Profrac Holding Corp ($ACDC) - my take
latest add to the portforlio
*Disclosure: I own shares in ACDC. I am not a professional. Please do your own due diligence.
I added ACDC to my porfolio after the news of the financing. There is already great quality work on the name so I’m not going to do a full profile here. I’ll try my best to add some value and share my perspective.
Check out these write-ups:
Price: $3.85 USD
Shares: ~179 million
Market Cap: 689 million
Enterprise Value: 1.75 billion
Why ACDC?
I’ve mentioned before that I own several oilfield services companies in a basket. I tend to be slow to add or remove names, though I did trim a bit of MCB.to when it pushed over $4. Recently I added ACDC.
I had been looking at PTEN when news of the financing broke, and instead I took a position in ProFrac.
Quick Background on ACDC
May 2022: ProFrac priced its IPO at $18.00 per share for 16 million shares, raising approximately $288 million pricing the company at around $1.7 billion.
The offering provided the company with roughly $273 million in net proceeds (or up to $313 million if underwriter options were fully exercised), earmarked for debt repayment and general corporate purposes.
Pre-IPO Merger Activity
Prior to going public, on October 21, 2021, ProFrac LLC agreed to acquire FTS International, Inc. (FTSI) for about $407.5 million in cash—a strategic step that significantly expanded its fracking capabilities.
Management & Board
ProFrac was founded in 2016 by the Wilks family, specifically brothers Dan and Farris Wilks, along with their children (including Ladd Wilks and Matt Wilks, who now hold executive positions).
Dan and Farris Wilks are well-known in the oilfield services sector: they previously built and sold Frac Tech Services for about $3.5 billion in 2011, which made them billionaires. After exiting Frac Tech, the family re-entered the industry by launching ProFrac Services in 2016, positioning it as a vertically integrated pressure pumping company.
Their next generation (Matt Wilks as Executive Chairman & President, and Ladd Wilks as CEO) have been leading ProFrac since the IPO under the public holding structure ProFrac Holding Corp. (ACDC).
Market Position
ACDC has around 45 frac spreads at the moment. This puts them in the top 3 in terms of fleet and horsepower.
The US frac market has consolidated in recent years. What is left are a handful of players with the scale to serve customers and survive through the downturns. ACDC is unique in that it also is vertically integrated as it owns proppant (sand mines) and manufacturing capabilities.
US LNG
I have been spending some time trying to understand the US LNG export buildout and what that means to the businesses I already own and/or follow. The US currently has about 15 Bcf/d of export capacity today. There is another 9.7 or so under construction. And even more approved by DOE, though not all will likley be built. It’s a pretty big needle mover.
The Recent Financing
The financing was announced on August 13:
18.75 million shares at $4.
This was a steep discount to the $6.10 it traded at before.
J.P. Morgan & Piper Sandler was the underwriter.
Wilks family committed to — and did — add 5M shares ($20M worth)
ACDC was already down ~20% YTD before the raise, and fell further to –45–50% YTD after.
My Thoughts On The Financing
Why such a steep discount?
It was a sloppy deal. Surprising for a business this size, with good underwriters, not a microcap. My guess is it was rushed or just didn’t get much attention.
One angle: underwriters may have been looking ahead at Alpine Silica (ACDC’s sand business) and its potential.
Why not just sell Flotek (FTK) shares?
The Flotek ownership all this stems from an asset purchase that Flotek did from Profrac. Here are the terms:
$17.6 million funded by offsetting $17.6 million from the 2024 order shortfall payments (the "OSP") due from ProFrac Services, LLC;
$40.2 million of equity, issued to ProFrac in the form of a warrant to purchase 6 million Flotek shares, valued on a 10-day volume weighted average price of the company's stock as of close of market on April 16, 2025. Flotek plans to have a special shareholder meeting to approve the issuance of the shares to convert the warrant before the end of July 2025;
$40 million secured promissory note with a five-year term, bearing interest at an annual rate of 10%; and
The balance of the consideration will be satisfied by offsetting future potential OSP against the purchase price.
At end of Q2 2025, they owned 50.4% of Flotek’s outstanding. This is about 15 million of the 29.854 outstanding. This puts the value at around 165-170 million.
On paper, they could’ve liquidated part of that stake instead of raising equity. But unloading $75M worth in the open market would have crushed the stock. They could’ve shopped the block privately, but apparently didn’t.
Is this a step toward going private?
Maybe. The Wilks already owned 85%+ before this year and have been steadily adding. They’re now closer to 89%.
If they wanted to put $20M more to work, the easiest path was to participate in this discounted raise. Yes, it hurt the share price, but it inreased their exposure to the business.
If the endgame is taking ACDC private, this move fits. But even if so, it would likely come at a premium to where we are today.
Risks
Leverage: Most debt matures in 2029, though ~$350M is tied to Alpine Silica. If Alpine IPOs under better conditions, that exposure may shrink. Debt still weighs on FCF.
Activity levels: Short-term risk is another leg down in frac demand vs. the fixed cost base at Profrac. Longer term, it’s hard to see things getting worse than today.
Wilks family control: Medium-term risk is a privatization. Even at a premium, retail shareholders may not be happy with the outcome. I have been a shareholder in takeunders and they leave me feeling violated.
Leverage
The majority of their debt isn’t due to 2029 and there is over 350 million worth of debt is linked to Alpine Silica which (I would assume) would be removed or greatly reduced in an IPO with better market conditions. So I’m less worried about the amount of leverage on the balance sheet here. Of course it’s still debt, and limits the FCF of the business.
Activity Levels
In the short term, I think the risk is activity levels with their fixed cost base. In the long term I have a hard time seeing things getting much worse for the industry. There could of course be some sort of economic slowdown that I am not prepared for.
Wilks Family Ownership
I think a risk in the medium term is ACDC getting taken private by the Wilks. Though it would likely be at a premium, it may still get stolen from us.
Closing Thoughts
After the financing drop, the stock seems to have stabilized. Short term, I don’t know where it trades. Long term, I like the setup:
Leverage to U.S. LNG
Vertical integration (sand + manufacturing)
Strategic stakes (Flotek, Alpine Silica)
Backed by a family with deep OFS experience and skin in the game
For me, ACDC is a long-term hold — though as always, that can change on a dime.
Thanks for reading. And thanks again to the other writers who covered ACDC first.
Dean
*long ACDC at time of writing
Who's the CEO? Angus Young?
I am not familiar with the company; however, I wonder if the bank forced the equity raise as I have seen this before.