ProPetro Reports Full Year and Fourth Quarter 2017 Results

ProPetro Holding Corp. (“ProPetro” or “the Company”) (NYSE: PUMP) today
announced financial and operational results for the full year and fourth
quarter of 2017, and additional expansion of its fleet.

Full Year 2017 Operational Highlights

• Grew year-end fleet capacity by 64% to 690,000 hydraulic horsepower
  (“HHP”), or 16 fleets, from 420,000 HHP, or ten fleets, at the end of
  2016;
• Maintained 100% fleet utilization throughout the year;
• Purchased 86 Tier 2 engines estimated to yield approximately $30
  million in savings;
• Implemented and completed transition from carbon steel to stainless
  steel fluid ends;
• Expanded operations to the Delaware Basin, and
• Maintained safety and performance metrics while growing employee head
  count nearly 100%.

Full Year 2017 Financial Highlights

• Successfully completed initial public offering to fund growth
  initiatives and strengthen balance sheet;
• Increased total revenue by 125% to $981.9 million from $436.9 million
  in 2016;
• Reported net income of $12.6 million as compared to a net loss of
  $53.1 million in 2016; and
• Grew adjusted EBITDA⁽¹⁾ to $137.4 million from $7.8 million
  in 2016 – more than a 1,600% increase.

Fourth Quarter 2017 Highlights

• Increased total revenue by 11% to $313.7 million from $282.7 million
  in the third quarter of 2017;
• Posted net income of $10.1 million and adjusted EBITDA⁽¹⁾
  of $42.8 million; and
• Deployed one new-build fleet (45,000 HHP).

(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.”

Dale Redman, Chief Executive Officer, commented, “2017 was clearly the
most transformational year in the Company’s history from both an
operational and financial perspective. Driving our results was a
continued unwavering focus on exceeding the needs of our customers and
working closely with our supply chain partners as we grew our
best-in-class fleet without sacrificing safety or performance. I am
incredibly proud of our team’s accomplishments during the past year,
which is a direct testament to the tireless efforts of our workforce.
While our fourth quarter results were affected by a higher than
originally anticipated amount of holiday time off, more vertical
completion work than expected, and inclement weather, I am pleased to
report we are off to a strong start for 2018 and anticipate another
outstanding year for ProPetro.”

Financial Summary

PROPETRO HOLDING CORP. AND SUBSIDIARY
SELECTED FINANCIAL AND OPERATING DATA
(In thousands, except per share, total HHP and fleet count data)
(Unaudited)
			Three Months Ended													Twelve Months Ended
			December 31				September 30				December 31
			2017				2017				2016					2017				2016
Revenue			$	313,712			$	282,730			$	163,921				$	981,865			$	436,920
Operating income (loss)			$	14,189			$	22,704			$	(22,295	)			$	24,113			$	(67,386	)
Net income (loss)			$	10,078			$	21,965			$	(17,315	)			$	12,613			$	(53,147	)
Net income (loss) per diluted common share			$	0.12			$	0.25			$	(0.33	)			$	0.16			$	(1.19	)
Adjusted EBITDA			$	42,790			$	47,768			$	6,246				$	137,443			$	7,816
Total HHP (end of period)				690,000				645,000				420,000					690,000				420,000
Total HHP (average for period)				677,900				575,400				420,000					533,800				420,000
Fleet count (end of period)				16.0				15.0				10.0					16.0				10.0
Fleet count (average for period)				15.7				13.5				10.0					12.5				10.0

Revenue for the fourth quarter of 2017 was $313.7 million, or 11% higher
than $282.7 million for the third quarter of 2017. Contributing to the
increase was larger fleet size and improved pricing for the Company’s
pressure pumping and other services. During the fourth quarter of 2017,
97.4% of total revenue was associated with pressure pumping services, as
compared to 96.2% in the third quarter of 2017.

Costs of services excluding depreciation and amortization for the fourth
quarter of 2017 increased to $262.0 million from $225.4 million during
the third quarter of 2017 primarily due to larger fleet size, coupled
with an associated increase in headcount. As a percentage of pressure
pumping segment revenues, pressure pumping costs of services increased
to 84% from 80% for the third quarter.

General and administrative expense was $10.3 million as compared to
$11.1 million in the third quarter of 2017.

Net income for the fourth quarter of 2017 totaled $10.1 million, or
$0.12 per diluted share, versus $22.0 million, or $0.25 per diluted
share, for the third quarter of 2017.

Adjusted EBITDA for the fourth quarter of 2017 was $42.8 million as
compared to $47.8 million for the third quarter of 2017.

In addition to the factors discussed above, fourth quarter profitability
was impacted by more holiday time off than originally expected, a higher
than anticipated amount of vertical frac work to assist certain
customers in addressing year end lease obligations, and inclement
weather.

Fleet Expansion Update

Active HHP deployed during fourth quarter 2017 averaged 677,900, or 15.7
fleets, and active HHP at year end was 690,000, or 16 fleets. As
previously announced, an additional 90,000 HHP, or two fleets, recently
commenced operations under multi-year dedicated agreements in January
and February, bringing active horsepower to 780,000, or 18 fleets. To
support growing demand for the Company’s pressure pumping services,
ProPetro announced today plans to further expand its fracturing capacity
by an additional 90,000 HHP, or two fleets. Fleets 19 and 20 are
expected to be deployed in the second and third quarter of 2018,
respectively. Both fleets will be deployed to new customers and are
supported by multi-year dedicated agreements. In the second quarter of
2018, the Company also plans to enhance its legacy fleet by an
incremental 35,000 HHP, which will bring average pressure pumping
capacity to 45,000 HHP per fleet. The combination of the two new build
fleets and enhancement of existing fleet capabilities will bring total
capacity to 905,000 HHP, or 20 fleets, by the end of the third quarter
of 2018.

The Company recently deployed one new build coiled tubing unit and one
new build cementing unit, both of which will operate under long-term
dedicated agreements. This brings total coiled tubing capacity to three
units and total cementing capacity to 16 units. To support growing
demand, ProPetro announced today plans to further expand its cementing
unit fleet capacity with two additional new build units that are
targeted to commence operations later this year.

Capital Spending and Liquidity

ProPetro incurred $305.3 million of capital expenditures in 2017, which
was inclusive of seven new build frac fleets, 68 additional Tier 2
diesel engines, a small amount of growth in ancillary services, and
maintenance capital expenditures. 2017 full year capital expenditures
were $276.8 million excluding the $28.5 million payment that was
incurred at the end of the year for fleet 17, which was not deployed and
revenue producing until January of 2018. ProPetro continues to expect
maintenance capital expenditures to be approximately 6% of revenue while
growth capital expenditure opportunities will be continuously evaluated.

As previously announced, on February 22, 2018 the Company expanded the
capacity of its existing asset-based loan facility (the “Amended ABL”)
to $200 million – a 33% increase over the previous cap of $150 million.
ProPetro is committed to maintaining financial discipline, a strong
balance sheet and ample liquidity. The Company continues to target a net
debt to last-twelve-month EBITDA ratio of less than 1.0x and plans to
remain below that level for the foreseeable future.

As of December 31, 2017, total liquidity was $103 million, including $24
million in cash as well as $79 million available under ProPetro’s
pre-amended asset-based loan facility.

Outlook

Due to the timing of reporting the Company’s year-end results for 2017
near the end of the first quarter, ProPetro is providing preliminary
financial estimates for the first quarter of 2018. This includes revenue
of between $372 million to $382 million and adjusted EBITDA of between
$64 million and $70 million.

Mr. Redman concluded, “Supported by frac operations focused solely on
the Permian, the outlook for our business in 2018 is outstanding. Demand
for our services is strong and we are continuing to collaborate with our
customers to drive wellsite efficiencies. In addition, our supply chain
partners have assisted us in avoiding many of the near-term transitory
issues in the industry and remain flexible to our needs. These factors,
combined with our reputation for providing industry-leading execution,
provide us the confidence to continue to invest in our business and
thereby increase shareholder value.”

Conference Call Information

The Company will host a conference call at 8:00 AM Central Time on
Tuesday, March 27, 2018 to discuss financial and operating results for
the full year and fourth quarter of 2017 along with recent developments.
This call will also be webcast and accessible on ProPetro’s website at www.propetroservices.com.
A slide deck prepared in conjunction with year-end reporting will be
published on the website the morning of the call.

To access the conference call, U.S. callers may dial toll free
1-877-317-6799 and international callers may dial 1-412-317-6799. 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 by dialing 1-877-344-7529
for U.S. callers and 1-412-317-0088 for international callers. The
access code for the replay is 10116656.

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.

Forward-Looking Statements

The information above includes forward-looking statements within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of
1934. These forward-looking statements are subject to certain risks,
uncertainties and assumptions identified above or as disclosed from time
to time in the Company’s filings with the Securities and Exchange
Commission. As a result of these factors, actual results may differ
materially from those indicated or implied by such forward-looking
statements.

PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
			Three Months Ended															Twelve Months Ended
			December 31					September 30					December 31
				2017					2017					2016					2017					2016
REVENUE - Service revenue			$	313,712				$	282,730				$	163,921				$	981,865				$	436,920
COSTS AND EXPENSES
Cost of services (exclusive of depreciation and amortization)				262,048					225,433					148,779					813,823					404,140
General and administrative (inclusive of stock-based compensation)				10,335					11,106					9,412					49,215					26,613
Depreciation and amortization				17,026					14,745					10,873					55,628					43,542
Property and equipment impairment expense				-					-					6,305					-					6,305
Goodwill impairment expense				-					-					1,177					-					1,177
Loss on disposal of assets				10,115					8,742					9,670					39,086					22,529
Total costs and expenses				299,524					260,026					186,216					957,752					504,306
OPERATING INCOME (LOSS)				14,188					22,704					(22,295	)				24,113					(67,386	)
Interest expense				(878	)				(644	)				(4,445	)				(7,347	)				(20,387	)
Gain on extinguishment of debt				-					-					-					-					6,975
Other expense				(232	)				(191	)				97					(1,025	)				(321	)
Total other income (expense)				(1,110	)				(835	)				(4,348	)				(8,372	)				(13,733	)
INCOME (LOSS) BEFORE INCOME TAXES				13,078					21,869					(26,643	)				15,741					(81,119	)
INCOME TAX (EXPENSE)/BENEFIT				(3,000	)				96					9,328					(3,128	)				27,972
NET INCOME (LOSS)			$	10,078				$	21,965				$	(17,315	)			$	12,613				$	(53,147	)
NET INCOME (LOSS) PER COMMON SHARE:
Basic			$	0.12				$	0.26				$	(0.33	)			$	0.17				$	(1.19	)
Diluted			$	0.12				$	0.25				$	(0.33	)			$	0.16				$	(1.19	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic				83,040					83,040					52,628					76,371					44,787
Diluted				86,818					86,264					52,628					79,583					44,787

PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
			December 31, 2017					December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	23,949				$	133,596
Accounts receivable - net of allowance for doubtful accounts of $443 and $552, respectively				199,656					115,179
Inventories				6,184					4,713
Prepaid expenses				5,123					4,608
Other current assets				748					6,684
Total current assets				235,660					264,780
PROPERTY AND EQUIPMENT - Net of accumulated depreciation				470,910					263,862
OTHER NONCURRENT ASSETS:
Goodwill				9,425					9,425
Intangible assets - net of amortization				301					589
Deferred revenue rebate - net of amortization				615					2,462
Other noncurrent assets				2,121					304
Total other noncurrent assets				12,462					12,780
TOTAL ASSETS			$	719,032				$	541,422
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable			$	211,149				$	129,093
Accrued liabilities				16,607					13,619
Current portion of long-term debt				15,764					16,920
Accrued interest payable				76					109
Total current liabilities				243,596					159,741
DEFERRED INCOME TAXES				4,881					1,148
LONG-TERM DEBT				57,178					159,407
OTHER LONG-TERM LIABILITIES				125					117
Total liabilities				305,780					320,413
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.001 par value, 30,000,000 shares authorized, 0 and 16,999,990 shares issued, respectively				—					17
Preferred stock, additional paid-in capital				—					162,494
Common stock, $0.001 par value, 200,000,000 shares authorized, 83,039,854 and 52,627,652 shares issued, respectively				83					53
Additional paid-in capital				607,466					265,355
Accumulated deficit				(194,297	)				(206,910	)
Total shareholders’ equity				413,252					221,009
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	719,032				$	541,422

PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
			Twelve Months Ended December 31,
				2017					2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)			$	12,613				$	(53,147	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization				55,628					43,542
Gain on extinguishment of debt				-					(6,975	)
Property and equipment impairment expense				-					6,305
Goodwill impairment expense				-					1,177
Deferred income tax benefit				3,430					(27,972	)
Amortization of deferred revenue rebate				1,846					1,846
Amortization of deferred debt issuance costs				3,403					2,091
Stock-based compensation				9,489					1,649
Loss on disposal of assets				39,086					22,529
(Gain) loss on interest rate swap				(251	)				(205	)
Changes in operating assets and liabilities:
Accounts receivable				(84,477	)				(24,888	)
Other current assets				3,304					(563	)
Inventories				(1,472	)				3,859
Prepaid expenses				(468	)				(62	)
Accounts payable				64,228					37,049
Accrued liabilities				2,930					4,392
Accrued interest				(32	)				32
Net cash provided by (used in) operating activities				109,257					10,659
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures				(285,891	)				(42,832	)
Proceeds from sale of assets				4,422					1,144
Net cash used in investing activities				(281,469	)				(41,688	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings				60,045					-
Repayments of borrowings				(166,546	)				(41,295	)
Proceeds from insurance financing				4,125					4,126
Repayments of insurance financing				(3,807	)				(4,527	)
Extinguishment of debt				-					(30,000	)
Payment of debt extinguishment costs				-					(525	)
Payment of debt issuance costs				(1,653	)				(140	)
Proceeds from additional common equity capitalization				-					40,425
Proceeds from preferred equity capitalization				-					170,000
Payment of preferred equity capitalization costs				-					(7,489	)
Proceeds from IPO				185,500					-
Payment of deferred IPO costs				(15,099	)				(260	)
Net cash provided by (used in) financing activities				62,565					130,315
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS				(109,647	)				99,286
CASH AND CASH EQUIVALENTS — Beginning of year				133,596					34,310
CASH AND CASH EQUIVALENTS — End of year			$	23,949				$	133,596

Reportable Segment Information
			Three Months Ended
			December 31, 2017													September 30, 2017													December 31, 2016
			Pressure													Pressure													Pressure
($ in thousands)			Pumping				All Other					Total				Pumping				All Other					Total				Pumping				All Other					Total
Service revenue			$	305,685			$	8,027				$	313,712			$	271,924			$	10,806				$	282,730			$	157,604			$	6,317				$	163,921
Adjusted EBITDA			$	46,826			$	(4,036	)			$	42,790			$	50,013			$	(2,245	)			$	47,768			$	9,155			$	(2,909	)			$	6,246
Depreciation and amortization			$	15,927			$	1,099				$	17,026			$	13,637			$	1,108				$	14,745			$	9,378			$	1,495				$	10,873
Capital expenditures			$	97,310			$	1,662				$	98,972			$	61,752			$	765				$	62,517			$	23,891			$	223				$	24,114
			Twelve Months Ended
			December 31, 2017													December 31, 2016
			Pressure													Pressure
($ in thousands)			Pumping				All Other					Total				Pumping				All Other					Total
Service revenue			$	945,040			$	36,825				$	981,865			$	409,014			$	27,906				$	436,920
Adjusted EBITDA			$	145,122			$	(7,679	)			$	137,443			$	15,656			$	(7,840	)			$	7,816
Depreciation and amortization			$	51,155			$	4,473				$	55,628			$	37,282			$	6,260				$	43,542
Capital expenditures			$	300,406			$	4,893				$	305,299			$	-			$	6,305				$	6,305

Non-GAAP Financial Measures

Adjusted EBITDA is not a financial measure presented in accordance
with GAAP. We believe that the presentation of this non-GAAP
financial measure provides useful information to investors in assessing
our financial condition and results of operations. Net income is
the GAAP measure most directly comparable to Adjusted EBITDA. Non-GAAP
financial measures should not be considered as alternatives to the most
directly comparable GAAP financial measure. 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 in isolation or as a substitute for an analysis of our
results as reported under GAAP. Because Adjusted EBITDA may be
defined differently by other companies in our industry, our definitions
of this non-GAAP financial measure may not be comparable to similarly
titled measures of other companies, thereby diminishing their utility.

Reconciliation of Net Income (Loss) to Adjusted EBITDA
			Three Months Ended
			December 31, 2017													September 30, 2017															December 31, 2016
			Pressure													Pressure															Pressure
($ in thousands)			Pumping				All Other					Total				Pumping					All Other					Total					Pumping					All Other					Total
Net income (loss)			$	20,330			$	(10,252	)			$	10,078			$	28,372				$	(6,407	)			$	21,965				$	(10,501	)			$	(6,816	)			$	(17,317	)
Depreciation and amortization				15,927				1,099					17,026				13,637					1,108					14,745					9,377					1,496					10,873
Interest expense				-				878					878				-					644					644					-					4,445					4,445
Income tax expense				-				3,000					3,000				-					(96	)				(96	)				-					(9,328	)				(9,328	)
Loss on disposal of assets				10,117				-					10,117				7,552					1,190					8,742					10,279					(610	)				9,669
Stock-based compensation				-				759					759				-					751					751					-					519					519
Property and equipment impairment				-				-					-				-					751					751					-					6,305					6,305
Goodwill impairment				-				-					-				-					751					751					-					1,177					1,177
Other expense and legal settlement				-				233					233				-					340					340					-					(97	)				(97	)
Deferred IPO bonus expense				452				247					699				452					225					677					-					-					-
Adjusted EBITDA			$	46,826			$	(4,036	)			$	42,790			$	50,013				$	(2,245	)			$	47,768				$	9,155				$	(2,909	)			$	6,246
			Twelve Months Ended
			December 31, 2017													December 31, 2016
			Pressure													Pressure
($ in thousands)			Pumping				All Other					Total				Pumping					All Other					Total
Net income (loss)			$	50,417			$	(37,804	)			$	12,613			$	(45,316	)			$	(7,831	)			$	(53,147	)
Depreciation and amortization				51,155				4,473					55,628				37,282					6,260					43,542
Interest expense				-				7,347					7,347				-					20,387					20,387
Income tax expense (benefit)				-				3,128					3,128				-					(27,972	)				(27,972	)
Loss (gain) on disposal of assets				38,059				1,027					39,086				23,690					(1,161	)				22,529
Stock-based compensation				-				9,489					9,489				-					1,649					1,649
Property and equipment impairment				-				-					-				-					6,305					6,305
Goodwill impairment				-				-					-				-					1,177					1,177
Other expense				-				1,025					1,025				-					321					321
Legal settlement expense				-				722					722				-					-					-
Gain on extiguishment of debt				-				-					-				-					(6,975	)				(6,975	)
Deferred IPO bonus expense				5,491				2,914					8,405				-					-					-
Adjusted EBITDA			$	145,122			$	(7,679	)			$	137,443			$	15,656				$	(7,840	)			$	7,816

View source version on businesswire.com: https://www.businesswire.com/news/home/20180326006045/en/

Source: Business Wire
(March 26, 2018 - 4:30 PM EDT)

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