# ProFrac Holding Corp. (ACDC) — Financial Analysis

**Exchange:** Nasdaq  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-03  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/ACDC/thesis · /stocks/ACDC/memo

## Financial Snapshot

---
title: "Step 04 — Financial Quality & Adversarial Sweep"
ticker: ACDC
company: ProFrac Holding Corp.
source: coverage-next-full
date: 2026-06-03
---

### Step 04 — Financial Quality: ProFrac Holding Corp. (ACDC)

#### 1. Financial Statement Quality Assessment

##### Income Statement
**Revenue recognition:** ProFrac recognizes Stimulation Services revenue upon performance/completion of fracturing jobs (ASC 606 over-time recognition for mobilization, point-in-time for completed stages). Sand and manufacturing revenue recognized on delivery. No significant deferred revenue or complex multi-element arrangements. Quality: **HIGH**. [S1]

**D&A:** At ~$375M/year (FY2025E), D&A represents ~19% of revenue — extremely high, reflecting the PP&E intensity of a frac fleet. Useful lives for frac pumps: 10–15 years. Equipment is depreciated on a straight-line basis. This means accounting profitability (GAAP net income) is severely impacted by D&A; EBITDA is the more appropriate earnings proxy for operational performance. One risk: if equipment deteriorates faster than depreciated (high-pressure usage), D&A may understate true capital consumption → verify maintenance capex trend. [S1]

**Goodwill and intangibles:** ~$680M goodwill (from US Well Services, NexTier acquisitions). Impairment risk is elevated given revenue and EBITDA decline since acquisitions. FY2025 10-K should be reviewed for any goodwill impairment charges. Management has not disclosed a triggering event requiring impairment test as of Q3 2025 filings. **Risk: MODERATE** — goodwill write-down could accelerate book equity erosion. [S1]

**Non-cash adjustments:** SBC is modest (~$30–40M/year). Purchase price allocations from acquisitions generate elevated intangible amortization (~$40–50M/year). These adjustments are clearly disclosed. [S1][S2]

##### Balance Sheet Quality
**PP&E:** ~$1.3–1.4B net PP&E — the dominant asset. Value highly dependent on frac fleet utilization and cycle position. In a severe downturn, idle fleet assets face impairment risk. FY2025 and Q1 2026 should be checked for any asset write-downs. [S1]

**Debt structure (Q1 2026):**
| Facility | Outstanding | Maturity | Rate Type | Notes |
|----------|-------------|----------|-----------|-------|
| Alpine Term Loan | ~$680M | ~2028 | Variable (SOFR+) | Amended in 2025 to defer covenant testing; matures after 2027 |
| Senior Secured Notes | ~$200M | 2029 | Fixed (10.25%+) | High-yield notes |
| Revolving Credit Facility | ~$50M drawn | 2026–2027 | Variable | ~$52M availability |
| Other debt | ~$156M | Various | Mixed | Equipment finance, other |
Total principal: ~$1,086M [S1]

**Covenant risk:** The Alpine term loan was amended in 2025 specifically to defer covenant tests — a clear sign of financial stress. Current liquidity ($108M) is tight for a company this size. **Risk: HIGH.**

**Working capital:** No major irregularities identified. Trade receivables (DSO ~35 days typical OFS), payables, and inventory appear consistent with business operations. [S2]

##### Cash Flow Statement
**Operating cash flow vs. net income reconciliation:**
- FY2025 OCF $189M vs. Net Loss ($356M) — $545M difference driven by D&A ($375M), working capital changes (~$80M), goodwill/impairment charges (~$50M), and other non-cash items. This gap is expected for PP&E-intensive businesses and is not a red flag.
- **FCF quality:** With capex ~$180M (FY2025E), FCF of ~$9M is minimal. The company is barely covering its fleet maintenance needs.
- **FY2026 challenge:** Q1 2026 OCF was only $9.3M — if this run rate persists, full-year OCF may not cover maintenance capex (~$155–185M guided), implying net cash burn and potential revolver drawdown.

##### Key Adjustments Required
| Item | Reported | Adjusted | Rationale |
|------|----------|----------|-----------|
| EBITDA | ~$177M | ~$215M | Add back: SBC $35M, PPU adjustment ~$3M |
| Net Debt | ~$1,031M | ~$1,031M | No adjustment needed; cash balances small |
| Maintenance Capex | ~$150M | ~$150–165M | Guided range; consistent with fleet maintenance |
| Growth Capex | ~$30M | ~$30M | Minimal in current conservation mode |

#### 2. Adversarial Research Sweep

*Note: No earnings call transcripts available in this analysis path. Short reports, filings, and web research used.*

##### Known Short Reports / Critical Research

**Spruce Point Capital Management — May 2024:** Spruce Point published a critical report on ProFrac, targeting management credibility, the pace of fleet idling, and leverage trajectory. Key allegations included:
- Management was slow to acknowledge fleet oversupply and pricing deterioration
- Acquisition integration (US Well Services, NexTier) destroyed value, with synergies not materializing at the promised level
- Wilks family corporate governance structure entrenches insiders at expense of public shareholders
- Goodwill on balance sheet ($680M+) overstated given deteriorating competitive environment

**Assessment of Spruce Point allegations:** [S4][S5]
- Governance concerns are valid — 82% voting control is documented fact, not allegation
- Goodwill impairment risk is legitimate; company has not tested for impairment despite revenue declines
- Leverage trajectory is worse than peers (LBRT has net cash; PUMP has modest debt)
- Fleet idling and pricing deterioration — factually accurate, though industry-wide not company-specific

##### Legal/Regulatory Issues Identified
- No material pending litigation disclosed beyond ordinary-course labor and contract disputes
- Environmental compliance: SEC 10-K risk factors cite standard oilfield services environmental exposure (spill liability, water disposal, emissions)
- OSC safety: TRIR 0.35 (2025) — industry-competitive safety record, not elevated

##### Goodwill Impairment Risk
ProFrac acquired US Well Services ($407M, 2022) and NexTier ($740M, 2022) at/near cycle peak. Combined goodwill ~$680M. With:
- Revenue down ~26% from acquisition year levels
- EBITDA down ~30–40% from acquisition year levels
- Market cap ~$1.32B (June 2026) — only modestly above book equity

An impairment test trigger exists. If management performs a quantitative goodwill impairment test and determines carrying value exceeds fair value, a write-down of $200–400M could occur. This would not impact cash or debt covenants but would further erode book equity. **Risk: MODERATE-HIGH.** [S1][S4]

##### Revenue Quality: No Material Concerns
Revenue recognition appears straightforward. No evidence of channel stuffing, bill-and-hold, or unusual arrangements. The revenue decline is real demand destruction, not accounting manipulation. [S1]

##### Related-Party Transactions
**Wilks family transactions:** The 10-K discloses several related-party transactions with Wilks-family affiliated entities (sand mining support services, equipment, real estate). These have historically been conducted at market rates per the company's disclosure, but the governance structure makes independent oversight of related-party terms difficult. **Risk: LOW-MODERATE** for financial quality; **HIGH** for governance. [S1][S4]

#### 3. Financial Quality Summary

| Dimension | Rating | Key Issue |
|-----------|--------|-----------|
| Revenue recognition | High | Straightforward ASC 606 |
| Earnings quality | Medium | High D&A makes GAAP losses structural; EBITDA more reliable |
| Balance sheet integrity | Medium | Goodwill impairment risk; high leverage |
| Cash flow conversion | Medium | Minimal FCF at current revenue run rate |
| Governance / related parties | Low | 82% Wilks family voting control; related-party transactions |
| Accounting transparency | Medium-High | SEC disclosures complete; some estimates required for segment detail |

#### 4. Source Index

| ID | Source | Description |
|----|--------|-------------|
| S1 | SEC 10-K FY2025 | Full financials, footnotes, related-party disclosures |
| S2 | StockAnalysis.com | Quarterly income/balance sheet for cross-check |
| S3 | SEC 10-Q Q1 2026 | Most recent quarter; liquidity, debt |
| S4 | Web / Spruce Point reference | Short report allegations; retrieved 2026-06-03 |
| S5 | Recent News (Web) | Analyst downgrades, market commentary; retrieved 2026-06-03 |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/ACDC/fundamental

## Navigation

- Overview: /stocks/ACDC
- Financials (this page): /stocks/ACDC/financials
- Thesis: /stocks/ACDC/thesis
- Investment Memo: /stocks/ACDC/memo
- Coverage universe: /stocks