ProPetro (PUMP) Q2 Earnings and Revenues Lag Estimates
ProPetro Holding PUMP reported second-quarter 2023 earnings per share of 34 cents, which missed the Zacks Consensus Estimate of 41 cents. The underperformance could be primarily attributed to a 38% increase in costs and expenses year over year.
The bottom line, however, improved from the year-ago quarter’s reported loss of 32 cents due to increased activity in the reported quarter.
Revenues of $435.2 million missed the consensus mark of $441 million due to weather-related downtime. The figure improved 38.1% from the year-ago quarter’s level of $315.1 million. This was due to improved pricing and fleet repositioning, additional net pricing gains, a favorable job mix and strong Hydraulic Fracturing performance.
Adjusted EBITDA amounted to $112.8, down 5.4% from $119.2 million in the previous quarter. The reported also figure missed our estimate of $123.7 million. This underperformance was primarily due to costs associated with increased weather-related downtime and a dormant frac fleet during the quarter.
ProPetro Holding Corp. Price, Consensus and EPS Surprise
ProPetro Holding Corp. price-consensus-eps-surprise-chart | ProPetro Holding Corp. Quote
Pressure Pumping
ProPetro provides hydraulic fracturing, cementing and acidizing functions through its Pressure Pumping segment. The business contributed 100% to PUMP's total revenues in the quarter under review. Service revenues from this unit surged about 21.4% to $423.6 million from the prior-year quarter’s level. This was mainly due to higher fleet strength and enhanced pricing. However, the figure missed our estimate of $432.9 million.
Costs & Financial Position
Total costs and expenses amounted to $382.8 million for the second quarter, up 7.7% from the prior-year quarter’s level. The service cost was $280.5 million compared with $197.3 million in the comparable period of 2022.
The company spent $115.2 million on capital expenditure. It also recorded positive free cash flows of $6 million in the reported quarter.
As of Jun 30, PUMP had approximately $62.1 million in cash and cash equivalents. Including cash and $15 million under its revolving credit facility, the company had total liquidity worth $170 million at the end of June 2023. Long-term debt amounted to $60 million. The total debt-to-total capital was 5.6%.
Key Points
PUMP plans to deploy the first two FORCE electric frac fleets in 2023, with the first expected in August and the second in the fourth quarter. It also anticipates strong demand for electric equipment going forward.
The company plans to focus on strategy in the second half of 2023, despite headwinds and market concerns. PUMP anticipates strong financial performance and solid demand for its services.
Guidance
ProPetro’s guidance for average effective fleet utilization lies in the range of 14-15 fleets for the second half of 2023.
It projects CapEx in the band of $250-$300 million for 2023.
Zacks Rank and Key Picks
Currently, PUMP carries a Zacks Rank #4 (Sell).
Some better-ranked stocks for investors interested in the energy sector are Murphy USA MUSA, sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum EPM and Archrock AROC, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is valued at around $6.55 billion. In the past year, its shares have risen 5.6%
MUSA currently pays a dividend of $1.52 per share, or 0.51% on an annual basis. Its payout ratio currently sits at 6% of earnings.
Evolution Petroleum is worth approximately $319.05 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.88. In comparison, its industry has an average forward P/E of 13.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.01 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.67%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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