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Results and Recent Highlights
- Reported first quarter 2019 revenue of
$421.7 million , compared to fourth quarter 2018 of$486.5 million - Realized first quarter 2019 net loss of
$21.8 million , compared to fourth quarter 2018 net income of$6.1 million - Achieved first quarter 2019 Adjusted EBITDA of
$64.1 million , compared to fourth quarter 2018 of$88.4 million - Reported annualized Adjusted Gross Profit per fleet of
$16.2 million , compared to fourth quarter 2018 of$20.9 million - Awarded a new fleet under a dedicated agreement with an existing customer to support activity in the SCOOP / STACK
First Quarter 2019 Financial Results
Revenue for the first quarter of 2019 totaled
Adjusted EBITDA for the first quarter of 2019 totaled
Selling, general and administrative expenses for the first quarter of 2019 totaled
“We are pleased to deliver financial results at the high-end of our guidance, driven by the addition of a new dedicated fleet, and ongoing cost control,” said Robert Drummond, Chief Executive Officer of Keane. “Keane’s dedicated model of partnering with high-quality customers, and relentless focus on efficiency is driving performance delineation versus the market, including top-tier profitability per fleet.”
Completion Services
Revenue for Completion Services totaled
Annualized revenue per average deployed hydraulic fracturing fleet for the first quarter of 2019 was
Other Services
Revenue in Other Services for the first quarter of 2019 totaled
First Quarter 2019 One-Time Items and Other Adjustments
Adjusted EBITDA for the first quarter of 2019 excludes
Balance Sheet and Capital
Total debt outstanding as of March 31, 2019 was
Total available liquidity as of March 31, 2019 was approximately
Stock Repurchase Program Update
Effective February 25, 2019, Keane’s Board of Directors authorized a reset of capacity on its existing stock repurchase program back to
Guidance and Outlook
For the second quarter of 2019, total revenue is expected to range between
Revenue for our Other Services business is expected to be in the range of
“Our first quarter performance is carrying momentum into the second quarter,” said Greg Powell. “We have realized roughly half of the approximately
“We are encouraged by the recent improvement in commodity prices, and are well positioned to grow as the market permits,” said Robert Drummond. “We continue to plan our business assuming a range-bound environment, but we’ll continue to stay nimble and responsive to the market. We are very well-positioned to deliver further earnings upside, including a strong base of activity, improvements in the frac calendar, and dry powder associated with our 6 idle market-ready fleets requiring no additional investment. We’re committed to generating industry leading returns, maintaining a strong balance sheet and allocating capital most efficiently, as we continue to expect more than
Conference Call
On May 7, 2019, 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 2019 results. Hosting the call will be Robert Drummond, Chief Executive Officer, and Greg Powell, President and Chief Financial Officer. The call can be accessed live over the telephone by dialing (877) 407-9208, or for international callers, (201) 493-6784. A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the replay is 13689474. The replay will be available until May 21, 2019.
About Keane Group, Inc.
Headquartered in
Definitions of Non-GAAP Financial Measures and Other Items
Keane has included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this press release, including Adjusted EBITDA and Adjusted Gross Profit and ratios based on these financial measures. These measurements provide supplemental information which Keane believes is useful to analysts and investors to evaluate its ongoing results of operations, when considered alongside GAAP measures such as net income and operating income. These non-GAAP financial measures exclude the financial impact of items management does not consider in assessing Keane’s ongoing operating performance, and thereby facilitate review of Keane’s operating performance on a period-to-period basis. Other companies may have different capital structures, and comparability to Keane’s results of operations may be impacted by the effects of acquisition accounting on its depreciation and amortization. As a result of the effects of these factors and factors specific to other companies, Keane believes Adjusted EBITDA and Adjusted Gross Profit provide helpful information to analysts and investors to facilitate a comparison of its operating performance to that of other companies.
Adjusted EBITDA is defined as net income (loss) adjusted to eliminate the impact of interest, income taxes, depreciation and amortization, along with certain items management does not consider in assessing ongoing performance. Adjusted Gross Profit is defined as Adjusted EBITDA, further adjusted to eliminate the impact of all activities in the Corporate segment, such as selling, general and administrative expenses, along with cost of services that 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.Words such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursuant,” “target,” “continue,” “positioned” and similar expressions are intended to identify such forward-looking statements. The statements in this press release that are not historical statements, including statements regarding the Company’s plans, objectives, future opportunities for the Company’s services, future financial performance and operating results and any other statements regarding Keane’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond Keane’s control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to the operations of Keane; the Company’s future financial condition, results of operations, strategy and plans; results of litigation, settlements and investigations; actions by third parties, including governmental agencies; volatility in customer spending and in oil and natural gas prices, which could adversely affect demand for Keane’s services and their associated effect on rates, utilization, margins and planned capital expenditures; global economic conditions; excess availability of pressure pumping equipment, including as a result of low commodity prices, reactivation or construction; liabilities from operations; weather; decline in, and ability to realize, backlog; equipment specialization and new technologies; shortages, delays in delivery and interruptions of supply of equipment and materials; ability to hire and retain personnel; loss of, or reduction in business with, key customers; difficulty with growth and in integrating acquisitions; product liability; political, economic and social instability risk; ability to effectively identify and enter new markets; cybersecurity risk; dependence on our subsidiaries to meet our long-term debt obligations; variable rate indebtedness risk; and anti-takeover measures in our charter documents.
Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in Keane’s Securities and Exchange Commission (“SEC”) filings, including the most recently filed Forms 10-Q and 10-K. Keane’s filings may be obtained by contacting Keane or the SEC or through Keane’s website at http://www.keanegrp.com or through the SEC’s Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. Keane undertakes no obligation to publicly update or revise any forward-looking statement.
KEANE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) |
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Three Months Ended
March 31, |
Three Months Ended |
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2019 | 2018 | 2018 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Revenue | $ | 421,654 | $ | 513,016 | $ | 486,549 | ||||||||||
Operating costs and expenses: | ||||||||||||||||
Cost of services | 337,646 | 403,408 | 372,654 | |||||||||||||
Depreciation and amortization | 71,476 | 60,051 | 71,403 | |||||||||||||
Selling, general and administrative expenses | 27,936 | 33,884 | 28,466 | |||||||||||||
(Gain) loss on disposal of assets | 481 | 769 | (122 | ) | ||||||||||||
Total operating costs and expenses | 437,539 | 498,112 | 472,401 | |||||||||||||
Operating income (loss) | (15,885 | ) | 14,904 | 14,148 | ||||||||||||
Other income (expenses): | ||||||||||||||||
Other income (expense), net | 448 | (12,989 | ) | (2,386 | ) | |||||||||||
Interest expense | (5,395 | ) | (6,990 | ) | (6,219 | ) | ||||||||||
Total other income (expenses) | (4,947 | ) | (19,979 | ) | (8,605 | ) | ||||||||||
Income (loss) before income taxes | (20,832 | ) | (5,075 | ) | 5,543 | |||||||||||
Income tax benefit (expense) | (974 | ) | (3,168 | ) | 585 | |||||||||||
Net income (loss) | (21,806 | ) | (8,243 | ) | 6,128 | |||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | (29 | ) | (34 | ) | (77 | ) | ||||||||||
Hedging activities | (2,862 | ) | 2,211 | (4,309 | ) | |||||||||||
Total comprehensive income (loss) | $ | (24,697 | ) | $ | (6,066 | ) | $ | 1,742 | ||||||||
Net income (loss) per share, basic | $ | (0.21 | ) | $ | (0.07 | ) | $ | 0.06 | ||||||||
Weighted average shares, basic | 104,422 | 112,010 | 105,265 | |||||||||||||
KEANE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) |
|||||||
ASSETS | March 31, | December 31, | |||||
2019 | 2018 | ||||||
(Unaudited) | (Audited) | ||||||
Current Assets: | |||||||
Cash and cash equivalents | 83,748 | 80,206 | |||||
Accounts receivable | 195,563 | 210,428 | |||||
Inventories, net | 30,959 | 35,669 | |||||
Assets held for sale | 358 | 176 | |||||
Prepaid and other current assets | 3,693 | 5,784 | |||||
Total current assets | 314,321 | 332,263 | |||||
Operating lease right-of-use assets | 51,386 | — | |||||
Finance lease right-of-use assets | 11,841 | — | |||||
Property and equipment, net | 492,978 | 531,319 | |||||
Goodwill | 132,524 | 132,524 | |||||
Intangible assets | 51,271 | 51,904 | |||||
Other noncurrent assets | 6,246 | 6,569 | |||||
Total Assets | 1,060,567 | 1,054,579 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | 106,964 | 106,702 | |||||
Accrued expenses | 74,238 | 101,539 | |||||
Current maturities of operating lease liabilities | 20,776 | — | |||||
Current maturities of finance lease liabilities | 7,756 | 4,928 | |||||
Current maturities of long-term debt | 2,701 | 2,776 | |||||
Customer contract liabilities | 60 | 60 | |||||
Stock based compensation - current | — | 4,281 | |||||
Other current liabilities | 407 | 294 | |||||
Total current liabilities | 212,902 | 220,580 | |||||
Long-term operating lease liabilities, less current maturities | 30,312 | — | |||||
Long-term finance lease liabilities, less current maturities | 5,590 | 5,581 | |||||
Long-term debt, net(1) less current maturities | 337,140 | 337,954 | |||||
Other non-current liabilities | 5,639 | 3,283 | |||||
Total non-current liabilities | 378,681 | 346,818 | |||||
Total liabilities | 591,583 | 567,398 | |||||
Shareholders’ equity: | |||||||
Stockholders’ equity | 461,903 | 456,485 | |||||
Retained (deficit) | 11,018 | 31,494 | |||||
Accumulated other comprehensive (loss) | (3,937 | ) | (798 | ) | |||
Total shareholders’ equity | 468,984 | 487,181 | |||||
Total liabilities and shareholders’ equity | 1,060,567 | 1,054,579 | |||||
(1) 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) |
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Three Months Ended March 31, |
Three Months Ended December 31, |
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2019 | 2018 | 2018 | ||||||||||||||
Completion Services: | ||||||||||||||||
Revenues | $ | 411,975 | $ | 507,451 | $ | 475,158 | ||||||||||
Cost of services | 326,670 | 397,064 | 360,430 | |||||||||||||
Gross profit | 85,305 | 110,387 | 114,728 | |||||||||||||
Depreciation, amortization and administrative expenses, and impairment | 66,747 | 55,180 | 66,793 | |||||||||||||
Operating income | $ | 17,967 | $ | 54,265 | $ | 48,025 | ||||||||||
Average hydraulic fracturing fleets deployed | 23.0 | 26.0 | 25.0 | |||||||||||||
Average hydraulic fracturing fleet utilization | 91 | % | 100 | % | 88 | % | ||||||||||
Wireline - fracturing fleet bundling percentages | 78 | % | 76 | % | 79 | % | ||||||||||
Average annualized revenue per fleet deployed(1) | $ | 78,471 | $ | 78,069 | $ | 86,392 | ||||||||||
Average annualized adjusted gross profit per fleet deployed(1) | $ | 16,248 | $ | 16,983 | $ | 20,860 | ||||||||||
Adjusted gross profit | $ | 85,305 | $ | 110,387 | $ | 114,728 | ||||||||||
Other Services: | ||||||||||||||||
Revenues | $ | 9,679 | $ | 5,565 | $ | 11,391 | ||||||||||
Cost of services | 10,976 | 6,344 | 12,224 | |||||||||||||
Gross loss | (1,297 | ) | (779 | ) | (833 | ) | ||||||||||
Depreciation, amortization and administrative expenses, and impairment | 873 | 1,398 | 871 | |||||||||||||
Operating loss | (2,170 | ) | (2,177 | ) | (1,704 | ) | ||||||||||
Adjusted gross profit loss | $ | (1,297 | ) | $ | (779 | ) | $ | (833 | ) | |||||||
(1) For the first quarter of 2019, average annualized revenue per fleet deployed and average annualized adjusted gross profit per fleet deployed was calculated using the equivalent of 21.0 fully-utilized hydraulic fracturing fleets, which represents 91% utilization of the Company’s 23.0 average hydraulic fracturing fleets deployed. |
KEANE GROUP, INC. AND SUBSIDIARIES NON- (unaudited, in thousands) |
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Three Months Ended March 31, 2019 | |||||||||||||||||||||
Completion Services | Other Services | Corporate and Other | Total | ||||||||||||||||||
Net Income (loss) | $ | 17,967 | $ | (2,170 | ) | $ | (37,603 | ) | $ | (21,806 | ) | ||||||||||
Interest expense, net | — | — | 5,395 | 5,395 | |||||||||||||||||
Income tax expense | — | — | 974 | 974 | |||||||||||||||||
Depreciation and amortization | 66,747 | 873 | 3,856 | 71,476 | |||||||||||||||||
EBITDA | $ | 84,714 | $ | (1,297 | ) | $ | (27,378 | ) | $ | 56,039 | |||||||||||
Plus Management Adjustments: | |||||||||||||||||||||
Non-cash stock compensation (1) | — | — | 3,973 | 3,973 | |||||||||||||||||
Other (2) | — | — | 4,120 | 4,120 | |||||||||||||||||
Adjusted EBITDA | $ | 84,714 | $ | (1,297 | ) | $ | (19,285 | ) | $ | 64,132 | |||||||||||
Selling, general and administrative | — | — | 27,936 | 27,936 | |||||||||||||||||
(Gain) loss on disposal of assets | 591 | — | (110 | ) | 481 | ||||||||||||||||
Other expense | — | — | (448 | ) | (448 | ) | |||||||||||||||
Less Management Adjustments not associated with cost of services | — | — | (8,093 | ) | (8,093 | ) | |||||||||||||||
Adjusted gross profit (loss) | $ | 85,305 | $ | (1,297 | ) | $ | — | $ | 84,008 | ||||||||||||
(1) Represents non-cash amortization of equity awards issued under Keane Group, Inc.’s Equity and Incentive Award Plan (the “Equity Plan”). According to the Equity Plan, the Compensation Committee of the Board of Directors can approve awards in the form of restricted stock, 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 administrative expenses. |
(2) Represents legal contingencies, which is recorded in selling, general and administrative expenses. |
KEANE GROUP, INC. AND SUBSIDIARIES NON- (unaudited, in thousands) |
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Three Months Ended December 31, 2018 | |||||||||||||||||||||
Completion Services | Other Services | Corporate and Other | Total | ||||||||||||||||||
Net Income (loss) | $ | 48,025 | $ | (1,704 | ) | $ | (40,193 | ) | $ | 6,128 | |||||||||||
Interest expense, net | — | — | 6,219 | 6,219 | |||||||||||||||||
Income tax benefit | — | — | (585 | ) | (585 | ) | |||||||||||||||
Depreciation and amortization | 66,793 | 871 | 3,739 | 71,403 | |||||||||||||||||
EBITDA | $ | 114,818 | $ | (833 | ) | $ | (30,820 | ) | $ | 83,165 | |||||||||||
Plus Management Adjustments: | |||||||||||||||||||||
Non-cash stock compensation (1) | — | — | 5,242 | 5,242 | |||||||||||||||||
Adjusted EBITDA | $ | 114,818 | $ | (833 | ) | $ | (25,578 | ) | $ | 88,407 | |||||||||||
Selling, general and administrative | — | — | 28,466 | 28,466 | |||||||||||||||||
Gain on disposal of assets | (90 | ) | — | (32 | ) | (122 | ) | ||||||||||||||
Other income | — | — | 2,386 | 2,386 | |||||||||||||||||
Less Management Adjustments not associated with cost of services | — | — | (5,242 | ) | (5,242 | ) | |||||||||||||||
Adjusted gross profit (loss) | $ | 114,728 | $ | (833 | ) | $ | — | $ | 113,895 | ||||||||||||
(1) Represents non-cash amortization of equity awards issued under the Equity Plan, which is recorded in selling, general and administrative expenses. |
KEANE GROUP, INC. AND SUBSIDIARIES NON- (unaudited, in thousands) |
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Three Months Ended March 31, 2018 | |||||||||||||||||||||
Completion |
Other |
Corporate and |
Total | ||||||||||||||||||
Net Income (loss) | $ | 54,265 | $ | (2,177 | ) | $ | (60,331 | ) | $ | (8,243 | ) | ||||||||||
Interest expense, net | — | — | 6,990 | 6,990 | |||||||||||||||||
Income tax expense | — | — | 3,168 | 3,168 | |||||||||||||||||
Depreciation and amortization | 55,180 | 1,398 | 3,473 | 60,051 | |||||||||||||||||
EBITDA | $ | 109,445 | $ | (779 | ) | $ | (46,700 | ) | $ | 61,966 | |||||||||||
Plus Management Adjustments: | |||||||||||||||||||||
Acquisition, integration and expansion (1) | — | — | 13,254 | 13,254 | |||||||||||||||||
Offering-related expenses (2) | — | — | 12,969 | 12,969 | |||||||||||||||||
Non-cash stock compensation (3) | — | — | 3,073 | 3,073 | |||||||||||||||||
Adjusted EBITDA | $ | 109,445 | $ | (779 | ) | $ | (17,404 | ) | $ | 91,262 | |||||||||||
Selling, general and administrative | — | — | 33,884 | 33,884 | |||||||||||||||||
(Gain) loss on disposal of assets | 942 | — | (173 | ) | 769 | ||||||||||||||||
Other income | — | — | 12,989 | 12,989 | |||||||||||||||||
Less Management Adjustments not associated with cost of services | — | — | (29,296 | ) | (29,296 | ) | |||||||||||||||
Adjusted gross profit (loss) | $ | 110,387 | $ | (779 | ) | $ | — | $ | 109,608 | ||||||||||||
(1) Represents adjustment to the contingent value right liability associated with the acquisition of RockPile Energy Services, LLC and its subsidiaries from RockPile Energy Holdings, LLC based on the final agreed-upon settlement. |
(2) Represents primarily professional fees and other miscellaneous expenses to consummate the secondary common stock offering completed in January 2018. These expenses were recorded in selling, general and administrative expenses, as Keane did not receive any proceeds in the offering to offset the expenses. |
(3) Represents non-cash amortization of equity awards issued under the Equity Plan, which is recorded in selling, general and administrative expenses. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190506005740/en/
Investor Relations
(713) 893-3602
Marc Silverberg, ICR
marc.silverberg@icrinc.com