ProPetro (US:PUMP)2020-07-02 11:04Financial Performance - Adjusted EBITDA for the three months ended March 31, 2020, was $74,923,000, compared to $150,275,000 for the same period in 2019, reflecting a significant decline [143]. - Revenue for the three months ended March 31, 2020, decreased by 27.7%, or $151.1 million, to $395.1 million compared to $546.2 million for the same period in 2019 [150]. - Adjusted EBITDA for the three months ended March 31, 2020, was $74.9 million, a decrease of 50.1% from $150.3 million in Q1 2019 [150]. - General and administrative expenses increased by 34.6%, or $6.4 million, to $24.9 million for Q1 2020 compared to $18.5 million in Q1 2019 [153]. - Impairment expense recorded in Q1 2020 was approximately $16.7 million, with $9.4 million related to goodwill impairment [155]. - Cost of services decreased by 21.1%, or $80.7 million, to $300.8 million for Q1 2020 compared to $381.5 million in Q1 2019 [152]. Market Conditions - WTI crude oil prices fell approximately 67% from around $62 per barrel in January 2020 to just above $20 per barrel by the end of March 2020 [131]. - The Permian Basin rig count decreased from approximately 403 at the beginning of 2020 to 175 in May 2020, indicating a significant decline in drilling activity [133]. - The company expects a material adverse impact on future revenue and cash flows due to reduced well completion activities and pricing pressure from customers [133]. Operational Adjustments - The company reduced its workforce by over 60% in response to changing activity levels, aiming to align operational capacity with market demand [136]. - ProPetro canceled substantially all planned growth capital expenditures for the remainder of 2020 to mitigate adverse economic conditions [136]. - ProPetro's operational focus has expanded into the Delaware sub-basin in response to increased customer demand, positioning the company for future growth opportunities [124]. - The average active fleet count decreased to approximately 18.6 active fleets in Q1 2020 from approximately 27.0 in Q1 2019 [150]. Financial Position - Total liquidity as of March 31, 2020, was approximately $194.1 million, consisting of $143.7 million in cash and cash equivalents and $50.4 million available under the ABL Credit Facility [160]. - The ABL Credit Facility has a total borrowing capacity of $300 million, with a borrowing base of approximately $161.9 million as of March 31, 2020 [164]. - The company repaid $130.0 million of borrowings under the ABL Credit Facility as of June 29, 2020, maintaining a conservative leverage ratio [169]. - There were no known future material contractual obligations as of March 2020, indicating stable future liquidity [170]. - The company had no off-balance sheet arrangements as of March 31, 2020, indicating a straightforward financial position [175]. Cash Flow Management - Net cash provided by operating activities was $61.7 million for the three months ended March 31, 2020, compared to $36.1 million for the same period in 2019, representing an increase of $25.6 million [172]. - Net cash used in investing activities decreased to $46.6 million for the three months ended March 31, 2020, from $177.9 million in the same period of 2019, primarily due to reduced capital expenditures [173]. - Net cash used in financing activities was $20.5 million for the three months ended March 31, 2020, compared to net cash provided of $88.6 million in the same period of 2019, driven by a repayment of $20.0 million under the ABL Credit Facility [174]. - The decrease in cash used in investing activities was primarily due to a significant reduction in capital expenditures compared to the previous year [173]. Vendor Relations and Efficiency - The company has negotiated more favorable payment terms with larger vendors to improve working capital management [142]. - ProPetro's management emphasizes the importance of operational efficiency and technical expertise as key factors in maintaining customer relationships amid competitive pressures [123]. - The company improved the collection of receivables, reducing the number of days revenue was outstanding during the three months ended March 31, 2020 [172]. Future Capital Expenditures - The company anticipates future capital expenditures will be primarily related to maintenance capital expenditures, funded by existing cash and cash flows from operations [168]. - The company has option agreements to purchase an additional 108,000 HHP of DuraStim® hydraulic pumps, but it is not probable these options will be exercised before expiration due to the current economic environment [168].