ProPetro (PUMP) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2025, detailing balance sheets, operations, cash flows, and notes on significant financial events Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased slightly to $1,229.1 million, driven by higher cash, while total liabilities decreased and shareholders' equity rose Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $327,463 | $292,221 | | Cash and cash equivalents | $74,840 | $50,443 | | Total Assets | $1,229,147 | $1,223,645 | | Total Current Liabilities | $231,050 | $222,266 | | Total Liabilities | $405,174 | $407,372 | | Total Shareholders' Equity | $823,973 | $816,273 | Condensed Consolidated Statements of Operations The company reported a net loss of $7.2 million on $326.2 million revenue for Q2 2025, with six-month net income significantly declining to $2.4 million on reduced revenues Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Service Revenue | $326,151 | $357,021 | $685,567 | $762,864 | | Operating (Loss) Income | $(3,167) | $(533) | $6,334 | $29,779 | | Net (Loss) Income | $(7,155) | $(3,660) | $2,447 | $16,270 | | Diluted EPS | $(0.07) | $(0.03) | $0.02 | $0.15 | Condensed Consolidated Statements of Cash Flows Net cash from operations decreased to $108.9 million for H1 2025, while cash used in investing and financing activities also declined, resulting in a $24.4 million increase in the cash balance Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $108,903 | $179,763 | | Net cash used in investing activities | $(68,524) | $(90,923) | | Net cash used in financing activities | $(15,982) | $(55,308) | | Net increase in cash | $24,397 | $33,532 | | Cash at end of period | $74,840 | $66,886 | Notes to Condensed Consolidated Financial Statements These notes detail key accounting policies, significant changes in estimates, new financing arrangements, segment performance, capital commitments, and related-party transactions - The company shortened the remaining useful lives of its Tier II diesel-only hydraulic fracturing units to no longer than the end of 2027, resulting in a $1.6 million decrease in net income for the six months ended June 30, 2025[37] - On April 2, 2025, the company entered into a financing arrangement for up to $103.7 million to support the purchase of mobile natural gas-fueled power generation equipment for its new PROPWR business line[78] - The company has commitments to purchase power generation equipment with a total remaining commitment of approximately $181.6 million ($84.8 million financed and $96.8 million with other manufacturers)[129] - Revenue from services provided to ExxonMobil (including its subsidiaries Pioneer and XTO) totaled $144.2 million for the six months ended June 30, 2025, representing approximately 21% of total revenue[112] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's decreased revenue and profitability for Q2 and H1 2025 due to lower pricing and activity, alongside strategic investments in lower-emissions equipment and solid liquidity Results of Operations Total revenue decreased by 8.6% in Q2 2025 to $326.2 million, leading to a wider net loss and a 24.9% decline in Adjusted EBITDA, with similar trends for the six-month period Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $326,151 | $357,021 | (8.6)% | | Cost of Services | $253,173 | $265,845 | (4.8)% | | Net Loss | $(7,155) | $(3,660) | (95.5)% | | Adjusted EBITDA | $49,607 | $66,062 | (24.9)% | - The Hydraulic Fracturing segment's revenue decreased by $25.9 million (9.5%) in Q2 2025 compared to Q2 2024, driven by lower customer pricing and activity, despite a $17.4 million revenue contribution from the AquaProp acquisition[174] H1 2025 vs H1 2024 Performance (in thousands) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $685,567 | $762,864 | (10.1)% | | Net Income | $2,447 | $16,270 | (85.0)% | | Adjusted EBITDA | $122,293 | $159,456 | (23.3)% | Liquidity and Capital Resources As of June 30, 2025, total liquidity stood at $178.1 million, with projected 2025 capital expenditures of $270 million to $310 million largely for the PROPWR business, and an extended share repurchase program - Total liquidity as of June 30, 2025, was approximately $178.1 million, comprising $74.8 million in cash and $103.3 million of availability under the ABL Credit Facility[204] - The 2025 capital expenditure budget is projected to be $270 million to $310 million, including approximately $170 million for the PROPWR business and $100 million to $140 million for the completion services business[208] - The share repurchase program was extended, permitting up to $200 million in repurchases through December 31, 2026 As of June 30, 2025, $89.2 million remained authorized, with no repurchases made during the quarter[205] Quantitative and Qualitative Disclosures About Market Risk As of June 30, 2025, there were no material changes in market risk from the disclosures in the company's 2024 Form 10-K[225] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025[227] - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[228] PART II – OTHER INFORMATION Legal Proceedings The company refers to Note 13 for legal matters, stating that while involved in routine claims, no pending proceedings are expected to materially adversely affect its financial position - The company is subject to routine tax audits by the Texas Comptroller and has accrued estimated settlement expenses of $6.0 million for motor vehicle fuel taxes and $0.8 million for gross receipt taxes[136][137] Risk Factors A new material risk factor highlights potential adverse effects from changes in U.S. trade policy, including tariffs that could increase input costs if not passed on to customers - A new risk factor was added regarding the potential adverse effects of changes in U.S. trade policy, including tariffs on steel and other imports[233] - Increased tariffs could raise material input costs and asset maintenance costs, which may adversely affect returns on investment if not passed on to customers[234] Unregistered Sales of Equity Securities and Use of Proceeds This section details the share repurchase program, noting no repurchases in Q2 2025, with the program extended through 2026 and $89.2 million remaining authorized Share Repurchase Activity for Q2 2025 | Period | Total Shares Purchased | Average Price Paid | Dollar Value Remaining | | :--- | :--- | :--- | :--- | | April 2025 | 0 | $0.00 | $89,152,858 | | May 2025 | 0 | $0.00 | $89,152,858 | | June 2025 | 0 | $0.00 | $89,152,858 | | Total | 0 | $0.00 | $89,152,858 | Other Information During Q2 2025, no director or officer of the Company adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements[240]