground on bundling. And including sand and logistics with each bar active fleets, but. The uncertainty and the visibility that we're getting from, especially the West Texas customers is, it's on a customer-by-customer basis. So we're still watching it close and. I hope to have some further color soon.

Maybe just on your electric frac assets. Could you remind us whether it's in horsepower or number of fleets? How much capacity you have deployed and I guess, appreciating that those kind of have some of the most robust contracting terms and would be, the least at risk assets in a more challenging macro environment. Could trying to get an idea of how much I guess term you have left on the existing contracts for those, is it still a couple of years or is there kind of a period where a lot of those electric fleets roll off of contracts sometime in the near future? Just anything you could share on the deployed e-frac fleets would be really helpful. Thanks.

Definitely. Most of our e-fleets are on long term contracts. We remain fully utilized on our e-fleets and -- don't see any changes to that. As far as our fuel efficient fleets across the board, there's still tremendous demand for all of them. And that's that remains one of the focal points with our customer retention and focus is, look, there's a lot of demand for those. They're easy to market and easy to sell and easy to keep working, so.

And sorry, there's like, eight or nine or is that the right ballpark of how many electric frac fleets you have deployed?

So there's seven in total, but we've got a couple of them that are simulfrac. So, you can -- as far as horsepower on horsepower, it'd be the equivalent of time.

The next question is coming from John Daniel of Daniel Energy Partners. Please go ahead.

Matt, I was goofing off looking at LinkedIn, and I saw you guys had two fleets, Fleet 18 and 35, that seemingly crushed it with, in terms of hours, pumped. Can you say if those wells were done in April? And if so, like, how that compares to the performance in Q1? And then, the second question is just, what have you done differently recently to sort of allow you to hit those types of numbers?

Yeah, I'll touch on this briefly and hand it off to Ladd. Most of those pads started in Q1, and how much of that is Q2, or April, and how much is Q1, I don't have that information right at my fingertips. But, really, we continue to see record-breaking pump times on across our entire fleet mix. And one of the big contributors to that is one of our phenomenal operations and team out in the field, as well as our asset management program, where we've gone in and controlled our standard processes for maintenance, for asset quality, and more importantly, the standardization of our fleets, our equipment, our parts and components. Standardizing this equipment makes it easier for training, makes your maintenance procedures more reliable and consistent from basin to basin. And it also means that every time a fleet rolls onto location, that there's no question that that's a ProFrac fleet, that means ProFrac standard of the highest quality, highest efficiency, and that customers know exactly what they're getting every single time. It also allows us to control our throughput, our costs, and to manage our inventory to a much greater degree. I think that's one of the things that we saw in Q1, we deployed six fleets and saw a reduction in costs associated with our per-fleet, on per-fleet basis. As we move forward, we expect to see, we're not deploying six fleets in Q2, so we expect the operating leverage and the impact to our cost structure to improve without the burden of deploying six fleets.

Yeah, John, Matt said that he's going to say a couple comments and then hand it off to me, but he really said it. Asset management is what it's all about, and we're just so proud of our team, our guys out in the field. We have the best in the business, and what they continue to do, and just the work that they're performing for our customers, we couldn't be happier. But it's really about asset management, and we're still in the early innings of that. As we work through more and more of our equipment and run it through the asset management program, we feel like we're going to continue to see those results with more fleets. And it's an exciting time, and we think that we're going to see even improvement on that So, as we go forward, that's a good sign.

And just sort of a basic and probably a dumb question, but I'll ask it anyways, Q4 seasonality typically has been sort of a pain on the industry, but you guys have a good presence in the Marcellus and Haynesville. Can you remind me what you saw Q4 versus Q3 and '24, high level, of course, and then what would you expect for this year? All else being equal for just those areas?

Yeah, I mean, there's always seasonality in Q4. What we're watching closely this year with such a with a stronger gas. A price -- a stronger gas price going forward and supply and demand. Fundamentally, we've got a much stronger gas market. And so, last year, going from Q3 to Q4, there was a pretty good slowdown. And now, with all this tariff stuff, most of this stuff is isolated to West Texas. As we look at the gas markets, even South Texas, the Haynesville, the Northeast, we're watching real close to see what kind of activity ramps that we see in the full back half of this year. I think the seasonal down, the seasonal slowdown in Q4 is likely to be muted, but we continue to watch and monitor that closely. The number of inbounds and conversations we've had with customers about their plans, it's all in the back half of the year and so far, we're not seeing any indication that they're going to be slowing down in Q4. Another thing I would say is, with Q2 and all this tariff, nonsense that's going on. It's foreseeing this as being a West Texas thing. It's not really as prevalent and anywhere else. But with that being said, the type of slowdown we saw in Q4 from Q3, we're not seeing this tariff. What's going on with tariffs and the uncertainty and the impact to the business, we don't see this being as material as the type of slowdown you see from seasonality from Q3 and Q4 of last year. So, hopefully that kind of gives some context into kind of what we're seeing in the near term, but we also believe that this is should be pretty short lived.

[Operator Instructions] Our next question is coming from Alec Scheibelhoffer, Stifel. Please go ahead.

I just want to follow up on your comments regarding a second quarter profit and sales volumes and average selling price as well as your commentary on your, and based in kind of capacity in the Haynesville. I was just wondering if you can provide some color and kind of the, maybe the pricing dynamics in the Haynesville versus West Texas, and just kind of the balancing effect that you might see coming out of the Haynesville versus maybe some softness in West Texas.

Yeah, I mean, each of these markets are pretty isolated from a pricing standpoint. Our focus is making sure that we've got the best value for our customers and finding that right spot to balance out the right volumes for operating leverage as well as get the right price from an ASP standpoint for us. I think there's a huge opportunity for us in the Haynesville of getting that balance right. We've recently opened up the damped product at all three of our mines, increasing damped volumes to 13 million tons a year of availability. And I think that that damped market has become a, these aren't mobile mines, these are fixed infrastructure, permanent mines, that basin is a little bit different than what you've seen with these mobile minis and some of these other basins. But in the Haynesville, every damped sand provider has a fixed infrastructure mine and they've been relatively successful in growing that damp market. And we've got 13 million tons and are the single largest producer of damp and dry and intend to grow those volumes, provide phenomenal pricing for our customers. Hopefully, they'll recognize how much of an impact that'll have for them on a cost per foot. But not only that, we've got three locations, so we can provide the best logistics and as well as redundancy so that there's no interruption on their end for any reason. I'm excited to be actually, really pursuing that side of it and hope to be updating you guys with some positive news going forward. And in South Texas, South Texas has always been a pretty robust market, they're still railing sand in. And so, anytime you see a market that's, that's still rails sand in, it provides a pretty good backdrop and really capturing just how strong the demand is in that market. If demand exceeds near local, near term or local supply, it gives you a lot of room to sell into attractive pricing. And then also to build those partnerships, because we've got a lot of capacity down there. It gives us the opportunity to go in and really deliver phenomenal operating results. And we've seen our production at our South Texas mine, continue to improve, put up record, record production in March. And it continues to get better in April was better than March. And then in May, our run rates are substantially better than what we saw even in April. So we're really excited about what we're doing in South Texas. Again, the uncertainty around this trade war and the tariffs and its impact on activity levels in the Permian, we do expect it to impact some of our volumes out there, but continue to find a market, find a spot for that so that we can focus on growing those volumes and benefiting from the operating leverage of diluting fixed costs. And so hope that provides a little bit of color on how to think about it, but South Texas and East Texas are, we expect big things from them and then navigating through a challenging market in West Texas.

Yeah, I think to summarize maybe a little bit favorable makeshift from a relative perspective from West Texas to South Texas and East Texas, North Louisiana. In addition to that, we're going to see increased volumes that include logistics and storage as well as we move into Q2 and then into the back half of the year, we think. So that's what's really driving that those differences.

Thanks, Austin. The logistics and storage piece and combining that with the sand volumes provides a lot of flexibility in how you manage your customer, your backlogs, and maintain reliable consistent service to your customers. These assets, you have issues here and there, but being able to control and manage the logistics, especially when you've got multiple assets nearby, ensures that your service quality is top-notch and that every ton shows up on time, every time.

Ladies and gentlemen, at this time, I would like to turn the floor back over to Mr. Wilks for closing comments.

Thanks, everybody. We appreciate your participation today. While market dynamics present some near-term uncertainty, our vertically integrated model, in-house capabilities, and strategic asset position, position us uniquely to navigate current conditions. Our leverage to both oil and natural gas markets, coupled with our operational flexibility and innovative solutions, enables us to adapt while maintaining readiness for market improvements. We look forward to connecting on our second quarter call.