ProPetro Holding Corp. (“ProPetro” or the “Company”) (NYSE:
PUMP) today announced financial and operational results for the
third quarter of 2020.
Third Quarter 2020 Highlights
- Total revenue for the quarter was $133.7 million compared to
$106.1 million for the second quarter of 2020.
- Net loss for the quarter was $29.2 million, or $0.29 per
diluted share, versus a net loss of $25.9 million, or $0.26 per
diluted share, for the second quarter of 2020.
- Adjusted EBITDA(1) for the quarter was $17.4 million compared
to $25.4 million for the second quarter of 2020.
- Effective utilization for the third quarter was 8.5 fleets
compared to 4.0 fleets for the second quarter of 2020.
- Generated approximately $16.9 million in free cash flow(2)
during the quarter.
(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)
Free cash flow (FCF) is a Non-GAAP
financial measure and is defined as net cash flow provided from
operating activities less net cash used in investing activities.
During the three months ended September 30, 2020, net cash provided
by operating activities of $21.1 million less net cash used in
investing activities of $4.2 million result in a free cash flow of
$16.9 million.
Phillip Gobe, Chief Executive Officer, commented, “We were
pleased to see improvement in activity for the third quarter as
compared to the second quarter amid uncertain market conditions.
Given this environment, I am extremely proud of the resilience of
the ProPetro team. Their focus on providing best-in-class execution
at the wellsite continues to benefit the development efforts of our
blue-chip customer base. Our performance on location has allowed us
to maintain market share at levels similar to the beginning of this
year, while also generating free cash flow. We are excited to be
redeploying our people and equipment as we continue to develop a
more efficient customer-driven completions solution. I would like
to thank our customers, team members and other industry
stakeholders for their efforts to move the oilfield forward and
develop a more cohesive and efficient completions solution.”
Third Quarter 2020 Financial Summary
Revenue for the third quarter of 2020 was $133.7 million
compared to revenue of $106.1 million for the second quarter of
2020. The increase was primarily attributable to an improvement in
activity levels partially offset by an increase in direct sourcing
of select consumables by certain customers. In addition, the
Company received approximately $6.9 million in idle fees in the
third quarter of 2020 as compared to $32.6 million in the second
quarter of 2020.
Cost of services, excluding depreciation and amortization of
approximately $37.5 million, for the third quarter of 2020
increased to $99.6 million compared to $68.2 million during the
second quarter of 2020. The increase was substantially associated
with higher activity levels in the third quarter versus the second
quarter.
General and administrative expense was $21.8 million for the
third quarter of 2020 compared to $20.3 million during the second
quarter of 2020. General and administrative expense, exclusive of
$2.5 million of non-recurring expenses and $2.5 million of non-cash
stock-based compensation expense, was $16.8 million for the third
quarter of 2020, compared to $16.4 million in the second quarter of
2020 after adjusting for non-recurring and/or unusual items.
Net loss for the third quarter of 2020 was $29.2 million, or a
$0.29 loss per diluted share, versus a net loss of $25.9 million,
or a $0.26 loss per diluted share, for the second quarter of
2020.
Adjusted EBITDA was $17.4 million for the third quarter of 2020
compared to $25.4 million for the second quarter of 2020.
Liquidity and Capital Spending
As of September 30, 2020, total cash was $54.3 million compared
to $37.3 million as of June 30, 2020. Consistent with the end of
the second quarter, ProPetro remains debt free. Total liquidity at
the end of the third quarter of 2020 was $85.9 million, including
cash and $31.6 million of available capacity under the Company’s
revolving credit facility. As of October 31, 2020, total cash was
$66.7 million. ProPetro will continue to proactively manage its
capital and liquidity needs.
Capital expenditures incurred during the third quarter of 2020
were $7.9 million, all of which was associated with spending on
maintenance capital. Full year 2020 estimated capital expenditures
have been reduced from previous expectations of below $100 million
to a current view of below $85 million and mostly comprised of
maintenance capital spending. Capital expenditures incurred for the
nine months ended September 30, 2020 totaled $59.9 million,
including $8.4 million for growth capital spending during the first
half of the year.
Outlook
Mr. Gobe concluded, “Looking to the fourth quarter, we expect
our effective fleet utilization levels to remain flat with the
third quarter exit rate, where we sit today. Taking a longer view,
we expect oilfield service activity to improve as global supply and
demand for crude oil becomes more balanced. We will seek to
continue to further differentiate ProPetro from its peers based on
the qualities we have developed carefully over the past 15 years,
including leveraging our cycle-proven business model of developing
and retaining a highly talented work force, maintaining a
conservative balance sheet, and remaining squarely-focused on our
mutual long-term success with a roster of the industry’s leading
operators.”
Conference Call Information
The Company will host a conference call at 8:00 AM Central Time
on Tuesday, November 3, 2020 to discuss preliminary financial and
operating results for the third quarter of 2020. This call will
also be webcast on ProPetro’s website at www.propetroservices.com.
To access the conference call, U.S. callers may dial toll free
844-340-9046 and international callers may dial 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 877-344-7529 for U.S. callers, 855-669-9658 for
Canadian callers, as well as 412-317-0088 for international
callers. The access code for the replay is 10147385.
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.
Forward-Looking Statements
Except for historical information contained herein, the
statements in this news release are forward-looking statements that
are made pursuant to the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995, including statements
regarding the future performance of newly improved technology (such
as our DuraStim® fleets), our expected capital expenditures and our
expected cost reductions. Forward-looking statements are subject to
a number of risks and uncertainties that may cause actual events
and results to differ materially from the forward-looking
statements. Such risks and uncertainties include the volatility of
and recent declines in oil prices, the operational disruption and
market volatility resulting from the COVID-19 pandemic and other
factors described in the Company's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, particularly the “Risk Factors”
sections of such filings, and other filings with the SEC. In
addition, the Company may be subject to currently unforeseen risks
that may have a materially adverse impact on it, including matters
related to shareholder litigation and the SEC investigation.
Accordingly, no assurances can be given that the actual events and
results will not be materially different than the anticipated
results described in the forward-looking statements. Readers are
cautioned not to place undue reliance on such forward-looking
statements and are urged to carefully review and consider the
various disclosures made in the Company’s Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and other filings made with
the SEC from time to time that disclose risks and uncertainties
that may affect the Company’s business. The forward-looking
statements in this news release are made as of the date of this
news release. ProPetro does not undertake, and expressly disclaims,
any duty to publicly update these statements, whether as a result
of new information, new developments or otherwise, except to the
extent that disclosure is required by law.
PROPETRO HOLDING CORP. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
data) (Unaudited)
Three Months Ended
September 30,
June 30,
September 30,
2020
2020
2019
REVENUE - Service revenue
$
133,710
$
106,109
$
541,847
COSTS AND EXPENSES Cost of services (exclusive of depreciation and
amortization)
99,592
68,193
396,922
General and administrative (inclusive of stock-based compensation)
21,817
20,331
27,558
Depreciation and amortization
37,467
40,173
37,653
Loss on disposal of assets
11,286
8,734
31,153
Total costs and expenses
170,162
137,431
493,286
OPERATING INCOME (LOSS)
(36,452
)
(31,322
)
48,561
OTHER EXPENSE: Interest expense
(137
)
(791
)
(1,749
)
Other expense
(312
)
(267
)
(75
)
Total other expense
(449
)
(1,058
)
(1,824
)
INCOME (LOSS) BEFORE INCOME TAXES
(36,901
)
(32,380
)
46,737
INCOME TAX (EXPENSE) BENEFIT
7,717
6,460
(12,340
)
NET INCOME (LOSS)
$
(29,184
)
$
(25,920
)
$
34,397
NET INCOME (LOSS) PER COMMON SHARE: Basic
$
(0.29
)
$
(0.26
)
$
0.34
Diluted
$
(0.29
)
$
(0.26
)
$
0.33
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic
100,897
100,821
100,606
Diluted
100,897
100,821
103,652
PROPETRO HOLDING CORP. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands, except share
data) (Unaudited)
September 30, 2020
December 31, 2019
ASSETS CURRENT ASSETS: Cash and cash equivalents
$
54,255
$
149,036
Accounts receivable - net of allowance for credit losses of $1,497
and $1,049, respectively
94,663
212,183
Inventories
1,849
2,436
Prepaid expenses
6,189
10,815
Other current assets
117
1,121
Total current assets
157,073
375,591
PROPERTY AND EQUIPMENT - Net of accumulated depreciation
936,283
1,047,535
OPERATING LEASE RIGHT-OF-USE ASSETS
781
989
OTHER NONCURRENT ASSETS: Goodwill
-
9,425
Other noncurrent assets
2,000
2,571
Total other noncurrent assets
2,000
11,996
TOTAL ASSETS
$
1,096,137
$
1,436,111
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES:
Accounts payable
$
71,577
$
193,096
Operating lease liabilities
326
302
Finance lease liabilities
-
2,831
Accrued and other current liabilities
24,364
36,343
Accrued interest payable
-
394
Total current liabilities
96,267
232,966
DEFERRED INCOME TAXES
87,551
103,041
LONG-TERM DEBT
-
130,000
NONCURRENT OPERATING LEASE LIABILITIES
552
799
Total liabilities
184,370
466,806
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY: Preferred
stock, $0.001 par value, 30,000,000 shares authorized, none issued,
respectively
-
-
Common stock, $0.001 par value, 200,000,000 shares authorized,
100,898,445 and 100,624,099 shares issued, respectively
101
101
Additional paid-in capital
831,999
826,629
Retained earnings
79,667
142,575
Total shareholders’ equity
911,767
969,305
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,096,137
$
1,436,111
PROPETRO HOLDING CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
Nine Months Ended September
30,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)
$
(62,908
)
$
140,335
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization
117,844
106,252
Impairment expense
16,654
-
Deferred income taxes
(15,490
)
42,623
Amortization of deferred debt issuance costs
407
405
Stock‑based compensation
5,968
5,246
Provision for credit losses
448
475
Loss on disposal of assets
39,875
81,578
Changes in operating assets and liabilities: Accounts receivable
117,072
(73,268
)
Other current assets
2,598
603
Inventories
587
4,503
Prepaid expenses
4,741
1,973
Accounts payable
(97,380
)
(11,496
)
Accrued and other current liabilities
(11,996
)
8,042
Accrued interest
(394
)
358
Net cash provided by operating activities
118,026
307,629
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures
(86,509
)
(394,343
)
Proceeds from sale of assets
4,330
6,774
Net cash used in investing activities
(82,179
)
(387,569
)
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings
-
110,000
Repayments of borrowings
(130,000
)
(50,000
)
Payment of finance lease obligations
(30
)
(186
)
Repayments of insurance financing
-
(4,547
)
Proceeds from exercise of equity awards
-
1,164
Tax withholdings paid for net settlement of equity awards
(598
)
-
Net cash (used in) provided by financing activities
(130,628
)
56,431
NET DECREASE IN CASH AND CASH EQUIVALENTS
(94,781
)
(23,509
)
CASH AND CASH EQUIVALENTS — Beginning of period
149,036
132,700
CASH AND CASH EQUIVALENTS — End of period
$
54,255
$
109,191
Reportable Segment Information
Three Months Ended
September 30, 2020
June 30, 2020
($ in thousands)
Pressure Pumping
All Other
Total
Pressure Pumping
All Other
Total
Service revenue
$
131,321
$
2,389
$
133,710
$
103,815
$
2,294
$
106,109
Adjusted EBITDA
$
26,662
$
(9,308
)
$
17,354
$
34,030
$
(8,620
)
$
25,410
Depreciation and amortization
$
36,326
$
1,141
$
37,467
$
38,910
$
1,263
$
40,173
Capital expenditures incurred
$
7,571
$
370
$
7,941
$
10,034
$
1,846
$
11,880
Non-GAAP Financial Measures
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 (loss) 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
September 30, 2020
June 30, 2020
($ in thousands)
Pressure Pumping
All Other
Total
Pressure Pumping
All Other
Total
Net loss
$
(20,920
)
$
(8,264
)
$
(29,184
)
$
(13,528
)
$
(12,392
)
$
(25,920
)
Depreciation and amortization
36,326
1,141
37,467
38,910
1,263
40,173
Interest expense
-
137
137
-
791
791
Income taxes
-
(7,717
)
(7,717
)
-
(6,460
)
(6,460
)
Loss on disposal of assets
11,256
30
11,286
8,587
147
8,734
Stock-based compensation
-
2,535
2,535
-
2,962
2,962
Other expense
-
312
312
-
267
267
Other general and administrative expense
-
2,481
2,481
-
4,802
4,802
Retention bonus and severance expense
-
37
37
61
-
61
Adjusted EBITDA
$
26,662
$
(9,308
)
$
17,354
$
34,030
$
(8,620
)
$
25,410
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201102005831/en/
ProPetro Holding Corp Sam Sledge, 432-688-0012 Chief
Strategy and Administrative Officer
sam.sledge@propetroservices.com
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