Elevating Value
Leveraging technology. Delivering value.
- Home
- Investor Relations / IR Press Releases
Results and Recent Highlights
- Reported fourth quarter 2016 revenue of
$151.0 million , compared to fourth quarter 2015 of$54.0 million - Achieved fourth quarter 2016 adjusted EBITDA of
$6.1 million , compared to fourth quarter 2015 of$0.4 million - Averaged 12 deployed hydraulic fracturing fleets during fourth quarter 2016; exited 2016 with 13 deployed fleets
- Completed initial public offering with portion of proceeds used to fully repay pre-existing term loan facility a portion of our secured notes
- Entered into a new
$150 million asset-based revolving credit facility; finalized the terms of a new five and a half year$150 million senior secured term loan facility
Fourth Quarter 2016 Financial Results
Revenue for the quarter ended December 31, 2016 totaled
Adjusted EBITDA for the quarter ended December 31, 2016 totaled
“We are proud of the strong financial and operational performance our team achieved during the fourth quarter and throughout 2016,” said James C. Stewart, Chairman and Chief Executive Officer of Keane. “We are encouraged by the increase in well completion activity we are seeing across our diversified footprint. This pace of recovery allowed us to activate three hydraulic fracturing fleets from warm to hot status during the fourth quarter, and all three of which have been deployed during the first quarter, including two in January. In response to strong customer demand and the expectation of continued growth in activity throughout the year, we are responsibly investing in our future, including the proactive addition of skilled workers who will safely and efficiently support our business today, as well as anticipated growth in demand over the intermediate and long-term.”
Full Year 2016 Financial Results
Revenue for the year ended December 31, 2016 totaled
Adjusted EBITDA for the year ended December 31, 2016 totaled
Completion Services
Revenue for Completion Services totaled
Adjusted gross profit in Completion Services totaled
Financial results for the quarter ended December 31, 2016 included approximately
“Our Completion Services business continues to benefit from our strategic focus on partnering with the most dependable and efficient customers,” said Gregory L.
Other Services
Revenue for Other Services totaled
Balance Sheet and Capital
As of December 31, 2016, total debt outstanding was
On January 25, 2017, we consummated our initial public offering of 30,774,000 shares of our common stock at a public offering price of
On February 17, 2017, we entered into a new
We have finalized the terms of a new five and a half year
“Our new public company platform provides significant benefits and establishes a broader set of capital opportunities for Keane,” said Gregory L.
Outlook
Due to the timing of this earnings release, the Company is providing further observations and expectations for the first quarter of 2017. In future periods, Keane expects to report quarterly earnings earlier in the reporting cycle and may not provide the same level of observations and expectations.
In January 2017, Keane deployed two additional hydraulic fracturing fleets, bringing total deployed fleets to 15, and currently has 16 hydraulic fracturing fleets deployed, representing approximately 70% utilization on our 23 total fleets. Pricing has continued to improve during the first quarter, with leading-edge new dedicated capacity pricing up approximately 25% sequentially on a gross basis. These factors and general improvement in market conditions lead us to expect sequential gross revenue increases of between 30% and 40% in the first quarter of 2017.
The recent input cost inflation, including sand, will continue to be a headwind for the industry. However, our agreements allow us to adjust pricing every three to six months to align contract pricing to market terms which may cause short term margin compression but not impact long-term profitability. In addition, we continue to leverage our scale in the market to drive efficiencies on our supply chain and logistics network with increased volume and activity.
Overall, favorable trends in pricing and the operating efficiency we benefit from with our current customers, enable us to generate attractive cash flow from incremental hydraulic fracturing fleet deployment. As a result, we are prepared to responsibly accelerate the re-activation of our remaining horsepower subject to the hiring and proper training of our crews.
Conference Call
On Wednesday, March 15, 2017, Keane will hold a conference call for investors at 7:30 a.m. Central Time (8:30 a.m. Eastern Time) to discuss Keane’s fourth quarter and full year 2016 results. Hosting the call will be James C. Stewart, Chairman and Chief Executive Officer and Gregory L.
About Keane Group, Inc.
Headquartered in
Definitions of Non-GAAP Financial Measures and Other Items
We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this press release, including Adjusted Gross Profit, Adjusted EBITDA, and ratios based on these financial measures. These measurements provide supplemental information we believe is useful to analysts and investors to evaluate our ongoing results of operations, when considered alongside other generally accepted accounting principles (“GAAP”) measures such as net income and operating income. These Non-GAAP Measures exclude the financial impact of items management does not consider in assessing our ongoing operating performance, and thereby facilitate review of our operating performance on a period-to-period basis. Other companies may have different capital structures, and comparability to our results of operations may be impacted by the effects of acquisition accounting on our depreciation and amortization. As a result of the effects of these factors and factors specific to other companies, we believe Adjusted Gross Profit and Adjusted EBITDA provide helpful information to analysts and investors to facilitate a comparison of our operating performance to that of other companies.
Adjusted Gross Profit is defined as operating income (loss) before the cost of revenue portion of certain expenses, such as impairment, selling, general and administrative expenses, depreciation and amortization, further adjusted to eliminate the effects of items management does not consider in assessing ongoing performance. Adjusted EBITDA is defined as Adjusted Gross Profit further adjusted to eliminate the effects of items management does not consider in assessing ongoing performance.
As used in this announcement, the term “warm” refers to our hydraulic fracturing fleets that are inactive and which we believe can be made operational at a cost of less than
Forward-Looking Statements
The statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.These forward-looking statements are based on Keane’s current expectations and are subject to uncertainty and changes in circumstances.Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond Keane's control. Any forward-looking statement in this release speaks only as of the date of this release. Keane undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
KEANE GROUP HOLDINGS, LLC AND SUBSIDIARIES |
|||||||||
Quarter Ended December 31, | |||||||||
2016 | 2015 | ||||||||
(Unaudited) | (Unaudited) | ||||||||
Revenue | $ | 151,033 | $ | 53,983 | |||||
Operating costs and expenses: | |||||||||
Cost of services | 142,978 | 50,345 | |||||||
Depreciation and amortization | 29,032 | 16,462 | |||||||
Selling, general and administrative expenses | 7,858 | 6,914 | |||||||
Impairment | 185 | — | |||||||
Total operating costs and expenses | 180,053 | 73,721 | |||||||
Operating (loss) | (29,020) | (19,739) | |||||||
Other expenses: | |||||||||
Other income (expense), net | 379 | (201) | |||||||
Interest expense | (9,891) | (5,792) | |||||||
Total other expenses | (9,512) | (5,993) | |||||||
Net (loss) | (38,532) | (25,732) | |||||||
Other comprehensive income (loss): | |||||||||
Foreign currency translation adjustments | (35) | (53) | |||||||
Hedging activities | 519 | 856 | |||||||
Total comprehensive (loss) | $ | (38,047) | $ | (24,929) | |||||
Year Ended December 31, |
|||||||||
2016 | 2015 | ||||||||
(Unaudited) | (Unaudited) | ||||||||
Revenue | $ | 420,570 | $ | 366,157 | |||||
Operating costs and expenses: | |||||||||
Cost of services | 416,342 | 306,596 | |||||||
Depreciation and amortization | 100,979 | 69,547 | |||||||
Selling, general and administrative expenses | 52,768 | 25,811 | |||||||
Impairment | 185 | 3,914 | |||||||
Total operating costs and expenses | 570,274 | 405,868 | |||||||
Operating (loss) | (149,704) | (39,711) | |||||||
Other expenses: | |||||||||
Other income (expense), net | 916 | (1,481) | |||||||
Interest expense | (38,299) | (23,450) | |||||||
Total other expenses | (37,383) | (24,931) | |||||||
Net (loss) | (187,087) | (64,642) | |||||||
Other comprehensive income (loss): | |||||||||
Foreign currency translation adjustments | 22 | (741) | |||||||
Hedging activities | 1,857 | (1,187) | |||||||
Total comprehensive (loss) | $ | (185,208) | $ | (66,570) | |||||
KEANE GROUP HOLDINGS, LLC AND SUBSIDIARIES |
|||||||||
ASSETS |
December 31, |
||||||||
2016 | 2015 | ||||||||
(Unaudited) | (Audited) | ||||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 48,920 | $ | 53,422 | |||||
Accounts receivable | 66,277 | 15,640 | |||||||
Inventories, net | 15,891 | 4,668 | |||||||
Prepaid and other current assets | 14,782 | 1,868 | |||||||
Total current assets | 145,870 | 75,598 | |||||||
Property and equipment, net | 294,209 | 153,625 | |||||||
Goodwill | 50,478 | 48,882 | |||||||
Intangible assets | 44,015 | 45,616 | |||||||
Other noncurrent assets | 2,368 | 1,074 | |||||||
Total Assets | 536,940 | 324,795 | |||||||
LIABILITIES AND MEMBERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | 48,484 | 12,562 | |||||||
Accrued expenses | 42,892 | 14,024 | |||||||
Current maturities of capital lease obligations | 2,633 | 1,742 | |||||||
Current maturities of long-term debt | 2,512 | 2,918 | |||||||
Other current liabilities | 3,171 | 1,100 | |||||||
Total current liabilities | 99,692 | 32,346 | |||||||
Capital lease obligations, less current maturities | 5,442 | 6,365 | |||||||
Long-term debt, less current maturities | 267,238 | 181,975 | |||||||
Long-term debt, related party | — | 22,174 | |||||||
Other non-current liabilities | 2,316 | 1,775 | |||||||
Total non-current liabilities | 274,996 | 212,289 | |||||||
Total liabilities | 374,688 | 244,635 | |||||||
Commitments and contingencies | — | — | |||||||
Members’ equity: | |||||||||
Members’ equity | 453,810 | 186,510 | |||||||
Stockholders’ equity | — | — | |||||||
Retained (deficit) | (288,771) | (101,684) | |||||||
Accumulated other comprehensive (loss) | (2,787) | (4,666) | |||||||
Total members’ equity | 162,252 | 80,160 | |||||||
Total liabilities and members’ equity | $ | 536,940 | $ | 324,795 | |||||
KEANE GROUP HOLDINGS, LLC AND SUBSIDIARIES |
||||||||||||||||||
Quarter Ended December 31, |
|
|||||||||||||||||
Year Ended December 31, |
||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Completion Services: | ||||||||||||||||||
Revenues | $ | 147,973 | $ | 53,983 | $ | 410,854 | $ | 363,820 | ||||||||||
Cost of services | 139,626 | 50,345 | 401,891 | 305,035 | ||||||||||||||
Gross profit | 8,347 | 3,638 | 8,963 |
58,784 |
||||||||||||||
Selling, general and administrative expenses | (25) | 859 | 94 | 4,006 | ||||||||||||||
Depreciation, amortization and impairment | 25,742 | 15,413 | 89,432 | 67,557 | ||||||||||||||
Operating (loss) | (17,436) | (11,122) | (80,563) | (11,260) | ||||||||||||||
Average hydraulic fracturing fleets deployed | 12 | 5 | 10 | 5 | ||||||||||||||
Average hydraulic fracturing fleet utilization | 52 |
% |
|
63 |
% |
|
50 |
% |
|
63 |
% |
|||||||
Wireline – fracturing fleet bundling percentages | 62 |
% |
|
78 |
% |
|
57 |
% |
|
73 |
% |
|||||||
Average annualized revenue per fleet deployed | $ | 49,324 | $ | 43,186 | $ | 41,085 | $ | 72,764 | ||||||||||
Average annualized adjusted gross profit per fleet deployed | $ | 4,436 | $ | 4,303 | $ | 3,145 | $ | 12,231 | ||||||||||
Adjusted gross profit | $ | 13,309 | $ | 5,379 | $ | 31,447 | $ | 61,155 | ||||||||||
Other Services: (1) | ||||||||||||||||||
Revenues | $ | 3,060 | $ | — | $ | 9,716 | $ | 2,337 | ||||||||||
Cost of services | 3,352 | — | 14,451 | 1,561 | ||||||||||||||
Gross profit | (292) | — | (4,735) | 777 | ||||||||||||||
Selling, general and administrative expenses | 44 | — | 149 | — | ||||||||||||||
Depreciation, amortization and impairment | 1,297 | 734 | 5,272 | 4,640 | ||||||||||||||
Operating (loss) | (1,632) | (730) | (10,156) | (3,864) | ||||||||||||||
Adjusted gross profit (loss) | (141) | 4 | (3,622) | 1,277 | ||||||||||||||
Number of working days – coiled tubing | 145 | NM | 400 | NM | ||||||||||||||
Revenue per working days – coiled tubing | $ | 21 | $ | NM | $ | 21 | $ | NM | ||||||||||
(1)Other services segment includes coiled tubing, cementing and drilling divisions.Coiled tubing began operations in March 2016.Other divisions operating data are not provided, as they are not considered material to the total operations.Coiled tubing revenues for the quarter and year ending December 31, 2016 were
KEANE GROUP HOLDINGS, LLC AND SUBSIDIARIES |
||||||||||||||
Quarter Ended December 31, 2016 | ||||||||||||||
Completion |
Other Services |
Corporate and |
Total | |||||||||||
Operating (loss) income | $ | (17,436) | $ | (1,632) | $ | (9,952) | $ | (29,020) | ||||||
Selling, general and administrative | (25) | 44 | 7,839 | 7,858 | ||||||||||
Depreciation and amortization | 25,742 | 1,112 | 2,178 | 29,032 | ||||||||||
Impairment(a) | — | 185 | — | 185 | ||||||||||
Cost of revenue adjustments: | ||||||||||||||
Acquisition, integration and divestiture costs(b) | 77 | 141 | — | 218 | ||||||||||
Fleet commissioning costs | 4,951 | 9 | — | 4,960 | ||||||||||
Other expenses | — | — | — | — | ||||||||||
Adjusted gross profit | $ | 13,309 | $ | (141) | $ | 65 | $ | 13,233 | ||||||
Quarter Ended December 31, 2015 |
||||||||||||||
Completion |
Other Services |
Corporate and |
Total | |||||||||||
Operating (loss) income | $ | (11,122) | $ | (730) | $ | (7,887) | $ | (19,739) | ||||||
Selling, general and administrative | 859 | — | 6,055 | 6,914 | ||||||||||
Depreciation and amortization | 15,413 | 734 | 315 | 16,462 | ||||||||||
Impairment(a) | — | — | — | — | ||||||||||
Cost of revenue adjustments: | ||||||||||||||
Acquisition, integration and divestiture costs(b) | 9 | — | — | 9 | ||||||||||
Fleet commissioning costs | 220 | — | — | 220 | ||||||||||
Other expenses | — | — | — | — | ||||||||||
Adjusted gross profit | $ | 5,379 | $ | 4 | $ | (1,517) | $ | 3,866 | ||||||
KEANE GROUP HOLDINGS, LLC AND SUBSIDIARIES |
||||||||||||||
Year Ended December 31, 2016 | ||||||||||||||
Completion |
Other Services |
Corporate and |
Total | |||||||||||
Operating (loss) income | $ | (80,563) | $ | (10,156) | $ | (58,985) | $ | (149,704) | ||||||
Selling, general and administrative | 94 | 149 | 52,525 | 52,768 | ||||||||||
Depreciation and amortization | 89,432 | 5,087 | 6,460 | 100,979 | ||||||||||
Impairment(a) | — | 185 | — | 185 | ||||||||||
Cost of revenue adjustments: | ||||||||||||||
Acquisition, integration and divestiture costs(b) | 13,233 | 366 | — | 13,599 | ||||||||||
Fleet commissioning costs | 9,251 | 747 | — | 9,998 | ||||||||||
Other expenses | — | — | — | — | ||||||||||
Adjusted gross profit | $ | 31,447 | $ | (3,622) | $ | — | $ | 27,825 | ||||||
Year Ended December 31, 2015 |
||||||||||||||
Completion |
Other Services |
Corporate and |
Total | |||||||||||
Operating (loss) income | $ | (11,260) | $ | (3,864) | $ | (24,587) | $ | (39,711) | ||||||
Selling, general and administrative | 4,006 | — | 21,805 | 25,811 | ||||||||||
Depreciation and amortization | 65,114 | 3,169 | 1,264 | 69,547 | ||||||||||
Impairment(a) |
2,443 |
1,471 | — |
3,914 |
||||||||||
Cost of revenue adjustments: | ||||||||||||||
Acquisition, integration and divestiture costs(b) | 632 | 501 | — | 1,133 | ||||||||||
Fleet commissioning costs | — | — | — | — | ||||||||||
Other expenses | 220 | — | — | 220 | ||||||||||
Adjusted gross profit | $ |
61,155 |
$ | 1,277 | $ | (1,518) | $ |
60,914 |
||||||
KEANE GROUP HOLDINGS, LLC AND SUBSIDIARIES |
||||||||||||||
Quarter Ended December 31, |
|
|||||||||||||
Year Ended December 31, |
||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||
Adjusted gross profit | $ | 13,233 | $ | 3,866 | $ | 27,825 | $ |
60,914 |
||||||
Minus: Selling, general and other administrative expenses | (7,593) | (6,322) | (51,966) | (26,499) | ||||||||||
Acquisition, integration and divestiture costs(b) | 336 | 2,328 | 23,703 | 5,139 | ||||||||||
Fleet commissioning costs | — | — | — | — | ||||||||||
Unit based compensation(c) | 159 | 192 | 1,985 | 312 | ||||||||||
Other expenses(d) | — | 297 | 374 | 2,019 | ||||||||||
Adjusted EBITDA | $ | 6,135 | $ | 361 | $ | 1,921 | $ |
41,885 |
||||||
(a) | Represents non-cash impairment charges with respect to our long-lived assets and intangible assets. | |
(b) | Represents professional fees, integration costs, earn-outs, lease termination costs, severance, start-up and other costs associated with our acquisition and integration of assets and liabilities relating to Trican Well Service L.P.'s oilfield services business and our acquisition and integration of Ultra Tech Frac Services, LLC, organic growth initiatives, and costs associated with the wind-down of our Canadian operations. In the quarter ending December 31, 2016 and 2015, these costs were recorded in selling, general and administrative expenses respectively. For the years ending December 31, 2016 and 2015, |
|
(c) | Represents non-cash amortization of units issued to our employees over the vesting period, net of any forfeitures which are reflected in selling, general and administrative expenses. | |
(d) | Represents legal expenses, consulting costs, development charges, forfeiture of deposit on hydraulic fracturing equipment purchase orders and other miscellaneous charges. For the year ended December 31, 2016, the foregoing was recorded in other expense, net. For the year ended December 31, 2015, |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170314006412/en/
ICR
Investors
Marc Silverberg, 646-277-1293
Marc.Silverberg@icrinc.com
or
Media
Jake Malcynsky, 203-682-8375
Jake.Malcynsky@icrinc.com