8-K
ProPetro Holding Corp. (PUMP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 4, 2021
ProPetro Holding Corp.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38035 | 26-3685382 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
1706 South Midkiff,
Midland, Texas 79701
(Address of principal executive offices)
(432) 688-0012
(Registrant’s telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| 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 |
| Preferred Stock Purchase Rights | N/A | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR230.405) of Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On May 4, 2021, ProPetro Holding Corp. (the “Company”) issued a press release announcing its results for the quarter ended March 31, 2021. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On May 4, 2021, the Company posted an investor presentation to its website pertaining to the financial and operational results for the quarter ended March 31, 2021. The presentation is posted on the Company's website at ir.propetroservices.com/presentations and attached hereto as Exhibit 99.2.
The information furnished with this report, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br>Number | Description of Exhibit |
|---|---|
| 99.1 | Press Release dated May 4, 2021. |
| 99.2 | Investor Presentation dated May 4, 2021. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 4, 2021
| PROPETRO HOLDING CORP. |
|---|
| /s/ David S. Schorlemer |
| David S. Schorlemer<br>Chief Financial Officer |
Document
ProPetro Reports Financial Results for the First Quarter of 2021
MIDLAND, TX, May 4, 2021, (Business Wire) – ProPetro Holding Corp. ("ProPetro" or "the Company") (NYSE: PUMP) today announced financial and operational results for the first quarter of 2021.
First Quarter 2021 and Recent Highlights
•Total revenue for the quarter was $161 million compared to $154 million for the fourth quarter of 2020.
•Net loss for the quarter was $20 million, or $0.20 per diluted share, compared to net loss of $44 million, or $0.44 per diluted share, for the fourth quarter of 2020.
•Adjusted EBITDA(1) for the quarter was $20 million compared to $24 million for the fourth quarter of 2020.
•Financial results were negatively impacted by eight days of lost revenue during extreme winter weather in Texas during February, and the Company absorbing certain operational costs, including expenses related to fleet reactivations.
•Effective utilization for the first quarter was 10.3 fleets compared to 9.6 fleets for the fourth quarter of 2020.
•Net cash provided by operating activities for the quarter of $17 million as compared to $21 million for the fourth quarter of 2020.
•Negative Free Cash Flow(2) of approximately $5 million as compared to positive Free Cash Flow of approximately $9 million for the fourth quarter of 2020.
(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) Free cash flow ("FCF") is a Non-GAAP financial measure and is defined as net cash flow provided from operating activities less net cash used in investing activities. During the quarter ended March 31, 2021, net cash provided by operating activities of $17 million less net cash used in investing activities of $22 million resulted in free cash flow of $(5) million. During the quarter ended December 31, 2020, net cash provided by operating activities of $21 million less net cash used in investing activities of $12 million resulted in free cash flow of $9 million.
Phillip Gobe, Chief Executive Officer, commented, “Despite challenges posed by extreme weather, our customer-focused culture once again drove our operational efficiencies to new heights through the continued strong collaboration between our teammates and customers as we began 2021. The best-in-class ProPetro operating team delivered another quarter of excellent execution at the wellhead, further proving our competitive advantage in the premier oil play in the United States, the Permian Basin.”
First Quarter 2021 Financial Summary
Revenue for the first quarter of 2021 was $161 million compared to revenue of $154 million for fourth quarter of 2020. The 5% increase was primarily attributable to increased effectively utilized fleet count, which was partially offset by approximately $16 million of lost revenue during the eight days of suspended operations during the freeze in February.
Cost of services, excluding depreciation and amortization of approximately $33 million, for the first quarter of 2021 increased slightly to $123 million from $116 million during the fourth quarter of 2020. Contributing to the increase were higher activity levels, direct labor and certain other
operational costs that were not passed through to customers as a result of downtime from severe weather along with additional fleet reactivation costs.
General and administrative expense of $20 million for the first quarter of 2021 was flat with the fourth quarter of 2020. General and administrative expense, exclusive of $2 million of non-recurring items, was $18 million, or 11% of revenue, for the first quarter of 2021 compared to $15 million in the fourth quarter of 2020, or 10% of revenue. The slight increase in general and administrative expense, net of non-recurring items, of approximately $3 million was a result of an increase in certain costs, including insurance and compensation-related expenses.
Net loss for the first quarter of 2021 totaled $20 million, or $0.20 per diluted share, versus net loss of $44 million, or $0.44 per diluted share, for the fourth quarter of 2020. The fourth quarter 2020 financial results were impacted by an approximate $21 million impairment expense.
Adjusted EBITDA decreased to $20 million for the first quarter of 2021 from $24 million for the fourth quarter of 2020. The sequential decline in Adjusted EBITDA was primarily attributable to lost profitability during the extreme winter weather event in February and fleet reactivation costs, which we believe adversely impacted Adjusted EBITDA by approximately $5 million.
Liquidity and Capital Spending
As of March 31, 2021, total cash was $56 million and the Company remained debt free. Total liquidity at the end of the first quarter of 2021 was $114 million including cash and $58 million of available capacity under the Company’s revolving credit facility. As of May 3, 2021 total cash was $51 million and had no debt outstanding. Total liquidity as of May 3, 2021 was $111 million including cash and $60 million of available capacity under the Company’s revolving credit facility.
Capital expenditures incurred during the first quarter of 2021 were $32 million, $18 million of which was maintenance spending, with the remainder allocated to Tier IV DGB purchases and conversions. Capital expenditures paid (as appears in the Investing Activities section of the Statement of Cash Flows) in the first quarter were $22 million. Based on our current and projected activity levels for 2021, and consistent with prior guidance, which is highly dependent on market conditions, the Company expects full year 2021 incurred capital expenditures to be between $115 million and $130 million. Our full year incurred capital expenditure guidance includes approximately $37 million allocated to our investment in 90,000 HHP of Tier IV DGB dual-fuel equipment and the remainder mostly comprised of maintenance spending. Full Year capital expenditures paid may differ slightly due to the timing of payments.
Outlook
Mr. Gobe concluded, “As the COVID-19 vaccine rollout continues to progress, the strengthening outlook for crude oil demand has positive implications for the oilfield services sector. While we are excited to see signs of improvement in the broader economy, we remain disciplined in our approach to enhancing shareholder value. Our conservative, debt-free balance sheet, combined with our unique advantages in collaboration and wellsite execution, will continue to differentiate our Company as we move through the remainder of the year and into a multi-year recovery in the Permian Basin. Supporting this outlook is our unwavering commitment to efficient operations and sustainability in support of our customers' long-term goals. ProPetro remains positioned as a premier oilfield services partner for leading operators in the Permian Basin.”
Updated Conference Call Information
The Company will host a conference call at 8:30 AM Central Time on Wednesday, May 5, 2021 to discuss financial and operating results for the first quarter of 2021. 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 10155044.
About ProPetro
ProPetro Holding Corp. is a Midland, Texas-based oilfield services company providing pressure pumping and other complementary services to leading upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources. For more information visit www.propetroservices.com.
Forward-Looking Statements
Except for historical information contained herein, the statements and information in this news release 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,” and other expressions that are predictions of, or indicate, future events and trends and that do not relate to historical matters identify forward‑looking statements. Our forward‑looking statements include, among other matters, statements about our business strategy, industry, future profitability, expected fleet utilization, sustainability efforts, the future performance of newly improved technology (such as our DuraStim® fleets), expected capital expenditures and the impact of such expenditures on our performance and capital programs. 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 and recent declines in oil prices, the operational disruption and market volatility resulting from the COVID-19 pandemic 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, including matters related to shareholder litigation and the SEC investigation. 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.
Contact: ProPetro Holding Corp
David Schorlemer, 432-688-0012
Chief Financial Officer
investors@propetroservices.com
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||
| REVENUE - Service revenue | $ | 161,458 | 154,343 | 395,069 | ||
| COSTS AND EXPENSES | ||||||
| Cost of services (exclusive of depreciation and amortization) | 123,378 | 115,646 | 300,848 | |||
| General and administrative (inclusive of stock-based compensation) | 20,201 | 19,681 | 24,937 | |||
| Depreciation and amortization | 33,478 | 35,445 | 40,205 | |||
| Impairment Expense | — | 21,349 | 16,654 | |||
| Loss on disposal of assets | 13,052 | 18,262 | 19,854 | |||
| Total costs and expenses | 190,109 | 210,382 | 402,498 | |||
| OPERATING LOSS | (28,651) | (56,039) | (7,429) | |||
| OTHER INCOME (EXPENSE): | ||||||
| Interest expense | (176) | (174) | (1,281) | |||
| Other income (expense) | 1,789 | (291) | (3) | |||
| Total other income (expense) | 1,613 | (465) | (1,284) | |||
| LOSS BEFORE INCOME TAXES | (27,038) | (56,504) | (8,713) | |||
| INCOME TAX EXPENSE | 6,663 | 12,393 | 909 | |||
| NET LOSS | (20,375) | (44,111) | (7,804) | |||
| NET LOSS PER COMMON SHARE: | ||||||
| Basic | $ | (0.20) | $ | (0.44) | $ | (0.08) |
| Diluted | $ | (0.20) | $ | (0.44) | $ | (0.08) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||
| Basic | 101,550 | 100,897 | 100,687 | |||
| Diluted | 101,550 | 100,897 | 100,687 |
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| March 31, 2021 | December 31, 2020 | |||
|---|---|---|---|---|
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $ | 55,859 | $ | 68,772 |
| Accounts receivable - net of allowance for credit losses of $0 and $1,497, respectively | 110,386 | 84,244 | ||
| Inventories | 2,329 | 2,729 | ||
| Prepaid expenses | 7,853 | 11,199 | ||
| Other current assets | 14 | 782 | ||
| Total current assets | 176,441 | 167,726 | ||
| PROPERTY AND EQUIPMENT - net of accumulated depreciation | 866,050 | 880,477 | ||
| OPERATING LEASE RIGHT-OF-USE ASSETS | 636 | 709 | ||
| OTHER NONCURRENT ASSETS: | ||||
| Other noncurrent assets | 1,656 | 1,827 | ||
| Total other noncurrent assets | 1,656 | 1,827 | ||
| TOTAL ASSETS | $ | 1,044,783 | $ | 1,050,739 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Accounts payable | $ | 108,931 | $ | 79,153 |
| Accrued and other current liabilities | 19,186 | 24,676 | ||
| Operating lease liabilities | 342 | 334 | ||
| Total current liabilities | 128,459 | 104,163 | ||
| DEFERRED INCOME TAXES | 68,677 | 75,340 | ||
| NONCURRENT OPERATING LEASE LIABILITIES | 378 | 465 | ||
| Total liabilities | $ | 197,514 | $ | 179,968 |
| COMMITMENTS AND CONTINGENCIES (Note 10) | ||||
| 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, 102,057,815 and 100,912,777 shares issued, respectively | 102 | 101 | ||
| Additional paid-in capital | 831,987 | 835,115 | ||
| Retained earnings | 15,180 | 35,555 | ||
| Total shareholders’ equity | 847,269 | 870,771 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,044,783 | $ | 1,050,739 |
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Net loss | $ | (20,375) | $ | (7,804) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Depreciation and amortization | 33,478 | 40,205 | ||
| Impairment expense | — | 16,654 | ||
| Deferred income tax benefit | (6,663) | (1,312) | ||
| Amortization of deferred debt issuance costs | 134 | 135 | ||
| Stock-based compensation | 2,487 | 471 | ||
| Provision for credit losses | — | 4,291 | ||
| Loss on disposal of assets | 13,052 | 19,854 | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (25,698) | (14,486) | ||
| Other current assets | 325 | 1,138 | ||
| Inventories | 401 | (860) | ||
| Prepaid expenses | 3,383 | 2,920 | ||
| Accounts payable | 18,579 | 10,080 | ||
| Accrued and other current liabilities | (2,095) | (9,431) | ||
| Accrued interest | — | (131) | ||
| Net cash provided by operating activities | 17,008 | 61,724 | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
| Capital expenditures | (22,494) | (47,290) | ||
| Proceeds from sale of assets | 224 | 733 | ||
| Net cash used in investing activities | (22,270) | (46,557) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Repayments of borrowings | — | (20,000) | ||
| Payment of finance lease obligation | — | (30) | ||
| Repayments of insurance financing | (2,037) | — | ||
| Tax withholdings paid for net settlement of equity awards | (5,614) | (456) | ||
| Net cash used in financing activities | (7,651) | (20,486) | ||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (12,913) | (5,319) | ||
| CASH AND CASH EQUIVALENTS - Beginning of period | 68,772 | 149,036 | ||
| CASH AND CASH EQUIVALENTS - End of period | $ | 55,859 | $ | 143,717 |
Reportable Segment Information
| December 31, 2020 | |||||||||||
| All Other | Total | Pressure <br>Pumping | All Other | Total | |||||||
| ( In thousands) | |||||||||||
| Service revenue | 158,191 | $ | 3,267 | $ | 161,458 | $ | 151,418 | $ | 2,925 | $ | 154,343 |
| Adjusted EBITDA | (11,853) | 20,017 | 34,672 | (10,896) | 23,776 | ||||||
| Depreciation and amortization | 965 | 33,478 | 34,453 | 992 | 35,445 | ||||||
| Capital expenditures | 30,023 | $ | 2,305 | $ | 32,328 | $ | 21,109 | $ | 48 | $ | 21,158 |
All values are in US Dollars.
Non-GAAP Financial Measures
Adjusted EBITDA is not a financial measure presented in accordance with GAAP. We believe that the presentation of this non-GAAP financial measure provides 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. Non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. 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 in isolation or as a substitute for an analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Reconciliation of Net Loss to Adjusted EBITDA
| Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2021 | December 31, 2020 | |||||||||||
| Pressure Pumping | All Other | Total | Pressure Pumping | All Other | Total | |||||||
| Net loss | $ | (13,675) | $ | (6,700) | $ | (20,375) | $ | (38,130) | $ | (5,981) | $ | (44,111) |
| Depreciation and amortization | 32,513 | 965 | 33,478 | 34,453 | 992 | 35,445 | ||||||
| Impairment expense | — | — | — | 21,349 | — | 21,349 | ||||||
| Interest expense | — | 176 | 176 | — | 174 | 174 | ||||||
| Income tax benefit | — | (6,663) | (6,663) | — | (12,393) | (12,393) | ||||||
| Loss on disposal of assets | 13,032 | 20 | 13,052 | 17,000 | 1,261 | 18,262 | ||||||
| Stock-based compensation | — | 2,487 | 2,487 | — | 3,132 | 3,132 | ||||||
| Other expense | — | (1,789) | (1,789) | — | 291 | 291 | ||||||
| Other general and administrative expense, net (1) | — | (961) | (961) | — | 620 | 620 | ||||||
| Severance expense | — | 612 | 612 | — | 1,007 | 1,007 | ||||||
| Adjusted EBITDA | $ | 31,870 | $ | (11,853) | $ | 20,017 | $ | 34,672 | $ | (10,896) | $ | 23,776 |
(1) Other general and administrative expense, (net) relates to nonrecurring professional fees paid to external consultants in connection with the Company's pending SEC investigation and shareholder litigation, net of insurance recoveries.
| Three Months Ended | ||||
|---|---|---|---|---|
| ($ In thousands) | March 31, 2021 | December 31, 2020 | ||
| Cash from Operating Activities | $ | 17,008 | $ | 21,098 |
| Cash used in Investing Activities | (22,270) | (12,038) | ||
| Free Cash Flow | $ | (5,262) | $ | 9,060 |
9
investor_presentationx1q
Q1 2021 INVESTOR PRESENTATION May 5, 2021
2 FORWARD LOOKING STATEMENTS Except for historical information contained herein, the statements and information in this presentation, including the oral statements made in connection herewith, 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,” and other expressions that are predictions of, or indicate, future events and trends and that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include, among other matters, statements about our business strategy, industry, future profitability, expected fleet utilization, sustainability efforts, the future performance of newly improved technology (such as our DuraStim® fleets), expected capital expenditures and the impact of such expenditures on our performance and capital programs. 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 and recent declines in oil prices, the operational disruption and market volatility resulting from the COVID-19 pandemic and other factors described in our 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, we may be subject to currently unforeseen risks that may have a materially adverse impact on us, including matters related to shareholder litigation and the SEC investigation. 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 our 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 our business. The forward-looking statements in this presentation are made as of the date of this presentation. We do not undertake, and expressly disclaim, 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.
© 2021 ProPetro Holding Corp. All Rights Reserved. 3 PROPETRO AT A GLANCE 2005 Founded 2010 Begins hydraulic fracturing operations in the Permian Basin 2013 Company recapitalization 2017 Initial public offering (NYSE: PUMP) 2019 Announces initial phase of DuraStim project 2020 Electrically Powered DuraStim field trials 2021 Announces Tier IV DGB sustainability investment Teamwork & Collaboration Execution Capital Discipline 0.49 Full Year 2020 TRIR 38% lower than 2019 Industry Average Customer Focused Team Driven Sustainability Investments 100% Concentration of Frac operations in the Permian 2011 50,000 HHP 2016 420,000 HHP 2019 1.4 million HHP 2021 1.3 million HHP as of March 31, 2021
© 2021 ProPetro Holding Corp. All Rights Reserved. 4 ProPetro is solely focused where capital is migrating CAPITAL MIGRATING TO OUR BACKYARD Over $60 billion in Permian E&P transactions since 2018 99% Permian 1% Non- Permian ProPetro FY2020 Revenue Mix $6bn $13bn $3bn $3bn $13bn Date Buyer Value ($MM) 4/1/2021 Pioneer Natural Resources $6,400 10/20/20 Pioneer Natural Resources $7,621 10/19/20 ConocoPhillips $13,337 12/16/19 WPX Energy $2,500 12/21/20 Diamondback Energy Inc $2,962 10/14/19 Parsley Energy Inc $2,270 11/19/18 Cimarex Energy Co $1,616 8/14/18 Diamondback Energy Inc $9,200 8/8/18 Diamondback Energy Inc $1,245 3/28/18 Concho Resources Inc $9,500 Recent Permian Upstream Transactions Notable Transactions * Source: Company filings and industry research, values as of time of announcement. $8bn
© 2021 ProPetro Holding Corp. All Rights Reserved. 5 Leveraging our scale in the Permian to drive profitability • Low-cost basin supports recovering activity levels • Single basin focus streamlines logistics and enhances efficiencies • Differentiated reliability and maintenance capabilities Increasing demand for efficient services • Driven by E&P acquisitions, dedicated fleet model, and completion intensity • Strategic investments in both Tier IV DGB and fully electric DuraStim to reduce emissions profile • E&P customers need flexibility to operate in volatile commodity price environments within strict capital budgets PERMIAN MACRO Permian shift to manufacturing mode • Driven by customer shift to multi-well pad development • Simul-Frac operations require flexibility and capable HHP capacity (1) Baker Hughes Rig Data as of April 23, 2021 Total U.S. Onshore Rigs Oil Directed Rig Count: 343(1) 66% Permian Basin 34% Other Total U.S. Onshore Oil Rigs Added Since Recent Trough (August 2020): 171(1) 64% Permian Basin 36% Other
© 2021 ProPetro Holding Corp. All Rights Reserved. 6 0 90 180 Diesel Propane Field Gas Liquefied Natural Gas (LNG) Pounds of CO2 per mmbtu(1) POSITIONING FOR A CLEANER FUTURE Tier II Diesel 100% Hydraulic Horsepower (HHP) Composition YE2020 YE2021(2) (1) Emissions data from EIA (2) Management estimates subject to change, DuraStim contribution dependent upon commercialization (3) Total investments since 2019 DuraStim $145mm Tier IV DGB $37mm Investing in displacement of legacy fuels(3) Emissions Friendly Conventional Diesel Conventional Diesel Displacing Conventional Diesel Fleets with Tier IV Dynamic Gas Blending (DGB) Dual Fuel Equipment through Conversions and New-Build Purchases
© 2021 ProPetro Holding Corp. All Rights Reserved. 7 RECENT HIGHLIGHTS (1) For a reconciliation to net income (loss), please see Appendix (2) Free cash flow (FCF) is a Non-GAAP financial measure and is defined as net cash flow provided from operating activities less net cash used in investing activities. Please see appendix for reconciliation to Net Cash from Operating activities Prudent approach to utilization • Effective utilization of 10.3 fleets in Q1 • Q1 Utilization was impacted by approximately 1 fleet due to extreme weather • Plans to deploy 90,000 HHP of Tier IV DGB by YE 2021 • Investing in converting 40,000 HHP to Tier IV DGB • Purchasing 50,000 HHP of new-build Tier IV DGB Valuable through-cycle partner • Collaboration with customers to reduce costs amid unprecedented downturn • Future re-investment cycle will be underwritten by customer relationships built on collaboration Revenue Adj. EBITDA(1) Free Cash Flow(2) $106.1 $133.7 $154.3 $161.5 Q2 2020 Q3 2020 Q4 2020 Q1 2021 (in $millions) (in $millions) $25.4 $17.4 $23.8 $20.0 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 Job Mix 4% Single Well 96% Multi- well (in $millions) $15.2 $17.0 $9.1 ($5.3) Q2 2020 Q3 2020 Q4 2020 Q1 2021 Net Loss $(25.9) $(29.2) $(44.1) $(20.4) Q2 2020 Q3 2020 Q4 2020 Q1 2021 (in $millions) +59% 2019 2020 2021 Pumping Hours per Day since Q1 2019
© 2021 ProPetro Holding Corp. All Rights Reserved. 8 Net Loss: $(20) MM 2021 Q1 FINANCIAL HIGHLIGHTS Adjusted EBITDA: $20 MM (1) Free Cash Flow: $(5) MM (2) (1) Adjusted EBITDA is a Non-GAAP financial measure, please see appendix for reconciliation to Net Income (2) Free cash flow (FCF) is a Non-GAAP financial measure and is defined as net cash flow provided from operating activities less net cash used in investing activities. Please see appendix for reconciliation to Net Cash from Operating activities (3) Inclusive of cash and available capacity under revolving credit facility as of 3/31/2021 Durable Capital Structure: • Cash: $56 MM • Total Debt: $0 MM • Total Liquidity: $114 MM (3) 2021 Q1 Revenue Mix 99% Permian 1% Non- Permian 98% Pressure Pumping 2% All Other Revenue: $161 MM
© 2021 ProPetro Holding Corp. All Rights Reserved. 9 UNIQUELY POSITIONED FOR SUCCESS Permian Focus Positioned in the low cost basin with sector leading operating scale Blue Chip Customers Large drilling inventories and sizeable rig programs Superior Performance Consistently outperforming the competition on location and efficient Simul-Frac completions partner Sustainable Future Investing in lower emissions equipment to reduce our carbon footprint Capital Discipline Strong Balance Sheet with no debt; disciplined capital allocation and asset deployment Safety Culture Full year 2020 Total Recordable Incident Rate of 0.49 Access to Premier Projects Meeting customer needs on their most complex jobs; dedicated contract with Pioneer Natural Resources including Simul-Frac Technology Leveraging leading cloud-based solutions to drive well-site performance to pull innovation forward
APPENDIX
11 NON-GAAP RECONCILIATIONS Three Months Ended (in thousands) March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 Net (loss) income ($20,375) ($44,111) ($29,184) ($25,920) Depreciation and amortization 33,478 35,445 37,467 40,173 Interest expense 176 174 137 791 Income tax (expense) benefit (6,663) (12,393) (7,717) (6,460) Loss on disposal of assets 13,052 18,262 11,286 8,734 Impairment Expense - 21,349 - - Stock-based compensation 2,487 3,132 2,535 2,962 Other expense (1,789) 291 312 267 Other general and administrative expenses (961) 620 2,481 4,802 Deferred IPO and retention bonus and severance expense 612 1,007 37 61 Adjusted EBITDA $20,017 $23,776 $17,354 $25,410 This presentation references “Adjusted EBITDA” and “Free Cash Flow,” which are non-GAAP financial measures. We define EBITDA as our earnings, before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets, (ii) stock-based compensation, and (iii) other unusual or nonrecurring (income)/expenses, such as impairment charges, severance, costs related to asset acquisitions, costs related to SEC investigation and class action lawsuits and one-time professional and advisory fees. Free cash flow (FCF) is defined as net cash flow provided by operating activities less net cash used in investing activities. These non-GAAP financial measures are not intended to be an alternative to any measure calculated in accordance with GAAP. We believe the presentation of Adjusted EBITDA and Free Cash Flow provide useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to Adjusted EBITDA. Net cash flow provided from operating activities is the GAAP measure most directly comparable to Free Cash Flow. 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 these non-GAAP financial measures in isolation or as a substitute for an analysis of our results as reported under GAAP. Further, Adjusted EBITDA and Free Cash Flow may be defined differently by other companies in our industry, and our definitions of Adjusted EBITDA and Free Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
12 NON-GAAP RECONCILIATIONS Three Months Ended (in thousands) March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 Net Cash from Operating Activities $17,008 $21,098 $21,116 $35,186 Net Cash used in Investing Activities (22,270) (12,038) (4,154) (31,468) Free Cash Flow ($5,262) $9,060 $16,962 $3,718
© 2021 ProPetro Holding Corp. All Rights Reserved. 13 CONTACT www.propetroservices.com Corporate Headquarters Investor Relations 1706 S. Midkiff Rd Midland, TX 79701 432.688.0012 David Schorlemer - CFO investors@propetroservices.com Office 432.688.0012