ProPetro Reports Financial 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 toMay 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
First Quarter 2024 Financial Summary
Revenue was
Cost of services, excluding depreciation and amortization of approximately
General and administrative expense of
Net income totaled
Adjusted EBITDA increased to
Net cash provided by operating activities was
Share Repurchase Program
On
Liquidity and Capital Spending
As of
Capital expenditures incurred during the first quarter of 2024 were
Guidance
The Company now expects to be on the low end of our prior guidance range for full-year 2024 incurred capital expenditures of
Outlook
Conference Call Information
The Company will host a conference call at
About
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
||||||||||||
|
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
|
||||||
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. |
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) |
||||||
|
|
|
|
|
||
ASSETS |
|
|
|
|
||
CURRENT ASSETS: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
46,458 |
|
$ |
33,354 |
Accounts receivable - net of allowance for credit losses of |
|
|
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: |
|
|
|
|
||
|
|
|
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, |
|
|
— |
|
|
— |
Common stock, |
|
|
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 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
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 |
|||||||||||||||
(in thousands) |
Hydraulic
|
|
Wireline |
|
All Other |
|
Reconciling
|
|
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 |
|||||||||||||||
(in thousands) |
Hydraulic
|
|
Wireline |
|
All Other |
|
Reconciling
|
|
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 |
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) |
|
|
|
||||
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 |
|
(2) |
Other income for the three months ended |
Reconciliation of Cash from Operating Activities to Free Cash Flow |
||||||||
|
|
Three Months Ended |
||||||
(in thousands) |
|
|
|
|
||||
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:
Chief Financial Officer
david.schorlemer@propetroservices.com
432-227-0864
Director, Corporate Development and Investor Relations
matt.augustine@propetroservices.com
432-219-7620
Source: