Elevating Value
Leveraging technology. Delivering value.
Results and Recent Highlights
- Reported first quarter 2017 revenue of
$240.2 million , compared to fourth quarter 2016 of$151.0 million - Achieved first quarter 2017 adjusted EBITDA of
$13.1 million , compared to fourth quarter 2016 of$6.1 million - Averaged 15.5 deployed hydraulic fracturing fleets during first quarter 2017; exited quarter with 17deployed fleets
- Increased annualized adjusted gross profit per fleet to
$6.3 million , compared to fourth quarter 2016 of$4.4 million
First Quarter 2017 Financial Results
Revenue for the quarter ended March 31, 2017 totaled
Adjusted EBITDA for the quarter ended March 31, 2017 totaled
“Our pressure pumping services continued to experience strong demand during the first quarter of 2017, as we placed four additional hydraulic fracturing fleets into service, bringing Keane’s total active fleets to 17,” said James Stewart, Chairman and Chief Executive Officer of Keane. “The quality and readiness of our fleet is apparent in our continued deployments with a total cost of less than
“Positive signals from the field have allowed us to accelerate the re-commissioning of our remaining idle hydraulic fracturing fleets,” continued Mr. Stewart. “Robust market conditions for oil and gas well completions supported deployment of an additional fleet early in the second quarter of 2017, bringing total deployed fleets to 18, and we expect to place a second additional fleet into service later in the second quarter, resulting in 6 new fleets placed into service since the start of 2017 for a total of 19 operating fleets. Our team is diligently preparing the remaining fleets for activation as quality, reliable and safe horsepower is currently facing demand in excess of dispatchable supply.”
“We remain committed to our core strategy of partnering with industry-leading customers under dedicated agreements,” said Greg
Completion Services
Revenue for Completion Services totaled
Of the
Adjusted gross profit in Completion Services totaled
“The execution of our strategy to partner with the most efficient customers supported Keane’s strong financial results during the first quarter,” said Mr.
Other Services
Adjusted gross profit in Other Services for the quarter ended March 31, 2017 totaled
First Quarter 2017 One-Time Items
Adjusted EBITDA for the quarter ended March 31, 2017 included approximately
Financial results for the quarter ended March 31, 2017 also included approximately
Balance Sheet and Capital
Total debt outstanding as of March 31, 2017 was
As of March 31, 2017, cash and equivalents totaled
Total available liquidity as of March 31, 2017 was approximately
On February 17, 2017, we entered into a new
On March 15, 2017, we entered into a new five and a half year
Second Quarter 2017 Outlook
We exited the quarter ended March 31, 2017 with 17 active hydraulic fracturing fleets, placing an additional hydraulic fracturing fleet in-service in April 2017 and expect to deploy a second additional fleet by the end of May 2017. Based on this deployment schedule, we expect second quarter 2017 revenues to increase between 25% and 35% sequentially.
Annualized gross profit per fleet totaled approximately
Conference Call
On Wednesday, May 3, 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 first quarter 2017 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.
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, INC. AND SUBSIDIARIES | ||||||||||||||
| CONDENSED CONSOLIDATED & COMBINED STATEMENTS OF OPERATIONS & COMPREHENSIVE (LOSS) | ||||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| 2017 | 2016 |
2016 (1) |
||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Revenue | $ | 240,153 | $ | 61,195 | $ | 151,033 | ||||||||
| Operating costs and expenses: | ||||||||||||||
| Cost of services | 223,992 | 67,845 | 142,978 | |||||||||||
| Depreciation and amortization | 30,373 | 16,108 | 29,032 | |||||||||||
| Selling, general and administrative expenses | 17,552 | 20,160 | 7,858 | |||||||||||
| Impairment | — | — | 185 | |||||||||||
| Total operating costs and expenses | 271,917 | 104,113 | 180,053 | |||||||||||
| Operating (loss) | (31,764 | ) | (42,918 | ) | (29,020 | ) | ||||||||
| Other income (expenses): | ||||||||||||||
| Other income (expense), net | 4 | 133 | 379 | |||||||||||
| Interest expense | (40,361 | ) | (8,589 | ) | (9,891 | ) | ||||||||
| Total other expenses | (40,357 | ) | (8,456 | ) | (9,512 | ) | ||||||||
| (Loss) before income taxes | (72,121 | ) | (51,374 | ) | (38,532 | ) | ||||||||
| Deferred tax (expenses) | (134 | ) | — | — | ||||||||||
| Net (loss) | (72,255 | ) | (51,374 | ) | (38,532 | ) | ||||||||
| Other comprehensive income (loss): | ||||||||||||||
| Foreign currency translation adjustments | 13 | 65 | (35 | ) | ||||||||||
| Hedging activities | 184 | 1,391 | 519 | |||||||||||
| Total comprehensive (loss) | $ | (72,058 | ) | $ | (49,918 | ) | $ | (38,048 | ) | |||||
| Net loss per share, basic | $ | (0.70 | ) | NM | NM | |||||||||
| Weighted average shares, basic | $ | 103,013 | NM | NM | ||||||||||
|
(1) |
Condensed Consolidated Financial Statements of Keane Group Holdings, LLC and Subsidiaries. |
|
|
NM – Not measured as Keane Group, Inc. did not consummate its IPO until 1/25/2017. |
||
| KEANE GROUP, INC. AND SUBSIDIARIES | ||||||||||
| CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS | ||||||||||
| (in thousands) | ||||||||||
| ASSETS | March 31, | December 31, | ||||||||
| 2017 |
2016 (1) |
|||||||||
| (Unaudited) | (Audited) | |||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 85,796 | $ | 48,920 | ||||||
| Accounts receivable | 126,431 | 66,277 | ||||||||
| Inventories, net | 21,101 | 15,891 | ||||||||
| Prepaid and other current assets | 9,704 | 14,618 | ||||||||
| Total current assets | 243,032 | 145,706 | ||||||||
| Property and equipment, net | 285,315 | 294,209 | ||||||||
| Goodwill | 50,624 | 50,478 | ||||||||
| Intangible assets | 42,507 | 44,015 | ||||||||
| Other noncurrent assets | 5,873 | 2,532 | ||||||||
| Total Assets | $ | 627,351 | $ | 536,940 | ||||||
| LIABILITIES AND OWNERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 69,065 | $ | 48,484 | ||||||
| Accrued expenses | 52,654 | 42,892 | ||||||||
| Current maturities of capital lease obligations | 2,617 | 2,633 | ||||||||
| Current maturities of long-term debt | 349 | 2,512 | ||||||||
| Stock based compensation - current | 4,281 | — | ||||||||
| Other current liabilities | 4,086 | 3,171 | ||||||||
| Total current liabilities | 133,052 | 99,692 | ||||||||
| Capital lease obligations, less current maturities | 4,744 | 5,442 | ||||||||
| Long-term debt, net(2) less current maturities | 144,718 | 267,238 | ||||||||
| Stock based compensation – non-current | 4,281 | — | ||||||||
| Long-term debt, related party | — | — | ||||||||
| Other non-current liabilities | 4,173 | 2,316 | ||||||||
| Total non-current liabilities | 157,916 | 274,996 | ||||||||
| Total liabilities | 290,968 | 374,688 | ||||||||
| Owners’ equity: | ||||||||||
| Members’ equity | — | 453,810 | ||||||||
| Stockholders’ equity | 402,459 | — | ||||||||
| Retained (deficit) | (63,486 | ) | (288,771 | ) | ||||||
| Accumulated other comprehensive (loss) | (2,590 | ) | (2,787 | ) | ||||||
| Total owners’ equity | 336,383 | 162,252 | ||||||||
| Total liabilities and owners’ equity | $ | 627,351 | $ | 536,940 | ||||||
|
(1) |
Condensed Consolidated Financial Statements of Keane Group Holdings, LLC and Subsidiaries. | |
|
(2) |
Net of unamortized deferred financing costs and unamortized debt discounts. | |
| KEANE GROUP, INC. AND SUBSIDIARIES | ||||||||||||||
| ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA | ||||||||||||||
|
(unaudited, amounts in thousands, except for non-financial statistics) |
||||||||||||||
| Quarter Ended | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| 2017 |
2016 (1) |
2016 (1) |
||||||||||||
| Completion Services: | ||||||||||||||
| Revenues | $ | 240,153 | $ | 58,872 | $ | 147,973 | ||||||||
| Cost of services | 223,992 | 65,184 | 139,626 | |||||||||||
| Gross profit | 16,161 | (6,312 | ) | 8,347 | ||||||||||
| Selling, general and administrative expenses | — | (1 | ) | (25 | ) | |||||||||
| Depreciation, amortization and administrative expenses, and impairment | 26,598 | 15,172 | 25,742 | |||||||||||
| Operating (loss) | $ | (10,437 | ) | $ | (21,483 | ) | $ | (17,436 | ) | |||||
| Average hydraulic fracturing fleets deployed | 15.5 | 5.3 | 12.3 | |||||||||||
| Average hydraulic fracturing fleet utilization | 67 | % | 23 | % | 52 | % | ||||||||
| Wireline – fracturing fleet bundling percentages | 58 | % | 63 | % | 62 | % | ||||||||
| Average annualized revenue per fleet deployed | $ | 61,975 | $ | 44,154 | $ | 49,324 | ||||||||
| Average annualized adjusted gross profit per fleet deployed | $ | 6,278 | $ | 3,413 | $ | 4,436 | ||||||||
| Adjusted gross profit | $ | 24,326 | $ | 4,550 | $ | 13,309 | ||||||||
| Other Services (2): | ||||||||||||||
| Revenues | $ | — | $ | 2,323 | $ | 3,060 | ||||||||
| Cost of services | — | 2,661 | 3,352 | |||||||||||
| Gross profit | — | (338 | ) | (292 | ) | |||||||||
| Selling, general and administrative expenses | — | — | 44 | |||||||||||
| Depreciation, amortization and administrative expenses, and impairment | 1,483 | 708 |
1,297 |
|||||||||||
| Operating (loss) | (1,483 | ) | (1,046 | ) | (1,632 | ) | ||||||||
| Adjusted gross profit (loss) | 43 | (338 | ) | (141 | ) | |||||||||
| Number of working days – coiled tubing | NM | 35 | 145 | |||||||||||
| Revenue per working days – coiled tubing | NM | $ | 66 | $ | 21 | |||||||||
|
(1) |
Condensed Consolidated Financial Information of Keane Group Holdings, LLC and Subsidiaries. | |
|
(2) |
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. There were no coiled tubing revenues for the quarter ending March 31, 2016; while for the quarter ending December 31, 2016, the revenue recognized was |
|
|
NM – Not meaningful to be disclosed. |
||
| KEANE GROUP, INC AND SUBSIDIARIES | ||||||||||||||||||
| NON- |
||||||||||||||||||
|
(unaudited, amounts in thousands) |
||||||||||||||||||
| Quarter Ended March 31, 2017 | ||||||||||||||||||
|
Completion |
Other |
Corporate |
Total | |||||||||||||||
| Operating (loss) income | $ | (10,437 | ) | $ | (1,483 | ) | $ | (19,844 | ) | $ |
(31,764 |
) |
||||||
| Selling, general and administrative | — | — | 17,552 | 17,552 | ||||||||||||||
| Depreciation and amortization | 26,598 | 1,483 | 2,292 | 30,373 | ||||||||||||||
| Impairment (1) | — | — | — | — | ||||||||||||||
| Cost of revenue adjustments: | ||||||||||||||||||
| Acquisition, integration and divestiture costs (2) | 43 | — | 43 | |||||||||||||||
| Fleet commissioning costs | 6,899 | — | — | 6,899 | ||||||||||||||
| IPO HR – related costs (5) | 1,266 | — | — | 1,266 | ||||||||||||||
| Adjusted gross profit | $ | 24,326 | $ | 43 | $ | — | $ | 24,369 | ||||||||||
| Quarter Ended December 31, 2016 | ||||||||||||||||||
|
Completion |
Other |
Corporate |
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 (1) | — | 185 | — | 185 | ||||||||||||||
| Cost of revenue adjustments: | ||||||||||||||||||
| Acquisition, integration and divestiture costs (2) | 77 | 141 | — | 218 | ||||||||||||||
| Fleet commissioning costs | 4,951 | 9 | — | 4,960 | ||||||||||||||
| Other expenses | 0 | — | — | 0 | ||||||||||||||
| Adjusted gross profit | $ | 13,309 | $ | (141 | ) | $ | 65 | $ | 13,233 | |||||||||
| Quarter Ended March 31, 2016 | ||||||||||||||||||
|
Completion |
Other |
Corporate |
Total | |||||||||||||||
| Operating (loss) income | $ | (21,483 | ) | $ | (1,046 | ) | $ | (20,389 | ) | $ | (42,918 |
) |
||||||
| Selling, general and administrative | (1 | ) | — | 20,161 | 20,160 | |||||||||||||
| Depreciation and amortization | 15,172 | 708 | 228 | 16,108 | ||||||||||||||
| Impairment (1) | — | — | — | — | ||||||||||||||
| Cost of revenue adjustments: | ||||||||||||||||||
| Acquisition, integration and divestiture costs (2) | 10,862 | — | — | 10,862 | ||||||||||||||
| Fleet commissioning costs | — | — | — | — | ||||||||||||||
| Other expenses | — | — | — | — | ||||||||||||||
| Adjusted gross profit | $ | 4,550 | $ | (338 | ) | $ | — | $ | 4,212 | |||||||||
| KEANE GROUP, INC AND SUBSIDIARIES | ||||||||||||||
| NON- |
||||||||||||||
|
(unaudited, amounts in thousands) |
||||||||||||||
| Quarter Ended | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| 2017 | 2016 | 2016 | ||||||||||||
| Adjusted gross profit | $ | 24,369 | $ | 4,212 | $ | 13,233 | ||||||||
| Minus: Selling, general and administrative | (17,548 | ) | (20,029 | ) | (7,593 | ) | ||||||||
| Acquisition, integration and divestiture costs (2) | 571 | 13,871 | (609 | ) | ||||||||||
| Fleet commissioning costs | 197 | — | — | |||||||||||
| Non-cash stock compensation (3) | 1,138 | 1,769 | 159 | |||||||||||
| IPO/Org restructure (non-HR) related costs, including early debt retirements (4) | 783 | — | 945 | |||||||||||
| IPO – HR related costs (5) | 3,626 | — | — | |||||||||||
| Other (6) | — | 285 | — | |||||||||||
| Adjusted EBITDA | $ | 13,136 | $ | 108 | $ | 6,135 | ||||||||
|
(1) |
Represents non-cash impairment charges with respect to our long-lived assets and intangible assets. | |
|
(2) |
Represents professional fees, integration costs, 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. For the quarters disclosed above, these costs were recorded in selling, general and administrative expenses. | |
|
(3) |
For quarter ending March 31, 2017, represents non-cash amortization of equity awards issued under Keane Group, Inc.’s Equity and Incentive Award Plan (“Plan”). According to the Plan, The Board of Directors can approve awards in the form of restricted stocks, restricted stock units, and/or other deferred compensation. Consistent with prior policy, amortization of awards is made ratably over the vesting periods, beginning with the grant date, based on the total fair value determined on grant date and recorded in selling, general and admin expenses. | |
|
(4) |
Represents legal expenses, accountants, research analysts, consulting costs, tax experts, “dba” registration fees and other miscellaneous expenses required to carry out the reporting, prior years’ audits and organizational (legal entities) restructuring to ready the Company for its initial public offering and the eventual consummation of the offering. These are expenses that could not be capitalized under |
|
|
(5) |
Represents one-time IPO bonuses paid out to key operational and corporate employees; recorded |
|
|
(6) |
For the quarter ending March 31, 2016, represents consulting costs for site rationalization and other miscellaneous charges. These costs were recorded in other expense. |
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Investors
ICR
Marc Silverberg
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or
Media
ICR
Jake Malcynsky, 203-682-8375
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