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ProPetro (PUMP) Down 11.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for ProPetro Holding (PUMP - Free Report) . Shares have lost about 11.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ProPetro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ProPetro Q2 Earnings and Revenues Miss Estimates
ProPetro Holding reported second-quarter 2024 loss per share of 3 cents, which missed the Zacks Consensus Estimate for earnings of 8 cents per share. Moreover, the bottom line also declined from the year-ago quarter’s reported profit of 34 cents.
Revenues of $357 million missed the consensus mark of $362 million. The figure also decreased 18% from the year-ago quarter’s level of $435.2 million. This was due to a year-over-year decline in service revenues from hydraulic fracturing and wireline operations.
Adjusted EBITDA amounted to $66.1 million, down 29.2% from $93.4 million reported in the previous quarter. This underperformance was due to customer delays, pricing pressures on Tier II diesel assets and weather impacts.
The company expanded its share repurchase program on Apr 24, increasing the authorization to $200 million and extending it through May 2025. In the quarter, 2.5 million shares were repurchased for $23 million, bringing the total shares retired since program inception to 11.3 million or approximately 10% of outstanding shares.
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 decreased 18% to $357 million from the prior-year quarter’s level. Additionally, the figure was lower than our estimate of $377.5 million.
Costs & Financial Position
Total costs and expenses were $357.6 million for the second quarter, down 17.9% from the prior-year quarter’s level. The cost of services (exclusive of depreciation and amortization) was $265.8 million compared with $297.8 million in the comparable period of 2023. Additionally, the loss on disposal of assets totaled $3.3 million compared with $14.8 million in the comparable period of 2023.
The company recorded $32 million in capital expenditure. The majority of capital expenditures incurred in this quarter were allocated to maintaining and upgrading equipment used in FORCESM electric hydraulic fracturing fleet deployments.
As of Jun 30, PUMP had $66.9 million in cash and cash equivalents and $45 million in borrowings under its ABL Credit Facility. Total liquidity stood at $145 million, including $78 million in available credit at June-end. Long-term debt amounted to $45 million. The total debt-to-total capital was 4.4%.
Net cash provided by operating activities increased to $104.9 million in this quarter, up from $74.8 million in the last quarter. Free Cash Flow increased to approximately $47.9 million from $41 million in the prior quarter. The company used $57 million in net cash for investing activities in the second quarter of 2024. Of this amount, $21 million was allocated to the acquisition of AquaProp.
Guidance
The company expects to reduce full-year 2024 capital expenditure guidance to be between $175 million to $200 million, down from the prior guided range of $200-$250 million. PUMP anticipates operating 14 active frac fleets in the third quarter of 2024.
ProPetro’s management expects the second half of the year to mirror the successful first six months, driven by its diversified fleet and exceptional operational team. The PUMP's FORCESM electric equipment remains in high demand, exceeding the current supply. Coupled with the ongoing integration of recent acquisitions, PUMP is expected to boost earnings further.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -66.67% due to these changes.
VGM Scores
Currently, ProPetro has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise ProPetro has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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ProPetro (PUMP) Down 11.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for ProPetro Holding (PUMP - Free Report) . Shares have lost about 11.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ProPetro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ProPetro Q2 Earnings and Revenues Miss Estimates
ProPetro Holding reported second-quarter 2024 loss per share of 3 cents, which missed the Zacks Consensus Estimate for earnings of 8 cents per share. Moreover, the bottom line also declined from the year-ago quarter’s reported profit of 34 cents.
Revenues of $357 million missed the consensus mark of $362 million. The figure also decreased 18% from the year-ago quarter’s level of $435.2 million. This was due to a year-over-year decline in service revenues from hydraulic fracturing and wireline operations.
Adjusted EBITDA amounted to $66.1 million, down 29.2% from $93.4 million reported in the previous quarter. This underperformance was due to customer delays, pricing pressures on Tier II diesel assets and weather impacts.
The company expanded its share repurchase program on Apr 24, increasing the authorization to $200 million and extending it through May 2025. In the quarter, 2.5 million shares were repurchased for $23 million, bringing the total shares retired since program inception to 11.3 million or approximately 10% of outstanding shares.
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 decreased 18% to $357 million from the prior-year quarter’s level. Additionally, the figure was lower than our estimate of $377.5 million.
Costs & Financial Position
Total costs and expenses were $357.6 million for the second quarter, down 17.9% from the prior-year quarter’s level. The cost of services (exclusive of depreciation and amortization) was $265.8 million compared with $297.8 million in the comparable period of 2023. Additionally, the loss on disposal of assets totaled $3.3 million compared with $14.8 million in the comparable period of 2023.
The company recorded $32 million in capital expenditure. The majority of capital expenditures incurred in this quarter were allocated to maintaining and upgrading equipment used in FORCESM electric hydraulic fracturing fleet deployments.
As of Jun 30, PUMP had $66.9 million in cash and cash equivalents and $45 million in borrowings under its ABL Credit Facility. Total liquidity stood at $145 million, including $78 million in available credit at June-end. Long-term debt amounted to $45 million. The total debt-to-total capital was 4.4%.
Net cash provided by operating activities increased to $104.9 million in this quarter, up from $74.8 million in the last quarter. Free Cash Flow increased to approximately $47.9 million from $41 million in the prior quarter. The company used $57 million in net cash for investing activities in the second quarter of 2024. Of this amount, $21 million was allocated to the acquisition of AquaProp.
Guidance
The company expects to reduce full-year 2024 capital expenditure guidance to be between $175 million to $200 million, down from the prior guided range of $200-$250 million. PUMP anticipates operating 14 active frac fleets in the third quarter of 2024.
ProPetro’s management expects the second half of the year to mirror the successful first six months, driven by its diversified fleet and exceptional operational team. The PUMP's FORCESM electric equipment remains in high demand, exceeding the current supply. Coupled with the ongoing integration of recent acquisitions, PUMP is expected to boost earnings further.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -66.67% due to these changes.
VGM Scores
Currently, ProPetro has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise ProPetro has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.