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): August 2, 2022
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 August 2, 2022, ProPetro Holding Corp. (the “Company”) issued a press release announcing its results for the quarter ended June 30, 2022. 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 August 2, 2022, the Company posted an investor presentation to its website pertaining to the financial and operational results for the quarter ended June 30, 2022. 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 August 2, 2022. |
| 99.2 | Investor Presentation dated August 2, 2022. |
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: August 2, 2022
| PROPETRO HOLDING CORP. |
|---|
| /s/ David S. Schorlemer |
| David S. Schorlemer<br>Chief Financial Officer |
Document
EXHIBIT 99.1
ProPetro Reports Financial Results for the Second Quarter of 2022
MIDLAND, TX, August 2, 2022, (Business Wire) – ProPetro Holding Corp. ("ProPetro" or "the Company") (NYSE: PUMP) today announced financial and operational results for the second quarter of 2022.
Second Quarter 2022 and Recent Highlights
•Total revenue for the quarter increased 11% to $315 million compared to $283 million for the first quarter of 2022.
•Net loss for the quarter was $33 million, or $0.32 per diluted share, compared to net income of $12 million, or $0.11 per diluted share, for the first quarter of 2022.
•Recorded impairment expense of $57 million in connection with our DuraStim® equipment.
•Adjusted EBITDA(1) for the quarter increased 13% to $76 million or 24% of revenues compared to $67 million for the first quarter of 2022.
•Effective utilization for the second quarter improved 8% to 14.8 fleets compared to 13.7 fleets for the first quarter of 2022.
•Net cash provided by operating activities for the quarter of $78 million as compared to $25 million for the first quarter of 2022.
•Positive Free Cash Flow(2) for the quarter was approximately $0.6 million as compared to negative Free Cash Flow of approximately $39 million for the first quarter of 2022.
•Recently ordered additional Tier IV Dynamic Gas Blending ("DGB" or "dual-fuel") frac units.
(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 is a Non-GAAP financial measure and is described and reconciled to cash from operating activities in the table under “Non-GAAP Financial Measures".
Sam Sledge, Chief Executive Officer, commented, “The Company produced another strong quarter of operational and financial performance in spite of many crosswinds and challenges, including continuing supply chain disruptions and cost inflation. We attribute this success to the hard work and effort of our team executing on our returns-focused strategy to take advantage of improving market conditions and increased demand for our services, all bolstered by first-in-class service at the wellsite.
As part of our fleet transition strategy announced last year, we now have three Tier IV DGB fleets operating and expect a fourth Tier IV DGB fleet to be operating in the fourth quarter of this year, subject to final equipment deliveries over the coming months. With the additional orders
EXHIBIT 99.1
announced today, we anticipate having approximately six marketed Tier IV DGB fleets during the first quarter of 2023. Given customer interest in long-term contracts for gas-burning equipment with our efficient crews, we are experiencing accelerating demand for Tier IV DGB assets into 2023.
Additionally, I want to comment that the demand for electric solutions from efficient frac providers is gaining momentum and ProPetro plans to play a significant role in the electric future of the Permian Basin. We have assessed multiple electric frac offerings with plans to deploy an electric solution in 2023, therefore putting our team in a position to participate directly in the electrification and industrialization of the Permian Basin. We are excited about continuing our transition to more efficient solutions that support gas-burning opportunities for our customers to help lower costs, reduce greenhouse gas emissions, and enhance our future competitiveness and free cash flow profile."
David Schorlemer, Chief Financial Officer, commented, "Our positive financial performance in the second quarter is a result of our commitment to our strict fleet deployment strategy and our pursuit of margin-over-market share. Achieving mid-cycle economics this early in the year gives our team confidence to move forward with our customers to prioritize Tier IV DGB equipment and the deployment of electric frac fleets in 2023."
Second Quarter 2022 Financial Summary
Revenue for the second quarter of 2022 was $315 million, compared to revenue of $283 million for the first quarter of 2022. The 11% increase was attributable to our increased effectively utilized fleet count of 14.8 fleets, from 13.7 fleets in the first quarter of 2022, driven by fleet repositioning and increased pricing.
Cost of services, excluding depreciation and amortization of approximately $31 million, for the second quarter of 2022 increased to $219 million from $197 million during the first quarter of 2022. The 11% increase was attributable to the increased operational activity levels and cost inflation in the second quarter of 2022.
General and administrative expense of $25 million for the second quarter of 2022 decreased from $32 million in the first quarter of 2022. General and administrative expense, exclusive of a net expense of $5 million relating to a non-recurring net legal expense of approximately $2 million and non-cash items consisting of stock-based compensation of approximately $3 million, was $20 million, or 6% of revenue, for the second quarter of 2022 compared to 7% of revenue for the first quarter of 2022. The decrease in our general and administrative expense as a percentage of revenue was driven by higher revenue in the second quarter of 2022.
Net loss for the second quarter of 2022 totaled $33 million, or $0.32 per diluted share, compared to net income of $12 million, or $0.11 per diluted share, for the first quarter of 2022. The net loss
EXHIBIT 99.1
recorded in the second quarter of 2022 was primarily driven by the non-recurring and non-cash impairment expense of $57 million in connection with our DuraStim® equipment.
Adjusted EBITDA increased to $76 million for the second quarter of 2022 from $67 million for the first quarter of 2022. The increase in Adjusted EBITDA was primarily attributable to increased activity, fleet repositioning and net pricing improvements.
Liquidity and Capital Spending
As of June 30, 2022, total cash was $70 million and the Company remained debt free. Total liquidity at the end of the second quarter of 2022 was $185 million including our total cash balance and available borrowing capacity under the Company’s revolving credit facility.
Capital expenditures incurred during the second quarter of 2022 were $89 million, the majority of which related to maintenance expenditures and our previously announced Tier IV DGB conversions. Net cash used in investing activities from our statement of cash flow during the second quarter of 2022 was $78 million.
Outlook
Effective utilization for the second half of 2022 is expected to be in the range of 14 to 15 fleets. Based on that range and assuming current market and industry conditions, the Company currently anticipates full year 2022 adjusted EBITDA to be at or above $300 million with capital expenditures increasing to a range of $300 million to $350 million due to the additional orders of Tier IV DGB frac units.
Mr. Schorlemer added, "As we plan to meet customer demand for gas-burning offerings in the face of pronounced supply chain constraints, we have accelerated some of our 2023 capital expenditures into 2022 that would otherwise have been allocated to maintaining and upgrading our conventional fleets, in favor of Tier IV DGB equipment. We believe this investment will protect our ability to expand margins further in 2023 and enhance our free cash flow longer term. Assuming a continuing favorable operating environment, which we believe will continue to strengthen as we move into 2023, capital expenditures next year are currently expected to be meaningfully lower. This sets the Company up for material free cash flow in 2023 and a further bolstering of our already strong liquidity position which enables our longer term capital allocation strategy."
Mr. Sledge concluded, "As we begin to approach 2023 into what we believe is a structurally undersupplied global crude oil market, we are optimizing ProPetro to fully benefit from global demand for short-cycle barrels in the Permian Basin. It is clear to our team that the transition to dual-fuel and electric equipment is an important step in maintaining our position as a leading Permian frac provider. The dual-fuel investment decisions announced today and the role we
EXHIBIT 99.1
expect to have in the electric frac market in 2023 and beyond will support a structural shift in the capabilities of our future fleet portfolio. While these assets will certainly be a highlight in 2023, optimizing our existing footprint and evaluating new technologies and other strategic opportunities will continue to play an important role in enhancing cash-on-cash returns and the long-term competitiveness of ProPetro as we move through a sustained up cycle. We expect that favorable industry conditions, our strong balance sheet, and our relentless pursuit of operational excellence will enable success in the execution of these initiatives."
Conference Call Information
The Company will host a conference call at 8:00 AM Central Time on Wednesday, August 3, 2022, to discuss financial and operating results for the second quarter of 2022. 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 1560734.
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, expected capital expenditures and the impact of such expenditures on our performance and capital programs. A forward‑looking statement
EXHIBIT 99.1
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 operational disruption and market volatility resulting from the COVID-19 pandemic, the global macroeconomic uncertainty related to the Russia-Ukraine war, 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. 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.
Investor Contacts:
David Schorlemer
Chief Financial Officer
david.schorlemer@propetroservices.com
432-688-0012
Matt Augustine
Investor Relations
matt.augustine@propetroservices.com
432-848-0871
EXHIBIT 99.1
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | |||
|---|---|---|---|
| June 30, 2022 | March 31, 2022 | June 30, 2021 | |
| REVENUE - Service revenue | $ 315,083 | $ 282,680 | $ 216,887 |
| COSTS AND EXPENSES | |||
| Cost of services (exclusive of depreciation and amortization) | 218,813 | 197,271 | 162,837 |
| General and administrative (inclusive of stock-based compensation) | 25,135 | 31,707 | 17,529 |
| Depreciation and amortization | 31,462 | 31,854 | 33,243 |
| Impairment expense | 57,454 | — | — |
| Loss on disposal of assets | 22,485 | 16,117 | 15,025 |
| Total costs and expenses | 355,349 | 276,949 | 228,634 |
| OPERATING INCOME (LOSS) | (40,266) | 5,731 | (11,747) |
| OTHER INCOME (EXPENSE): | |||
| Interest expense | (669) | (134) | (159) |
| Other income (expense) | 6 | 10,357 | (302) |
| Total other income (expense) | (663) | 10,223 | (461) |
| INCOME (LOSS) BEFORE INCOME TAXES | (40,929) | 15,954 | (12,208) |
| INCOME TAX (EXPENSE) BENEFIT | 8,069 | (4,137) | 3,697 |
| NET INCOME (LOSS) | $ (32,860) | $ 11,817 | $ (8,511) |
| NET INCOME (LOSS) PER COMMON SHARE: | |||
| Basic | $ (0.32) | $ 0.11 | $ (0.08) |
| Diluted | $ (0.32) | $ 0.11 | $ (0.08) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||
| Basic | 104,236 | 103,683 | 102,398 |
| Diluted | 104,236 | 105,384 | 102,398 |
EXHIBIT 99.1
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| June 30, 2022 | December 31, 2021 | |
|---|---|---|
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 69,789 | $ 111,918 |
| Accounts receivable - net of allowance for credit losses of $217 and $217, respectively | 182,026 | 128,148 |
| Inventories | 3,491 | 3,949 |
| Prepaid expenses | 3,493 | 6,752 |
| Other current assets | 202 | 297 |
| Total current assets | 259,001 | 251,064 |
| PROPERTY AND EQUIPMENT - net of accumulated depreciation | 806,513 | 808,494 |
| OPERATING LEASE RIGHT-OF-USE ASSETS | 755 | 409 |
| OTHER NONCURRENT ASSETS: | ||
| Other noncurrent assets | 1,354 | 1,269 |
| Total other noncurrent assets | 1,354 | 1,269 |
| TOTAL ASSETS | $ 1,067,623 | $ 1,061,236 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $ 170,145 | $ 152,649 |
| Operating lease liabilities | 588 | 369 |
| Accrued and other current liabilities | 22,925 | 20,767 |
| Total current liabilities | 193,658 | 173,785 |
| DEFERRED INCOME TAXES | 56,732 | 61,052 |
| NONCURRENT OPERATING LEASE LIABILITIES | 197 | 97 |
| Total liabilities | 250,587 | 234,934 |
| 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, 104,308,413 and 103,437,177 shares issued, respectively | 104 | 103 |
| Additional paid-in capital | 856,605 | 844,829 |
| Accumulated deficit | (39,673) | (18,630) |
| Total shareholders’ equity | 817,036 | 826,302 |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 1,067,623 | $ 1,061,236 |
EXHIBIT 99.1
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended June 30, | ||
|---|---|---|
| 2022 | 2021 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income (loss) | $ (21,043) | $ (28,886) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
| Depreciation and amortization | 63,317 | 66,721 |
| Impairment expense | 57,454 | — |
| Deferred income tax expense (benefit) | (4,321) | (10,360) |
| Amortization of deferred debt issuance costs | 655 | 269 |
| Stock-based compensation | 14,822 | 5,396 |
| Provision for credit losses | — | 140 |
| Loss on disposal of assets | 38,603 | 28,076 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (53,878) | (53,762) |
| Other current assets | 561 | 325 |
| Inventories | 457 | 89 |
| Prepaid expenses | 3,343 | 7,711 |
| Accounts payable | (426) | 44,933 |
| Accrued and other current liabilities | 3,764 | 828 |
| Net cash provided by operating activities | 103,308 | 61,480 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Capital expenditures | (144,519) | (52,187) |
| Proceeds from sale of assets | 2,951 | 1,267 |
| Net cash used in investing activities | (141,568) | (50,920) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Repayments of insurance financing | — | (4,093) |
| Payment of debt issuance costs | (824) | — |
| Proceeds from exercise of equity awards | 741 | 3,235 |
| Tax withholdings paid for net settlement of equity awards | (3,786) | (5,773) |
| Net cash used in financing activities | (3,869) | (6,631) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (42,129) | 3,929 |
| CASH AND CASH EQUIVALENTS - Beginning of period | 111,918 | 68,772 |
| CASH AND CASH EQUIVALENTS - End of period | $ 69,789 | $ 72,701 |
EXHIBIT 99.1
Reportable Segment Information
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, 2022 | March 31, 2022 | |||||
| (in thousands) | Pressure<br><br>Pumping | All Other | Total | Pressure<br><br>Pumping | All Other | Total |
| Service revenue | $ 309,445 | $ 5,638 | $ 315,083 | $ 277,112 | $ 5,568 | $ 282,680 |
| Adjusted EBITDA | $ 86,291 | $ (10,344) | $ 75,947 | $ 76,995 | $ (10,462) | $ 66,533 |
| Depreciation and amortization | $ 30,528 | $ 934 | $ 31,462 | $ 30,930 | $ 924 | $ 31,854 |
| Capital expenditures | $ 83,170 | $ 5,911 | $ 89,081 | $ 71,602 | $ 126 | $ 71,728 |
Non-GAAP Financial Measures
Adjusted EBITDA and Free Cash Flow are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures provide useful information to investors in assessing our financial condition and results of operations. Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA, and net cash from operating activities is the GAAP measure most directly comparable to Free Cash Flow. Non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. Non-GAAP financial measures have important limitations as analytical tools because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider Adjusted EBITDA or Free Cash Flow in isolation or as a substitute for an analysis of our results as reported under GAAP. Because Adjusted EBITDA and Free Cash Flow may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
EXHIBIT 99.1
Reconciliation of Net Income (Loss) to Adjusted EBITDA
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, 2022 | March 31, 2022 | |||||
| (in thousands) | Pressure Pumping | All Other | Total | Pressure Pumping | All Other | Total |
| Net income (loss) | $ (24,392) | $ (8,468) | $ (32,860) | $ 29,370 | $ (17,553) | $ 11,817 |
| Depreciation and amortization | 30,528 | 934 | 31,462 | 30,930 | 924 | 31,854 |
| Impairment expense | 57,454 | — | 57,454 | — | — | — |
| Interest expense | — | 669 | 669 | — | 134 | 134 |
| Income tax expense (benefit) | — | (8,069) | (8,069) | — | 4,137 | 4,137 |
| Loss (gain) on disposal of assets | 22,680 | (195) | 22,485 | 16,421 | (304) | 16,117 |
| Stock-based compensation | — | 3,458 | 3,458 | — | 11,364 | 11,364 |
| Other expense (income)(2) | — | (6) | (6) | — | (10,357) | (10,357) |
| Other general and administrative expense, net(1) | 21 | 1,333 | 1,354 | 274 | 1,193 | 1,467 |
| Adjusted EBITDA | $ 86,291 | $ (10,344) | $ 75,947 | $ 76,995 | $ (10,462) | $ 66,533 |
(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. During the three months ended June 30, 2022 and March 31, 2022, we received approximately $2.4 million and $1.0 million, respectively, from our insurance carriers in connection with the SEC investigation and Shareholder litigation.
(2)Includes $10.7 million of net tax refund received from the Comptroller of Texas in March 2022 in connection with sales and use tax audit for periods 2015 through 2018.
Reconciliation of Cash from Operating Activities to Free Cash Flow
| Three Months Ended | ||
|---|---|---|
| (in thousands) | June 30, 2022 | March 31, 2022 |
| Cash from Operating Activities | $ 78,138 | $ 25,170 |
| Cash used in Investing Activities | (77,520) | (64,048) |
| Free Cash Flow | $ 618 | $ (38,878) |
10
exhibit99
© 2022 ProPetro Holding Corp. All Rights Reserved. Q2 2022 INVESTOR PRESENTATION August 2, 2022 EXHIBIT 99.2
2© 2022 ProPetro Holding Corp. All Rights Reserved. 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, 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, the global macroeconomic uncertainty related to the Russia-Ukraine war, 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. EXHIBIT 99.2
3© 2022 ProPetro Holding Corp. All Rights Reserved. PROPETRO AT A GLANCE 2005 Founded 2010 Begins hydraulic fracturing operations in the Permian Basin 2019 Completes Pioneer Pressure Pumping acquisition 2020 Electrically Powered field trials 2021 Announces investment in Tier IV Dynamic Gas Blending (DGB) dual-fuel equipment Teamwork & Collaboration Execution Capital Discipline 0.54 Full Year 2021 TRIR Customer Focused Team Driven Sustainability Investments Accelerating 100% Concentration of Frac Operations in the Permian 2017 Initial public offering (NYSE: PUMP) 420,000 HHP 2019 1.4 million HHP 2022 1.3 million HHP (as of June 30, 2022) 2022 Announces additional investment in Tier IV dual-fuel equipment to bring total marketed fleets to 6 by the start of 2023 EXHIBIT 99.2
4© 2022 ProPetro Holding Corp. All Rights Reserved. ProPetro is ~100% focused in the Permian CAPITAL MIGRATES TO THE PERMIAN Over $75 billion in Permian E&P transactions since 2018 $6bn $13bn $3bn $3bn $13bn Notable Transactions Announced Date Buyer Value ($MM) 5/19/2022 Centennial / Colgate $7,000 12/31/2021 Continental Resources $3,250 10/1/2021 Coterra Energy $7,400 9/20/2021 ConocoPhillips $9,500 4/1/2021 Pioneer Natural Resources $6,400 10/20/2020 Pioneer Natural Resources $7,621 10/19/2020 ConocoPhillips $13,337 12/16/2019 WPX Energy $2,500 12/21/2020 Diamondback Energy Inc $2,962 10/14/2019 Parsley Energy Inc $2,270 11/19/2018 Cimarex Energy Co $1,616 8/14/2018 Diamondback Energy Inc $9,200 8/8/2018 Diamondback Energy Inc $1,245 3/28/2018 Concho Resources Inc $9,500 Recent Permian Upstream Transactions * Source: Company filings and industry research, values as of time of announcement. $8bn $7bn $9bn $3bn * $7bn EXHIBIT 99.2
5© 2022 ProPetro Holding Corp. All Rights Reserved. POSITIONING FOR A CLEANER FUTURE Converting our Fleet to Tier IV DGB Dual-Fuel • Displacing diesel ~70% with cleaner- burning natural gas • Customers willing to pay a premium due to fuel savings and lower emissions - "A Win-Win" • EPA Emissions Standards compliant • We continue to invest in natural gas- powered equipment to lower emissions with 215,000 HHP of Tier IV DGB recently delivered and expect another 125,000 HHP to be delivered in the fourth quarter of this year • Expect to start 2023 with six marketed Tier IV DGB fleets EXHIBIT 99.2
6© 2022 ProPetro Holding Corp. All Rights Reserved. Net Loss: $33 million 2Q22 FINANCIAL HIGHLIGHTS Adj. EBITDA: $76 million(2) or 24% of revenues, increased 13% vs. 1Q22 Free Cash Flow: $1 million(3) (1) Hydraulic fracturing revenue represents approximately 94% of pressure pumping revenue for the first quarter. (2) Adjusted EBITDA is a Non-GAAP financial measure, please see appendix for reconciliation to Net Income (Loss). (3) 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. (4) Inclusive of cash and available capacity under revolving credit facility as of the end of the quarter. Durable Capital Structure: • Cash: $70 million • Total Debt: $0 • Total Liquidity: $185 million(4) Focused Revenue Mix 99% Permian 1% Non- Permian 98% Pressure Pumping(1) 2% All Other Revenue: $315 million, increased 11% vs. 1Q22 EXHIBIT 99.2
7 FINANCIAL TRENDS (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 increased utilization • Capital-efficient growth through disciplined fleet deployments, improved pricing, and efficient operations • Effective utilization of 14.8 fleets in 2Q22 • Expect to start 2023 with six marketed fleets of Tier IV DGB equipment Valuable through-cycle partner • Collaboration with customers to create unparalleled efficiencies at the wellsite • Profitable operations with committed fleets are the driving force behind future re-investment cycles Revenue Adj. EBITDA(1) Free Cash Flow(2) Net Income (Loss) (in millions) $250 $246 $283 $315 3Q21 4Q21 1Q22 2Q22 $(5) $(20) $12 $(33) $42 $37 $67 $76 $13 $26 $(39) $1 Pumping Hour Productivity 53% Change in pumping hours per day indexed to 2019 2019 2020 2021 2022 YTD EXHIBIT 99.2
© 2022 ProPetro Holding Corp. All Rights Reserved. 8 DELIVERING DISCIPLINED EXECUTION 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 2021 Total Recordable Incident Rate of 0.54 Access to Premier Projects Meeting customer needs on their most complex jobs; dedicated contract and agreements with high quality Permian operators Technology Focused on technological improvements to optimize our performance EXHIBIT 99.2
© 2022 ProPetro Holding Corp. All Rights Reserved. Appendix EXHIBIT 99.2
10© 2022 ProPetro Holding Corp. All Rights Reserved. NON-GAAP RECONCILIATIONS Three Months Ended (in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Net income (loss) $ (32,860) $ 11,817 $ (20,232) $ (5,067) Depreciation and amortization 31,462 31,854 33,124 33,531 Impairment expense 57,454 — — — Interest expense 669 134 137 143 Income tax expense (benefit) (8,069) 4,137 (2,613) (1,279) Loss on disposal of assets 22,485 16,117 24,145 12,424 Stock-based compensation 3,458 11,364 3,114 3,009 Other expense (income) (6) (10,357) 305 309 Other general and administrative expenses (net) 1,354 1,467 (800) (972) Severance expense — — 20 — Adjusted EBITDA $ 75,947 $ 66,533 $ 37,200 $ 42,098 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 (loss) 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. EXHIBIT 99.2
11© 2022 ProPetro Holding Corp. All Rights Reserved. NON-GAAP RECONCILIATIONS Three Months Ended (in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Net Cash from Operating Activities $ 78,138 $ 25,170 $ 45,455 $ 47,779 Net Cash used in Investing Activities $ (77,520) $ (64,048) $ (18,743) $ (34,629) Free Cash Flow $ 618 $ (38,878) $ 26,712 $ 13,150 EXHIBIT 99.2
12© 2022 ProPetro Holding Corp. All Rights Reserved. CONTACT INFORMATION www.propetroservices.com Corporate Headquarters Investor Relations 1706 South Midkiff Road Midland, TX 79701 432.688.0012 David Schorlemer, Chief Financial Officer david.schorlemer@propetroservices.com Direct 432.688.0012 Matt Augustine, Investor Relations matt.augustine@propetroservices.com Direct 432.848.0871 EXHIBIT 99.2