ProPetro vs Expion360: Cash Flow vs Growth in Energy

Two energy companies reporting 2024 results this month lay out opposite investing bets. ProPetro Holding Corp. posted $1.7 billion in revenue from its Permian Basin pressure-pumping business. Net income came in at $110 million. Operating cash flow reached $420 million, and after $240 million in capital spending the company had $180 million of free cash flow. The balance sheet shows $85 million of cash against $350 million of debt, for net debt of $265 million.

Expion360 Inc. took a different path. Revenue hit $4.2 million, up 62% from $2.6 million the prior year. The lithium iron phosphate battery maker reported a net loss of $12.8 million, wider than the $10.1 million loss in 2023. Operating cash flow was negative $9.5 million. The company held $2.1 million in cash at year-end with no long-term debt, though accounts payable and accrued expenses stood at $4.8 million.

ProPetro’s edge is cash generation. The company has produced positive free cash flow for three straight years across oil prices ranging from $70 to $120 a barrel. Its fleet of 22 hydraulic fracturing spreads – 12 of them electric-powered – gives it pricing power in the Permian. Operators need completion capacity to hold drilling leases. The electric fleet also lowers diesel costs and emissions, a factor when bidding for contracts from ESG-focused producers.

Expion360’s story is about market share, not profit. The 62% revenue gain came from expanding distribution into RV dealers and marine outfitters. Gross margin contracted to 18% from 22% the year before as the company cut prices to win shelf space. Selling, general and administrative expenses ran at $6.8 million, or 162% of revenue. That spending makes near-term profitability unlikely without a sharp volume increase.

The valuation gap reflects the different stages. ProPetro trades at about six times trailing free cash flow. Expion360, with no earnings and negative cash flow, prices on revenue multiples and option value. The lithium iron phosphate battery market is real: the global market is projected to grow at a compound annual rate of 15% through 2030, driven by energy storage and electric vehicles. Expion360 competes against larger players like Dragonfly Energy and RELiON Batteries that have deeper distribution and lower costs.

The decision between the two comes down to risk tolerance. ProPetro offers current cash returns tied to oil prices. A downturn in drilling activity could compress its margins. Expion360 offers a bet on battery adoption in recreational vehicle and marine niches. The risk is that cash burn forces a dilutive capital raise before the company reaches scale.

ProPetro’s cash flow is the safer choice today. Expion360’s upside, if its growth trajectory holds, is larger. They are not substitutes. They occupy different points on the same energy spectrum.