ProPetro Holding Corp. ("ProPetro" or "the Company") (NYSE:
PUMP) today announced financial and operational results for the
third quarter of 2024.
Third Quarter 2024 Results and Highlights
- Total revenue of $361 million increased 1% compared to the
prior quarter.
- Net loss was $137 million ($1.32 loss per diluted share) as
compared to a net loss of $4 million in the prior quarter ($0.03
loss per diluted share).
- The net loss in the third quarter included a noncash impairment
expense of $189 million related to the Company's Tier II
diesel-only pumping units and related conventional equipment in our
hydraulic fracturing operating segment which currently represent a
diminishing part of our active fleets.
- Adjusted Net Income in the quarter was $13 million which
excludes the noncash impairment expense.
- Adjusted EBITDA(1) of $71 million was 20% of revenue and
increased 8% compared to the prior quarter.
- Repurchased and retired 1.3 million shares during the quarter
with total repurchases of 12.6 million shares representing
approximately 11% of outstanding shares since plan inception in May
2023.
- Year-to-date net cash provided by operating activities, Free
Cash Flow and Free Cash Flow adjusted for Acquisition
Consideration(2) were $214 million, $84 million, and $105 million,
respectively.
- Three FORCE® electric-powered hydraulic fracturing
fleets are now operating under contract with leading customers with
a fourth expected to be deployed by year-end and a fifth to be
deployed in early 2025.
(1)
Adjusted Net Income (Loss) and
Adjusted EBITDA are non-GAAP financial measures and are described
and reconciled to net income (loss) in the table under “Non-GAAP
Financial Measures.”
(2)
Free Cash Flow and Free Cash Flow adjusted
for Acquisition Consideration are non-GAAP financial measures and
are described and reconciled to net cash from operating activities
in the table under “Non-GAAP Financial Measures."
Management Comments
Sam Sledge, Chief Executive Officer, commented, "ProPetro’s
third quarter results reflect our team’s success in advancing our
strategy, even in a turbulent market environment. Thanks to our
decisive actions and despite moderated customer spending and
activity levels, ProPetro delivered strong financial performance in
the third quarter, while returning capital to shareholders and
capturing additional market share. With three FORCE®
electric fleets in the field, a fourth and fifth on the way, and
plans to order and deploy more electric assets, ProPetro is meeting
the growing demand for our next-generation services and solidifying
our leadership position in the Permian Basin. The Company's strong
financial performance, driven by our investment in industrialized
equipment solutions and services, is supported by our commitment to
operational excellence and financial discipline. In 2024, we have
proven our ability to execute our strategy and are demonstrating
the tremendous potential of ProPetro."
David Schorlemer, Chief Financial Officer, said, "Our third
quarter results are signaling continued reliability of financial
performance in our business. While short-term working capital
headwinds impacted free cash flow, Adjusted EBITDA less our
incurred capital expenditures remained strong. Additionally,
revenues and Adjusted EBITDA were favorably impacted by improved
utilization and cost management despite unfavorable weather delays
during the quarter. Capital spending remained low leading to a
reduction in our full year capital expenditure guidance for the
second time this year. During the quarter, we also recorded a
noncash impairment expense of approximately $189 million on our
Tier II diesel-only hydraulic fracturing equipment. We view this
impairment as validation of our strategy, including our decision
years ago to begin transitioning our fleet towards next generation
gas burning equipment."
Third Quarter 2024 Financial Summary
Revenue was $361 million, compared to $357 million for the
second quarter of 2024. The 1.1% increase in revenue was largely
attributable to a full quarter of AquaPropSM wet sand
solutions partially offset by unfavorable weather impacts in our
hydraulic fracturing and wireline businesses during the
quarter.
Cost of services, excluding depreciation and amortization of
approximately $52 million relating to cost of services, were $268
million during the third quarter of 2024.
General and administrative ("G&A") expense of $28 million
decreased from $31 million in the second quarter of 2024. G&A
expense excluding nonrecurring and noncash items (stock-based
compensation, transaction expense, and other items) of $6 million,
was $22 million, or 6.1% of revenue, a decrease of 12% vs. the
prior quarter.
Net loss totaled $137 million, or $1.32 per diluted share,
compared to net loss of $4 million, or $0.03 per diluted share, for
the second quarter of 2024. During the quarter, the Company
recorded a noncash impairment expense of approximately $189 million
for its conventional Tier II diesel-only pumping units and related
equipment following a comprehensive assessment in compliance with
GAAP standards. The Company is on track to increase its portfolio
of next-generation, lower-emissions hydraulic fracturing equipment
to approximately 75% of its total fleet by the end of 2024,
ensuring alignment with industry trends and customer
preferences.
Adjusted Net Income in the third quarter was $13 million which
excludes the noncash impairment expense compared to an Adjusted Net
Loss of $4 million in the second quarter of 2024.
Adjusted EBITDA increased to $71 million from $66 million in the
second quarter of 2024 primarily related to increased revenues and
improved cost management noted above.
Net cash provided by operating activities was $35 million as
compared to $105 million in the prior quarter, with an investment
in working capital during the third 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 third
quarter, the Company repurchased and retired 1.3 million shares for
$10 million. Since inception, the Company has acquired and retired
12.6 million shares representing approximately 11% of its
outstanding shares.
Liquidity and Capital Spending
As of September 30, 2024, total cash was $47 million and our
borrowings under the ABL Credit Facility were $45 million. Total
liquidity at the end of the third quarter of 2024 was $127 million
including cash and $80 million of available capacity under the ABL
Credit Facility.
Capital expenditures incurred during the third quarter of 2024
were $37 million, which primarily related to maintenance and
support equipment for our FORCE® electric hydraulic
fracturing fleet deployments. Net cash used in investing activities
as shown on the statement of cash flows during the third quarter of
2024 was $40 million.
Guidance
For the second time this year, the Company is reducing its
full-year 2024 capital expenditure guidance to be between $150
million to $175 million, down from prior guidance of $175 million
to $200 million.
During the third quarter, 14 hydraulic fracturing fleets were
active and we expect to run approximately 14 active frac fleets in
the fourth quarter of 2024.
Outlook
Mr. Sledge added, “Looking ahead, while we do expect some
industry softness through normal seasonality and budget exhaustion
in the fourth quarter, demand for our services remains strong. We
believe ProPetro is uniquely positioned to capture the
opportunities ahead and win quality market share. We remain
confident in our ability to deliver strong financial results
through the remainder of this year, in 2025, and beyond. To achieve
this, we are focused on controlling what we can, through decisive
actions that ensure prudent cost management and capital discipline.
With healthy liquidity, a clean balance sheet and the derisking of
future earnings through our next generation equipment and
associated contracts, we believe ProPetro is optimally positioned
to continue transitioning our fleet, strategically pursue organic
and inorganic growth and deliver tangible, sustainable and
increased value to our shareholders."
Conference Call Information
The Company will host a conference call at 8:00 AM Central Time
on Wednesday, October 30, 2024, to discuss financial and operating
results for the third 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 6437367. The Company has
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,” "confident,"
“plan,” “project,” “budget,” "design," “predict,” “pursue,”
“target,” “seek,” “objective,” “believe,” “expect,” “anticipate,”
“intend,” “estimate,” “will,” “should,” "continue," 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, industry trends and activity levels, our
business strategy, 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 and central bank policy
actions, 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
September 30,
2024
June 30,
2024
September 30,
2023
REVENUE - Service revenue
$
360,868
$
357,021
$
423,804
COSTS AND EXPENSES
Cost of services (exclusive of
depreciation and amortization)
267,555
265,845
292,490
General and administrative (inclusive of
stock-based compensation)
28,356
30,910
28,597
Depreciation and amortization
54,299
57,522
45,361
Impairment expense
188,601
—
—
Loss on disposal of assets
2,149
3,277
12,673
Total costs and expenses
540,960
357,554
379,121
OPERATING (LOSS) INCOME
(180,092
)
(533
)
44,683
OTHER (EXPENSE) INCOME:
Interest expense
(1,939
)
(1,965
)
(1,169
)
Other income (expense), net
3,599
2,403
1,883
Total other (expense) income, net
1,660
438
714
INCOME (LOSS) BEFORE INCOME TAXES
(178,432
)
(95
)
45,397
INCOME TAX BENEFIT (EXPENSE)
41,365
(3,565
)
(10,644
)
NET (LOSS) INCOME
$
(137,067
)
$
(3,660
)
$
34,753
NET (LOSS) INCOME PER COMMON SHARE:
Basic
$
(1.32
)
$
(0.03
)
$
0.31
Diluted
$
(1.32
)
$
(0.03
)
$
0.31
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic
104,121
106,303
112,286
Diluted
104,121
106,303
112,698
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)
September 30,
2024
December 31,
2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
46,566
$
33,354
Accounts receivable - net of allowance for
credit losses of $236 and $236, respectively
225,617
237,012
Inventories
16,743
17,705
Prepaid expenses
9,453
14,640
Short-term investment, net
7,405
7,745
Other current assets
1,037
353
Total current assets
306,821
310,809
PROPERTY AND EQUIPMENT - net of
accumulated depreciation
716,823
967,116
OPERATING LEASE RIGHT-OF-USE ASSETS
127,085
78,583
FINANCE LEASE RIGHT-OF-USE ASSETS
35,562
47,449
OTHER NONCURRENT ASSETS:
Goodwill
26,754
23,624
Intangible assets - net of
amortization
65,155
50,615
Other noncurrent assets
2,010
2,116
Total other noncurrent assets
93,919
76,355
TOTAL ASSETS
$
1,280,210
$
1,480,312
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
128,615
$
161,441
Accrued and other current liabilities
73,738
75,616
Operating lease liabilities
33,532
17,029
Finance lease liabilities
18,967
17,063
Total current liabilities
254,852
271,149
DEFERRED INCOME TAXES
63,882
93,105
LONG-TERM DEBT
45,000
45,000
NONCURRENT OPERATING LEASE LIABILITIES
56,275
38,600
NONCURRENT FINANCE LEASE LIABILITIES
18,145
30,886
OTHER LONG-TERM LIABILITIES
9,100
3,180
Total liabilities
447,254
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, 103,282,917 and 109,483,281 shares
issued, respectively
103
109
Additional paid-in capital
884,616
929,249
Retained earnings (accumulated
deficit)
(51,763
)
69,034
Total shareholders’ equity
832,956
998,392
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
1,280,210
$
1,480,312
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income
$
(120,797
)
$
102,743
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
164,027
124,749
Impairment expense
188,601
—
Deferred income tax (benefit) expense
(29,224
)
28,753
Amortization of deferred debt issuance
costs
327
250
Stock-based compensation
12,975
10,604
Loss on disposal of assets
11,884
62,117
Unrealized loss on short-term
investment
340
2,120
Noncash gain from adjustment of business
acquisition contingent consideration
(1,800
)
—
Changes in operating assets and
liabilities, net of effects of business acquisition:
Accounts receivable
21,876
(44,832
)
Other current assets
(480
)
(2,584
)
Inventories
962
(4,520
)
Prepaid expenses
4,966
(275
)
Accounts payable
(31,933
)
9,584
Accrued and other current liabilities
(7,292
)
16,362
Net cash provided by operating
activities
214,432
305,071
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(112,449
)
(320,747
)
Business acquisition, net of cash
acquired
(21,038
)
—
Proceeds from sale of assets
2,884
7,976
Net cash used in investing activities
(130,603
)
(312,771
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings
—
30,000
Repayments of borrowings
—
(15,000
)
Payment of debt issuance costs
—
(1,179
)
Payments on finance lease obligations
(13,067
)
(889
)
Tax withholdings paid for net settlement
of equity awards
(1,377
)
(3,506
)
Share repurchases
(55,729
)
(36,258
)
Payment of excise tax on share
repurchases
(444
)
—
Net cash used in financing activities
(70,617
)
(26,832
)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
13,212
(34,532
)
CASH AND CASH EQUIVALENTS - Beginning of
period
33,354
88,862
CASH AND CASH EQUIVALENTS - End of
period
$
46,566
$
54,330
Reportable Segment Information
Three Months Ended September
30, 2024
(in thousands)
Hydraulic Fracturing
Wireline
All Other
Reconciling Items
Total
Service revenue
$
274,138
$
47,958
$
38,920
$
(148
)
$
360,868
Adjusted EBITDA
$
66,166
$
9,194
$
8,989
$
(13,219
)
$
71,130
Depreciation and amortization
$
46,752
$
5,260
$
2,264
$
23
$
54,299
Impairment expense (1)
$
188,601
$
—
$
—
$
—
$
188,601
Operating lease expense on FORCE®
fleets (2)
$
12,516
$
—
$
—
$
—
$
12,516
Capital expenditures incurred
$
33,465
$
1,757
$
1,575
$
38
$
36,835
Three Months Ended June 30,
2024
(in thousands)
Hydraulic Fracturing
Wireline
All Other
Reconciling Items
Total
Service revenue
$
271,628
$
49,202
$
36,277
$
(86
)
$
357,021
Adjusted EBITDA
$
63,623
$
10,793
$
6,583
$
(14,937
)
$
66,062
Depreciation and amortization
$
50,082
$
5,129
$
2,279
$
32
$
57,522
Operating lease expense on FORCE®
fleets (2)
$
11,533
$
—
$
—
$
—
$
11,533
Capital expenditures incurred
$
25,631
$
1,943
$
4,376
$
—
$
31,950
(1)
Represents noncash impairment expense
related to our Tier II diesel-only and related conventional
equipment.
(2)
Represents lease cost related to operating
leases on our FORCE® electric-powered hydraulic fracturing
fleets. This cost is recorded within cost of services in our
condensed consolidated statements of operations.
Non-GAAP Financial Measures
Adjusted Net Income (Loss), Adjusted EBITDA, Free Cash Flow and
Free Cash Flow adjusted for Acquisition Consideration are not
financial measures presented in accordance with GAAP. We define
Adjusted Net Income (Loss) as net income (loss) plus impairment
expense, less income tax benefit. 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 define
Free Cash Flow adjusted for Acquisition Consideration as Free Cash
Flow excluding net cash paid as consideration for business
acquisitions.
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 Net Income
(Loss), Adjusted EBITDA, and net cash from operating activities is
the GAAP measure most directly comparable to Free Cash Flow and
Free Cash Flow adjusted for Acquisition Consideration. 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 Net Income (Loss), Adjusted EBITDA, Free Cash
Flow or Free Cash Flow adjusted for Acquisition Consideration in
isolation or as a substitute for an analysis of our results as
reported under GAAP. Because Adjusted Net Income (Loss), Adjusted
EBITDA, Free Cash Flow and Free Cash Flow adjusted for Acquisition
Consideration 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 Net Income (Loss)
Three Months Ended
(in thousands)
September 30, 2024
June 30, 2024
Net loss
$
(137,067
)
$
(3,660
)
Impairment expense (1)
188,601
—
Income tax benefit
(38,230
)
—
Adjusted Net Income (Loss)
$
13,304
$
(3,660
)
(1)
Represents the noncash impairment expense of our conventional
Tier II diesel-only hydraulic fracturing pumps and associated
conventional assets.
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
Three Months Ended
(in thousands)
September 30, 2024
June 30, 2024
Net loss
$
(137,067
)
$
(3,660
)
Depreciation and amortization
54,299
57,522
Impairment expense (1)
188,601
—
Interest expense
1,939
1,965
Income tax (benefit) expense
(41,365
)
3,565
Loss on disposal of assets
2,149
3,277
Stock-based compensation
4,615
4,618
Other income, net (2)
(3,599
)
(2,403
)
Other general and administrative expense,
net
346
1,113
Retention bonus and severance expense
1,212
65
Adjusted EBITDA
$
71,130
$
66,062
(1)
Represents the noncash impairment expense of our conventional
Tier II diesel-only hydraulic fracturing pumps and associated
conventional assets.
(2)
Other income for the three months ended September 30, 2024 is
primarily comprised of tax refunds of $1.8 million and a $1.8
million decrease in the estimated fair value of the contingent
consideration payable on our acquisition of AquaProp LLC. Other
income for the three months ended June 30, 2024 is primarily
comprised of tax refunds of $1.7 million and a $0.7 unrealized gain
on short-term investment.
Reconciliation of Cash Flows from
Operating Activities to Free Cash Flow and Free Cash Flow adjusted
for Acquisition Consideration
Three Months Ended
(in thousands)
September 30, 2024
June 30, 2024
Net Cash provided by Operating
Activities
$
34,669
$
104,941
Net Cash used in Investing Activities
(39,680
)
(57,076
)
Free Cash Flow
(5,011
)
47,865
Acquisition Consideration
—
21,038
Free Cash Flow adjusted for Acquisition
Consideration
$
(5,011
)
$
68,903
Nine Months Ended
(in thousands)
September 30, 2024
September 30, 2023
Net Cash provided by Operating
Activities
$
214,432
$
305,071
Net Cash used in Investing Activities
(130,603
)
(312,771
)
Free Cash Flow
83,829
(7,700
)
Acquisition Consideration
21,038
—
Free Cash Flow adjusted for Acquisition
Consideration
$
104,867
$
(7,700
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030978687/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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