NexTier Announces Fourth Quarter and Full Year 2019 Financial and Operational Results

HOUSTON, March 10, 2020 /PRNewswire/ -- NexTier Oilfield Solutions Inc. (NYSE: NEX) ("NexTier" or the "Company") today reported fourth quarter and full year 2019 financial and operational results.  On October 31, 2019, NexTier completed its previously announced merger between Keane Group Inc. ("Keane") and C&J Energy Services, Inc. ("C&J"), and concurrent with closing, Keane, as the parent company, was renamed NexTier Oilfield Solutions Inc.  Given the merger close date of October 31, 2019, GAAP financial results for the fourth quarter of 2019 include the full quarterly results of legacy Keane, and legacy C&J results from November 1, 2019 through December 31, 2019.  Pro forma financial results(1) for the third and fourth quarters of 2019 include the full quarterly results of both Keane and C&J giving effect to the merger as if it had closed on January 1, 2019.

Full Year 2019 Results

  • Reported GAAP revenue of $1.8 billion and pro forma revenue of $3.4 billion for the year ended December 31, 2019
  • Reported GAAP net loss of $106.2 million and pro forma net loss of $196.6 million for the year ended December 31, 2019
  • Achieved total pro forma Adjusted EBITDA(2) of $446.3 million for the year ended December 31, 2019

Fourth Quarter 2019 Results and Recent Highlights

  • Reported GAAP revenue of $528.2 million, compared to $444.0 million of GAAP revenue in the third quarter of 2019; pro forma revenue totaled $648.4 million, compared to pro forma revenue of $896.6 million in the third quarter of 2019
  • Reported GAAP net loss of $82.9 million, compared to GAAP net income of $3.6 million in the third quarter of 2019; pro forma net loss totaled $106.6 million, compared to pro forma net loss of $10.4 million in the third quarter of 2019
  • Achieved total pro forma Adjusted EBITDA(2) of $77.6 million, compared to total pro forma Adjusted EBITDA of $137.8 million in the third quarter of 2019
  • Averaged 25 pro forma fully-utilized fracturing fleets in the fourth quarter of 2019; forecasting an average of 28 fully-utilized fracturing fleets in the first quarter of 2020
  • Generated Completion Services segment Adjusted Gross Profit of $105.1 million, compared to $109.3 million in the third quarter of 2019
  • Achieved Adjusted Gross Profit, when taking only fracturing and bundled wireline into account, of $99.2 million, compared to Adjusted Gross Profit of $109.3 million in the third quarter of 2019; pro forma Adjusted Gross Profit totaled $97.7 million, compared to pro forma Adjusted Gross Profit of $153.6 million in the third quarter of 2019
  • Generated pro forma annualized adjusted gross profit per fully-utilized fracturing fleet, when only taking fracturing and bundled wireline into account, of $15.6 million, compared to pro forma annualized adjusted gross profit per fully-utilized fracturing fleet of $18.6 million in the third quarter of 2019
  • On pace to capture previously announced targeted annualized run rate cost synergies of $125 million by the end of the second quarter of 2020; identified approximately $80 million of incremental cash synergies with estimated capture by year-end 2020
  • Exited the fourth quarter with $255 million in cash and $304 million of available borrowing capacity under our asset-based credit facility
  • Divested our Well Support Services segment on March 9, 2020 to Basic Energy Services for $93.7 million in total consideration, including $59.35 million of cash consideration before transaction costs and escrowed amounts

Fourth Quarter 2019 Financial Results

(USD in thousands, except per share amounts)


Three Months Ended


Previously Disclosed
Guidance for the
Three Months Ended
December 31, 2019



December 31, 2019


September 30, 2019


GAAP revenue


$

528,216



$

443,953




GAAP net income (loss)


(82,928)



3,558




GAAP net income (loss) per share


$

(0.47)



$

0.03











Pro forma revenue


$

648,434



$

896,616



$640,000 ¯ $660,000

Pro forma net loss


(106,553)



(10,410)




Pro forma net loss per share


$

(0.50)



$

(0.05)











Pro forma Adjusted EBITDA


$

77,564



$

137,764



$73,000 ¯ $78,000

Pro forma Adjusted net income (loss)


(19,069)



41,523




Pro forma Adjusted net income (loss) per share


$

(0.09)



$

0.20




GAAP revenue totaled $528.2 million in the fourth quarter of 2019 compared to GAAP revenue of $444.0 million in the third quarter of 2019.  Pro forma revenue totaled $648.4 million in the fourth quarter of 2019, compared to our previously disclosed guidance range of $640 million to $660 million.  This compared to pro forma revenue of $896.6 million in the third quarter of 2019.

GAAP net loss totaled $82.9 million, or $0.47 per diluted share, in the fourth quarter of 2019, compared to GAAP net income of $3.6 million, or $0.03 per diluted share, in the third quarter of 2019.  Pro forma net loss totaled $106.6 million, or $0.50 per diluted share, in the fourth quarter of 2019, compared to pro forma net loss of $10.4 million, or $0.05 per diluted share, in the third quarter of 2019.  Pro forma Adjusted net loss(2) totaled $19.1 million, or $0.09 per diluted share, in the fourth quarter of 2019, compared to pro forma Adjusted net income of $41.5 million, or $0.20 per diluted share, in the third quarter of 2019.

GAAP selling, general and administrative expense ("SG&A") totaled $42.7 million in the fourth quarter of 2019, compared to GAAP SG&A of $26.6 million in the third quarter of 2019.  Pro forma SG&A totaled $70.1 million in the fourth quarter of 2019, compared to pro forma SG&A of $102.4 million in the third quarter of 2019.  Excluding management adjustments, pro forma Adjusted SG&A totaled $54.2 million in the fourth quarter of 2019, compared to pro forma Adjusted SG&A of $65.8 million in the third quarter of 2019.

Total pro forma Adjusted EBITDA totaled $77.6 million in the fourth quarter of 2019, compared to our previously disclosed guidance range of $73 million to $78 million.  This compared to total pro forma Adjusted EBITDA of $137.8 million in the third quarter of 2019.

"I am pleased that our fourth quarter financial results exceeded the initial outlook on profitability provided just after closing the merger with C&J," said Robert Drummond, President and Chief Executive Officer of NexTier.  "Despite a challenging market backdrop, we stayed focused on our partnership model of working closely with our customers, managing what was in our direct control, and driving costs out of operations.  Our focus enabled us to achieve better than expected operational efficiency and commendable relative profitability during a quarter with challenging market-driven obstacles.  We continue to make swift progress with the integration process and the resulting improved cost efficiency."

"Notwithstanding the recent oil price volatility, NexTier will remain nimble and is uniquely positioned to effectively navigate these challenges.  This includes a strong balance sheet and liquidity position that allows us to be offensive and defensive, with plenty of runway on our debt maturity through 2025, alignment with a base of resilient customers, and a track record of adjusting our cost structure in response to challenging market conditions."

Fourth Quarter 2019 Management Adjustments

Total pro forma Adjusted EBITDA in the fourth quarter of 2019 includes management adjustments of $87.5 million consisting of $55.0 million of merger and integration related costs primarily driven by severance and accelerated non-cash stock compensation expense, $12.3 million of non-cash impairment expense mostly associated with the retirement of the Keane trade name, $5.6 million of non-cash stock compensation expense, and $14.5 million of other costs driven by tax and litigation reserves and facility closures.

Business Segment Results

Completion Services

GAAP revenue in our Completion Services segment totaled $440.3 million in the fourth quarter of 2019, compared to GAAP revenue of $437.3 million in the third quarter of 2019.  Pro forma revenue in our Completion Services segment totaled $509.8 million in the fourth quarter of 2019, compared to pro forma revenue of $735.2 million in the third quarter of 2019.  The sequential decrease in pro forma revenue was driven by reduced asset deployment and decreased customer activity levels due to year-end seasonality and budget exhaustion. Adjusted Gross Profit totaled $105.1 million in the fourth quarter of 2019, compared to Adjusted Gross Profit of $109.3 million in the third quarter of 2019.  Pro forma Adjusted Gross Profit totaled $105.6 million in the fourth quarter of 2019, compared to pro forma Adjusted Gross Profit of $168.9 million in the third quarter of 2019.  Pro forma net loss totaled $21.5 million, resulting in pro forma Adjusted EBITDA of $83.3 million in the fourth quarter of 2019, compared to pro forma net income of $54.5 million, resulting in pro forma Adjusted EBITDA of $141.3 million in the third quarter of 2019.

The Company had an average of 25 pro forma fully-utilized fracturing fleets in the fourth quarter of 2019.  When taking only fracturing and bundled wireline into account, annualized pro forma Adjusted Gross Profit per fully-utilized fracturing fleet totaled $15.6 million in the fourth quarter of 2019, compared to annualized pro forma Adjusted Gross Profit per fully-utilized fracturing fleet of $18.6 million in the third quarter of 2019.

Well Construction and Intervention Services

GAAP revenue in our Well Construction and Intervention ("WC&I") Services segment, totaled $39.4 million in the fourth quarter of 2019, compared to GAAP revenue of $6.6 million in the third quarter of 2019.  Pro forma revenue in our WC&I segment totaled $57.7 million in the fourth quarter of 2019, compared to pro forma revenue of $66.9 million in the third quarter of 2019. Adjusted Gross Profit totaled $6.8 million in the fourth quarter of 2019, compared to Adjusted Gross Profit of $1.2 million in the third quarter of 2019.  Pro forma Adjusted Gross Profit totaled $9.1 million in the fourth quarter of 2019, compared to pro forma Adjusted Gross Profit of $13.2 million in the third quarter of 2019.  Pro forma net income totaled $0.3 million, resulting in pro forma Adjusted EBITDA of $7.2 million in the fourth quarter of 2019, compared to pro forma net income of $2.3 million, resulting in pro forma Adjusted EBITDA of $9.1 million in the third quarter of 2019.

Well Support Services

GAAP revenue in our Well Support Services segment, which only includes the period after the completion of the merger on October 31, 2019, totaled $48.6 million in the fourth quarter of 2019.  Pro forma revenue in our Well Support Services segment totaled $80.9 million in the fourth quarter of 2019, compared to pro forma revenue of $94.5 million in the third quarter of 2019. Adjusted Gross Profit totaled $8.0 million in the fourth quarter of 2019.  Pro forma Adjusted Gross Profit totaled $14.9 million in the fourth quarter of 2019, compared to pro forma Adjusted Gross Profit of $14.3 million in the third quarter of 2019.  The sequential decrease in pro forma revenue mostly pertained to the divestiture of the majority of our fluids management assets in West and South Texas on July 31, 2019.  Pro forma net income totaled $5.3 million, resulting in pro forma Adjusted EBITDA of $9.2 million in the fourth quarter of 2019, compared to a pro forma net income of $2.3 million, resulting in pro forma Adjusted EBITDA of $12.4 million in the third quarter of 2019.

Balance Sheet and Capital

Total debt outstanding as of December 31, 2019 totaled $338 million, net of debt discounts and deferred finance costs and excluding lease obligations.  As of December 31, 2019, cash and equivalents totaled $255 million, and total available liquidity was $559 million, which included $304 million of available borrowing capacity under our asset-based credit facility.

Total operating cash flow was $80 million and cash flow used in investing activities was $44 million, resulting in free cash flow of $36 million in the fourth quarter of 2019.  Combined operating cash flow, which includes the full quarterly results for both legacy Keane and C&J, was $48 million and cash flow used in investing activities was $54 million resulting in combined free cash flow usage of $6 million in the fourth quarter of 2019.  Excluding cash used for merger and integration related costs of $61 million, combined Adjusted free cash flow totaled $55 million in the fourth quarter of 2019.

On March 9, 2020, we divested our Well Support Services segment to Basic Energy Services for approximately $93.7 million in total consideration that included $59.35 million in cash consideration before transaction costs, escrowed amounts, and subject to customary working capital adjustments.

First Quarter 2020 Update

For the first quarter of 2020, the Company expects to deploy an average of 28 fully-utilized fracturing fleets compared to 25 fully-utilized fracturing fleets deployed in the fourth quarter.  We expect increased activity levels to be offset by lower overall pricing and the divestiture of our Well Support Service segment on March 9, 2020.

"In light of the ongoing market and commodity price volatility, NexTier is taking the necessary steps to protect our business," said Kenneth Pucheu, Senior Vice President and Chief Financial Officer of NexTier.  "NexTier is well fortified with a strong balance sheet, further enhanced liquidity position, and an experienced management team to navigate through these challenging market headwinds."

Conference Call Information

The Company's executive management team will host a conference call on Wednesday, March 11, 2020 at 8:30 a.m. ET / 7:30 a.m. CT to discuss our fourth quarter 2019 financial and operating results.  Interested parties may listen to the conference call via a live webcast accessible on our website at www.nextierofs.com or by calling U.S. (Toll Free): 1-855-560-2574 or International: 1-412-542-4160 and asking for the "NexTier Oilfield Solutions' Earnings Call."  Please dial-in ten to fifteen minutes before the scheduled call time to avoid any delays entering the earnings call.  An archive of the webcast will be available shortly after the call on our website at www.nextierofs.com for twelve months following the call.  A replay of the call will also be available for one week by calling U.S. (Toll Free): 1-877-344-7529 or International: 1-412-317-0088, using the access code: 10138991.

About NexTier Oilfield Solutions

Headquartered in Houston, Texas, NexTier is an industry-leading U.S. land oilfield service company, with a diverse set of well completion and production services across the most active and demanding basins.  Our integrated solutions approach delivers efficiency today, and our ongoing commitment to innovation helps our customers better address what is coming next.  NexTier is differentiated through four points of distinction, including safety performance, efficiency, partnership and innovation.  At NexTier, we believe in living our core values from the basin to the boardroom, and helping customers win by safely unlocking affordable, reliable and plentiful sources of energy.

Pro forma information and Non-GAAP Financial Measures

(1)

Pro forma information before management adjustments was determined in accordance with Article 11 of Regulation S-X and is presented to enhance comparability to the prior quarter pre-merger operating results by adjusting for the merger of Keane and C&J. 



(2)

The Company has included in this press release certain non-GAAP financial measures, some of which are calculated on a consolidated basis, segment basis, product line basis, combined basis or pro forma basis, including Adjusted EBITDA, Adjusted Gross Profit, Adjusted Net Income (loss), free cash flow, Adjusted free cash flow, Adjusted SG&A and annualized adjusted gross profit per fully-utilized fracturing fleet.  These measurements provide supplemental information which the Company 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 the Company's ongoing operating performance, and thereby facilitate review of the Company's operating performance on a period-to-period basis.  Other companies may have different capital structures, and comparability to the Company'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, the Company believes Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A and Adjusted Net Income provide helpful information to analysts and investors to facilitate a comparison of its operating performance to that of other companies.  The Company believes free cash flow and Adjusted free cash flow is important to investors in that it provides a useful measure to assess management's effectiveness in the areas of profitability and capital management.  Annualized Gross Profit per fully-utilized fracturing fleet is used to evaluate the operating performance of the business line for comparable periods, and the Company believes it is important as an indicator of operating performance of our fracturing and bundled wireline product line because it excludes the effects of the capital structure and certain non-cash items from the product line's operating results.  For a reconciliation of these non-GAAP measures, please see the tables at the end of this press release.



(3)

Non-GAAP Measure Definitions: 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 revenue less cost of services, further adjusted to eliminate items in cost of services that management does not consider in assessing ongoing performance. Adjusted Gross Profit at the segment level is not considered to be a non-GAAP financial measure as it is our segment measure of profit or loss and is required to be disclosed under GAAP pursuant to ASC 280. Adjusted Net Income (Loss) is defined as net income (loss) plus the after-tax amount of merger/transaction-related costs and other non-routine items. Adjusted SG&A is defined as selling, general and administrative expenses adjusted for severance and business divestiture costs, merger/transaction-related costs, and other non-routine items. Free cash flow is defined as the net increase (decrease) in cash and cash equivalents before financing activities, including share repurchase activity. Adjusted free cash flow adjusts free cash flow for certain management adjustments. Annualized Adjusted Gross Profit per fully-utilized fleet, is a non-GAAP measure and is defined as (i) revenue less cost of services attributable to the fracturing and bundled wireline product line, further adjusted to eliminate items in cost of services that management does not consider in assessing ongoing performance for the fracturing and bundled wireline product line, (ii) divided by the fully-utilized fracturing and bundled wireline fleets (average deployed fleets multiplied by fleet utilization) per quarter, and then (iii) multiplied by four.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1993, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Where a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. The words "believe," "continue," "could," "expect," "anticipate," "intends," "estimate," "forecast," "project," "should," "may," "will," "would" or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. Statements in this press release regarding the Company that are forward-looking, including projections as to the amount and timing of synergies from C&J merger and the Company's 2020 guidance and outlook information, are based on management's estimates, assumptions and projections, and are subject to significant uncertainties and other factors, many of which are beyond the Company's control. These factors and risks include, but are not limited to, (i) the competitive nature of the industry in which the Company conducts its business, including pricing pressures; (ii) the ability to meet rapid demand shifts; (iii) the impact of pipeline capacity constraints and adverse weather conditions in oil or gas producing regions; (iv) the ability to obtain or renew customer contracts and changes in customer requirements in the markets the Company serves; (v) the ability to identify, effect and integrate acquisitions, joint ventures or other transactions; (vi) the ability to protect and enforce intellectual property rights; (vii) the effect of environmental and other governmental regulations on the Company's operations; (viii) the effect of a loss of, or interruption in operations of, one or more key suppliers, including resulting from product defects, recalls or suspensions; (ix) the variability of crude oil and natural gas commodity prices; (x) the market price and availability of materials or equipment; (xi) the ability to obtain permits, approvals and authorizations from governmental and third parties; (xii) the Company's ability to employ a sufficient number of skilled and qualified workers to combat the operating hazards inherent in the Company's industry; (xiii) fluctuations in the market price of the Company's stock; (xiv) the level of, and obligations associated with, the Company's indebtedness; (xv) the duration, impact and severity of the novel coronavirus (COVID-19) outbreak; and (xvi) other risk factors and additional information. In addition, material risks that could cause actual results to differ from forward-looking statements include: the inherent uncertainty associated with financial or other projections; the prompt and effective integration of C&J's businesses into the Company and the ability to achieve the anticipated synergies and value-creation contemplated in connection with the merger. For a more detailed discussion of such risks and other factors, see the Company's filings with the Securities and Exchange Commission (the "SEC"), including under the heading "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 available on the SEC website or www.NexTierOFS.com. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates, to reflect events or circumstances after the date of this Current Report on Form 8-K, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued "forward-looking statement" constitutes a reaffirmation of that statement.

Coronavirus Monitoring and Planning

The Company is monitoring the spread and impact of the coronavirus closely, and is implementing measures in accordance with local directives, as well as internal policies, to protect employees and limit business interruption.  These measures include restrictions on travel and employee contact in certain regions, employee education, enhanced customer and supplier communication, alternative sourcing, and other measures.  The Company is also preparing mitigation plans for further or prolonged impact from the coronavirus.

Merger of Equals

On October 31, 2019, Keane and C&J completed their merger and concurrent with closing, Keane, as the parent company, was renamed NexTier.  In accordance with the terms of the Agreement and Plan of Merger, dated as of June 16, 2019, by and among NexTier, C&J and King Merger Sub Corp., a wholly owned subsidiary of NexTier ("Merger Sub"), Merger Sub merged with and into C&J, with C&J surviving the merger as a wholly owned subsidiary of NexTier.  Immediately following the merger, C&J was merged with and into King Merger Sub II LLC ("LLC Sub"), with LLC Sub continuing as the surviving entity as a wholly-owned subsidiary of NexTier and as the successor to C&J.  Keane was determined to be the accounting acquirer in the merger, and as a result, the historical financial statements of Keane, prepared under U.S. generally accepted accounting principles ("GAAP"), for the periods prior to the merger are considered to be the historical financial statements of NexTier.

Unaudited Pro Forma Financial Information

In order to provide the most meaningful comparison of results of operations and results by segment, supplemental unaudited pro forma financial information has been included in the following financial schedules. The unaudited pro forma financial information is based on the historical consolidated financial statements and accompanying notes of both Keane and C&J and has been prepared to illustrate the effects of the merger, assuming the merger had been consummated on January 1, 2019. For all periods presented, adjustments have been made for (1) the preliminary acquisition accounting impact, (2) accounting policy alignment, and (3) the elimination of the impact from events that are directly attributable to the Agreement and Plan of Merger (e.g., non-routine merger and integration costs).  The unaudited pro forma financial information was based on and should be read in conjunction with the separate historical financial statements and accompanying notes contained in each of the Keane and C&J Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K for the applicable periods.  The pro forma financial statements were prepared in accordance with Article 11 of Regulation S-X.  The unaudited pro forma financial information has been presented for informational purposes only and is not necessarily indicative of what NexTier's results of operations actually would have been had the merger been completed on January 1, 2019, nor is it indicative of the future operating results of NexTier.  The unaudited pro forma financial information does not reflect any cost or growth synergies that NexTier may achieve as a result of the merger, future costs to combine the operations of Keane and C&J or the costs necessary to achieve any cost or growth synergies.

Investor Contact:

Daniel Jenkins
Vice President - Investor Relations
(713) 325-6000
investors@nextierofs.com

Marc Silverberg
Managing Director (ICR)
marc.silverberg@icrinc.com

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)

(unaudited, amounts in thousands, except per share data)



Three Months Ended
December 31,


Three Months Ended
September 30,


2019


2018


2019







Revenue

$

528,216



$

486,549



$

443,953


Operating costs and expenses:






Cost of services

408,345



372,654



333,438


Depreciation and amortization

82,080



71,403



68,708


Selling, general and administrative expenses

42,698



28,466



26,579


Merger and integration

55,972





6,651


(Gain) loss on disposal of assets

3,640



(122)



679


Impairment

12,346






Total operating costs and expenses

605,081



472,401



436,055


Operating income

(76,865)



14,148



7,898


Other income (expenses):






Other income (expense), net

(7)



(2,386)



55


Interest expense

(5,769)



(6,219)



(5,215)


Total other income (expense)

(5,776)



(8,605)



(5,160)


Income (loss) before income taxes

(82,641)



5,543



2,738


Income tax benefit (expense)

(287)



585



820


Net income (loss)

(82,928)



6,128



3,558


Other comprehensive income (loss):






Foreign currency translation adjustments

(87)



(77)




Hedging activities

1,036



(4,309)



(2,120)


Total comprehensive income (loss)

$

(81,979)



$

1,742



$

1,438








Net income (loss) per share: basic

$

(0.47)



$

0.06



$

0.03


Net income (loss) per share: diluted

$

(0.47)



$

0.06



$

0.03








Weighted-average shares: basic

177,149



105,265



104,899


Weighted-average shares: diluted

177,149



105,566



105,259



Note:  The condensed consolidated statements of operations & comprehensive income (loss) for the three month periods ended December 31, 2019, December 31, 2018, and September 30, 2019, reflect the results of legacy Keane for all periods presented and the results of legacy C&J for the period beginning on and after November 1, 2019.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)



Year Ended

December 31,


2019


2018


(Unaudited)



Revenue

$

1,821,556



$

2,137,006


Operating costs and expenses:




Cost of services

1,403,932



1,660,546


Depreciation and amortization

292,150



259,145


Selling, general and administrative expenses

123,676



113,810


Merger and integration

68,731



448


Loss on disposal of assets

4,470



5,047


Impairment

12,346




Total operating costs and expenses

1,905,305



2,038,996


Operating income (loss)

(83,749)



98,010


Other income (expenses):




Other income, net

453



(905)


Interest expense

(21,856)



(33,504)


Total other expenses

(21,403)



(34,409)


Income (loss) before income taxes

(105,152)



63,601


Income tax expense

(1,005)



(4,270)


Net income (loss)

(106,157)



59,331


Other comprehensive income (loss):




Foreign currency translation adjustments

(116)



(114)


Hedging activities

(7,628)



(880)


Total comprehensive income (loss)

$

(113,901)



$

58,337






Net income (loss) per share: basic

$

(0.86)



$

0.54


Net income (loss) per share: diluted

$

(0.86)



$

0.54






Weighted-average shares, basic

122,977



109,335


Weighted-average shares, diluted

122,977



109,660



Note:  The condensed consolidated statements of operations & comprehensive income (loss) for the years ended December 31, 2019 and 2018, reflect the results of legacy Keane for all periods presented and the results of legacy C&J for the period beginning on and after November 1, 2019.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS 

(amounts in thousands)




December 31,


December 31,



2019


2018

ASSETS


(Unaudited)



Current assets:





Cash and cash equivalents


$

255,015



$

80,206


Accounts receivable


350,765



210,428


Inventories, net


61,641



35,669


Assets held for sale


141



176


Prepaid and other current assets


20,492



5,784


Total current assets


688,054



332,263


Operating lease right-of-use assets


54,503




Finance lease right-of-use assets


9,511




Property and equipment, net


709,404



531,319


Goodwill


137,458



132,524


Intangible assets


55,021



51,904


Other noncurrent assets


10,956



6,569


Total assets


$

1,664,907



$

1,054,579


LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Accounts payable


$

115,251



$

106,702


Accrued expenses


234,895



101,539


Current maturities of operating lease liabilities


23,473




Current maturities of finance lease liabilities


4,594



4,928


Current maturities of long-term debt


2,311



2,776


Stock based compensation




4,281


Other current liabilities


5,670



354


Total current liabilities


386,194



220,580


Long-term operating lease liabilities, less current maturities


35,123




Long-term finance lease liabilities, less current maturities


4,844



5,581


Long-term debt, net less current maturities


335,312



337,954


Other non-current liabilities


16,662



3,283


Total non-current liabilities


391,941



346,818


Total liabilities


778,135



567,398


Shareholders' equity:





Common stock


2,124



1,038


Paid-in capital in excess of par value


966,762



455,447


Retained earnings (deficit)


(73,333)



31,494


Accumulated other comprehensive loss


(8,781)



(798)


Total shareholders' equity


886,772



487,181


Total liabilities and shareholders' equity


$

1,664,907



$

1,054,579



Note:  The condensed consolidated balance sheet at December 31, 2019, reflects the financial position of NexTier Oilfield Solutions Inc.  The condensed consolidated balance sheet at December 31, 2018, solely reflects the financial position of legacy Keane.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS

(amounts in thousands)



Three Months Ended


December 31, 2019


September 30, 2019





Revenue

$

648,434



$

896,616


Operating costs and expenses:




Cost of services

518,893



700,131


Depreciation and amortization

89,794



91,846


Selling, general and administrative expenses

70,104



102,414


Merger and integration

55,023



7,170


Loss on disposal of assets

2,335



416


Impairment

12,346




Total operating costs and expenses

748,495



901,977


Operating loss

(100,061)



(5,361)


Other income (expenses):




Other income, net

347



(654)


Interest expense

(5,769)



(5,215)


Total other expenses

(5,422)



(5,869)


Loss before income taxes

(105,483)



(11,230)


Income tax benefit (expense)

(1,070)



820


Net loss

$

(106,553)



$

(10,410)






Net loss per share: basic

$

(0.50)



$

(0.05)


Net loss per share: diluted

$

(0.50)



$

(0.05)






Weighted-average shares, basic

211,909



210,098


Weighted-average shares, diluted

211,909



210,098



Note:  The pro forma condensed consolidated statements of operations for the three month periods ended December 31, 2019 and September 30, 2019, reflect the results of operations of legacy Keane and legacy C&J assuming the merger had occurred on January 1, 2019.    See full unaudited pro forma condensed consolidated statements of operations for the three months ended December 31, 2019 and September 30, 2019, as well as the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2019, below.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA 

(unaudited, amounts in thousands)



Three Months Ended


December 31, 2019


September 30, 2019

Completion Services:




Revenue

$

440,253



$

437,343


Cost of services

335,157



328,029


Depreciation, amortization and administrative expenses, and impairment

76,728



64,735


Net income

28,367



43,505


Adjusted gross profit(1)

$

105,096



$

109,314






Well Construction and Intervention Services:




Revenue

$

39,380



$

6,610


Cost of services

32,572



5,409


Depreciation, amortization and administrative expenses, and impairment

1,950



502


Net income

4,858



699


Adjusted gross profit(1)

$

6,808



$

1,201






Well Support Services:




Revenue

$

48,583




Cost of services

40,616



$


Depreciation, amortization and administrative expenses, and impairment

1,008




Net income

6,959




Adjusted gross profit(1)

$

7,967



$



Note: The financial and operating data for the three months ended December 31, 2019 and September 30, 2019, reflect the results of legacy Keane for all periods presented and the results of legacy C&J for the period beginning on and after November 1, 2019.



(1) 

The Company uses adjusted gross profit as its measure of profitability for segment reporting.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

ADDITIONAL SELECTED UNAUDITED PRO FORMA FINANCIAL AND OPERATING DATA

(amounts in thousands)



Three Months Ended


December 31, 2019


September 30, 2019

Completion Services:




Revenue

$

509,845



$

735,166


Cost of services

404,235



566,230


Depreciation, amortization, administrative expenses, and impairment

127,086



114,481


Operating income (loss)

(21,476)



54,455


Pro forma adjusted gross profit(1)

$

105,610



$

168,936






Well Construction and Intervention Services:




Revenue

$

57,650



$

66,927


Cost of services

48,579



53,701


Depreciation, amortization, administrative expenses, and impairment

8,750



10,885


Operating income (loss)

321



2,341


Pro forma adjusted gross profit(1)

$

9,071



$

13,226






Well Support Services:




Revenue

$

80,939



$

94,523


Cost of services

66,079



80,200


Depreciation, amortization, administrative expenses, and impairment

9,540



11,990


Operating income (loss)

5,320



2,333


Pro forma adjusted gross profit(1)

$

14,860



$

14,323



Note:  The pro forma financial and operating data reflect the results of legacy Keane and legacy C&J assuming the merger had occurred on January 1, 2019.



(1) 

The Company uses adjusted gross profit as its measure of profitability for segment reporting.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA NON-GAAP FINANCIAL MEASURES

(amounts in thousands)



Three Months Ended December 31, 2019


Completion
Services


WC&I


Well Support
Services


Corporate
and Other


NexTier

Pro forma net income (loss)(1)

$

(21,476)



$

321



$

5,320



$

(90,718)



$

(106,553)


Interest expense, net







5,769



5,769


Income tax benefit







1,070



1,070


Depreciation and amortization

79,243



2,801



2,123



5,627



89,794


Pro forma EBITDA

$

57,767



$

3,122



$

7,443



$

(78,252)



$

(9,920)


Plus Management Adjustments:










Acquisition, integration and expansion(2)

22,676



391



76



31,880



55,023


Non-cash stock compensation(3)

363



25



626



4,632



5,646


Inventory adjustment

2,218









2,218


Facility closure

308



635



1,043





1,986


Litigation accrual



3,000







3,000


Tax audit







7,000



7,000


Impairment of assets







12,346



12,346


Restructuring costs and other







265



265


Pro forma Adjusted EBITDA (1)

$

83,332



$

7,173



$

9,188



$

(22,129)



$

77,564






Three Months Ended
December 31, 2019

Pro forma selling, general and administrative expenses(1)


$

70,104


Less Management Adjustments:



Non-cash stock compensation(3)


5,615


Litigation accrual


3,000


Tax audit


7,000


Restructuring costs


265


Pro forma adjusted selling, general and administrative


$

54,224




(1) 

The pro forma net income (loss), pro forma Adjusted EBITDA and pro forma selling, general and administrative expenses, reflect the results of operations of legacy Keane and legacy C&J assuming the merger had occurred on January 1, 2019.  Pro forma Adjusted EBITDA is calculated using NexTier management adjustment methodology; historical C&J amounts have been conformed accordingly.

(2) 

Represents transaction costs related to the merger.

(3) 

Represents non-cash amortization of equity awards issued under the Company's Incentive Award Plan.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA NON-GAAP FINANCIAL MEASURES

(amounts in thousands)



Three Months Ended September 30, 2019


Completion
Services


WC&I


Well Support
Services


Corporate
and Other


NexTier

Pro forma net income (loss)(1)

$

54,455



$

2,341



$

2,333



$

(69,539)



$

(10,410)


Interest expense, net







5,215



5,215


Income tax benefit







(820)



(820)


Depreciation and amortization

81,169



3,460



2,122



5,095



91,846


Pro forma EBITDA

$

135,624



$

5,801



$

4,455



$

(60,049)



$

85,831


Plus Management Adjustments:










Acquisition, integration and expansion (2)

2,449





801



3,919



7,169


Non-cash stock compensation (3)

794



276



413



8,375



9,858


Severance

6



47



5,206



335



5,594


Inventory adjustment

2,448









2,448


Facility closure





1,568





1,568


Litigation accrual



3,000







3,000


Tax audit







22,160



22,160


Restructuring costs and other







136



136


Pro forma Adjusted EBITDA (1)

$

141,321



$

9,124



$

12,443



$

(25,124)



$

137,764






Three Months Ended
September 30, 2019

Pro forma selling, general and administrative expenses (1)


$

102,414


Less Management Adjustments:



Non-cash stock compensation (3)


9,692


Litigation accrual


3,000


Tax audit


22,160


Restructuring costs


136


Severance


1,583


Pro forma adjusted selling, general and administrative


$

65,843




(1) 

The pro forma net income (loss), pro forma Adjusted EBITDA and pro forma selling, general and administrative expenses, reflect the results of operations of legacy Keane and legacy C&J assuming the merger had occurred on January 1, 2019.  Pro forma Adjusted EBITDA is calculated using NexTier management adjustment methodology; historical C&J amounts have been conformed accordingly.

(2) 

Represents transaction costs related to the merger.

(3) 

Represents non-cash amortization of equity awards issued under the Company's Incentive Award Plan.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA NON-GAAP FINANCIAL MEASURES

(amounts in thousands)



Year Ended
December 31, 2019

Pro forma net loss (1)

$

(196,577)


Interest expense, net

21,856


Income tax expense

1,643


Depreciation and amortization

369,276


Pro forma EBITDA

196,198


Plus Management Adjustments:


Acquisition, integration and expansion

67,516


Non-cash stock compensation

36,242


Impairment of assets

92,281


Severance and stock compensation acceleration

5,594


Facility Closures

3,554


Inventory Adjustments

4,666


Legal

6,600


Tax Audit

29,160


Other

4,527


Pro forma Adjusted EBITDA (1)(2)

$

446,338




(1)

The pro forma net loss and pro forma Adjusted EBITDA reflect the results of operations of legacy Keane and legacy C&J assuming the merger had occurred on January 1, 2019.

(2) 

Pro forma Adjusted EBITDA is calculated using NexTier management adjustment methodology; historical C&J amounts have been conformed accordingly.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA NON-GAAP FINANCIAL MEASURES

(amounts in thousands)











Three Months Ended December 31, 2019


Completion
Services


WC&I


Well Support
Services


Total

Pro forma revenue (1)

$

509,845



$

57,650



$

80,939



$

648,434


Pro forma cost of services (1)

404,235



48,579



66,079



518,893


Pro forma gross profit excluding depreciation and amortization

105,610



9,071



14,860



129,541


Management adjustments associated with cost of services








Pro forma adjusted gross profit

$

105,610



$

9,071



$

14,860



$

129,541



















Three Months Ended September 30, 2019


Completion
Services


WC&I


Well Support
Services


Total

Pro forma revenue (1)

$

735,166



$

66,927



94,523



$

896,616


Pro forma cost of services (1)

566,230



53,701



80,200



700,131


Pro forma gross profit excluding depreciation and amortization

168,936



13,226



14,323



196,485


Management adjustments associated with cost of services








Pro forma adjusted gross profit

$

168,936



$

13,226



$

14,323



$

196,485




















(1) 

The pro forma revenue and pro forma cost of services reflects the results of operations of legacy Keane and legacy C&J assuming the merger had occurred on January 1, 2019.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES 

(unaudited, amounts in thousands)



Year Ended December 31, 2019


Completion
Services


WC&I


Well Support
Services


Total

Pro forma revenue (1)

$

2,726,869



$

293,430



$

385,989



$

3,406,288


Pro forma cost of services (1)

2,126,654



245,870



318,720



2,691,244


Pro forma gross profit excluding depreciation and amortization

600,215



47,560



67,269



715,044


Management adjustments associated with cost of services








Pro forma Adjusted gross profit

$

600,215



$

47,560



$

67,269



$

715,044






Three Months Ended



December 31,
2019


September 30,
2019



Frac & Bundled Wireline

Revenue


$

403,862



$

437,343


Cost of services


304,670



328,029


Gross profit excluding depreciation and amortization


99,192



109,314


Management adjustments associated with cost of services





Adjusted gross profit


$

99,192



$

109,314






Three Months Ended



December 31,
2019


September 30,
2019



Frac & Bundled Wireline

Pro forma revenue (1)


$

449,707



$

654,313


Pro forma cost of services (1)


351,968



500,743


Pro forma gross profit excluding depreciation and amortization


97,739



153,570


Management adjustments associated with cost of services





Pro forma adjusted gross profit


$

97,739



$

153,570







Average hydraulic fracturing fleets deployed


30



38


Fully-utilized hydraulic fracturing fleets


25



33


Pro forma annualized adjusted gross profit per fully-utilized fleet


$

15,638



$

18,615




(1) 

The pro forma revenue and pro forma cost of services reflects the results of operations of legacy Keane and legacy C&J assuming the merger had occurred on January 1, 2019.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES 

(unaudited, amounts in thousands)



NexTier

Three Months

Ended


C&J
Historical

Month Ended


Combined
Three Months
Ended




December 31, 2019


October 31, 2019


December 31, 2019

Net cash provided by (used in) operating activities

$

79,884



$

(32,285)



$

47,599


Cash flows used in investing activities (1)

(44,102)



(9,660)



(53,762)


Combined free cash flow generation (usage)

35,782



(41,945)



(6,163)


Merger and integration costs

54,993



5,979



60,972


Adjusted combined free cash flow generation (usage)

$

90,775



$

(35,966)



$

54,809





NexTier

Year Ended


C&J
Historical

Ten Months
Ended


Combined
Year Ended




December 31, 2019


October 31, 2019


December 31, 2019

Net cash provided by operating activities

$

305,463



$

103,545



$

409,008


Cash flows used in investing activities (1)

(182,907)



(98,151)



(281,058)


Combined free cash flow generation

122,556



5,394



127,950


Merger and integration costs

61,918



9,738



71,656


Adjusted combined free cash flow generation

$

184,474



$

15,132



$

199,606




(1) 

Excludes the $68.8 million of legacy C&J cash on hand as of the merger date.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

PRO FORMA NON-GAAP FINANCIAL MEASURES 

(unaudited, amounts in thousands)



Three Months Ended


December 31, 2019


September 30, 2019

Pro forma net loss

$

(106,553)



$

(10,410)


Plus Management Adjustments:




Acquisition, integration and expansion

55,023



7,169


Non-cash stock compensation

5,646



9,858


Severance and stock compensation acceleration



5,594


Inventory adjustment

2,218



2,448


Facility closure

1,986



1,568


Litigation accrual

3,000



3,000


Tax audit

7,000



22,160


Impairment of assets

12,346




Other

265



136


Pro forma adjusted net income (loss)

$

(19,069)



$

41,523






Pro forma adjusted net income (loss) per share, basic and diluted

$

(0.09)



$

0.20






Weighted-average shares, basic and diluted

211,909



210,098


 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019

(amounts in thousands, except per share amounts)








Adjustments





NexTier (1)


Historical
C&J (2)


Reclass (3)


Pro forma (4)


Pro Forma

Revenue


$

528,216



$

120,218



$



$



$

648,434


Operating costs and expenses:











Cost of services


408,345



115,516



(4,968)





518,893


Depreciation and amortization


82,081



17,673





(9,960)



89,794


Selling, general and administrative expenses


42,698



22,007



5,399





70,104


Merger and integration


55,972



30,978





(31,927)



55,023


Research and development




431



(431)






Impairment


12,346









12,346


(Gain) loss on disposal of assets


3,639



(1,304)







2,335


Total operating costs and expenses


605,081



185,301





(41,887)



748,495


Operating loss


(76,865)



(65,083)





41,887



(100,061)


Other income (expenses):











Other income, net


(6)



353







347


Interest expense


(5,769)



(55)





55



(5,769)


Total other expenses


(5,775)



298





55



(5,422)


Loss before income taxes


(82,640)



(64,785)





41,942



(105,483)


Income tax expense


(287)



(783)







(1,070)


Net loss


$

(82,927)



$

(65,568)



$



$

41,942



$

(106,553)




Net loss per share:



Basic net loss per share


$

(0.50)


Diluted net loss per share


$

(0.50)



Weighted-average shares outstanding - basic


211,909


Weighted-average shares outstanding - diluted


211,909




(1) 

The condensed consolidated statements of operations for the three months ended December 31, 2019, reflects the results of legacy Keane for the period presented and the results of legacy C&J for the period beginning on and after November 1, 2019.

(2) 

Reflects legacy C&J activity for the period from October 1, 2019 to October 31, 2019.

(3) 

Certain reclassifications were made to historical C&J to conform to NexTier presentation.

(4) 

Certain pro forma adjustments were made to illustrate the estimated effects of the merger, assuming the merger had been consummated on January 1, 2019.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

(amounts in thousands, except per share amounts)








Adjustments





Historical
Keane (1)


Historical
C&J (2)


Reclass (3)


Pro forma (4)


Pro Forma

Revenue


$

443,953



$

452,663



$



$



$

896,616


Operating costs and expenses:











Cost of services


333,438



372,842



(6,149)





700,131


Depreciation and amortization


68,708



51,124





(27,986)



91,846


Selling, general and administrative expenses


26,579



68,234



7,601





102,414


Merger and integration


6,651



8,205





(7,686)



7,170


Research and development




1,452



(1,452)






(Gain) loss on disposal of assets


679



(263)







416


Total operating costs and expenses


436,055



501,594





(35,672)



901,977


Operating income (loss)


7,898



(48,931)





35,672



(5,361)


Other income (expenses):











Other income, net


55



(709)







(654)


Interest expense


(5,215)



(253)





253



(5,215)


Total other expenses


(5,160)



(962)





253



(5,869)


Income (loss) before income taxes


2,738



(49,893)





35,925



(11,230)


Income tax benefit


820









820


Net income (loss)


$

3,558



$

(49,893)



$



$

35,925



$

(10,410)




Net loss per share:



Basic net loss per share


$

(0.05)


Diluted net loss per share


$

(0.05)



Weighted-average shares outstanding - basic


210,098


Weighted-average shares outstanding - diluted


210,098




(1) 

The condensed consolidated statements of operations for the three months ended September 30, 2019, reflects the results of legacy Keane for the period presented.

(2) 

See the condensed consolidated statements of operations included as exhibit 99.1 in NexTier's form 8-K filed with the SEC on November 21, 2019.

(3) 

Certain reclassifications were made to historical C&J to conform to NexTier presentation.

(4) 

Certain pro forma adjustments were made to illustrate the estimated effects of the merger, assuming the merger had been consummated on January 1, 2019.

 

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2019

(amounts in thousands, except per share amounts)








Adjustments





NexTier (1)


Historical
C&J (2)


Reclass (3)


Pro forma (4)


Pro Forma

Revenue


$

1,821,556



$

1,584,732



$



$



$

3,406,288


Operating costs and expenses:











Cost of services


1,403,932



1,313,211



(25,899)





2,691,244


Depreciation and amortization


292,150



186,646





(109,520)



369,276


Selling, general and administrative expenses


123,676



190,581



31,283





345,540


Merger and integration


68,731



47,089





(48,304)



67,516


Research and development




5,384



(5,384)






Impairment


12,346



79,935







92,281


(Gain) loss on disposal of assets


4,470



9,151







13,621


Total operating costs and expenses


1,905,305



1,831,997





(157,824)



3,579,478


Operating loss


(83,749)



(247,265)





157,824



(173,190)


Other income (expenses):











Other income, net


453



(341)







112


Interest expense


(21,856)



(1,097)





1,097



(21,856)


Total other expenses


(21,403)



(1,438)





1,097



(21,744)


Loss before income taxes


(105,152)



(248,703)





158,921



(194,934)


Income tax expense


(1,005)



(638)







(1,643)


Net loss


$

(106,157)



$

(249,341)



$



$

158,921



$

(196,577)




Net loss per share:



Basic net loss per share


$

(0.93)


Diluted net loss per share


$

(0.93)



Weighted-average shares outstanding - basic


211,376


Weighted-average shares outstanding - diluted


211,376




(1)

The condensed consolidated statement of operations for the year ended December 31, 2019, reflects the results of legacy Keane for the period presented and the results of legacy C&J for the period beginning on and after November 1, 2019.

(2) 

Reflects legacy C&J's activity for the period from January 1, 2019 to October 31, 2019.

(3) 

Certain reclassifications were made to historical C&J to conform to NexTier presentation.

(4) 

Certain pro forma adjustments were made to illustrate the estimated effects of the merger, assuming the merger had been consummated on January 1, 2019.

 

NexTier Oilfield Solutions Logo (PRNewsfoto/NexTier Oilfield Solutions)

 

SOURCE NexTier Oilfield Solutions