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ProPetro (PUMP) Q4 Earnings Miss Mark, Revenues Top Y/Y

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ProPetro Holding Corp. (PUMP - Free Report) reported fourth-quarter 2019 net income per share of 25 cents, missing the Zacks Consensus Estimate of 42 cents and also declining from the year-ago figure of 59 cents. This underperformance is due to holiday seasonality and tepid demand for the company’s services as its upstream energy player clients take a conservative approach to capital spending amid depressed oil and gas prices.  

Further, ProPetro’s revenues of $434.8 million lagged the Zacks Consensus Estimate by 0.35%. However, the top line inched up 2.2% year over year, driven by improved operating efficiency and lower downtime.

Adjusted EBITDA in the fourth quarter amounted to $110.3 million, decreasing from $112.4 million a year ago.

Pressure Pumping Division

This Midland, TX-based company through its Pressure Pumping division provides hydraulic fracturing, cementing and acidizing functions. The business accounted for 97.7% of the company's total revenues in the quarter under review.

Costs & Expenses

ProPetro reported cost of services of $305.7 million in the fourth quarter, up 1.8% from the year-ago quarter. General and administrative expenses came in at $31.1 million, up from $15.01 million in the year-ago period.

Balance Sheet & Capital Expenditure

As of Dec 31, ProPetro had cash and cash equivalents of $149.03 million while its long-term debt was $130 million. The company’s debt-to-capitalization ratio was 11.8%. ProPetro also has $49.7 million available under the revolving credit facility. Capital expenditure for the December quarter was reported at $66.3 million, down 82% from the level in fourth quarter of 2018.

Guidance

By now, we all know that the oil price is persistently trending in the bear market territory following the coronavirus pandemic’s adverse impact on global energy demand. As a result, the outlook for all industries in the energy sector business turns downbeat. Thus, energy players are limiting their operational activities by trimming capital budgets.

Last week, ProPetro announced plans to cut an unspecified number of jobs as it struggles with a weak industry environment and the coronavirus-induced demand reduction. Management at this oilfield services provider further informed that it will lower its maintenance capex and field costs significantly while looking to strike a bargain with suppliers for pricing concessions on materials and replacement parts.

ProPetro declared that it has no big growth capital spending lined up for the remainder of 2020. As of Mar 20, the company had zero net debt with $178 million in total liquidity.

Notably, this Zacks Rank #3 (Hold) company’s strategic capex-cut movemakes it join the club of other oilfield service players like Halliburton Company HAL, Schlumberger Limited SLB and Oceaneering International OII. These industry players aim to overcome the tough times while sustaining financial flexibility and operational efficiency. Importantly, solidifying the companies’ capital position during a dull phase with oil prices yielding no profits at all to most producers is considered a wise action. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ProPetro Holding Corp. Price, Consensus and EPS Surprise

ProPetro Holding Corp. Price, Consensus and EPS Surprise

ProPetro Holding Corp. price-consensus-eps-surprise-chart | ProPetro Holding Corp. Quote

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