ProPetro (PUMP) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited financial statements for June 30, 2021, report total assets of $1.067 billion, a $28.9 million net loss, and $61.5 million in operating cash flow Condensed Consolidated Balance Sheets - Total assets increased slightly to $1,066.8 million as of June 30, 2021, from $1,050.7 million at December 31, 2020[16] - Cash and cash equivalents increased to $72.7 million from $68.8 million, while accounts receivable grew significantly to $138.3 million from $84.2 million[16] - Total liabilities increased to $222.0 million from $180.0 million, primarily driven by a rise in accounts payable from $79.2 million to $136.4 million[16] - Total shareholders' equity decreased to $844.7 million from $870.8 million, mainly due to a reduction in retained earnings[16] Condensed Consolidated Statements of Operations Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Service Revenue | $216,887 | $106,109 | $378,345 | $501,178 | | Operating Loss | $(11,747) | $(31,322) | $(40,398) | $(38,751) | | Net Loss | $(8,511) | $(25,920) | $(28,886) | $(33,724) | | Net Loss Per Share (Basic & Diluted) | $(0.08) | $(0.26) | $(0.28) | $(0.33) | - Revenue for Q2 2021 more than doubled year-over-year, increasing to $216.9 million from $106.1 million in Q2 2020[19] - For the six-month period, revenue decreased to $378.3 million in 2021 from $501.2 million in 2020[19] Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $61,480 | $96,910 | | Net cash used in investing activities | $(50,920) | $(78,025) | | Net cash used in financing activities | $(6,631) | $(130,615) | | Net increase (decrease) in cash | $3,929 | $(111,730) | | Cash and cash equivalents - End of period | $72,701 | $37,306 | - Net cash provided by operating activities decreased to $61.5 million in the first half of 2021 from $96.9 million in the same period of 2020, primarily due to changes in operating assets and liabilities, including a significant increase in accounts receivable[23] - Cash used in investing activities decreased, with capital expenditures falling to $52.2 million from $80.7 million year-over-year[23] Notes to Condensed Consolidated Financial Statements - The company's single reportable segment is "Pressure Pumping," which includes hydraulic fracturing and cementing Hydraulic fracturing revenue constituted approximately 93.5% of the pressure pumping segment's revenue for the first six months of 2021[26][54][55] - Pioneer Natural Resources is a significant customer, accounting for approximately $217.0 million of total revenue in the first six months of 2021, up from $191.6 million in the same period of 2020[81] - The company is involved in pending legal matters, including the Logan Lawsuit (a shareholder class action), the Shareholder Derivative Lawsuit, and an SEC investigation No provision has been made for these contingencies as the final outcome cannot be reasonably estimated[97][99][100] - As of June 30, 2021, the company had no borrowings under its $300 million ABL Credit Facility The borrowing base was approximately $71.8 million[50][52] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2021 revenue growth to rebounding demand, while six-month revenue decreased due to pricing, maintaining solid liquidity and focusing on lower-emissions equipment Overview - ProPetro is an oilfield services company focused on hydraulic fracturing in the Permian Basin[108] - As of June 30, 2021, the company had 1,423,000 available HHP, including conventional Tier II, Tier IV DGB, and new DuraStim® electric hydraulic fracturing equipment[109] - The company is field-testing its DuraStim® electric powered hydraulic fracturing equipment, with a goal to commercialize its first fleet, though supply chain disruptions may extend the timeline[110] Results of Operations Q2 2021 vs Q2 2020 Performance (in thousands) | Metric | Q2 2021 | Q2 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $216,887 | $106,109 | $110,778 | 104.4% | | Cost of Services | $162,837 | $68,193 | $94,644 | 138.8% | | Net Loss | $(8,511) | $(25,920) | $(17,409) | (67.2)% | | Adjusted EBITDA | $35,693 | $25,410 | $10,283 | 40.5% | - The Q2 revenue increase was driven by a significant rise in average effectively utilized fleet count to approximately 13.1 active fleets from 4.0 in Q2 2020, following the rebound from the COVID-19 pandemic's impact[132] Six Months 2021 vs Six Months 2020 Performance (in thousands) | Metric | H1 2021 | H1 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $378,345 | $501,178 | $(122,833) | (24.5)% | | Cost of Services | $286,215 | $369,041 | $(82,826) | (22.4)% | | Net Loss | $(28,886) | $(33,724) | $(4,838) | (14.3)% | | Adjusted EBITDA | $55,709 | $100,334 | $(44,625) | (44.5)% | - The revenue decrease in the first six months of 2021 was primarily due to significant pricing discounts provided to customers starting in April 2020 and customers directly sourcing consumables like sand and chemicals[144] Liquidity and Capital Resources - As of June 30, 2021, total liquidity was approximately $140.8 million, comprising $72.7 million in cash and $68.1 million available under the ABL Credit Facility[155] - The company had no borrowings under its $300 million ABL Credit Facility as of June 30, 2021 The facility has a total capacity of $300 million, subject to a borrowing base of 85% of eligible accounts receivable[155][158] - Primary uses of cash will be funding operations and maintenance capital expenditures, including costs to convert existing conventional equipment to lower-emissions Tier IV DGB equipment[161] Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $61,480 | $96,910 | | Net cash used in investing activities | $(50,920) | $(78,025) | | Net cash used in financing activities | $(6,631) | $(130,615) | [165] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in market risk exposure since the prior Form 10-K filing - There have been no material changes in market risk since the last annual report (Form 10-K)[172] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[174] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2021[175] PART II – OTHER INFORMATION Item 1. Legal Proceedings Information on legal proceedings is detailed in Note 10 of the Condensed Consolidated Financial Statements - Information on legal proceedings is detailed in "Note 10 – Commitments and Contingencies" in the financial statements[178] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Form 10-K - There have been no material changes to the risk factors disclosed in the company's Form 10-K[179] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[180] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[181] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[182] Item 5. Other Information The company reported no other information for this item - None[183] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906[185] - Interactive Data Files (XBRL) are also included as exhibits[185]