ProPetro Holding Corp. (“ProPetro” or “the Company”) (NYSE:
PUMP) today announced preliminary unaudited financial and
operational results for the first quarter of 2020 and provided
other updates.
Preliminary First Quarter 2020 and Recent Highlights
- Total revenue for the quarter was $395.1 million compared to
$434.8 million for the fourth quarter of 2019.
- Net loss for the quarter was $7.8 million, or $0.08 per diluted
share, versus net income of $22.7 million, or $0.22 per diluted
share, for the fourth quarter of 2019.
- Adjusted EBITDA(1) for the quarter was $74.9 million compared
to $110.3 million for the fourth quarter of 2019.
- Effective utilization for the first quarter was 18.6 fleets
compared to 19.2 fleets for the fourth quarter of 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.”
Phillip Gobe, Chief Executive Officer, commented, “Our proven
through-cycle business model and performance on location by our
best-in-class operating team drove strong financial results for the
first ten weeks of the first quarter. The unprecedented drop in
crude oil prices during the second week of March resulted in an
extremely swift curtailment of well completions activity in all
U.S. basins. As activity declined, we acted quickly to reduce our
costs while continuing to provide safe and efficient service to our
customers. We believe our early year success is a positive
indicator of our ability to execute in the face of these uncertain
times.
“Unfortunately, deteriorating market conditions resulted in
necessary reductions to our workforce, and we are grateful to all
of our impacted team members for their hard work and dedication in
serving our customers over the years. While we found it prudent to
make these reductions, we have retained the capability to deliver
efficient and safe services while protecting our ability to respond
to a market that we expect to eventually improve.
“I would also like to thank our essential workers, medical
professionals, and first responders for their tireless efforts in
keeping us safe across the Permian Basin during these unprecedented
times as our community bands together to navigate a global
pandemic.”
Preliminary First Quarter 2020 Financial Summary
Revenue for the first quarter of 2020 was $395.1 million
compared to revenue of $434.8 million for the fourth quarter of
2019. The decrease was primarily attributable to a changing job mix
as well as decreased pricing for our services. At the end of the
quarter there was also a negative effect to revenue due to the
steep decline in well completions activity beginning in mid-March
as a result of the collapse of global oil prices.
Cost of services, excluding depreciation and amortization of
approximately $40.2 million, for the first quarter of 2020
decreased slightly to $300.8 million from $305.7 million during the
fourth quarter of 2019. Contributing to the decrease was the
reduction in frac activity as described above, partially offset by
the delay in achieving cost savings from the Company’s reduction in
workforce initiatives previously announced and implemented
beginning in late March.
General and administrative expense was $24.9 million for the
first quarter of 2020 compared to $31.1 million during the fourth
quarter of 2019. General and administrative expense, exclusive of
(a) $5.1 million of non-recurring items and (b) $4.3 million of
provision for credit losses, was $15.5 million, or 3.9% of revenue,
for the first quarter of 2020 compared to $18.8 million in the
fourth quarter of 2019, or 4.3% of revenue.
Net loss for the first quarter of 2020 totaled $7.8 million, or
$0.08 per diluted share, versus net income of $22.7 million, or
$0.22 per diluted share, for the fourth quarter of 2019. Net income
was negatively affected during the first quarter by goodwill and
asset impairment expenses of $16.7 million.
Adjusted EBITDA decreased to $74.9 million for the first quarter
of 2020 from $110.3 million for the fourth quarter of 2019.
Liquidity and Capital Spending
As of March 31, 2020, total cash was $143.7 million and total
debt was $110.0 million. Total liquidity at the end of the first
quarter of 2020 was $194.1 million including cash and $50.4 million
of available capacity under the Company’s revolving credit
facility.
As of May 29, 2020 total cash was $135.9 million and total debt
was $70.0 million. Total liquidity as of May 29, 2020 was $159.7
including cash and $23.8 million of available capacity under
ProPetro’s revolving credit facility. The Company’s borrowing
capacity under its revolving credit facility (which is determined
monthly based on 85% of eligible accounts receivables, less
customary reserves) will be adversely impacted by the expected
decline in the Company’s customers’ activity given current market
conditions. ProPetro will continue to proactively manage its
capital and liquidity needs.
Capital expenditures incurred during the first quarter of 2020
were $40.1 million, substantially all of which was maintenance
spending (other than approximately $3.7 million related to DuraStim
growth initiatives). The Company has minimal commitments for growth
capital expenditures for the remainder of 2020 and expects to
significantly reduce maintenance capital expenditures and field
level consumable costs throughout the rest of the year. Based on
current activity forecasts, full year 2020 capital expenditures are
expected to be below $85 million and mostly comprised of
maintenance spending.
The Company expects a significant portion of its second quarter
revenue to consist of idle fees that are payable by Pioneer Natural
Resources (“Pioneer”) as contemplated by the parties’ service
agreement. These fees are designed to partially protect ProPetro in
the event that fleets dedicated to Pioneer are idled.
DuraStim® Update
As oilfield activity rapidly contracted, management modified the
deployment of the first DuraStim® fleet. Moving forward, the
individual units will continue to be tested and developed by
working alongside conventional equipment. This will allow the
Company ample time to collect data in various operating conditions,
both controlled environments and field trials, for the purpose of
optimizing its DuraStim® technology initiative.
Outlook
Mr. Gobe concluded, “We were once again impressed by the
performance and execution of our team throughout the first quarter
despite the adversity brought on by the deteriorating commodity
price environment. Consistent with other oilfield service
providers, we have experienced further decreases in activity levels
during the second quarter. Our current view is that onshore
completion activity will remain at a reduced level in the second
half of the year as the over-supply of crude oil is absorbed by
increasing demand as economic activity recovers.
“We remain committed to our premier service quality and
execution, which we believe positions us favorably in the Permian
Basin, the premier resource play in North America. We believe our
deep customer relationships will prove critical as we navigate
through this challenging period, and we look forward to serving
them for many years to come. In addition, I would like to thank our
employees, supply chain partners and shareholders for their ongoing
support.”
Other Items
Management continues to provide information to its independent
registered public accounting firm in order to allow it to evaluate
the sufficiency of the scope of the internal review and associated
findings, as well as the Company’s proposed remediation plan.
Management is working to complete its preparation of quarterly and
annual financial statements to allow its independent registered
public accounting firm to perform quarterly reviews and an audit of
the financial statements as of and for the year ended December 31,
2019. The Company continues to work diligently to become current in
its filing obligations with the Securities and Exchange Commission
(“SEC”) as soon as reasonably practicable, and it currently expects
to do so prior to the expiration of the additional trading period
granted by the NYSE on July 15, 2020.
As previously disclosed, the audit committee and management have
not identified to date any items that would require revision or
restatement of the Company’s previously reported balance sheets,
statements of operations, statements of shareholders’ equity or
statements of cash flows.
Conference Call Information
The Company will host a conference call at 8:00 AM Central Time
on Tuesday, June 2, 2020 to discuss preliminary financial and
operating results for the first 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
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 10143925.
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.
Cautionary Statement Regarding Preliminary Financial
Information
The Company has prepared the preliminary financial information
set forth above on a materially consistent basis with its
historical financial information and in good faith based upon its
internal reporting for the three months ended March 31, 2020. This
financial information is preliminary and unaudited and is thus
inherently uncertain and subject to change as the Company finalizes
its financial results and related review for the three months ended
March 31, 2020. The Company is in the process of completing its
customary quarterly close and review procedures as of and for the
three months ended March 31, 2020, and there can be no assurance
that its final results for this period will not differ from this
preliminary financial information. During the course of the
preparation of the Company’s consolidated financial statements and
related notes as of and for the three months ended March 31, 2020,
the Company may identify items that could cause its final reported
results to be materially different from the preliminary financial
information set forth above. This preliminary financial information
should not be viewed as a substitute for full reviewed or audited
financial statements prepared in accordance with GAAP. In addition,
this preliminary financial information for the three months ended
March 31, 2020 is not necessarily indicative of the results to be
achieved for any future period. This preliminary financial
information has been prepared by and is the responsibility of
management. In addition, the preliminary financial information
presented above has not been audited, reviewed, or compiled by the
Company’s independent registered public accounting firm.
Accordingly, the Company’s independent registered public accounting
firm does not express an opinion or any other form of assurance
with respect thereto and assumes no responsibility for, and
disclaims any association with, this information.
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, our
expected cost reductions and our ability and the timing to become
current in our SEC filing obligations. 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 the audit committee’s
internal review, the 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
March 31,
December 31,
March 31,
2020
2019
2019
REVENUE - Service revenue
$
395,069
$
434,793
$
546,179
COSTS AND EXPENSES Cost of services (exclusive of depreciation and
amortization)
300,848
305,693
381,523
General and administrative (inclusive of stock-based compensation)
24,937
31,103
18,524
Depreciation and amortization
40,205
39,052
33,117
Impairment expense
16,654
3,405
-
Loss on disposal of assets
19,854
25,233
19,228
Total costs and expenses
402,498
404,486
452,392
OPERATING INCOME (LOSS)
(7,429
)
30,307
93,787
OTHER EXPENSE: Interest expense
(1,281
)
(1,463
)
(1,903
)
Other expense
(3
)
(178
)
(187
)
Total other expense
(1,284
)
(1,642
)
(2,090
)
INCOME (LOSS) BEFORE INCOME TAXES
(8,713
)
28,665
91,697
INCOME TAX (EXPENSE) BENEFIT
909
(5,990
)
(21,892
)
NET INCOME (LOSS)
$
(7,804
)
$
22,675
$
69,805
NET INCOME (LOSS) PER COMMON SHARE: Basic
$
(0.08
)
$
0.23
$
0.70
Diluted
$
(0.08
)
$
0.22
$
0.67
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic
100,687
100,618
100,232
Diluted
100,687
103,055
104,123
PROPETRO HOLDING CORP. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands, except share data)
(Unaudited)
March 31, 2020
December 31, 2019
ASSETS CURRENT ASSETS: Cash and cash equivalents
$
143,717
$
149,036
Accounts receivable - net of allowance for credit losses of $5,340
and $1,049, respectively
222,378
212,183
Inventories
3,296
2,436
Prepaid expenses
7,934
10,815
Other current assets
637
1,121
Total current assets
377,962
375,591
PROPERTY AND EQUIPMENT - Net of accumulated depreciation
1,018,660
1,047,535
OPERATING LEASE RIGHT-OF-USE ASSETS
921
989
OTHER NONCURRENT ASSETS: Goodwill
-
9,425
Other noncurrent assets
2,347
2,571
Total other noncurrent assets
2,347
11,996
TOTAL ASSETS
$
1,399,890
$
1,436,111
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES:
Accounts payable
$
198,437
$
193,096
Operating lease liabilities
309
302
Finance lease liabilities
-
2,831
Accrued and other current liabilities
26,916
36,343
Accrued interest payable
263
394
Total current liabilities
225,925
232,966
DEFERRED INCOME TAXES
101,729
103,041
LONG-TERM DEBT
110,000
130,000
NONCURRENT OPERATING LEASE LIABILITIES
720
799
Total liabilities
438,374
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,
100,777,670 and 100,624,099 shares issued, respectively
101
101
Additional paid-in capital
826,644
826,629
Retained earnings
134,771
142,575
Total shareholders’ equity
961,516
969,305
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,399,890
$
1,436,111
PROPETRO HOLDING CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
Three Months Ended March
31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)
$
(7,804
)
$
69,805
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization
40,205
33,117
Impairment expense
16,654
-
Deferred income tax expense (benefit)
(1,312
)
21,083
Amortization of deferred debt issuance costs
135
134
Stock-based compensation
471
1,829
Provision for credit losses
4,291
-
Loss on disposal of assets
19,854
19,228
Changes in operating assets and liabilities: Accounts receivable
(14,486
)
(154,516
)
Other current assets
1,138
(274
)
Inventories
(860
)
482
Prepaid expenses
2,920
759
Accounts payable
10,080
45,324
Accrued and other current liabilities
(9,431
)
(1,366
)
Accrued interest
(131
)
480
Net cash provided by operating activities
61,724
36,085
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures
(47,290
)
(178,912
)
Proceeds from sale of assets
733
1,027
Net cash used in investing activities
(46,557
)
(177,885
)
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings
-
90,000
Repayments of borrowings
(20,000
)
-
Payment of finance lease obligations
(30
)
-
Repayments of insurance financing
-
(1,934
)
Proceeds from exercise of equity awards
-
552
Tax withholdings paid for net settlement of equity awards
(456
)
-
Net cash (used in) provided by financing activities
(20,486
)
88,618
NET DECREASE IN CASH AND CASH EQUIVALENTS
(5,319
)
(53,182
)
CASH AND CASH EQUIVALENTS — Beginning of period
149,036
132,700
CASH AND CASH EQUIVALENTS — End of period
$
143,717
$
79,518
Reportable Segment Information
Three Months Ended
March 31, 2020
December 31, 2019
($ in thousands)
Pressure Pumping
All Other
Total
Pressure Pumping
All Other
Total
Service revenue
$
386,919
$
8,150
$
395,069
$
424,846
$
9,947
$
434,793
Adjusted EBITDA
78,664
(3,741
)
74,923
116,743
(6,408
)
110,335
Depreciation and amortization
38,969
1,236
40,205
37,433
1,619
39,052
Capital expenditures
39,268
828
40,096
64,771
1,574
66,345
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
March 31, 2020
December 31, 2019
($ in thousands)
Pressure Pumping
All Other
Total
Pressure Pumping
All Other
Total
Net income (loss)
$
4,308
$
(12,112
)
$
(7,804
)
$
52,805
$
(30,130
)
$
22,675
Depreciation and amortization
38,969
1,236
40,205
37,433
1,619
39,052
Impairment expense
15,559
1,095
16,654
-
3,405
3,405
Interest expense
1
1,280
1,281
8
1,455
1,463
Income tax expense (benefit)
-
(909
)
(909
)
-
5,990
5,990
Loss on disposal of assets
19,815
39
19,854
25,068
165
25,233
Stock-based compensation
-
471
471
-
2,530
2,530
Other expense
-
3
3
-
178
178
Other general and administrative expense
-
5,135
5,135
-
7,882
7,882
Retention bonus and severance expense
12
21
33
1,429
498
1,927
Adjusted EBITDA
$
78,664
$
(3,741
)
$
74,923
$
116,743
$
(6,408
)
$
110,335
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200601005599/en/
ProPetro Holding Corp Sam Sledge, 432-688-0012 Chief
Strategy and Administrative Officer
sam.sledge@propetroservices.com
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