ACDC 10-K & 10-Q changes, risk factors and insider trading

the social, political and economic conditions in oil and natural gas producing countries and regions, including developments related to the ongoing wars between Russia and Ukraine and Israelconflicts andin Hamasthe Middle East, as well as the instability in Venezuela;

We currently hold, and will seek, numerous environmental, mining and other permits from governmental authorities, as well as water rights and approvals authorizing our frac sand operations. For our extraction and processing, the permitting process is governed by to federal, state, and local laws and regulations. For example, on the federal level, a Mine Identification Request (MSHA Form 7000-51) must be filed and obtained before mining commences. If wetlands are implicated, a wetlands permit may be required from the U.S. Army Corps of Engineers (the “Corps”).Corps. At the federal and state level, a series of permits and approvals are required related to air quality, wetlands, water quality (wastewater and stormwater), grading permits, threatened and endangered species, archaeological assessments and high capacity wells in addition to others depending upon site-specific factors and operational detail. At the local level, mining, zoning, building, stormwater, erosion control, road usage and access, among other matters, may be regulated and require permitting or approval from local governmental authorities. For example, Aggregate Production Operations permits are required for our Texas production facilities and similar permits may be required for our facilities in other states. A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to commence or continue related operations.

Our operations are exposed to the risks inherent to our industry, such as equipment defects, vehicle accidents, fires, explosions, blowouts, surface cratering, uncontrollable flows of gas or well fluids, pipe or pipeline failures, abnormally pressured formations and various environmental hazards, such as oil spills and releases of, and exposure to, hazardous substances (including fracturing fluids,fluids and chemical additives). In addition, our operations are exposed to potential natural disasters, such as blizzards, tornadoes, storms, floods, other adverse weather conditions and earthquakes. The occurrence of any of these events could result in substantial losses to us due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigations and penalties or other damage resulting in curtailment or suspension of our operations. The cost of managing such risks may be significant. The frequency and severity of such incidents will affect operating costs, insurability and relationships with customers, employees and regulators.

A significant portion of our frac sand mining operations are currently conducted in whole or in part by contractors, including services from related parties. Contractors provide us mining, wet and dry loading and hauling services at our KermitKermit, SandLamesa, Mine, Lamesa Sand Mine, Monahans Sand Mine,Monahans, San Antonio Sand Mine,Antonio, and Merryville Sand Mine (when not idled), Sand Mines, and provide us certain related equipment. Wilks Earthworks, LLC (“Earthworks”), an affiliate of the Wilks Parties, provides us those services at our Kermit Sand Mine,Kermit, Lamesa Sand Mine and San Antonio Sand MineMines pursuant to a Master Services Agreement dated effective as of December 1, 2022 (the “Earthworks Services Agreement”).2022. The initial term of the agreement expired on December 1, 2024, but it renews automatically for successive one yearone-year terms unless earlier terminated. As a result of these arrangements, our operations are subject to a number of risks, some of which are outside our control and may negatively affect our operations and financial results, including:

liability to third parties as a result of the actions of our contractors; and the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement; and negotiating renewal terms or new agreements with contractors on acceptable terms.

As of December 31, 2024,2025, we had outstanding principal indebtedness of $1,138.9$1,048.1 million. See “Note 7. Debt” in the notes to our consolidated financial statements for more details on our debt including the portion of our outstanding principal that matures in the year ending December 31, 2025.2026. Our existing and future indebtedness, whether incurred in connection with acquisitions, operations or otherwise,indebtedness and limited access to liquidity may adversely affect our operations and limit our growth, and we may have difficulty making debt service payments on such indebtedness as payments become due. Our level of indebtedness may affect our operations in several ways, including:

increasing our vulnerability to general adverse economic and industry conditions including reduced or volatile customer activity;

enter into transactions with affiliatesaffiliates, including financings, or amend material agreements;

If we violate any of the restrictions, covenants, ratios or tests in our credit agreements, a significant portion of our indebtedness may become immediately due and payable. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. Any subsequent replacement or amendment of our debt agreements or any new indebtedness could have similar or greater restrictions.

Our business may not be able to generate sufficient cash flows from operations and collect our receivables, and there is no assurance that our future cash flows from operations will be sufficient to enable us to make payments due on our current or future indebtedness and to fund our other liquidity needs. If this is the case, we will need to refinance all or a portion of our indebtedness on or before maturity, and we cannot assure that we will be able to refinance any of our indebtedness in a timely manner, on commercially reasonable terms, or at all. We may need to implement one or more alternatives, such as reducing or delaying planned business activities, expenses and capital expenditures, selling assets, restructuring debt, or obtaining additional equity or debt financing. While in the past, we have received financing support from certain of our secured lenders and from affiliates that have allowed for relief of covenants, refinancings and access to capital, such sources are under no obligation to provide new support in the future. These financing strategies may not be executed on satisfactory terms, if at all or on terms that would be advantageous to our stockholders. Our abilityefforts to upsize our current facilities, refinance our indebtedness or obtain additional financing, and to do so on commercially reasonable terms, will depend on, among other things, our financial condition at the time, restrictions in agreements governing our indebtedness, and other factors, including the condition of the financial markets and the markets in which we will compete.

We and our customers are subject to a variety of federal, state and local environmental laws and regulations affecting the hydraulic fracturing and mining and mineral processing industry, including, among others, those relating to employee health and safety, environmental permitting and licensing, plant and wildlife protection, wetlands protection, air and water emissions, greenhouse gas emissions, water pollution, waste management, including the transportation and disposal of waste and other materials, remediation of soil and groundwater contamination, land use, reclamation and restoration of properties, hazardous materials and natural resources. These laws and regulations have imposed, and will continue to impose, numerous obligations on our operations and the operations of our customers, including the acquisition of permits or other approvals to conduct regulated activities, the imposition of restrictions on the types, quantities and concentrations of various substances that may be released into the environment, the incurrence of capital expenditures to mitigate or prevent releases of hazardous materials from our equipment and facilities, and the application of specific health and safety criteria addressing worker protection. Some environmental laws impose substantial penalties for noncompliance, and others, such as the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),CERCLA, impose strict, retroactive and joint and several liability for the remediation of releases of hazardous substances. Liability may be imposed as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior owners or operators or other third parties without regard to fault or the legality of the conduct at the time. Governmental agencies, citizen organizations, neighboring landowners and other third parties may file claims against us for personal injury or property damage allegedly caused by the release of pollutants into the environment. In addition, any failure by us to comply with applicable laws and regulations may cause governmental authorities to take actions that could adversely impact our operations and financial condition, including:

Climate change continues to attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit emissions of carbon dioxide, methane and other GHGs. These efforts have included significant public investment in zero-carbon energy production and storage, consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources. Although, under the current Trump administration, we expect less GHG regulation, the risk of these continued efforts to drive down carbon emissions may result in reduced business opportunities and profitability.

Additional restrictions on drilling and mining activities intended to protect certain species of wildlife may adversely affect our ability to conduct completion activities.activities or mining operations.

For example, onsince JuneMay 20, 2024, the FWSdunes issuedsagebrush a final rule that the Dunes Sagebrush Lizard,lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where we and our customers operate), behas been listed as endangered under the ESA. In the final rule, FWS determined that designating the dunes sagebrush lizard critical habitat was prudent, but not determinable at the time of issuance, thus triggering a one-year review period for the future designation of critical habitat. Legal challenges have been filed relating to the listing, and we cannot predict what actions, if any, the current Trump administration may take relating to the listing of the dunes sagebrush lizard as endangered. As discussed above, the decision to list the Dunesdunes Sagebrushsagebrush Lizardlizard as endangered could subject us and our customers to operating restrictions and/or limit areas of our current or future operations.operations Thein FWSany hasarea notthat yetis proposedlater todesignated designateas a critical habitat for the Dunes Sagebrush Lizard, which it may do so up to a year after a listing under the ESA.habitat. At this time, the effects of such designation on our or our customers’ operations or the operations of our peers are likewise uncertain.

We are subject to laws and regulations relating to human exposure to crystalline silica. For example, the federal Occupational Safety and Health Act (“OSHA”) has implemented rules establishing a more stringent permissible exposure limit for exposure to respirable crystalline silica and provided other provisions to protect employees. These rules require compliance with engineering control obligations to limit exposures to respirable crystalline silica in connection with hydraulic fracturing activities. In June 2022, the DepartmentDOL’s of Labor’s (“DOL”) Mine Safety and Health Administration (“MSHA”) launched a new enforcement initiative to better protect U.S. miners from health hazards resulting from repeated overexposure to respirable crystalline silica. MSHA reports that silica dust affects thousands of miners each year and, without adequate protection, miners face risks of serious illnesses, many of which can be fatal. In April 2024, the MSHA issued a final rule amending its existing standards and setting a permissible exposure limit of respirable crystalline silica.

Specifically, the silica enforcement initiative will includeincludes:

Over the past few decades, a number of companies that utilize silica in their operations have been named as a defendant, usually among many defendants, in product liability lawsuits brought by or on behalf of current or former employees or customers alleging damages caused by silica exposure. The silica- relatedsilica-related litigation brought against us to date, and associated litigation costs, settlements and verdicts, have not resulted in a material liability to us, and we presently maintain insurance policies where available. However, we may continue to have silica exposure claims filed against us in the future, including claims that allege silica exposure for periods or in areas not covered by insurance, and the costs, outcome and impact to us of any pending or future claims is not certain. Any such pending or future claims or inadequacies of our insurance coverage could have a material adverse effect on our business, reputation, financial condition and results of operations.

Conflicts of interest could arise between us, on the one hand, and Dan Wilks and Farris Wilks and entities owned by or affiliated with them and certain individuals affiliated with such entities (collectively, the “Wilks Parties”), on the other hand, concerning among other things, business transactions, competitive business activities or business opportunities.

The market price of our Class A Common Stock could vary significantly as a result of a number of factors, some of which are beyond ProFrac’s control. For example, since we consummated our IPO, the closing sales price of our Class A Common Stock has fluctuated from a high of $25.72 per share on November 22, 2022, to a low of $5.34 per share on October 23, 2024.

Our Series A Preferred Stock is convertible into our Class A Common Stock at a conversion ratio that is the quotient of: (i) the liquidation preference as of the date of the conversion and (ii) the then applicable conversion price (which is initially set at $20.00, but may be adjusted from time to time, in accordance with the terms of the Series A Certificate of Designation). It is likely that a larger amount of our Class A Common Stock will be issued the further into the future that our Series A Preferred Stock is converted into our Class A Common Stock. The Series A Preferred Stock is entitled to 8% dividends per annum, paid-in-kind and compounded quarterly on the then outstanding Liquidation Preference (as defined in the Series A Certificate of Designation). See “Note 9. Preferred StockEquity” in the notes to our consolidated financial statements for additional information. We cannot predict when, and how many, shares of our Class A Common Stock shall be issued upon the conversion of the Series A Preferred Stock, or predict or quantify any dilution existing holders of our Class A Common Stock may experience upon such conversion. The conversion of the Series A Preferred Stock into our Class A Common Stock could result in substantial dilution to existing holders of our Class A Common Stock. Holders of our Series A Preferred Stock also have liquidation rights that could affect the residual value of the Class A Common Stock.

As of December 31, 2024,2025, we had 160,146,602180,871,183 shares of our Class A Common Stock outstanding, and approximately 1,180,220756,173 shares of Class A Common Stock remained available for issuance under our long-term incentive plan. The Wilks Parties owned 139,573,147148,503,480 shares of our outstanding Class A Common Stock at March 3, 2025.2026. Under the Registration Rights Agreement dated as of May 17, 2022 by and among ProFrac and certain of the Wilks Parties,Parties and the Series A Purchase Agreement, the Wilks Parties have registration rights in accordance with which ProFrac must file a registration statement for resale of all the shares of Class A Common Stock and Series A Preferred Stock held by the Wilks Parties. We filed a registration statement, which became effective December 1, 2025, covering all of the Series A Preferred Stock and Class A Common Stock issuable upon conversion of the Series A Preferred Stock. In addition, the price of the Class A Common Stock may decline as a result of the conversion of the outstanding Series A Preferred Stock into Class A Common Stock. All of these shares are subject to the rights of the holders thereof to require ProFrac to file a registration statement for their resale.

The term of the Tax Receivable Agreement will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired, unless we experience a change of control (as defined in the Tax Receivable Agreement, which includes certain mergers, asset sales, or other forms of business combinations) or the Tax Receivable Agreement otherwise terminates early (at our election or as a result of our breach or the commencement of bankruptcy or similar proceedings by or against us) and ProFrac makes the termination payments specified in the Tax Receivable Agreement in connection with such change of control or other early termination. In the event that the Tax Receivable Agreement is not terminated, the payments under the Tax Receivable Agreement are anticipated to commence in 2025 and to continue for 15 years after the date of the last redemption of the Units, which occurred in April 2023, see “Item 1. Business – 2023 Significant Events - Redemption of ProFrac LLC Units” for additional information.

As the sole managingshareholder of FTS International, Inc., which is the sole member of ProFrac LLC, the Issuer indirectly controls and operates ProFrac LLC. On that basis, we believe that the Issuer’s interest in ProFrac LLC is not an “investment security” as that term is used in the 1940 Act. However, if the Issuer were to cease participation in the management of ProFrac LLC, its interest in ProFrac LLC could be deemed to be an “investment security” for purposes of the 1940 Act.

Because the Wilks Parties beneficially own 139,573,147more sharesthan ofa our Class A Common Stock, representing approximately 87.2%majority of the voting power of ProFrac as of December 31, 2024,ProFrac, we are a controlled company under Sarbanes-Oxley and rules of Nasdaq. Additionally, the Wilks Parties are currently, and we expect that they will continue to be, deemed a group for purposes of certain rules and regulations of the SEC as a result of the ProFrac Stockholders’ Agreement. Under the Nasdaq rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain Nasdaq corporate governance requirements, including the requirements that:

Developments related to the ongoing wars between Russia and UkraineUkraine, andconflicts betweenin Israelthe andMiddle Hamas,East, economic instability in Venezuela, and the global response thereto, could adversely affect our business, financial condition and results of operations.

We operate in threefour reportable business segments: Stimulation Services, Proppant ProductionProduction, Manufacturing and Manufacturing.Flotek. Our Stimulation Services segment, which primarily relates to ProFrac LLC, owns and operates a fleet of mobile hydraulic fracturing units and other auxiliary equipment that generates revenue by providing stimulation services to our customers. Our Proppant Production segment, which primarily relates to Alpine, provides proppant to oilfield service providers and E&P companies. Our Manufacturing segment sells products such as high horsepower pumps, valves, piping, swivels, large-bore manifold systems, and fluid ends. Flotek is a leading chemistry and data technology company focused on servicing the E&P industry.

OverallRecent Trends and Outlook

Proppant Production revenues in 20242025 decreasedincreased $136.8$89.5 million, or 36%, from 2023.2024. ThisThe decreaseincrease was attributableprimarily due to lowerhigher average pricespricing for productsour soldproppant andin 2025, which was due to a reductionshift in volumesintercompany soldsales mix from mine-gate pricing to wellsite pricing that began in 2024.the second quarter of 2025. Exclusive of this mix shift, revenues also increased due to higher sales volumes in 2025. Revenue recognized for the amortization of acquired off-market contracts was $43.7$7.6 million and $57.5$43.7 million in 20242025 and 2023,2024, respectively. Intersegment revenues for the Proppant Production segment were 26%64% and 30%26% in 20242025 and 2023,2024, respectively.

Manufacturing revenues in 20242025 increaseddecreased $46.7$10.5 million, or 27%,5%, from 2023.2024. ThisThe increasedecrease was attributableprimarily due to higherdecreased intercompany demand for manufacturing products.products in the last nine months of 2025, which was partially offset by increased demand in the first quarter of 2025. Additionally, the acquisition of BPC and NRG contributed revenue starting in April 2024 and June 2024, respectively. Intersegment revenues for the Manufacturing segment were 77%82% and 89%77% in 20242025 and 2023,2024, respectively.

OtherFlotek revenues in 20242025 increased $2.5$51.2 million, or 1%,27%, from 2023.2024. This increase was primarily due to increased intercompany and third-party revenue. Flotek recorded $32.5$27.4 million and $20.1$32.5 million of revenue in 20242025 and 2023,2024, respectively, related to contract shortfalls with the Stimulation Services segment. Intersegment revenues for the Flotek segment were 63% and 65% in 20242025 and 2023,2024, respectively.

Stimulation Services cost of revenues in 20242025 decreased $274.1$26.7 million, or 16%,2%, from 2023.2024. This decrease was primarily attributabledue to a decrease in average active fleets and decreased volume of proppant and chemistry in 2024.2025. Cost of revenues for this segment included an intercompany supply commitment charge of $27.4 million in 2025 and $32.5 million in 2024 and $20.1 million in 2023 because the Stimulation Services segment did not purchase the minimum contractual commitment of chemistry products from Flotek.

Manufacturing cost of revenues in 20242025 increaseddecreased $43.5$16.4 million, or 30%,9%, from 2023.2024. This increasedecrease was primarily attributabledue to higherdecreased volumes of products sold to intercompany andcustomers third-partyin the last nine months of 2025, which was partially offset by increased volumes of products sold to intercompany customers in 2024.the first quarter of 2025. Additionally, the acquisition of BPC and NRG contributed costs beginning in April 2024 and June 2024, respectively.

OtherFlotek cost of revenues in 20242025 decreasedincreased $13.7$27.3 million, or 8%,19%, from 2023.2024. This decreaseincrease was primarily attributabledue to Flotek’sincreased decreasedcosts productrelated salesto andthe lowerincreased freightvolume costs.of business.

Selling, general and administrative (“SG&A”) expenses in 20242025 decreased $29.0$14.1 million, or 12%,7%, from 2023.2024. Excluding stock-based compensation expense, SG&A expenses decreased $6.5$17.2 million, or 3%.9%. This decrease was due to lower labor costs resulting from cost savingscontrol initiatives,measures whichand wasreduced incentive compensation expense. These decreases were partially offset by higherincreased expense at Flotek. The decrease was also partially offset by increased labor and non-laborfacility costs associatedrelated withto our 2024acquisitions acquisitions.of BPC, AST and NRG in the second quarter of 2024. Additionally, management fees of approximately $5.0 million owed to Wilks Brothers, LLC was reclassified to stock-based compensation expense as a result of an agreement to settle certain management fee payments by issuing common stock. See “Note 11. Stock-based Compensation” in the notes to our consolidated financial statements for a discussion of our stock-based compensation.

Litigation expenses and accruals for legal contingencies generally represent legal and professional fees incurred in significant litigation as well as estimates for loss contingencies with regards to certain vendor disputes and litigation matters. In 2025, substantially all of these costs represent litigation costs incurred in connection with certain patent infringement lawsuits. In 2024, substantially all of these costs represent litigation costs incurred in connection with certain patent infringement lawsuits with Halliburton,Halliburton Company, which were settled in September 2024. See "Note 14. Commitments and Contingencies" in the notes to our consolidated financial statements for a discussion of significant litigation matters. In 2023 more than half of these costs were related to litigation costs incurred in connection with the lawsuits against Halliburton.

TheTransaction transactioncosts in 2025 represent legal and professional fees incurred for strategic initiatives. Transaction costs for 2024 represent deferred costs incurred for Alpine's initial public offering that were charged to earnings as a result of its postponement.

Gain or loss on disposal of assets, net consists of gains or losses on excess property, early equipment failures, and other asset dispositions. In 2025, loss on disposal of assets included the scrapping of certain equipment that was determined to be uneconomical to repair.

Supply commitment charges for 2024 represent charges related to contractual inventory purchase commitments to certain proppant suppliers. These charges were attributable to our decreased volume of purchases from these suppliers due to certain customers decreasing their activity levels. If future customer demand differs from our contracted supply, we may incur additional supply commitment charges in future periods.

Interest expense, net in 20242025 was $156.6$138.8 million, whichcompared wasto consistent with $154.9$156.6 million in 2023.2024. The decrease is due to lower average interest rates and lower average outstanding debt balances in 2025. We are subject to interest rate risk on our variable-rate debt. A 1% increase in interest rates on our variable-rate debt as of December 31, 2024, would increase the annual interest expense for this debt by approximately $10.7 million. See “Note 7. Debt” in the notes to our consolidated financial statements for additional discussion related to our debt.

Other expense, net in 2025 was $3.8 million, compared to other income, net in 2024 wasof $3.0 million. Other expense,The net change in 2023 was $36.2 million. This balance2025 was primarily due to anthe unrealized$10.5 million loss on our investment in BPCdisposal of $30.2EKU million.Power SeeDrives, “Notewhich 6.was Investments”partially offset by a decrease in the notesfair to our consolidated financial statements for discussionvalue of our investment in BPC. This balance was also due to a loss of $8.5 million on our Munger make-whole provision.provision in 2025. See “Note 15. Fair Value Measurements” in the notes to our consolidated financial statements for discussion of the Munger make-whole provision.

OurHistorically, our primary sources of liquidity are cash flows from operations and availability under our revolving credit facility. While Flotek is included in our consolidated financial statements, we do not have the ability to access or use Flotek’s cash or liquidity in our operations and, accordingly, have excluded Flotek’s cash and other sources of liquidity from the following discussion of our liquidity and capital resources. See “"Note 4.1. Organization and Description of Business Combinations”" in the notes to our consolidated financial statements for discussion of our ownership of Flotek.

Our Alpine 2023 Term Loan requires us to segregate collateral associated with Alpine and limits our ability to use Alpine's cash or assets to satisfy our obligations or the obligations of our other subsidiaries. We also have limited ability to provide Alpine with liquidity to satisfy its obligations. See “Note 7. Debt” in the notes to our consolidated financial statements for more information.information regarding the Alpine 2023 Term Loan.

At December 31, 2024,2025, we had $10.4$17.2 million of cash and cash equivalents, excluding Flotek, and $70.7$135.4 million available for borrowings under our revolving credit facility which resulted in a total liquidity position of $81.1$152.6 million. Refer to “Note 7. Debt” and “Note 18. Subsequent Events” in the notes to our consolidated financial statements for more information regarding our revolving credit facility.

Total revenue for the three months and six months ended MarchJune 31,30, 2026 was $449.6$498.1 million and $947.7 million, respectively, which represented decreases of $150.7$3.8 million and $154.5 million, respectively, from the same periodperiods in 2025.

Net loss attributable to ProFrac Holding Corp. for the three months and six months ended MarchJune 31,30, 2026 was $83.5$79.7 million and $163.2 million, respectively, which represented increasea decrease in net loss of $66.0$28.3 million and an increase of net loss of $37.7 million, respectively, from the same periodperiods in 2025.

Cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026, was $9.3$32.2 million, a decrease of $29.4$103.2 million from the same period in 2025.

Total principal amount of long-term debt was $1,085.6$1,102.4 million at MarchJune 31,30, 2026, an increase of $37.5$54.3 million from December 31, 2025.

Our business depends on the willingness of E&P companies to make expenditures to explore for, develop, and produce oil and natural gas in the United States. The willingness of E&P companies to undertake these activities is predominantly influenced by current and expected future prices for oil and natural gas. Although adverseAdverse weather impacted our results early in the first quarter of 2026,2026. our results improved in February and March on a relative basis. We believeIn the conflictsecond quarter of 2026, oil commodity prices were higher than their average in the Middlefirst Eastquarter hasof created supply disruptions that have meaningfully shifted market dynamics in our industry and we are in active discussions2026 with customersincreased regarding improved pricing for our products and services.volatility.

We actively monitor the effects of inflation and tariffs on our business. In the first quarter we noted initial indications of certain increased costs as a result of the conflict in the Middle Eastbusiness; however, the potential effects and duration of inflation and tariffs on our business remain uncertain at this time.

Stimulation Services. Stimulation Services revenues for the three and six months ended MarchJune 31,30, 2026 decreased $117.5$2.5 million and $120.0 million, or 22%,1% and 13%, respectively, from the same periodperiods in 2025. The decreasedecreases waswere primarily due to a decreasedecreases in average active fleets and lower average pricing for our services in the first quarter of 2026 compared to the same periodperiods in 20252025. asThe welldecreases aswere also due to cold weather related work disruptions in January 2026. TheThese decreasedecreases waswere partially offset by increasedan increase in jobs where we supplied proppant revenueand volumes in 2026.chemistry.

Proppant Production. Proppant Production revenues for the three and six months ended MarchJune 31,30, 2026 increased $52.3$43.8 million and $96.1 million, or 78%,57% and 66%, respectively, from the same periodperiods in 2025. The increase was primarily due to higher average pricing for our proppant in 2026 compared to the same periodperiods last year, which was due to a shift in intercompany sales mix from mine-gate pricing to wellsite pricing that began in the second quarter of 2025.

Additionally, revenue recognized for the amortization of acquired off-market contracts for the three and six months ended MarchJune 31,30, 2026 was zerozero, compared to $5.7$1.9 million and $7.6 million in the same periodperiods in 2025. Refer to Item 8 "Financial Statements and Supplementary Data" in our Annual Report for information about our acquired contract liabilities. During the three and six months ended MarchJune 31,30, 2026, approximately 88%87% and 88%, respectively, of the Proppant Production segment's revenues were intercompany, compared with 36%58% and 48% in the same periodperiods in 2025.

Manufacturing. Manufacturing revenues for the three and six months ended MarchJune 31,30, 2026 decreased by $17.4$8.0 million and $25.4 million, or 26%,14% and 21% respectively from the same periodperiods lastin year.2025. The decrease was due to decreased intercompany demand for manufacturing products. During the three and six months ended MarchJune 31,30, 2026, approximately 86%82% and 84%, respectively, of the Manufacturing segment's revenues were intercompany, compared with 87%78% and 83% in the same periodperiods in 2025.

Flotek. Flotek revenues for the three and six months ended MarchJune 31,30, 2026 increased by $15.5$42.0 million and $57.5 million, or 27%,70% and 49%, from the same periodperiods lastin year.2025. The increase was primarily due to increased volume of intercompany sales to the Stimulation Services segment.segment and increased sales to external customers. Flotek recorded contract shortfall revenue of $2.7 million and $7.5 million for the three and six months ended MarchJune 31,30, 2026 of $1.2 and $3.9, compared to $7.7 million and $15.2 million in the same periods in 2025, respectively, related to contract shortfalls with the Stimulation Services segment. During the three and six months ended MarchJune 31,30, 2026, approximately 75%58% and 65% of Flotek revenues were intercompany, compared with 57%58% and 58% in the same periodperiods in 2025.

Other. Other revenues for the three and six months ended MarchJune 31,30, 2026 decreased by $2.5$1.6 million,million orand 46%,$4.1 million from the same periodperiods in 2025. The decrease was due to lower intercompany sales for Livewire. During the three and six months ended MarchJune 31,30, 2026, approximately 100% and 100%, respectively, of other revenues were intercompany, compared with 98%100% and 99% in the same periodperiods in 2025.

Stimulation Services. Stimulation Services cost of revenues for the three and six months ended MarchJune 31,30, 2026 decreasedincreased by $38.5$15.5 million and decreased $23.0 million, or 10%,4% and 3%, respectively, from the same periodperiods in 2025. TheThese decreasechanges was primarilywere due to a decrease in average active fleets in the first quarter of 2026 compared to the same periodperiods last year. ThisThese decreasedecreases was partiallywere offset by thean costincrease ofin increasedjobs where we supplied proppant volumes.and chemistry. Cost of revenues for this segment included intercompany supply commitment charges of $2.7$1.2 million and $7.5$7.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $3.9 million and $15.2 million for the six months ended June 30, 2026 and 2025, respectively, because the Stimulation Services segment did not purchase the minimum contractual commitment of chemistry products from Flotek.

Proppant Production. Proppant Production cost of revenues for the three and six months ended MarchJune 31,30, 2026 increased by $65.3$52.2 million and $117.5 million, or 151%,91% and 117%, respectively, from the same periodperiods in 2025. TheThese increaseincreases waswere primarily due to increased costs to support the shift in intercompany sales mix from mine-gate pricing to wellsite pricing, which began in the second quarter of 2025. Additionally, costs of revenues also increased due to a mix shift towards brokered volumes in 2026.

Manufacturing. Manufacturing cost of revenues for the three and six months ended MarchJune 31,30, 2026 decreased by $17.2$5.0 million and $22.2 million, or 31%,11% and 22%, respectively, from the same periodperiods in 2025. TheThese decreasedecreases in the first quarter waswere due to decreased volumes of products sold to intercompany customers in the first quarter of 2026.

Flotek.. Flotek cost of revenues for the three and six months ended MarchJune 31,30, 2026 increased by $11.1$31.3 million and $42.4 million, or 26%,72% and 49%, respectively, from the same periodperiods in 2025. TheThese increaseincreases waswere primarily due to increased volumevolumes of intercompany sales.sales and sales to external customers.

Other. Other cost of revenues for the three and six months ended MarchJune 31,30, 2026 decreased by $2.0$1.9 million and $3.9 million, or 40%,37% and 39%, respectively, from the same periodperiods in 2025. The decrease was due to lower intercompany sales for Livewire.

Selling, general and administrative expenses for the three and six months ended MarchJune 31,30, 2026 decreased by $10.0$7.7 million and $17.7 million, or 19%,15% and 17%, respectively, from the same periodperiods in 2025. TheThese decreasedecreases waswere primarily due to lower labor and non-labor costs resulting from cost control measures. These decreases were partially offset by increased expense at Flotek.

Depreciation, depletion, and amortization for the three and six months ended MarchJune 31,30, 2026 decreased by $8.9$7.7 million and $16.6 million, respectively, from the same periodperiods in 2025 due to certain assets becoming fully depreciated.

Litigation expenses generally represent legal and professional fees incurred in litigation as well as estimates for loss contingencies with regards to certain vendor disputes and litigation matters. In the periods presented, substantially all of these costs primarily represent litigation costs incurred in connection with certain patent infringement lawsuits.

Interest expense, net of interest income, for the three and six months ended MarchJune 31,30, 2026 was $32.8$33.2 million and $66.0 million, respectively, compared to $35.9$35.1 million and $71.0 million in the same periodperiods in 2025. These decreases were due to lower average outstanding debt balances and interest rates in 2026.

Other Income,Expense, Net

For the three and six months ended MarchJune 31,30, 2025, we recognized other income,expense, net of $4.8$9.7 million and $4.9 million, respectively. These amounts were primarily due to a $10.5 million loss on disposal of EKU Power Drives in the second quarter of 2025, which was primarilypartially attributableoffset toby a decrease in the fair value of our Munger make-whole provision.provision in the first quarter of 2025.

Income taxes expense was $1.6$5.2 million and $0.3$4.7 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Our effective tax rate was for the threesix months ended MarchJune 31,30, 2026 was negative 2.0%,3.5%, compared with negative 2.0%4.0% in the same period in 2025.

For the threesix months ended MarchJune 31, 2025 and30, 2026, the difference between our effective tax rate and the federal statutory rate related to changes in the valuation allowance on our net deferred tax assets.

Historically, our primary sources of liquidity are cash flows from operations and availability under our revolving credit facility. In the three months ended March 31, 2026, we also issued $25.0 million of 2029 Senior Notes. While Flotek is included in our unaudited condensed consolidated financial statements, we do not have the ability to access or use Flotek’s cash or liquidity in our operations and, accordingly, have excluded Flotek’s cash and other sources of liquidity from the following discussion of our liquidity and capital resources. See "Note 1. Organization and Description of Business" in the notes to our unaudited condensed consolidated financial statements for discussion of our ownership of Flotek.

At MarchJune 31,30, 2026, we had $27.8$14.4 million of cash and cash equivalents, excluding Flotek, and $80.0$57.6 million available for borrowings under our previous revolving credit facility, which resulted in a total liquidity position of $107.8$72.0 million. ReferOn July 1, 2026, we entered into a new revolving credit facility. See “Note 14. Subsequent Events” in the notes to our Annualunaudited Reportcondensed consolidated financial statements for more information regarding our new revolving credit facility. At July 1, 2026, we had $70.6 million available for borrowings under our new revolving credit facility.

We believe that our cash and cash equivalents, cash provided by operations, and the availability under our new revolving credit facility will be sufficient to fund our capital expenditures, satisfy our obligations, and remain in compliance with our existing debt covenants for at least the next 12 months. The market for our services is cyclical and if our customers unexpectedly reduce activity levels or the pricing of our products and services unexpectedly declines, we may need to take action to improve our liquidity, which may include selling assets or seeking additional sources of capital. There can be no assurance that any such additional liquidity enhancements will be available, or if available, that they will be on terms acceptable to us or our stakeholders. In addition, Alpine is closely monitoring its forthcoming debt covenant compliance obligation that commences in the fiscal quarter ending March 31, 2028. While there can be no assurance, Alpine believes that it will be able to meet, modify, or further defer this debt covenant. See “Note 4. Debt” in the notes to our unaudited condensed consolidated financial statements for more information about this forthcoming debt covenant.

Operating Activities. Net cash provided by operating activities was $9.3$32.2 million and $38.7$135.4 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Cash flows from operating activities consist of net income or loss adjusted for non-cash items and changes in net working capital. Net income or loss adjusted for non-cash items for the threesix months ended MarchJune 31,30, 2026 resulted in a cash increase of $19.4$54.9 million compared with a cash increase of $88.9$116.8 million in the same period of 2025. This change was primarily due to lower earnings in 2026. Changes in net working capital for the threesix months ended MarchJune 31,30, 2026 resulted in a cash decrease of $10.1$22.7 million compared with a cash decreaseincrease of $50.2$18.6 million in the same period in 2025.

Investing Activities. Net cash used in investing activities was $34.5$65.3 million and $51.7$94.2 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. This change was primarily due to decreased capital expenditures in 2026.

Financing Activities. Net cash provided by financing activities was $35.8$51.1 million for the threesix months ended MarchJune 31,30, 2026, compared with cash providedused by financing activities of $14.2$30.0 million for the same period in 2025. This change was primarily due to increased net borrowings in 2026.

As of MarchJune 31,30, 2026 we have $1,085.6$1,102.4 million in aggregate principal amount of long-term debt outstanding, with $156.2$165.3 million coming due over the next twelve months. For additional information about our long-term debt, see "Note 4. Debt" in the notes to our unaudited condensed consolidated financial statements and Item 8 "Financial Statements and Supplementary Data" in our Annual Report.

Both the 2029 Senior Notes and theour ABLrevolving Creditcredit Facilityfacility contain certain customary representations and warranties and affirmative and negative covenants. As of MarchJune 31,30, 2026, we were in compliance with these covenants and expect to be compliant for at least the next twelve months.

During the threesix months ended MarchJune 31,30, 2026 our capital expenditures were $40.7$72.4 million, consisting of maintenance capital expenditures for our hydraulic fracturing fleet, upgrades to legacy pumps, expenditures to maintain efficient operations at our sand mines, and investments in next generation technology.

As of MarchJune 31,30, 2026, we had purchase commitments of $6.4$0.9 million.million in 2026, $1.6 million in 2027, $1.6 million in 2028, and $0.3 million in 2029.

As of MarchJune 31,30, 2026 we have $86.6$86.7 million of estimated tax receivable agreement obligations, with an estimated $4.6$4.7 million coming due over the next twelve months. This obligation will generally be paid under the tax receivable agreement as the Company realizes actual cash tax savings from the tax benefits covered by the tax receivable agreement in future tax years. We do not expect a significant increase in the estimate of this liability in future periods. For additional information about our tax receivable agreement, please see Item 8 "Financial Statements and Supplementary Data" in our Annual Report.