ProPetro Holding Corp. ("ProPetro" or "the Company") (NYSE:
PUMP) today announced financial and operational results for the
first quarter of 2024.
First Quarter 2024 Results and Highlights
- Total revenue of $406 million increased 17% compared to the
prior quarter.
- Net Income was $20 million ($0.18 income per diluted share) as
compared to a net loss of $17 million in the prior quarter ($0.16
loss per diluted share).
- Adjusted EBITDA(1) of $93 million was 23% of revenue and
increased 45% compared to the prior quarter with 50% incremental
margins.(2)
- Incurred capital expenditures were $40 million.
- Awarded a long-term contract from ExxonMobil for two
FORCESM electric-powered hydraulic fracturing fleets with
the option for a third FORCESM fleet coupled with our
Silvertip wireline and pumpdown services.
- Four FORCESM electric fleets are now under contract with
leading customers with three FORCESM electric fleets
currently operating.
- Increased share repurchase program by $100 million for a total
of $200 million and extended the program to May 2025.
- Effective frac fleet utilization was 15.0 fleets compared to
12.9 fleets in the prior quarter.
- Repurchased and retired 3.0 million shares during the quarter
with total repurchases of 8.8 million shares representing
approximately 8% of outstanding shares since plan inception in May
2023.
- Net cash provided by operating activities was $75 million with
Free Cash Flow(3) of $41 million.
(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)
Incremental margins represent the
sequential change in Adjusted EBITDA divided by the sequential
change in revenues.
(3)
Free Cash Flow is a non-GAAP financial
measure and is described and reconciled to cash from operating
activities in the table under “Non-GAAP Financial Measures."
Management Comments
Sam Sledge, Chief Executive Officer, commented, “We are excited
to start off 2024 with strong financial results and positive
momentum. Our results reflect a strategy that is working. Thanks to
the dedication and discipline of our teams across our service
lines, we continue to deliver strong performance and advance our
strategic priorities toward industrializing our business. We are
delighted to have entered into an agreement under which ProPetro
will provide electric hydraulic fracturing services to ExxonMobil
in the Permian Basin, including introducing FORCESM electric
fleets to our longstanding partnership. The FORCESM
electric-powered fleets, along with our Tier IV DGB dual-fuel
fleets, are part of our strategy to transition to next-generation
assets, delivering premium value to our customers while lowering
their completions costs and reducing their emissions. The long-term
agreement with ExxonMobil, which includes FORCESM electric
hydraulic fracturing fleets coupled with our Silvertip wireline and
pumpdown services, is a significant milestone for ProPetro and
underscores our dedication to delivering industry-leading services
for customers while accelerating the efficiency and profitability
of our business for shareholders."
Mr. Sledge continued, "We delivered strong financial results
despite market pressures in the first quarter thanks to our
disciplined operating strategy, operational density in the
resilient Permian Basin and prudent investments in next-generation
equipment. The strong free cash flow we generated, and our
confidence in the continued growth and resiliency of our earnings,
facilitates our commitment to returning capital to shareholders
through our share repurchase program. We also recently announced
that our board of directors approved a $100 million increase to our
share repurchase program, bringing that program to $200 million,
and extending the program to May 2025. With the larger capital
requirements behind us following the recent upgrading of our fleet,
we are beginning to showcase the results of our superior assets and
industrialized business model. We’re excited to continue delivering
differentiated services to our customers and strong financial
returns for all our stakeholders.”
David Schorlemer, Chief Financial Officer, said, "ProPetro's
robust first quarter results reflect the strategy yielding results.
As expected, revenues recovered as our customers reinitiated
dedicated fleet operations and the business generated healthy 50%
incremental margins. Additionally, lower capital spending coupled
with our stronger profitability resulted in a dramatic improvement
in free cash flow performance, another theme we've previously
communicated. Another key aspect of our strategy has been selective
M&A to complement our existing businesses and drive incremental
free cash flow available for capital returns. In the last 18 months
since our acquisition of Silvertip, we've now repurchased and
retired nearly 90% of the number of shares we issued to Silvertip
shareholders in the acquisition and we continue to benefit from
this segment's high EBITDA to free cash flow conversion."
First Quarter 2024 Financial Summary
Revenue was $406 million, compared to $348 million for the
fourth quarter of 2023. The 17% increase in revenue was
attributable to increased utilization and job mix in our hydraulic
fracturing and wireline businesses during the quarter.
Cost of services, excluding depreciation and amortization of
approximately $51 million relating to cost of services, increased
to $289 million from $261 million during the fourth quarter of
2023. The 11% increase was attributable to the increased
operational activity levels across our hydraulic fracturing and
wireline operating segments.
General and administrative expense of $28 million was unchanged
from $28 million in the fourth quarter of 2023. G&A expense
excluding nonrecurring and noncash items (stock-based compensation
and other items) of $4 million, was $24 million, or 6% of
revenue.
Net income totaled $20 million, or $0.18 per diluted share,
compared to net loss of $17 million, or $0.16 per diluted share,
for the fourth quarter of 2023.
Adjusted EBITDA increased to $93 million from $64 million for
the fourth quarter of 2023. The increase in Adjusted EBITDA was
primarily attributable to higher activity and stable pricing during
the quarter.
Net cash provided by operating activities was $75 million as
compared to $70 million in the prior quarter. Free Cash Flow was
approximately $41 million as compared to negative Free Cash Flow of
approximately $2 million in the prior quarter.
Share Repurchase Program
On April 24, 2024, the Company announced a $100 million increase
to its share repurchase program increasing it to a total of $200
million while extending the plan to May 2025. During the quarter,
the Company repurchased and retired 3.0 million shares for $23
million. Since inception, the Company has acquired and retired 8.8
million shares representing approximately 8% of its outstanding
shares as of the date of plan inception.
Liquidity and Capital Spending
As of March 31, 2024, total cash was $46 million and our
borrowings under the ABL Credit Facility were $45 million. Total
liquidity at the end of the first quarter of 2024 was $202 million
including cash and $156 million of available capacity under the ABL
Credit Facility.
Capital expenditures incurred during the first quarter of 2024
were $40 million, the majority of which related to maintenance and
support equipment for our FORCESM electric hydraulic
fracturing fleet deployments. Net cash used in investing activities
during the first quarter of 2024 was $34 million.
Guidance
The Company now expects to be on the low end of our prior
guidance range for full-year 2024 incurred capital expenditures of
$200 million to $250 million. Frac fleet effective utilization is
expected to be between 14 to 15 fleets during the second quarter
2024.
Outlook
Mr. Sledge added, “Looking ahead, we expect demand for our
differentiated service quality and next generation equipment to
remain strong. We believe the recent transition and investment in
our fleet will contribute to industry-leading efficiencies and high
customer satisfaction, as evidenced by our recently announced
multi-year agreement to advance our partnership with ExxonMobil.
Additionally, with our strong balance sheet and steady free cash
flow generation, we continue to make excellent progress on our
strategic priorities, and we will continue to evaluate
opportunities to further enhance financial returns.”
Mr. Sledge concluded, “We are entering the second quarter with
exciting momentum with our industrialization strategy, which is
designed for the future of our sector and industry. In light of the
market pressures that we and our peers face in a slow-to-no-growth
environment, continued focus on our execution is paramount. With
our strategic initiatives largely in place, we believe ProPetro is
well-positioned to provide the reliable completion services,
next-generation technologies and competitive costs that customers
seek in the consolidating E&P space. As we further
industrialize our business, optimize operations, modernize our
fleet and remain opportunistic in value-accretive transactions and
capital returns, aligned with our disciplined capital allocation
framework, we are confident in ProPetro's ability to deliver
increased shareholder value.”
Conference Call Information
The Company will host a conference call at 8:00 AM Central Time
on Wednesday, May 1, 2024, to discuss financial and operating
results for the first quarter of 2024. The 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
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 7906080. The Company
also posted the scripted remarks on its website.
About ProPetro
ProPetro Holding Corp. is a Midland, Texas-based provider of
premium completion services to leading upstream oil and gas
companies engaged in the exploration and production of North
American unconventional oil and natural gas resources. We help
bring reliable energy to the world. For more information visit
www.propetroservices.com.
Forward-Looking Statements
Except for historical information contained herein, the
statements and information in this news release and discussion in
the scripted remarks described above are forward-looking statements
that are made pursuant to the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995. Statements that are
predictive in nature, that depend upon or refer to future events or
conditions or that include the words “may,” “could,” “plan,”
“project,” “budget,” “predict,” “pursue,” “target,” “seek,”
“objective,” “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “will,” “should,” and other expressions that are
predictions of, or indicate, future events and trends or that do
not relate to historical matters generally identify forward‑looking
statements. Our forward‑looking statements include, among other
matters, statements about the supply of and demand for
hydrocarbons, our business strategy, industry, projected financial
results and future financial performance, expected fleet
utilization, sustainability efforts, the future performance of
newly improved technology, expected capital expenditures, the
impact of such expenditures on our performance and capital
programs, our fleet conversion strategy and our share repurchase
program. A forward‑looking statement may include a statement of the
assumptions or bases underlying the forward‑looking statement. We
believe that we have chosen these assumptions or bases in good
faith and that they are reasonable.
Although forward‑looking statements reflect our good faith
beliefs at the time they are made, 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 oil prices, the global macroeconomic uncertainty
related to the conflict in the Israel-Gaza region and continued
hostilities in the Middle East, including rising tensions with
Iran, and the Russia-Ukraine war, general economic conditions,
including the impact of continued inflation, central bank policy
actions, bank failures, and the risk of a global recession, 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 Securities and
Exchange Commission (the “SEC”). In addition, the Company may be
subject to currently unforeseen risks that may have a materially
adverse impact on it. 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
March 31, 2024
December 31, 2023
March 31, 2023
REVENUE - Service revenue
$
405,843
$
347,776
$
423,570
COSTS AND EXPENSES
Cost of services (exclusive of
depreciation and amortization)
288,641
261,034
280,486
General and administrative (inclusive of
stock-based compensation)
28,226
27,990
28,746
Depreciation and amortization
52,206
56,137
38,271
Loss on disposal of assets
6,458
10,898
34,607
Total costs and expenses
375,531
356,059
382,110
OPERATING INCOME (LOSS)
30,312
(8,283
)
41,460
OTHER INCOME (EXPENSE):
Interest expense
(2,029
)
(2,292
)
(667
)
Other income (expense), net
1,405
(7,784
)
(3,704
)
Total other (expense) income, net
(624
)
(10,076
)
(4,371
)
INCOME (LOSS) BEFORE INCOME TAXES
29,688
(18,359
)
37,089
INCOME TAX (EXPENSE) BENEFIT
(9,758
)
1,250
(8,356
)
NET INCOME (LOSS)
$
19,930
$
(17,109
)
$
28,733
NET INCOME (LOSS) PER COMMON SHARE:
Basic
$
0.18
$
(0.16
)
$
0.25
Diluted
$
0.18
$
(0.16
)
$
0.25
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic
108,540
110,164
114,881
Diluted
108,989
110,164
115,331
NOTE:
Certain reclassifications to loss on
disposal of assets and depreciation and amortization have been made
to the statement of operations and the statement of cash flows for
the periods prior to 2024 to conform to the current period
presentation.
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
data)
(Unaudited)
March 31, 2024
December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
46,458
$
33,354
Accounts receivable - net of allowance for
credit losses of $236 and $236, respectively
273,709
237,012
Inventories
19,447
17,705
Prepaid expenses
13,124
14,640
Short-term investment, net
7,143
7,745
Other current assets
155
353
Total current assets
360,036
310,809
PROPERTY AND EQUIPMENT - net of
accumulated depreciation
947,138
967,116
OPERATING LEASE RIGHT-OF-USE ASSETS
109,362
78,583
FINANCE LEASE RIGHT-OF-USE ASSETS
42,923
47,449
OTHER NONCURRENT ASSETS:
Goodwill
23,624
23,624
Intangible assets - net of
amortization
49,183
50,615
Other noncurrent assets
1,994
2,116
Total other noncurrent assets
74,801
76,355
TOTAL ASSETS
$
1,534,260
$
1,480,312
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
189,216
$
161,441
Accrued and other current liabilities
70,855
75,616
Operating lease liabilities
26,534
17,029
Finance lease liabilities
17,379
17,063
Total current liabilities
303,984
271,149
DEFERRED INCOME TAXES
101,045
93,105
LONG-TERM DEBT
45,000
45,000
NONCURRENT OPERATING LEASE LIABILITIES
56,481
38,600
NONCURRENT FINANCE LEASE LIABILITIES
26,416
30,886
OTHER LONG-TERM LIABILITIES
3,180
3,180
Total liabilities
536,106
481,920
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, 106,891,337 and 109,483,281 shares
issued, respectively
107
109
Additional paid-in capital
909,083
929,249
Retained earnings
88,964
69,034
Total shareholders’ equity
998,154
998,392
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
1,534,260
$
1,480,312
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March
31,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
19,930
$
28,733
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
52,206
38,271
Deferred income tax expense
7,940
7,807
Amortization of deferred debt issuance
costs
108
64
Stock-based compensation
3,742
3,536
Loss on disposal of assets
6,458
34,607
Unrealized loss on short-term
investment
602
3,794
Changes in operating assets and
liabilities:
Accounts receivable
(36,697
)
(74,199
)
Other current assets
430
(468
)
Inventories
(1,742
)
(6,366
)
Prepaid expenses
1,530
(548
)
Accounts payable
21,191
29,823
Accrued and other current liabilities
(876
)
8,006
Net cash provided by operating
activities
74,822
73,060
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(34,585
)
(114,839
)
Proceeds from sale of assets
738
1,089
Net cash used in investing activities
(33,847
)
(113,750
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on finance lease obligations
(4,154
)
—
Tax withholdings paid for net settlement
of equity awards
(1,209
)
(3,379
)
Share repurchases
(22,508
)
—
Net cash used in financing activities
(27,871
)
(3,379
)
NET INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
13,104
(44,069
)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
- Beginning of period
33,354
88,862
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
- End of period
$
46,458
$
44,793
Reportable Segment Information
Three Months Ended March 31,
2024
(in thousands)
Hydraulic Fracturing
Wireline
All Other
Reconciling Items
Total
Service revenue
$
309,300
$
60,805
$
35,738
$
—
$
405,843
Adjusted EBITDA
$
86,119
$
16,786
$
4,861
$
(14,371
)
$
93,395
Depreciation and amortization
$
44,995
$
4,915
$
2,271
$
25
$
52,206
Operating lease expense on FORCESM fleets
(1)
$
8,592
$
—
$
—
$
—
$
8,592
Capital expenditures incurred
$
35,988
$
2,386
$
1,466
$
—
$
39,840
Three Months Ended December
31, 2023
(in thousands)
Hydraulic Fracturing
Wireline
All Other
Reconciling Items
Total
Service revenue
$
262,448
$
50,417
$
34,911
$
—
$
347,776
Adjusted EBITDA
$
58,360
$
11,261
$
7,805
$
(13,158
)
$
64,268
Depreciation and amortization (2)
$
49,471
$
4,900
$
1,741
$
25
$
56,137
Operating lease expense on FORCESM fleets
(1)
$
4,310
$
—
$
—
$
—
$
4,310
Capital expenditures incurred
$
37,020
$
1,316
$
200
$
—
$
38,536
(1)
Represents lease cost related to operating
leases on our FORCESM electric-powered hydraulic fracturing fleets.
This cost is recorded within cost of services in our condensed
consolidated statements of operations.
(2)
The write-offs of remaining book value of
prematurely failed power ends are recorded as loss on disposal of
assets for the three months ended March 31, 2024. In order to
conform to current period presentation, we have reclassified the
corresponding amount of $6.0 million from depreciation to loss on
disposal of assets for the three months ended December 31,
2023.
Non-GAAP Financial Measures
Adjusted EBITDA and Free Cash Flow are not financial measures
presented in accordance with GAAP. We define EBITDA as net income
(loss) plus (i) interest expense, (ii) income tax expense (benefit)
and (iii) depreciation and amortization. We define Adjusted EBITDA
as EBITDA plus (i) loss (gain) on disposal of assets, (ii)
stock-based compensation, (iii) other expense (income), (iv) other
unusual or nonrecurring (income) expenses such as costs related to
asset acquisitions, insurance recoveries, one-time professional
fees and legal settlements and (v) retention bonus and severance
expense. We define Free Cash Flow as net cash provided by operating
activities less net cash used in investing activities.
We believe that the presentation of these non-GAAP financial
measures provide 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, and
net cash from operating activities is the GAAP measure most
directly comparable to Free Cash Flow. Non-GAAP financial measures
should not be considered as alternatives to the most directly
comparable GAAP financial measures. 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 or
Free Cash Flow in isolation or as a substitute for an analysis of
our results as reported under GAAP. Because Adjusted EBITDA and
Free Cash Flow may be defined differently by other companies in our
industry, our definitions of these non-GAAP financial measures 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
(in thousands)
March 31, 2024
December 31, 2023
Net income (loss)
$
19,930
$
(17,109
)
Depreciation and amortization (1)
52,206
56,137
Interest expense
2,029
2,292
Income tax expense (benefit)
9,758
(1,250
)
Loss on disposal of assets (1)
6,458
10,898
Stock-based compensation
3,742
3,846
Other (income) expense, net (2)
(1,405
)
7,784
Other general and administrative expense,
net
59
1,310
Retention bonus and severance expense
618
360
Adjusted EBITDA
$
93,395
$
64,268
(1)
The write-offs of remaining book value of
prematurely failed power ends are recorded as loss on disposal of
assets for the three months ended March 31, 2024. In order to
conform to current period presentation, we have reclassified the
corresponding amount of $6.0 million from depreciation to loss on
disposal of assets for the three months ended December 31,
2023.
(2)
Other income for the three months ended
March 31, 2024 is primarily comprised of insurance reimbursements
of $2.0 million, partially offset by a $0.6 million unrealized loss
on short-term investment. Other expense for the three months ended
December 31, 2023 includes settlement expenses resulting from
routine audits and true-up health insurance costs of totaling
approximately $7.4 million.
Reconciliation of Cash from Operating
Activities to Free Cash Flow
Three Months Ended
(in thousands)
March 31, 2024
December 31, 2023
Cash from Operating Activities
$
74,822
$
69,671
Cash used in Investing Activities
(33,847
)
(71,356
)
Free Cash Flow
$
40,975
$
(1,685
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501694892/en/
Investor Contacts:
David Schorlemer Chief Financial Officer
david.schorlemer@propetroservices.com 432-227-0864
Matt Augustine Director, Corporate Development and Investor
Relations matt.augustine@propetroservices.com 432-219-7620
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