ACDC Q1 2026 Update – ACDC
Q1 Below Expectations, Outlook More Constructive
Disclosure: I own shares in ACDC. I am not a professional. Please do your own due diligence.
Price: $6.66 USD
MC: ~1.2 billion USD
EV: ~2.3 billion USD
1 year performance: +51%
ProFrac reported May 7, 2026 (Thursday) morning and held a call. Results were below my expectations and the stock was down 7.7% on the day.
all numbers in USD unless stated otherwise
Quarter Recap
Q1 2026 Financials
Revenue: 449.6M vs 600.3M (-25% YoY)
Adjusted EBITDA: 54.0M vs 129.5M (-58% YoY)
Adjusted EBITDA Margin: 12% vs ~21.6% (-9.6pp YoY)
Weather impact on Adjusted EBITDA by 9.3M
Segment and Other KPIs Breakdown
Stimulation Services
Revenue: 407.0M vs 524.5M (-22.4% YoY)
Adjusted EBITDA: 32.0M vs 104.6M (-69.4% YoY)
Proppant Production
Revenue: 119.6M vs 67.3M (+77.7% YoY)
Adjusted EBITDA: 6.5M vs 18.3M (-64.5% YoY)
Intercompany proppant revenue: 88%
Third‑party proppant volumes: 28% vs 39% (-11pp YoY)
Manufacturing
Revenue: 48.4M vs 65.8M (-26.4% YoY)
Adjusted EBITDA: 4.8M vs 8.0M (-40.0% YoY)
Intercompany manufacturing revenue: 86%
Flotek
Revenue: 72.3M vs 56.8M (+27.3% YoY)
Adjusted EBITDA: 11.3M vs 4.0M (+182.5% YoY)
Intercompany Flotek revenue: 75% vs Not disclosed (Not disclosed YoY)
Other revenue: 2.9M vs 5.4M (-46.3% YoY)
Pumping hours per active fleet: 600+ vs Not disclosed (Not disclosed YoY)
Peak fleet pumping hours: 682 vs Not disclosed (Not disclosed YoY)
Capital Plan (Quarter Activity)
Total capex: 41M vs 36.6M (+12% YoY)
2026 capex guidance including Flotek: 155M–185M
2026 capex guidance excluding Flotek: 145M–175M
Fleet upgrades: dual‑fuel conversions, natural‑gas capable configurations
E‑blender deployment: internally designed modular electric blenders
Conference Call Notes
Pricing dynamics: management stated that pricing was stable from Q4 to Q1, and material price increases have been secured for the majority of fleets beginning in late Q2 and fully reflected in the back half of 2026.
Market tightness: tightening horsepower availability and improved operator sentiment are supporting pricing discussions across the fleet.
Weather impact: winter storms reduced consolidated Adjusted EBITDA by approximately 9M in Q1.
Cost savings: approximately 65% to 70% of the 100M annualized savings target has already been realized, with additional savings expected from repair and maintenance optimization and maintenance capex efficiency.
Activity compression: weather delays and customer scheduling compressed activity into late Q1 and Q2, tightening calendars and reducing white space.
Operator activity: increased operator activity and work pulled forward following the Iran conflict contributed to a tighter completions market.
Automation benefits: automation and asset management tools are reducing preventable equipment failures and improving cost efficiency.
Fleet discipline: fleet count remains in the low 20s, and additional deployments require meaningful pricing improvements and sufficient contract duration.
Machina platform: Machina integrates surface automation and subsurface intelligence; the company is in active price discovery with customers and highlighted potential applications in complex subsurface environments.
Cost inflation: management noted emerging cost pressures in chemicals, diesel, specialty materials, and steel.
Guidance & Outlook
ProFrac expects Q2 2026 to be stronger than Q1 in Stimulation Services, supported by tightening calendars and improved operator sentiment. Pricing increases secured across most fleets are scheduled to begin phasing in during late Q2 and are expected to be fully reflected in the second half of 2026. Management noted that the majority of planned cost‑savings initiatives have already been realized, with remaining efficiencies continuing through the rest of the year.
In Proppant Production, volumes are expected to decline sequentially in Q2 due to operational issues and unplanned downtime, even as broader industry completion activity increases. Overall, management sees market conditions tightening through 2026, with improving customer activity levels and supportive demand trends across the business.
Valuation
I have ACDC at 10x EV/ttm EBITDA and negative FCF on a ttm basis. They are around 8.8x EV/2026 EBITDA estimates at this point.
If the cycle has bottomed and we get several years of tailwinds from here, then this look cheap, in my opinion anyways.
Closing Thoughts
The quarter was weaker than I was anticipating. Having said that, some forward looking indicators are positive. The technology investments, including Machina and e‑blenders, could become differentiators if adoption accelerates, but they are not yet material contributors.
The balance sheet remains leveraged, making the upcoming pricing cycle critical for improving cash generation. I own ACDC in my basket of OFS companies. It is one of the riskier bets in the basket. The concentrated insider ownership and debt levels take some getting used to.
Like many things, I am expected ACDC to trade in sympathy with geopolitical events with Iran.
Thanks for reading my work.
Dean
long ACDC
Feels like these names are trading more off sentiment vibes then fundamentals which did not look good. Seems technology enhancements has really brought down pricing power opportunities in the space.