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ProPetro Holding Corp.$11.34$.07.62%

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 ProPetro Reports Results for the First Quarter 2019
   Tuesday, May 07, 2019 4:15:00 PM ET

MIDLAND, Texas--(BUSINESS WIRE)-- ProPetro Holding Corp. (“ProPetro” or “the Company”) (NYSE: PUMP) today announced financial and operational results for the first quarter of 2019.

First Quarter 2019 Highlights

  • Total revenue for the quarter was $546.2 million, as compared to $425.4 million for the fourth quarter of 2018.
  • Net income was $69.8 million, or $0.67 per diluted share, an increase of 35% from $51.8 million, or $0.59 per diluted share, for the fourth quarter of 2018.
  • Adjusted EBITDA(1) for the quarter was $150.3 million, an increase of 34% from $112.4 million for the fourth quarter of 2018.
  • Effective utilization for the first quarter was 27.0 fleets.
  • Plans to deploy two new-build electrically powered DuraStim® fleets(2) in late 2019.

(1) Adjusted EBITDA is a Non-GAAP financial measure and is described and reconciled to net income (loss) in the table under “Non-GAAP Financial Measures.”

(2) DuraStim® is a registered trademark of AFGlobal Corporation (“AFGlobal”)

Dale Redman, Chief Executive Officer, commented, “ProPetro’s success in the first quarter is yet another example of our differentiated, customer-centric and performance driven business model. We remain extremely proud of our best-in-class team and the consistent results they produce. I’m also proud to report that we’ve integrated approximately 500 employees from our Pioneer transaction and that they are already adding significant value as members of the ProPetro team. Our team continues to support some of the most effective and efficient operators in the upstream space, and we will remain closely focused on their needs as we execute plans for an exciting 2019.”

First Quarter 2019 Financial Summary

Revenue for the first quarter of 2019 was $546.2 million, an increase of 28% as compared to revenue of $425.4 million for the fourth quarter of 2018. The increase was primarily attributable to the acquisition of 510,000 Hydraulic Horsepower (“HHP”) on December 31, 2018. During the first quarter of 2019, 97.4% of total revenue was associated with pressure pumping services, compared to 97.8% in the fourth quarter.

Costs of services excluding depreciation and amortization for the first quarter of 2019 increased to $381.5 million from $300.4 million during the fourth quarter of 2018 primarily due to increased active fleet size and activity levels. As a percentage of pressure pumping segment revenues, pressure pumping costs of services decreased to 69.7% from 70.3% in the fourth quarter of 2018.

General and administrative expense was $18.5 million as compared to $15.0 million in the fourth quarter of 2018. The increase was primarily attributable to overhead in connection with the added capacity from our transaction with Pioneer Natural Resources (“Pioneer”). General and administrative expense, exclusive of stock-based compensation, deferred IPO bonus and retention expense, was $14.4 million, or 2.6% of revenue, for the first quarter of 2019.

Net income for the first quarter of 2019 totaled $69.8 million, or $0.67 per diluted share, versus $51.8 million, or $0.59 per diluted share, for the fourth quarter of 2018.

Adjusted EBITDA increased approximately 34% to $150.3 million for the first quarter of 2019 from $112.4 million in the previous quarter. Adjusted EBITDA margin for the first quarter of 2019 was 27.5%, as compared to 26.4% for the fourth quarter of 2018.

Operational Highlights and Fleet Expansion

As previously announced, ProPetro expanded its fracturing capacity by 510,000 HHP, representing 8 fleets and related pump down equipment, through its transaction with Pioneer. This transaction increased the Company’s total capacity to 1,415,000 HHP. Effective utilization of the Company’s fracturing assets during the first quarter of 2019 was 27.0 fleets. ProPetro expects effective utilization in the second quarter of 2019 to be approximately 26.0 fleets.

The Company also plans to build and deploy two electrically powered DuraStim (for further information, see “The DuraStim Difference” section later in this release) fleets by the end of 2019. Each of these fleets consists of 36,000 HHP and related power equipment. Both of these fleets will be deployed to existing customers under dedicated agreements.

During the quarter the Company also expanded its cementing operation by deploying one additional unit, bringing total current cementing capacity to 21 units. Also, as previously announced, ProPetro plans to organically expand its cementing operation by 3 additional units this year as well as organically expand its coil tubing capacity by 1 additional unit.

Liquidity and Capital Spending

As of March 31, 2019, total cash was $79.5 million and total debt was $160.0 million. Total liquidity at the end of the first quarter of 2019 was $156.1 million, including cash and $76.6 million of available capacity under the Company’s $300 million revolving credit facility.

Capital expenditures incurred during the first quarter of 2019 were $86.1 million. This reflects spending on ProPetro’s growth initiatives as well as maintenance capital.

Outlook

Mr. Redman concluded, “We remain confident in our ability to produce consistent results driven by our high performing workforce and close partnerships with a blue-chip customer base. The Permian Basin is the premier resource play in North America, and we expect it will remain so for decades to come. We believe we are uniquely positioned for outperformance through 2019 and beyond.”

The DuraStim Difference

Designed by AFGlobal Corporation’s (“AFGlobal”) Pressure Pumping Technologies group, the DuraStim frac pump, at 6,000 HHP, offers the equivalent of three times the effective horsepower of a conventional frac unit, while operating at approximately 10% of the cyclic rate. Upon deployment, we expect the DuraStim pump will offer many advantages, including a substantial reduction in fleet footprint and manpower, while dramatically extending equipment life and reducing maintenance costs. This novel system, when coupled with an electric drive, is also expected to deliver a significant reduction in fuel consumption and emissions.

Curtis Samford, AFGlobal CEO, commented, “The AFGlobal team is excited to take the next step in the commercialization of our DuraStim pump with ProPetro. ProPetro and AFGlobal have a long history of collaboration that will prove to be very helpful as we deploy the first full DuraStim fleets.”

Dale Redman commented, “Due to the success of DuraStim’s initial field trial alongside one of our conventional fleets in late 2018, we are proud to continue our strong relationship with AFGlobal by assisting them in the commercialization of the first 2 full fleets of DuraStim pumps.”

Conference Call Information

The Company will host a conference call at 8:00 AM Central Time on Wednesday, May 8, 2019 to discuss financial and operating results for the first quarter of 2019 and recent developments. This call will also be webcast, along with a presentation slide deck on ProPetro’s website at www.propetroservices.com . The slide deck will be published on the website the morning of the call. To access the conference call, U.S. callers may dial toll free 1-844-340-9046 and international callers may dial 1-412-858-5205. Please call ten minutes ahead of the scheduled start time to ensure a proper connection. A replay of the conference call will be available for one week following the call and can be accessed toll free by dialing 1-877-344-7529 for U.S. callers, 1-855-669-9658 for Canadian callers, as well as 1-412-317-0088 for international callers. The access code for the replay is 1012994.

About ProPetro

ProPetro Holding Corp. is a Midland, Texas-based oilfield services company providing pressure pumping and other complementary services to leading upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources. For more information, visit www.propetroservices.com .

About AFGlobal

AFGlobal is an oil and gas OEM specializing in technology, products, and services. Our fully-integrated manufacturing capabilities serve clients around the world. We align well-established precision engineering with industry-leading innovation. AFGlobal provides strategic technologies to the upstream market for onshore, offshore and connectors and precision manufacturing requirements. For more information visit www.afglobalcorp.com .

Forward-Looking Statements

The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in the Company’s filings with the Securities and Exchange Commission. As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements.

   
 
PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)        
        Three Months Ended
March 31 December 31 March 31
2019 2018 2018
REVENUE - Service revenue $ 546,179 $ 425,414 $ 385,219
 
COSTS AND EXPENSES
Cost of services (exclusive of depreciation and amortization) 381,523 300,421 298,122
General and administrative (inclusive of stock-based compensation) 18,524 15,015 11,944
Depreciation and amortization 33,117 24,710 18,936
Loss on disposal of assets   19,228     16,159     7,665  
Total costs and expenses 452,392 356,305 336,667
OPERATING INCOME 93,787 69,109 48,552
OTHER EXPENSE:
Interest expense (1,903 ) (1,916 ) (1,261 )
Other expense   (187 )   (158 )   (230 )
Total other income (expense) (2,090 ) (2,074 ) (1,491 )
INCOME BEFORE INCOME TAXES 91,697 67,035 47,061
INCOME TAX EXPENSE   (21,892 )   (15,257 )   (10,353 )
NET INCOME $ 69,805   $ 51,778   $ 36,708  
NET INCOME PER COMMON SHARE:
Basic $ 0.70   $ 0.62   $ 0.44  
Diluted $ 0.67   $ 0.59   $ 0.42  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic   100,232     83,758     83,081  
Diluted   104,123     87,218     86,848  
 
 
PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
               
March 31, 2019 December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 79,518 $ 132,700
Accounts receivable - net of allowance for doubtful accounts of $199 and $100, respectively 357,472 202,956
Inventories 5,870 6,353
Prepaid expenses 5,597 6,610
Other current assets   1,198   638  
Total current assets 449,655 349,257
PROPERTY AND EQUIPMENT - Net of accumulated depreciation 945,089 912,846
OPERATING LEASE RIGHT-OF-USE ASSETS 1,734 -
OTHER NONCURRENT ASSETS:
Goodwill 9,425 9,425
Intangible assets - net of amortization - 13
Other noncurrent assets   3,102   2,981  
Total other noncurrent assets   12,527   12,419  
TOTAL ASSETS $ 1,409,005 $ 1,274,522  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 274,016 $ 214,460
Operating lease liabilities 416 -
Finance lease liabilities 3,042 -
Accrued and other current liabilities 24,492 138,089
Accrued interest payable   691   211  
Total current liabilities 302,657 352,760
DEFERRED INCOME TAXES 75,366 54,283
LONG-TERM DEBT 160,000 70,000
NONCURRENT OPERATING LEASE LIABILITIES 1,441 -
OTHER LONG-TERM LIABILITIES   -   124  
Total liabilities 539,464 477,167
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock, $0.001 par value, 200,000,000 shares authorized, 100,294,098 and 100,190,126 shares issued, respectively 100 100
Additional paid-in capital 820,071 817,690
Accumulated surplus (deficit)   49,370   (20,435 )
Total shareholders’ equity   869,541   797,355  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,409,005 $ 1,274,522  
 
 
PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                   
Three Months Ended March 31,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 69,805 $ 36,708
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 33,117 18,936
Deferred income tax expense 21,083 10,054
Amortization of deferred revenue rebate - 462
Amortization of deferred debt issuance costs 134 89
Stock-based compensation 1,829 758
Loss on disposal of assets 19,228 7,529
Changes in operating assets and liabilities:
Accounts receivable (154,516 ) (53,461 )
Other current assets (274 ) (338 )
Inventories 482 (1,327 )
Prepaid expenses 759 (742 )
Accounts payable 45,324 38,750
Accrued liabilities and other current liabilities (1,366 ) (3,252 )
Accrued interest   480     468  
Net cash provided by operating activities   36,085     54,634  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (178,912 ) (75,148 )
Proceeds from sale of assets   1,027     317  
Net cash used in investing activities   (177,885 )   (74,831 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 90,000 46,735
Repayments of borrowings - (2,343 )
Repayments of insurance financing (1,934 ) (1,371 )
Payment of debt issuance costs - (360 )
Proceeds from exercise of equity awards 552 -
Net cash provided by financing activities   88,618     42,661  
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (53,182 ) 22,464
CASH AND CASH EQUIVALENTS — Beginning of period   132,700     23,949  
CASH AND CASH EQUIVALENTS — End of period $ 79,518   $ 46,413  
 
 

Non-GAAP Financial Measures

Reportable Segment Information
                           
Three Months Ended
March 31, 2019 December 31, 2018
($ in thousands) Pressure Pumping All Other Total Pressure Pumping All Other Total
 
Service revenue $ 532,064 $ 14,115   $ 546,179 $ 416,117 $ 9,297   $ 425,414
Adjusted EBITDA $ 151,040 $ (765 ) $ 150,275 $ 116,446 $ (4,003 ) $ 112,443
Depreciation and amortization $ 31,783 $ 1,334   $ 33,117 $ 23,573 $ 1,136   $ 24,709
Capital expenditures $ 82,035 $ 4,112   $ 86,147 $ 359,059 $ 8,845   $ 367,904
 

Adjusted EBITDA is not a financial measure presented in accordance with GAAP. We believe that the presentation of this non-GAAP financial measure provides useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to Adjusted EBITDA. Non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Non-GAAP financial measures have important limitations as analytical tools because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider Adjusted EBITDA in isolation or as a substitute for an analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Reconciliation of Net Income (loss) to Adjusted EBITDA
                           
Three Months Ended
March 31, 2019 December 31, 2018
($ in thousands) Pressure Pumping All Other Total Pressure Pumping All Other Total
 
Net income (loss) $ 98,094 $ (28,289 ) $ 69,805 $ 76,244 $ (24,466 ) $ 51,778
Depreciation and amortization 31,783 1,334 33,117 23,574 1,136 24,710
Interest expense - 1,903 1,903 - 1,916 1,916
Income tax expense - 21,892 21,892 - 15,257 15,257
Loss on disposal of assets 19,006 222 19,228 16,194 (35 ) 16,159
Stock-based compensation - 1,829 1,829 - 1,650 1,650
Other expense and legal settlement - 187 187 - 343 343
Deferred IPO bonus and retention expense   2,157   157     2,314   434   196     630
Adjusted EBITDA $ 151,040 $ (765 ) $ 150,275 $ 116,446 $ (4,003 ) $ 112,443
 

ProPetro Holding Corp
Sam Sledge, 432-688-0012
Director of Investor Relations
sam.sledge@propetroservices.com

Source: ProPetro Holding Corp.



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