UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from [ ] to [ ]
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
As of November 1, 2024, the registrant had
TABLE OF CONTENTS
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Item 1. |
5 |
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5 |
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6 |
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7 |
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8 |
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10 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
11 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
31 |
Item 3. |
39 |
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Item 4. |
39 |
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Item 1. |
40 |
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Item 1A. |
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Item 2. |
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Item 3. |
40 |
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Item 4. |
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Item 5. |
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Item 6. |
41 |
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42 |
2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals, as well as our expectations with respect to:
These forward-looking statements may be accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “will,” “should,” “could,” “would,” “likely,” “future,” “budget,” “pursue,” “target,” “seek,” “objective,” or similar expressions that are predictions of or indicate future events or trends that do not relate to historical matters.
The forward-looking statements in this Quarterly Report speak only as of the date of this Quarterly Report, or such other date as specified herein. We disclaim any obligation to update these statements unless required by law, and we caution you not to place undue reliance on them. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following:
3
Our forward-looking statements speak only as of the date they were made and, except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements because of new information, future events or other factors. All of our forward-looking information involves risks and uncertainties that could cause actual results to differ materially from the results expected. Although it is not possible to identify all factors, these risks and uncertainties include the risk factors and the timing of any of the risk factors identified in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report").
4
PART I
ITEM 1. FINANCIAL STATEMENTS
ProFrac Holding Corp.
Condensed Consolidated Balance Sheets
(in millions, except per share amounts or where otherwise noted)
(Unaudited)
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September 30, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Accounts receivable — related party, net |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant, and equipment (net of accumulated depreciation of $ |
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Operating lease right-of-use assets, net |
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Goodwill |
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Intangible assets, net |
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Investments ($ |
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Deferred tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accounts payable — related party |
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Accrued expenses |
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Current portion of long-term debt |
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Current portion of operating lease liabilities |
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Other current liabilities |
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Other current liabilities — related party |
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Total current liabilities |
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Long-term debt |
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Long-term debt — related party |
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Operating lease liabilities |
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Tax receivable agreement liability |
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Other liabilities |
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Total liabilities |
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Mezzanine equity: |
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Series A redeemable convertible preferred stock, $ |
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Stockholders' equity: |
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Preferred stock, $ |
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Class A common stock, $ |
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Class B common stock, $ |
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— |
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— |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive income |
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Total stockholders' equity attributable to ProFrac Holding Corp. |
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Noncontrolling interests |
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Total stockholders' equity |
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Total liabilities, mezzanine equity, and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
ProFrac Holding Corp.
Condensed Consolidated Statements of Operations
(in millions, except per share amounts)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues: |
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Services |
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$ |
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$ |
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$ |
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$ |
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Product sales |
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Total revenues |
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Operating costs and expenses: |
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Cost of revenues, exclusive of depreciation, depletion and amortization |
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Selling, general, and administrative |
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Depreciation, depletion and amortization |
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Acquisition and integration costs |
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Goodwill impairment |
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— |
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— |
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Other operating expense, net |
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Total operating costs and expenses |
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Operating income (loss) |
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( |
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( |
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Other income (expense): |
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Interest expense, net |
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( |
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( |
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( |
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( |
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Gain (loss) on extinguishment of debt |
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— |
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— |
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( |
) |
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Other income (expense), net |
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( |
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( |
) |
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( |
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Income (loss) before income taxes |
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( |
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( |
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( |
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Income tax benefit (expense) |
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( |
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Net income (loss) |
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( |
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( |
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( |
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Less: net (income) loss attributable to noncontrolling interests |
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( |
) |
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( |
) |
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( |
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Less: net income attributable to redeemable noncontrolling interests |
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— |
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— |
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— |
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( |
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Net income (loss) attributable to ProFrac Holding Corp. |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
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Net loss attributable to Class A common shareholders |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Loss per Class A common share (basic and diluted) |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average Class A common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
ProFrac Holding Corp.
Condensed Consolidated Statement of Comprehensive Income
(in millions)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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( |
) |
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— |
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( |
) |
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Comprehensive income (loss) |
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( |
) |
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( |
) |
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( |
) |
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Less: comprehensive (income) loss attributable to noncontrolling interest |
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( |
) |
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( |
) |
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( |
) |
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Less: comprehensive income attributable to redeemable noncontrolling interest |
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— |
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— |
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— |
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( |
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Comprehensive income (loss) attributable to ProFrac Holding Corp. |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
ProFrac Holding Corp.
Condensed Consolidated Statements of Changes in Equity
(in millions)
(Unaudited)
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Class A Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Noncontrolling |
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Total Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income |
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Interests |
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Equity |
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Balance, December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Tax withholding related to net share settlement of equity awards |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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( |
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Share issuance |
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— |
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— |
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— |
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— |
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— |
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— |
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Adjustment of Series A redeemable convertible preferred stock to redemption amount |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
) |
Balance, March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Class A shares issued for vested stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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Tax withholding related to net share settlement of equity awards |
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( |
) |
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— |
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( |
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— |
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— |
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— |
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( |
) |
Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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( |
) |
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Adjustment of Series A redeemable convertible preferred stock to redemption amount |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Noncontrolling interest of acquired business |
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— |
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— |
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— |
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— |
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— |
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Balance, June 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Class A shares issued for vested stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Tax withholding related to net share settlement of equity awards |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustments |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Adjustment of Series A redeemable convertible preferred stock to redemption amount |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Balance, September 30, 2024 |
|
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$ |
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$ |
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$ |
( |
) |
|
$ |
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|
$ |
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|
$ |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
ProFrac Holding Corp.
Condensed Consolidated Statements of Changes in Equity (continued)
(in millions)
(Unaudited)
|
|
Class A Common Stock |
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Class B Common Stock |
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Additional |
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(Accumulated Deficit) Retained |
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Accumulated |
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Noncontrolling |
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Total Stockholders' (Deficit) |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Interests |
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Equity |
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Balance, December 31, 2022 |
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$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|
|
( |
) |
||||||
Class A shares issued to acquire Producers |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Class A shares issued to acquire Performance Proppants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Stock-based compensation related to deemed contribution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Conversion of Flotek notes to equity |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Adjustment of redeemable noncontrolling interest to redemption amount |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance, March 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Stock-based compensation related to deemed contribution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Class A shares issued for vested equity awards |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Tax withholding related to net share settlement of equity awards |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Flotek common stock issued to satisfy convertible notes held by ProFrac Holdings Corp. |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
Adjustment of redeemable noncontrolling interest to redemption amount |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Conversion of Class B common stock to Class A common stock |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||