ACDC's Hidden Fuel: Why ProFrac Could Ignite in the Natural Gas Export Surge

The energy sector is on the brink of a transformation as new natural gas export terminals come online in 2025, and one company stands poised to profit from the shift: ProFrac Holding Corp (NASDAQ: ACDC). Despite operating in a market overshadowed by oil price volatility, ProFrac's vertically integrated business model, aggressive debt-funded acquisitions, and undervalued sales multiple suggest it's underappreciated by investors. Let's dissect why this stock could be a hidden gem—and why the market's overlooking its EBITDA growth potential.

Vertical Integration: The Engine of Efficiency

ProFrac's secret sauce lies in its end-to-end control over critical energy services. The company operates in four segments: Stimulation Services (hydraulic fracturing), Proppant Production (sand used in fracking), Manufacturing (frac trucks and equipment), and Other Business Activities (power generation services). This vertical integration reduces costs, minimizes supply chain risks, and ensures seamless coordination between operations.

Take its Proppant Production division: in Q1 2025, revenue jumped 43% year-over-year to $67 million, with margins holding steady at 27%. By owning eight sand mines and manufacturing its own frac trucks, ProFrac avoids price swings in third-party proppant and equipment markets—a critical advantage as natural gas producers ramp up activity ahead of new export terminals.

The Stimulation Services segment, which accounts for 87% of revenue, saw Q1 2025 revenue hit $525 million—up 37% sequentially—and EBITDA margins improve to 20%. This growth stems from a focus on natural gas-directed completions, which are less sensitive to oil price declines. As export terminals boost demand for gas production, ProFrac's ability to offer integrated services at scale becomes a competitive moat.

Debt-Fueled Expansion: A Double-Edged Sword

ProFrac's $1.15 billion debt load is a red flag for some investors. But this leverage has enabled strategic moves that position the company for dominance. Over the past year, the firm has acquired competitors, expanded its sand mine portfolio, and invested in automation and emissions-reduction tech. These moves have reduced costs, boosted fleet utilization, and created operational synergies.

The gamble? ProFrac's liquidity remains solid: $76 million in cash and credit facilities, plus a flexible capital allocation strategy ($70–100 million in potential cuts to non-essential spending). Management has prioritized high-return projects, such as expanding its Midland, Texas, operations—a region critical to U.S. gas production growth.

Undervalued at 0.52x Sales: A Bargain for EBITDA Growth

ProFrac trades at a sales multiple of 0.52x, far below peers like C&J Energy Services (CJES) at 1.1x and Baker Hughes (BKR) at 0.8x. This discount ignores ProFrac's EBITDA trajectory: in Q1 2025, adjusted EBITDA hit $130 million, a 22% margin, up from $71 million in Q4 2024.

Analysts project a peak-cycle EBITDA of $1.5 billion by 2027—a figure supported by rising frac utilization rates and export-driven gas demand. At current valuations, even a partial re-rating to 0.8x sales would lift ACDC's stock price to $34.38, a 150% premium from recent lows.

Near-Term Catalyst: Frac Utilization Surges Ahead of Export Terminals

The single most important catalyst for ProFrac is the expected rebound in frac fleet utilization. In Q1 2025, utilization averaged 65%, up from 55% in early 2024. As new export terminals in Texas and Louisiana begin operations this year, gas producers will accelerate completions, pushing utilization toward 80%—a level that could boost ProFrac's EBITDA margins to 25–30%.

Risks to Consider

• Debt Overhang: While manageable, a prolonged gas price slump or delayed export terminal approvals could strain cash flow.
• Commodity Volatility: ProFrac's exposure to gas prices (which are less volatile than oil) reduces risk, but not entirely.
• Execution Risks: Scaling operations to meet export demand hinges on integrating recent acquisitions and maintaining cost discipline.

Conclusion: Buy ACDC for the Export Surge Play

ProFrac's combination of vertical integration, debt-driven scale, and undervalued multiple positions it as a prime beneficiary of the 2025 gas export boom. Near-term catalysts like rising frac utilization and terminal rollouts could drive EBITDA to $1.5 billion by 2027, unlocking a valuation uplift.

Investment Thesis:
- Buy Below $15: ACDC's current price offers a margin of safety.
- Hold for 12–18 Months: Target $28–$34 by late 2026 as export infrastructure ramps up.
- Avoid if: Natural gas prices collapse below $2.50/mmBtu or frac utilization stagnates below 70%.

In a market fixated on oil's ups and downs, ProFrac's focus on gas—and its underappreciated EBITDA potential—makes it a compelling contrarian bet. The ACDC engine is revved; investors who act now could catch the surge.