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ProPetro (PUMP) Rallies 13.4% Despite Missing on Q2 Earnings

Zacks Equity Research
·3 min read

Shares of ProPetro Holding Corp. PUMP have rallied more than 13% since second-quarter 2020 earnings announcement on Aug 4. Although the bottom line missed the Zacks Consensus Estimate, investors were impressed by the company’s effort in maintaining a debt-free balance sheet in the quarter under review while having $13.1 million under its revolving credit facility. Further, the company’s pressure pumping business was able to achieve better-than-anticipated profitability even amid the challenging operating environment. ProPetro recorded adjusted EBITDA of $34 million, ahead of the Zacks Consensus Estimate of $20.1 million. This upside is indicative of the company’s operating efficiencies and successful cost control.

ProPetro reported second-quarter adjusted net loss per share of 26 cents, wider than the Zacks Consensus Estimate of a loss of 20 cents. However, the year-ago bottom line was earnings of 35 cents. This underperformance is due to decline in activity levels and pricing.  

Meanwhile, ProPetro’s revenues of $106.11 million were in line with the Zacks Consensus Estimate, attributable to better-than-expected pressure pumping revenues. Precisely, this oilfield service provider’s pressure pumping revenues of $103.8 million surpassed the Zacks Consensus Estimate of $97 million. But the top line fell 80% year over year.

Adjusted EBITDA in the second quarter amounted to $25.4 million, decreasing from $126.6 million a year ago.

Pressure Pumping Division

This Midland, TX-based company through its Pressure Pumping division provides hydraulic fracturing, cementing and acidizing functions. The business accounted for 97.8% of the company's total revenues in the quarter under review. Service revenues plunged more than 79.8% from the year-ago period to $103.8 million as the number of hydraulic fracturing fleets dropped significantly.

ProPetro Holding Corp. Price, Consensus and EPS Surprise

ProPetro Holding Corp. Price, Consensus and EPS Surprise
ProPetro Holding Corp. Price, Consensus and EPS Surprise

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

Costs & Expenses

ProPetro reported cost of services of $68.2 million in the second quarter, down 82.3% from the year-ago quarter. General and administrative expenses came in at $20.3 million, down from $27.9 million in the year-ago period.

Balance Sheet & Capital Expenditure

As of Jun 30, ProPetro had cash and cash equivalents worth $37.3 million and did not incur any long-term debt. ProPetro also has $13.1 million under its revolving credit facility. Capital expenditure for the June quarter totaled $11.9 million, down 92.6% from the level in second-quarter 2019.

Guidance

ProPetro’s outlook for the remaining year looks uncertain as the oilfield activity in North America is yet to recuperate up to a level favourable enough to produce a competitive return.

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However, the company remains optimistic about sustaining strong customer relationships, a debt-free balance sheet and deep bench of committed talent.

Zacks Rank & Performance of Other Energy Players

ProPetro currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Murphy USA Inc. MUSA, CNOOC Limited CEO and SilverBow Resources Inc. SBOW, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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CNOOC Limited (CEO) : Free Stock Analysis Report
 
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
 
ProPetro Holding Corp. (PUMP) : Free Stock Analysis Report
 
SilverBow Resources Inc. (SBOW) : Free Stock Analysis Report
 
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