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ProPetro (PUMP) - 2025 Q2 - Earnings Call Transcript
2025-07-30 14:00
Financial Data and Key Metrics Changes - ProPetro generated total revenue of $326 million, a decrease of 9% compared to the prior quarter [19] - The net loss totaled $7 million, or $0.07 loss per diluted share, compared to net income of $10 million, or $0.09 income per diluted share for the previous year [19] - Adjusted EBITDA totaled $50 million, representing 15% of revenue, and decreased 32% compared to the prior quarter [19] - Free cash flow for the completions business was $26 million, demonstrating sustainable cash generation despite market challenges [20] Business Line Data and Key Metrics Changes - The legacy completions business continues to generate sustainable free cash flow, supported by ongoing cost optimization and targeted capital programs [8] - Utilization across all segments was down due to macro impacts, including lower commodity prices and weather downtime [16] - Capital expenditures incurred were $73 million, with $30 million primarily supporting maintenance in the completions business and $43 million supporting Pro Power orders [20] Market Data and Key Metrics Changes - The Permian frac fleet counts are likely approaching 70, down from approximately 90 to 100 fleets operating at the start of the year [9] - Increased market uncertainty driven by tariffs and rising OPEC plus production has resulted in more idle capacity than anticipated [9] - The company expects to operate an average of 10 to 11 fleets in the third quarter, with the possibility of running fewer fleets in the fourth quarter [17] Company Strategy and Development Direction - ProPetro's strategy focuses on capital discipline and efficiency, emphasizing capital light assets and disciplined investments [8] - The company is transitioning from Tier two diesel equipment to Force electric equipment due to high demand and successful contracts [12] - Pro Power is a new initiative aimed at providing power generation capacity, with a significant contract already secured [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current market challenges and highlighted the company's strong balance sheet and low debt [10] - The outlook for the second half of the year remains uncertain due to ongoing market volatility, but management believes the company is well-positioned for future opportunities [17][18] - Management anticipates a reduction in activity in the third quarter, particularly with conventional equipment, but remains optimistic about long-term growth [17] Other Important Information - As of June 30, 2025, total cash was $75 million, and total liquidity was $178 million [22] - The company extended its $200 million share repurchase program to December 2026, having repurchased 13 million shares since its inception [22] Q&A Session Summary Question: How much of an overhang do you think this will be on the Permian Basin? - Management indicated that the looseness in the market is likely to persist into 2026, but they are well-positioned to capitalize on future recovery [29] Question: Any thoughts around continuing with the current equipment orders? - Management expressed satisfaction with the flexibility of the current equipment and indicated a focus on oil and gas for now, with exploratory conversations about non-oil and gas opportunities [30][35] Question: How should we think about the trajectory for Q4? - Management noted that while historical trends show a decline, the current market conditions make it difficult to predict, and they are being conservative in their outlook [38][42] Question: Does power demand suggest a disconnect from drilling and completions activity? - Management confirmed that power demand is primarily tied to production and midstream activities, which remain stable despite drilling and completions volatility [45] Question: What is the stability of pricing given long-term contracts? - Management stated that contracts have semi-annual adjustments resulting in low single-digit changes, indicating stable pricing [72]