ProPetro Reports Results for the Third Quarter 2018

ProPetro Holding Corp. (“ProPetro” or “the Company”) (NYSE: PUMP) today
announced financial and operational results for the third quarter of
2018.

Third Quarter 2018 and Recent Highlights

• Total revenue for the quarter was $434.0 million, as compared to
  $459.9 million for the second quarter of 2018.
• Net income was $46.3 million, or $0.53 per diluted share, an increase
  of 18% from $39.1 million, or $0.45 per diluted share, for the second
  quarter of 2018.
• Adjusted EBITDA for the quarter was $103.4 million, an increase of 8%
  from $96.0 million for the second quarter of 2018.
• Active hydraulic horsepower (“HHP”) deployed during the quarter and at
  quarter end was 860,000, or 19 fleets.
• The Company deployed one additional fleet in early October, increasing
  current total frac fleet capacity to 905,000 HHP, or 20 fleets.

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, “ProPetro’s success in
the third quarter is a direct result of our differentiated,
customer-centric business model. We remain extremely proud of our
best-in-class team and the consistent results they produce. Our team
supports some of the most effective and efficient operators in the
upstream space, and we will remain closely focused on their needs as we
finish 2018 strong and prepare for an exciting 2019.”

Third Quarter 2018 Financial Summary

Revenue for the third quarter of 2018 was $434.0 million, or 6% lower
than $459.9 million for the second quarter of 2018. The decrease was
primarily attributable to increased volumes of local sand. During the
third quarter of 2018, 97.1% of total revenue was associated with
pressure pumping services, compared to 96.9% in the second quarter.

Costs of services excluding depreciation and amortization for the third
quarter of 2018 decreased to $320.1 million from $351.9 million during
the second quarter of 2018 primarily due to increased volumes of local
sand. As a percentage of pressure pumping segment revenues, pressure
pumping costs of services decreased to 73.9% from 76.7% in the second
quarter of 2018.

General and administrative expense was $12.8 million as compared to
$14.2 million in the second quarter of 2018. The decrease was primarily
attributable to normalizing costs after one-time expenses incurred in
the second quarter. General and administrative expense, exclusive of
stock-based compensation and deferred IPO bonus, was $10.5 million, or
2.4% of revenue, for the third quarter of 2018.

Net income for the third quarter of 2018 totaled $46.3 million, or $0.53
per diluted share, versus $39.1 million, or $0.45 per diluted share, for
the second quarter of 2018.

Adjusted EBITDA increased approximately 8% to $103.4 million for the
third quarter of 2018 from $96.0 million in the previous quarter.
Adjusted EBITDA margin for the third quarter of 2018 was 23.8%, as
compared to 20.9% for the second quarter of 2018.

Operational Highlights and Fleet Expansion

Active HHP deployed during the quarter and at quarter end was 860,000,
or 19 fleets. Consistent with the Company’s previously announced plans,
ProPetro expanded its fracturing capacity by an additional 45,000 HHP,
or one fleet, in October. This brings current and expected 2018 year-end
capacity to 905,000 HHP or, or 20 fleets. This fleet is working under a
dedicated agreement with a new customer.

The Company also deployed one new build cementing unit in September
bringing total cementing capacity to 19 units. To support growing
demand, ProPetro plans to further expand its cementing fleet capacity
with one additional new-build unit that is targeted to commence
operations by the end of the year.

Liquidity and Capital Spending

As of September 30, 2018, total cash was $78.2 million and total debt
was $89.1 million. Total liquidity at the end of the third quarter of
2018 was $198.2 million, including cash and $120.0 million of capacity
under the Company’s $200 million revolving credit facility.

Capital expenditures incurred during the third quarter of 2018 were
$74.2 million. This reflects spending on ProPetro’s growth initiatives
as well as maintenance capital.

Outlook

Mr. Redman concluded, “We remain confident in our ability to produce
consistent results driven by our high performing workforce and close
partnerships with a blue-chip customer base. The Permian Basin is the
premier resource play in North America and we expect it will remain so
for decades to come. We believe we are uniquely positioned for
outperformance through the end of 2018 and beyond.”

Conference Call Information

The Company will host a conference call at 8:00 AM Central Time on
Wednesday, November 7, 2018 to discuss financial and operating results
for the third quarter of 2018 and recent developments. This call will
also be webcast, along with a presentation slide deck on ProPetro’s
website at www.propetroservices.com.
The slide deck will be published on the website the morning of the call.
To access the conference call, U.S. callers may dial toll free
1-844-340-9046 and international callers may dial 1-412-858-5205. 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 toll free by dialing
1-877-344-7529 for U.S. callers, 1-855-669-9658 for Canadian callers, as
well as 1-412-317-0088 for international callers. The access code for
the replay is 10124240.

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
					September 30				June 30				September 30
						2018				2018				2017
REVENUE - Service revenue					$	434,041			$	459,888			$	282,730
COSTS AND EXPENSES
	Cost of services (exclusive of depreciation and amortization)					320,146				351,888				225,433
	General and administrative (inclusive of stock-based compensation)					12,821				14,178				11,106
	Depreciation and amortization					23,217				21,276				14,745
	Loss on disposal of assets					16,407				18,990				8,742
		Total costs and expenses				372,591				406,332				260,026
OPERATING INCOME						61,450				53,556				22,704
OTHER INCOME (EXPENSE):
	Interest expense					(1,480	)			(2,231	)			(644	)
	Other expense					(93	)			(182	)			(191	)
		Total other income (expense)				(1,573	)			(2,413	)			(835	)
INCOME BEFORE INCOME TAXES						59,877				51,143				21,869
INCOME TAX (EXPENSE)/BENEFIT						(13,592	)			(12,052	)			96
NET INCOME					$	46,285			$	39,091			$	21,965
NET INCOME PER COMMON SHARE:
	Basic				$	0.55			$	0.47			$	0.26
	Diluted				$	0.53			$	0.45			$	0.25
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
	Basic					83,544				83,447				83,040
	Diluted					86,878				86,878				86,264

PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
					September 30, 2018				December 31, 2017
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents				$	78,164			$	23,949
	Accounts receivable - net of allowance for doubtful accounts of $457 and $443, respectively					252,390				199,656
	Inventories					6,681				6,184
	Prepaid expenses					2,911				5,123
	Other current assets					1,179				748
		Total current assets				341,325				235,660
PROPERTY AND EQUIPMENT - Net of accumulated depreciation						586,218				470,910
OTHER NONCURRENT ASSETS:
	Goodwill					9,425				9,425
	Intangible assets - net of amortization					85				301
	Deferred revenue rebate - net of amortization					-				615
	Other noncurrent assets					2,665				2,121
		Total other noncurrent assets				12,175				12,462
TOTAL ASSETS					$	939,718			$	719,032
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Accounts payable				$	250,074			$	211,149
	Accrued liabilities					20,774				16,607
	Current portion of long-term debt					9,088				15,764
	Accrued interest payable					480				76
		Total current liabilities				280,416				243,596
DEFERRED INCOME TAXES						39,958				4,881
LONG-TERM DEBT						80,000				57,178
OTHER LONG-TERM LIABILITIES						125				125
		Total liabilities				400,499				305,780
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
	Common stock, $0.001 par value, 200,000,000 shares authorized, 83,543,839 and 83,039,854 shares issued, respectively					84				83
	Additional paid-in capital					611,348				607,466
	Accumulated deficit					(72,213	)			(194,297	)
		Total shareholders’ equity				539,219				413,252
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY					$	939,718			$	719,032

PROPETRO HOLDING CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
						Nine Months Ended September 30,
							2018				2017
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income					$	122,084			$	2,535
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization					63,428				38,602
		Deferred income tax expense					34,546				166
		Amortization of deferred revenue rebate					615				1,385
		Amortization of deferred debt issuance costs					295				3,322
		Stock-based compensation					3,832				8,730
		Loss on disposal of assets					42,898				28,971
		Gain on interest rate swap					-				(226	)
	Changes in operating assets and liabilities:
		Accounts receivable					(52,734	)			(44,868	)
		Other current assets					(431	)			3,271
		Inventories					(496	)			(4,435	)
		Prepaid expenses					2,265				(910	)
		Accounts payable					26,378				41,564
		Accrued liabilities and other current liabilities					7,384				589
		Accrued interest					1,030				(23	)
			Net cash provided by operating activities				251,094				78,673
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures						(212,152	)			(193,820	)
	Proceeds from sale of assets						3,280				4,237
			Net cash used in investing activities				(208,872	)			(189,583	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from borrowings						77,378				27,112
	Repayments of borrowings						(61,858	)			(164,638	)
	Repayments of insurance financing						(3,218	)			(2,900	)
	Payment of debt issuance costs						(360	)			(1,653	)
	Proceeds from exercise of equity awards						51				-
	Proceeds from IPO						-				185,500
	Payment of IPO costs						-				(15,099	)
			Net cash provided by financing activities				11,993				28,322
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS							54,215				(82,588	)
CASH AND CASH EQUIVALENTS — Beginning of period							23,949				133,596
CASH AND CASH EQUIVALENTS — End of period						$	78,164			$	51,008

	Reportable Segment Information
					Three Months Ended
					September 30, 2018										June 30, 2018
	($ in thousands)				Pressure Pumping			All Other				Total			Pressure Pumping			All Other				Total
		Service revenue			$	421,436		$	12,605			$	434,041		$	445,805		$	14,083			$	459,888
		Adjusted EBITDA			$	105,069		$	(1,701	)		$	103,368		$	97,818		$	(1,850	)		$	95,968
		Depreciation and amortization			$	22,026		$	1,191			$	23,217		$	20,042		$	1,234			$	21,276
		Capital expenditures			$	73,143		$	1,060			$	74,203		$	68,106		$	2,437			$	70,543

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
				September 30, 2018										June 30, 2018
($ in thousands)				Pressure Pumping			All Other				Total			Pressure Pumping			All Other				Total
	Net income (loss)			$	66,493		$	(20,208	)		$	46,285		$	57,524		$	(18,433	)		$	39,091
	Depreciation and amortization				22,026			1,191				23,217			20,042			1,234				21,276
	Interest expense				-			1,480				1,480			-			2,231				2,231
	Income tax expense				-			13,592				13,592			-			12,052				12,052
	Loss on disposal of assets				16,117			290				16,407			19,823			(833	)			18,990
	Stock-based compensation				-			1,631				1,631			-			1,443				1,443
	Other expense and legal settlement				-			93				93			2			198				200
	Deferred IPO bonus expense				433			230				663			427			258				685
	Adjusted EBITDA			$	105,069		$	(1,701	)		$	103,368		$	97,818		$	(1,850	)		$	95,968

View source version on businesswire.com: https://www.businesswire.com/news/home/20181106005947/en/

Source: Business Wire
(November 6, 2018 - 4:15 PM EST)

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