ProPetro Holding Corp 10-Q for FY2024 Q3

ProPetro Holding Corp. (PUMP)

10-Q 2024-10-31 For: 2024-09-30

Added on April 07, 2026

About this 10-Q

ProPetro Holding Corp filed this 10-Q on October 31, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $360.87M; down 14.9% from $423.8M a year earlier
Net loss: $137.07M; compared with net income of $34.75M a year earlier
Diluted EPS: -$1.32; compared with $0.31 a year earlier

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Delaware						26-3685382
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	PUMP	New York Stock Exchange


		Page
	Cautionary Note Regarding Forward-Looking Statements	ii

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023	2
	Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended Sept ember 30, 2024 and 2023	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
	Signatures	48


	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 (Note 13)
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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUE - Service revenue	$	360,868	$	423,804	$	1,123,732	$	1,282,623
COSTS AND EXPENSES
Cost of services (exclusive of depreciation and amortization)	267,555		292,490		822,041		870,767
General and administrative expenses (inclusive of stock-based compensation)	28,356		28,597		87,492		86,364
Depreciation and amortization	54,299		45,361		164,027		124,749
Impairment expense	188,601		—		188,601		—
Loss on disposal of assets	2,149		12,673		11,884		62,117
Total costs and expenses	540,960		379,121		1,274,045		1,143,997
OPERATING (LOSS) INCOME	(180,092)		44,683		(150,313)		138,626
OTHER INCOME (EXPENSE):
Interest expense	(1,939)		(1,169)		(5,933)		(3,016)
Other income (expense), net	3,599		1,883		7,408		(1,749)
Total other income (expense), net	1,660		714		1,475		(4,765)
INCOME (LOSS) BEFORE INCOME TAXES	(178,432)		45,397		(148,838)		133,861
INCOME TAX BENEFIT (EXPENSE)	41,365		(10,644)		28,041		(31,118)
NET (LOSS) INCOME	$	(137,067)	$	34,753	$	(120,797)	$	102,743

NET (LOSS) INCOME PER COMMON SHARE:
Basic	$	(1.32)	$	0.31	$	(1.14)	$	0.90
Diluted	$	(1.32)	$	0.31	$	(1.14)	$	0.90

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	104,121		112,286		106,314		113,960
Diluted	104,121		112,698		106,314		114,294


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Nine Months Ended September 30, 2024
	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Total
BALANCE - January 1, 2024	109,483	$	109	$	929,249	$	69,034	$	998,392
Stock-based compensation cost	—	—		3,742		—		3,742
Issuance of equity awards, net	376	1		(1)		—		—
Tax withholdings paid for net settlement of equity awards	—	—		(1,209)		—		(1,209)
Share repurchases	(2,968)	(3)		(22,505)		—		(22,508)
Excise tax on share repurchases	—	—		(193)		—		(193)
Net income	—	—		—		19,930		19,930
BALANCE - March 31, 2024	106,891	$	107	$	909,083	$	88,964	$	998,154
Stock-based compensation cost	—	—		4,618		—		4,618
Issuance of equity awards, net	168	—		—		—		—
Tax withholdings paid for net settlement of equity awards	—	—		(61)		—		(61)
Share repurchases	(2,535)	(2)		(22,986)		—		(22,988)
Excise tax on share repurchases	—	—		(215)		—		(215)
Net loss	—	—		—		(3,660)		(3,660)
BALANCE - June 30, 2024	104,524	$	105	$	890,439	$	85,304	$	975,848
Stock-based compensation cost	—	—		4,615		—		4,615
Issuance of equity awards, net	28	—		—		—		—
Tax withholdings paid for net settlement of equity awards	—	—		(107)		—		(107)
Share repurchases	(1,269)	(2)		(10,231)		—		(10,233)
Excise tax on share repurchases	—	—		(100)		—		(100)
Net loss	—	—		—		(137,067)		(137,067)
BALANCE - September 30, 2024	103,283	$	103	$	884,616	$	(51,763)	$	832,956


	Nine Months Ended September 30, 2023
	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Total
BALANCE - January 1, 2023	114,515	$	114	$	970,519	$	(16,600)	$	954,033
Stock-based compensation cost	—	—		3,536		—		3,536
Issuance of equity awards, net	656	1		(1)		—		—
Tax withholdings paid for net settlement of equity awards	—	—		(3,379)		—		(3,379)
Net income	—	—		—		28,733		28,733
BALANCE - March 31, 2023	115,171	$	115	$	970,675	$	12,133	$	982,923
Stock-based compensation cost	—	—		3,758		—		3,758
Issuance of equity awards, net	76	—		—		—		—
Tax withholdings paid for net settlement of equity awards	—	—		(4)		—		(4)
Share repurchases	(2,289)	(2)		(17,468)		—		(17,470)
Excise tax on share repurchases	—	—		(105)		—		(105)
Net income	—	—		—		39,257		39,257
BALANCE - June 30, 2023	112,958	$	113	$	956,856	$	51,390	$	1,008,359
Stock-based compensation cost	—	—		3,310		—		3,310
Issuance of equity awards, net	25	—		—		—		—
Tax withholdings paid for net settlement of equity awards	—	—		(123)		—		(123)
Share Repurchases	(1,892)	(2)		(18,785)		—		(18,787)
Excise tax on share repurchases	—	—		(185)		—		(185)
Net income	—	—		—		34,753		34,753
BALANCE - September 30, 2023	111,091	$	111	$	941,073	$	86,143	$	1,027,327


(in thousands)

Balance - January 1, 2024	$	236
Provision for credit losses during the period	—
Write-off during the period	—
Balance - September 30, 2024	$	236


(in thousands)
Fair value of purchase consideration:
Cash	$	21,216
Deferred cash consideration	3,664
Contingent consideration	10,900
Total consideration	$	35,780


(in thousands)
Recognized amounts of assets acquired and liabilities assumed:
Cash	$	178
Accounts receivable	10,551
Property and equipment	13,468
Intangible assets:
Trade name	1,300
Customer relationships	18,600
Accounts payable	(1,423)
Factored receivables	(10,024)
Total net assets acquired	32,650
Goodwill	3,130
Total consideration	$	35,780


(unaudited, in thousands)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	360,868	$	428,435	$	1,166,222	$	1,289,157
Net (loss) income	(136,647)		35,413		(109,682)		102,298


(in thousands)
Total purchase consideration:
Cash	$	22,215
Deferred cash consideration	3,109
Total consideration	$	25,324


(in thousands)
			Estimated fair value measurements
	Balance		Quoted prices in active market (Level 1)		Significant other observable inputs (Level 2)		Significant other unobservable inputs (Level 3)		Total gains (losses)
September 30, 2024:
Short-term investment	$	7,405	$	7,405	$	—	$	—	$	(340)
Business acquisition contingent consideration payable	$	9,100	$	—	$	—	$	9,100	$	1,800
December 31, 2023:
Short-term investment	$	7,745	$	7,745	$	—	$	—	$	(2,538)


	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


(in thousands)
Year	Estimated future amortization expense
2024	$	2,229
2025	8,917
2026	8,917
2027	8,917
2028 and beyond	36,175
Total	$	65,155


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Service Revenue
Hydraulic Fracturing	$	274,138	$	340,089	$	855,066	$	1,018,074
Wireline	47,958		52,775		157,966		179,182
All Other	38,920		30,940		110,935		85,367
Total service revenue for reportable segments	361,016		423,804		1,123,967		1,282,623
Elimination of inter-segment service revenue	(148)		—		(235)		—
Total consolidated service revenue	$	360,868	$	423,804	$	1,123,732	$	1,282,623

Adjusted EBITDA
Hydraulic Fracturing	$	66,166	$	99,586	$	215,995	$	308,448
Wireline	9,194		14,011		36,687		50,667
All Other	8,989		6,375		20,433		16,861
Total Adjusted EBITDA for reportable segments	84,349		119,972		273,115		375,976
Unallocated corporate administrative expenses	(13,219)		(12,258)		(42,529)		(36,284)
Depreciation and amortization (1)	(54,299)		(45,361)		(164,027)		(124,749)
Impairment expense (2)	(188,601)		—		(188,601)		—
Interest expense	(1,939)		(1,169)		(5,933)		(3,016)
Income tax benefit (expense)	41,365		(10,644)		28,041		(31,118)
Loss on disposal of assets (1)	(2,149)		(12,673)		(11,884)		(62,117)
Stock-based compensation	(4,615)		(3,310)		(12,975)		(10,604)
Other income (expense), net (3)	3,599		1,883		7,408		(1,749)
Other general and administrative expense, net	(346)		(450)		(1,517)		(1,659)
Retention bonus and severance expense	(1,212)		(1,237)		(1,895)		(1,937)
Net (loss) income	$	(137,067)	$	34,753	$	(120,797)	$	102,743


(in thousands)	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Stock options	179	196	179	320
Restricted stock units	3,243	452	3,243	611
Performance stock units	1,381	—	1,381	—
Total	4,803	648	4,803	931


(in thousands)
	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024
Business acquisition contingent consideration payable - opening balance	$	10,900	$	—
Addition	—		10,900
Decrease in estimated fair value (1)	(1,800)		(1,800)
Business acquisition contingent consideration payable - closing balance	$	9,100	$	9,100


	Three Months Ended September 30, 2023
	Hydraulic Fracturing		Wireline		All Other		Reconciling Items		Total
Service revenue	$	340,089	$	52,775	$	30,940	$	—	$	423,804
Adjusted EBITDA for reportable segments	$	99,586	$	14,011	$	6,375	$	—	$	119,972
Depreciation and amortization (2)	$	39,098	$	4,860	$	1,363	$	40	$	45,361
Capital expenditures incurred	$	52,713	$	5,488	$	880	$	—	$	59,081
Goodwill	$	—	$	23,624	$	—	$	—	$	23,624
Total assets at December 31, 2023	$	1,189,526	$	198,957	$	78,475	$	13,354	$	1,480,312


	Number of Shares	Weighted Average Exercise Price
Outstanding at January 1, 2024	180	$	14.00
Granted	—	$	—
Exercised	—	$	—
Forfeited	—	$	—
Expired	(1)	$	14.00
Outstanding at September 30, 2024	179	$	14.00
Exercisable at September 30, 2024	179	$	14.00


	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2024	2,264	$	9.81
Granted	1,762	$	7.42
Vested	(737)	$	9.57
Forfeited	(46)	$	8.42
Canceled	—	$	—
Outstanding at September 30, 2024	3,243	$	8.59


Period Granted	Target Shares Outstanding at January 1, 2024		Target Shares Granted		Target Shares Vested		Target Shares Forfeited		Target Shares Outstanding at September 30, 2024
2021	620		—		—		(620)		—
2022	306		—		—		—		306
2023	438		—		—		—		438
2024	—		637		—		—		637
Total	1,364		637		—		(620)		1,381
Weighted Average Fair Value Per Share	$	15.80	$	8.22	$	—	$	14.73	$	12.79



(in thousands)	Operating Leases		Finance Leases
2024	$	9,697	$	5,229
2025	38,680		20,915
2026	37,916		13,462
2027	11,332		—
2028	821		—
Total undiscounted future lease payments	98,446		39,606
Less: amount representing interest	(8,639)		(2,494)
Present value of future lease payments (lease obligation)	$	89,807	$	37,112


(in thousands, except for percentages)	Three Months Ended September 30,						Change Increase (Decrease)
	2024			2023			$			%
Revenue
Hydraulic Fracturing	$	274,138		$	340,089		$	(65,951)		(19.4)	%
Wireline	47,958			52,775			(4,817)			(9.1)	%
All Other (1)	38,920			30,940			7,980			25.8	%
Elimination of inter-segment service revenue	(148)			—			(148)			(100.0)	%
Total revenue	360,868			423,804			(62,936)			(14.9)	%

Cost of services (2)
Hydraulic Fracturing	202,601			233,250			(30,649)			(13.1)	%
Wireline	36,158			35,807			351			1.0	%
All Other (1)	28,944			23,433			5,511			23.5	%
Elimination of inter-segment cost of services	(148)			—			(148)			(100.0)	%
Total cost of services	267,555			292,490			(24,935)			(8.5)	%

General and administrative expense (3)	28,356			28,597			(241)			(0.8)	%
Depreciation and amortization	54,299			45,361			8,938			19.7	%
Impairment expense	188,601			—			188,601			100.0	%
Loss on disposal of assets	2,149			12,673			(10,524)			(83.0)	%
Interest expense	1,939			1,169			770			65.9	%
Other (income) expense	(3,599)			(1,883)			(1,716)			(91.1)	%
Income tax (benefit) expense	(41,365)			10,644			(52,009)			(488.6)	%
Net (loss) income	$	(137,067)		$	34,753		$	(171,820)		(494.4)	%

Adjusted EBITDA (3)	$	71,130		$	107,714		$	(36,584)		(34.0)	%
Adjusted EBITDA Margin (3)	19.7		%	25.4		%	(5.7)		%	(22.4)	%

Hydraulic Fracturing segment results of operations:
Revenue	$	274,138		$	340,089		$	(65,951)		(19.4)	%
Cost of services	$	202,601		$	233,250		$	(30,649)		(13.1)	%
Adjusted EBITDA (4)	$	66,166		$	99,586		$	(33,420)		(33.6)	%
Adjusted EBITDA Margin (5)	24.1		%	29.3		%	(5.2)		%	(17.7)	%


Period	Total number of shares purchased	Average price paid per share (2)		Total number of shares purchased as part of publicly announced plans or programs (1)	Approximate dollar value of shares that may yet be purchased under the plans or programs (1)
July 1, 2024 to July 31, 2024	362,143	$	8.52	362,143	$	99,679,449
August 1, 2024 to August 31, 2024	—	$	—	—	$	99,679,449
September 1, 2024 to September 30, 2024	906,988	$	7.88	906,988	$	92,533,309
Total	1,269,131	$	8.06	1,269,131	$	92,533,309


3.1						Amended and Restated Certificate of Incorporation of ProPetro Holding Corp. dated as of June 19, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, dated June 19, 2019).
3.2						Amended and Restated Bylaws of ProPetro Holding Corp. (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K, dated June 19, 2019).
3.3						Certificate of Designations of Series B Junior Participating Preferred Stock of ProPetro Holding Corp. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, dated April 14, 2020).
31.1*						Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						XBRL Instance Document
101.SCH*						XBRL Taxonomy Extension Schema Document
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document
104*						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document


1.			I have reviewed this Quarterly Report on Form 10-Q of ProPetro Holding Corp.;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


			(a)			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			(b)			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			(c)			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			(d)			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


			(a)			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


			(b)			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/s/ Samuel D. Sledge
Samuel D. Sledge Chief Executive Officer (Principal Executive Officer)