ProFrac Holding Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Summary of Components of Income Tax Expense (Benefit)

The following table summarizes the components of income tax expense (benefit):


	Year Ended December 31,
	2023			2022
Current income taxes:
Federal	$	(1.1	)	$	1.7
State		2.2			3.7
Total current		1.1			5.4

Deferred income taxes:
Federal		—			3.6
State		0.1			0.1
Total deferred		0.1			3.7

Income tax expense (benefit)	$	1.2		$	9.1

Summary of Actual Income Tax Expense (Benefit) Differed From the Amount Computed by Applying the Statutory Federal Income Tax Rate to Income (Loss) Before Income Taxes

Actual income tax expense (benefit) differed from the amount computed by applying the statutory federal income tax rate to income (loss) before income taxes as follows:


	Year Ended December 31,
	2023			2022
Income (loss) before income taxes	$	(58.0	)	$	351.8
Statutory rate	21%			21%
Federal income tax expense (benefit) at statutory rate		(12.2	)		73.9
State taxes, net of federal benefit		0.8			9.5
Permanent items		7.2			13.6
Other		(1.3	)		(3.2	)
Non-controlling interest		(10.7	)		(59.9	)
Business combination adjustment		(8.3	)		—
Valuation allowance		25.7			(24.8	)
Income tax expense (benefit)	$	1.2		$	9.1
Effective tax rate		-2.1	%		2.6	%

Summary of Temporary Differences That Gives Rise to Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:


	December 31,
	2023			2022
Deferred tax assets:
Net operating loss carryforward	$	114.8		$	93.1
Investment in ProFrac Holdings, LLC (1)		—			85.1
Tax receivable agreement		74.1			18.1
Flotek net operating loss and tax credit carryforwards		48.1			45.4
Flotek intangible assets and goodwill		8.0			9.0
Flotek other		10.4			12.7
Gross deferred tax assets		255.4			263.4
Valuation allowance		(91.1	)		(261.3	)
Total deferred tax assets		164.3			2.1

Deferred tax liabilities:
Investment in ProFrac Holdings, LLC		(156.5	)		—
Flotek right-of-use asset and other		(7.5	)		(1.8	)
Total deferred tax liabilities		(164.0	)		(1.8	)

Net deferred tax assets (liabilities)	$	0.3		$	0.3

(1)

The December 31, 2022 balance was originally reported as $19.3 million and has been corrected in this presentation. See “Correction of an Immaterial Error on Previously Issued Financial Statements” in “Note 1 - Organization and Description of Business” for discussion of this immaterial error correction.