ProPetro Reports Financial 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.
-
The net loss in the third quarter included a noncash impairment expense of
-
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
Third Quarter 2024 Financial Summary
Revenue was
Cost of services, excluding depreciation and amortization of approximately
General and administrative ("G&A") expense of
Net loss totaled
Adjusted Net Income in the third quarter was
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 third quarter of 2024 were
Guidance
For the second time this year, the Company is reducing its full-year 2024 capital expenditure guidance to be between
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
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,” "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
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
||||||||||||
|
|
|
Three Months Ended |
||||||||||
|
|
|
2024 |
|
2024 |
|
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. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) |
|||||||
|
|
|
2024 |
|
2023 |
|||
|
ASSETS |
|
|
|
|
|||
|
CURRENT ASSETS: |
|
|
|
|
|||
|
Cash and cash equivalents |
|
$ |
46,566 |
|
|
$ |
33,354 |
|
Accounts receivable - net of allowance for credit losses of |
|
|
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: |
|
|
|
|
|||
|
|
|
|
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, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
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 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
|
|
Nine Months Ended |
||||||
|
|
|
|
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 |
||||||||||||||
|
(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 |
||||||||||||||
|
(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) |
|
|
|
||||
|
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) |
|
|
|
||||
|
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 |
|
Reconciliation of Cash Flows from Operating Activities to Free Cash Flow and Free Cash Flow adjusted for Acquisition Consideration |
|||||||
|
|
Three Months Ended |
||||||
|
(in thousands) |
|
|
|
||||
|
|
$ |
34,669 |
|
|
$ |
104,941 |
|
|
|
|
(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) |
|
|
|
|
||||
|
|
|
$ |
214,432 |
|
|
$ |
305,071 |
|
|
|
|
|
(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:
Chief Financial Officer
david.schorlemer@propetroservices.com
432-227-0864
Director, Corporate Development and Investor Relations
matt.augustine@propetroservices.com
432-219-7620
Source:
