HOUSTON, Jan. 3, 2022 /PRNewswire/ -- NexTier
Oilfield Solutions Inc. (NYSE: NEX) ("NexTier" or the "Company")
today provided an operational update and guidance for the fourth
quarter of 2021.
Fourth Quarter 2021 Guidance & Recent Highlights
- Total revenue guidance of $500-510 million for Q4 2021, reflecting an
increase of more than 25% compared to Q3 2021
- Reported adjusted EBITDA(1) guidance of $75-80 million for Q4 2021, includes
approximately $18 million in expected
gain on sale of assets
- Averaged 30 deployed and 29 fully-utilized fleets in Q4 2021
vs. 25 deployed and 24 fully-utilized fleets in Q3 2021
- Consistent with prior guidance, exited Q4 2021 with 31 deployed
fleets with 1 additional staffed fleet ready for Q1 2022
deployment
Management Commentary
"The strong momentum we experienced when exiting the third
quarter continued through year-end," said Robert Drummond, President and Chief Executive
Officer of NexTier. "The expected sequential gains resulted from
solid growth across the entire NexTier enterprise, enhanced by the
inclusion of a full quarter of Alamo contribution versus just one month in Q3
2021. Further, market indicators suggest that the pace of market
recovery is increasing and frac service supply is rapidly
tightening.
"We're only just beginning to see the financial benefits of our
integrated completion service model, which offers our customers
higher efficiency and a path to lower costs and emissions,"
Drummond continued. "Our integrated model will be a distinct
competitive advantage for NexTier and our partners as we enter the
next phase in US shale's evolution. Supply chain disruptions and
the newest COVID variant will continue to pose a challenge for our
operations, but we're confident we have the right team in place to
minimize disruptions and any related financial impacts."
"NexTier is beginning to experience the benefits from our
countercyclical investment strategy, with the guidance revealing
signs of strong, profitable growth as we exited 2021," said
Kenny Pucheu, Executive Vice
President and Chief Financial Officer of NexTier. "Despite typical
holiday seasonality, our Q4 2021 guidance suggests a step change in
profitability per active frac fleet relative to Q3 2021 and we
anticipate further gains throughout 2022.
"As an early adopter of low cost and emission technologies,
NexTier is reaching the end of its two-year strategic conversion to
a predominately natural gas capable fleet," Pucheu added. "These
investments were funded substantially by the sale of non-core
businesses and assets, allowing us to minimize new capital deployed
while repositioning the company as a leader in natural gas powered
frac solutions. We enter 2022 with momentum, the industry's largest
natural gas capable fleet, and a supportive market backdrop."
Fourth Quarter Expected One-Time Gains
Adjusted EBITDA guidance of $75-80
million for the fourth quarter includes an expected $18 million in one-time gain on the sale of
assets. During Q4 2021, NexTier continued down the path of
divesting diesel-powered frac equipment and other non-core assets
to fund conversions of equipment to be powered by natural
gas. These divestitures and resulting significant accounting
gains in Q4 2021 came via previously announced equipment sales
outside of the US as well as through trade-ins of excess diesel
equipment in exchange for Tier 4 DGB conversions and conversion
kits. These gains reflect our commitment to reallocate capital
through the sale and trade in of conventional diesel equipment for
conversion to dual fuel.
Outlook
Consistent with prior commentary, for the first quarter of 2022,
NexTier expects to operate an average of 32 deployed frac fleets.
The company was operating 31 fleets exiting Q4 2021 and intends to
deploy one additional upgraded Tier 4 dual fuel frac fleet in Q1
2022.
Sequentially, we anticipate net pricing gains in Q1 2022 and
increased utilization, with the expectation that we can achieve
double-digit annualized EBITDA per fleet by the end of Q1 2022.
"We see a constructive demand backdrop for US onshore completion
services as we begin 2022," added Robert
Drummond. "Supply of frac services has tightened
considerably over the past year, and NexTier is in a great position
to recapture a significant portion of the pricing concessions we
made to help our customers through COVID while also benefitting
from value provided by its leading position of premium horsepower.
We remain confident that pricing can exit 2022 up double-digits
from 2021's exit. NexTier remains intently focused on Free Cash
Flow ("FCF") and we anticipate being on a sustained path to
significant FCF generation beginning in 2022."
Coronavirus Monitoring
The Company continues our coronavirus protocols focused on
compliance with regulatory requirements and the safety of our
partners, employees, and the communities in which we operate, while
mitigating the impact on our financial performance. We continue to
encourage our workforce to practice safe behaviors in the workplace
and while away from work to help prevent community spread of
COVID-19. In December, however, the Company experienced higher
levels of employee absenteeism resulting from the surge in COVID-19
cases associated with the Omicron variant. It is possible that
these negative effects will continue until infection rates decline.
The future progression of the pandemic remains uncertain, including
with respect to new or potential variants.
About NexTier Oilfield Solutions
Headquartered in Houston,
Texas, NexTier is an industry-leading U.S. land oilfield
service company, with a diverse set of well completion and
production services across active and demanding basins. Our
integrated solutions approach delivers efficiency today, and our
ongoing commitment to innovation helps our customers better address
what is coming next. NexTier is differentiated through four points
of distinction, including safety performance, efficiency,
partnership, and innovation. At NexTier, we believe in living
our core values from the basin to the boardroom, and helping
customers win by safely unlocking affordable, reliable and
plentiful sources of energy.
(1)
Non-GAAP Financial Measures. The Company has included in
this press release or discussed on the conference call described
above certain non-GAAP financial measures, some of which are
calculated on segment basis or product line basis. These
measurements provide supplemental information which the Company
believes is useful to analysts and investors to evaluate its
ongoing results of operations, when considered alongside GAAP
measures such as net income and operating income.
Non-GAAP financial measures
include EBITDA, Adjusted EBITDA, Adjusted Gross Profit, Adjusted
Net Income (loss), free cash flow, adjusted free cash flow,
Adjusted SG&A, and annualized adjusted gross profit per
fully-utilized fracturing fleet and annualized adjusted gross
profit per deployed fracturing fleet. These non-GAAP financial
measures exclude the financial impact of items management does not
consider in assessing the Company's ongoing operating performance,
and thereby facilitate review of the Company's operating
performance on a period-to-period basis. Other companies may
have different capital structures, and comparability to the
Company's results of operations may be impacted by the effects of
acquisition accounting on its depreciation and amortization.
As a result of the effects of these factors and factors specific to
other companies, the Company believes EBITDA, Adjusted EBITDA,
Adjusted Gross Profit, Adjusted SG&A, and Adjusted Net
Income(loss) provide helpful information to analysts and investors
to facilitate a comparison of its operating performance to that of
other companies. The Company believes free cash flow and
Adjusted free cash flow is important to investors in that it
provides a useful measure to assess management's effectiveness in
the areas of profitability and capital management. Annualized
Adjusted Gross Profit per fully-utilized fracturing fleet or per
deployed fracturing fleet is used to evaluate the operating
performance of the business line for comparable periods, and the
Company believes it is important as an indicator of operating
performance of our fracturing and integrated wireline product line
because it excludes the effects of the capital structure and
certain non-cash items from the product line's operating
results. For a reconciliation of these non-GAAP measures,
please see the tables at the end of this press release.
Reconciliations of forward-looking non-GAAP financial measures to
comparable GAAP measures are not available due to the challenges
and impracticability with estimating some of the items,
particularly with estimates for certain contingent liabilities, and
estimating non-cash unrealized fair value losses and gains which
are subject to market variability and therefore a reconciliation is
not available without unreasonable effort.
Non-GAAP Measure Definitions:
EBITDA is defined as net income (loss) adjusted to eliminate the
impact of interest, income taxes, depreciation and amortization.
Adjusted EBITDA is defined as net income (loss) adjusted to
eliminate the impact of interest, income taxes, depreciation and
amortization, along with certain items management does not consider
in assessing ongoing performance. Adjusted Gross Profit is defined
as revenue less cost of services, further adjusted to eliminate
items in cost of services that management does not consider in
assessing ongoing performance. Adjusted Gross Profit at the segment
level is not considered to be a non-GAAP financial measure as it is
our segment measure of profit or loss and is required to be
disclosed under GAAP pursuant to ASC 280. Adjusted Net Income
(Loss) is defined as net income (loss) plus the after-tax amount of
merger/transaction-related costs and other non-routine items.
Adjusted SG&A is defined as selling, general and administrative
expenses adjusted for severance and business divestiture costs,
merger/transaction-related costs, and other non-routine items. Free
cash flow is defined as the net increase (decrease) in cash and
cash equivalents before financing activities, including share
repurchase activity. Adjusted free cash flow adjusts free cash flow
for certain management adjustments. Annualized Adjusted Gross
Profit per fully-utilized fleet, is a non-GAAP measure and is
defined as (i) revenue less cost of services attributable to the
fracturing and integrated wireline product line, further adjusted
to eliminate items in cost of services that management does not
consider in assessing ongoing performance for the fracturing and
integrated wireline product line, (ii) divided by the
fully-utilized fracturing and integrated wireline fleets (average
deployed fleets multiplied by fleet utilization) per quarter, and
then (iii) multiplied by four. Annualized Adjusted Gross Profit per
deployed fracturing fleet, is a non-GAAP measure and is defined as
(i) revenue less cost of services attributable to the fracturing
and integrated wireline product line, further adjusted to eliminate
items in cost of services that management does not consider in
assessing ongoing performance for the fracturing and integrated
wireline product line, (ii) divided by the deployed fracturing and
integrated wireline fleets per quarter, and then (iii) multiplied
by four.
Forward-Looking Statements
This press release and discussion in the conference call
described above contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
that are subject to risks and uncertainties and are made pursuant
to the safe harbor provisions of Section 27A of the Securities Act
of 1993, as amended and Section 21E of the Securities Exchange Act
of 1934, as amended. Where a forward-looking statement expresses or
implies an expectation or belief as to future events or results,
such expectation or belief is expressed in good faith and believed
to have a reasonable basis. The words "believe," "continue,"
"could," "expect," "anticipate," "intends," "estimate," "forecast,"
"project," "should," "may," "will," "would" or the negative thereof
and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements are
only predictions and involve known and unknown risks and
uncertainties, many of which are beyond the Company's control.
Statements in this press release or made during the conference call
described above regarding NexTier, Alamo and the combined company that are
forward-looking, including projections as to the Company's 2021
guidance and outlook information, projections as to the number of
fleets and other anticipated benefits of the proposed transaction,
the impact of the proposed transaction on NexTier's and
Alamo's business and future
financial and operating results, and the amount and timing of
synergies from the proposed transaction are based on management's
estimates, assumptions and projections, and are subject to
significant uncertainties and other factors, many of which are
beyond NexTier's and Alamo's
control. These factors and risks include, but are not limited to,
(i) the competitive nature of the industry in which NexTier and
Alamo conduct their business,
including pricing pressures; (ii) the ability to meet rapid demand
shifts; (iii) the impact of pipeline capacity constraints and
adverse weather conditions in oil or gas producing regions; (iv)
the ability to obtain or renew customer contracts and changes in
customer requirements in the markets NexTier and Alamo serve; (v) the ability to identify,
effect and integrate acquisitions, joint ventures or other
transactions; (vi) the ability to protect and enforce intellectual
property rights; (vii) the effect of environmental and other
governmental regulations on NexTier and Alamo operations; (viii) the effect of a loss
of, or interruption in operations of, NexTier or Alamo operations, or of one or more key
suppliers, or customers, including resulting from inflation,
COVID-19 resurgence, product defects, recalls or suspensions; (ix)
the variability of crude oil and natural gas commodity prices; (x)
the market price (including inflation) and timely availability of
materials or equipment; (xi) the ability to obtain permits,
approvals and authorizations from governmental and third parties;
(xii) NexTier's and Alamo's
ability to employ a sufficient number of skilled and qualified
workers; (xiii) the level of, and obligations associated with,
indebtedness; (xiv) fluctuations in the market price of NexTier's
stock; (xv) the duration (including resurgences), impact and
severity of the COVID-19 pandemic and the response thereto,
including the impact of social distancing, shelter-in-place or
shutdowns of non-essential businesses and similar measures imposed
or undertaken by governments, private businesses or others
(including the economic, administrative, and social impacts of mask
or vaccine mandates), and the possibility of increased inflation,
travel restrictions, lodging shortages or other macro-economic
challenges as the economy emerges from the COVID-19 pandemic; and
(xv) other risk factors and additional information. In addition,
material risks that could cause actual results to differ from
forward-looking statements include: the inherent uncertainty
associated with financial or other projections; the effective
integration of Alamo's businesses
and the ability to achieve the anticipated synergies and
value-creation contemplated by the proposed transaction;
unanticipated difficulties or expenditures relating to the
transaction, the response or retention of customers and vendors as
a result of the announcement and/or closing of the transaction; and
the diversion of management time on transaction-related issues. For
a more detailed discussion of such risks and other factors, see the
Company's filings with the Securities and Exchange Commission (the
"SEC"), including under the heading "Risk Factors" in Item 1A of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020, available on the
SEC website or www.NexTierOFS.com. The Company assumes no
obligation to update any forward-looking statements or information,
which speak as of their respective dates, to reflect events or
circumstances after the date hereof, or to reflect the occurrence
of unanticipated events, except as may be required under applicable
securities laws. Investors should not assume that any lack of
update to a previously issued "forward-looking statement"
constitutes a reaffirmation of that statement.
Investor Contact:
Kenneth Pucheu
Executive Vice President - Chief Financial Officer
Michael Sabella
Vice President - Investor Relations and Business Development
michael.sabella@nextierofs.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/nextier-provides-operational-update-and-guidance-for-the-fourth-quarter-of-2021-301453031.html
SOURCE NexTier Oilfield Solutions