Keane Announces Third Quarter 2018 Financial and Operational Results HOUSTON
Keane Group, Inc. ("Keane" or the "Company") today reported third
quarter 2018 financial and operational results.
Results and Recent Highlights
-
Reported third quarter 2018 revenue of $558.9 million, compared to
second quarter 2018 of $578.5 million
-
Realized third quarter 2018 net income of $30.8 million, compared to
second quarter 2018 net income of $30.7 million
-
Achieved third quarter 2018 Adjusted EBITDA of $100.9 million compared
to second quarter 2018 of $111.3 million
-
Reported annualized Adjusted Gross Profit per fleet of $20.5 million,
compared to second quarter 2018 of $20.0 million
-
Averaged 27.0 hydraulic fracturing fleets deployed in third quarter
2018; equivalent of 24.0 fully-utilized fleets
-
Executed $88 million of stock repurchases to date, representing
approximately 6% of outstanding shares
-
Board of Directors authorized second stock repurchase program capacity
reset to $100 million
Third Quarter 2018 Financial Results
Revenue for the third quarter of 2018 totaled $558.9 million, a decrease
of 3% compared to revenue for the second quarter of 2018 of $578.5
million. Net income for the third quarter of 2018 was $0.28 per share,
unchanged from the $0.28 per share reported for the second quarter of
2018. Excluding one-time items and other adjustments further discussed
below, net income for the third quarter of 2018 was $24.0 million,
compared to net income of $38.5 million for the second quarter of 2018.
Adjusted EBITDA for the third quarter of 2018 totaled $100.9 million,
compared to $111.3 million for the second quarter of 2018. Adjusted
Gross Profit for the third quarter of 2018 was $122.3 million, compared
to $130.8 million for the second quarter of 2018.
Selling, general and administrative expenses for the third quarter of
2018 totaled $27.8 million, compared to $24.1 million for the second
quarter of 2018. Excluding one-time items, selling, general and
administrative expenses for the third quarter of 2018 totaled $19.9
million compared to $18.9 million for the second quarter of 2018.
“My first few months since joining Keane have been exciting, and I am
pleased to be working alongside James, Greg and the rest of the
leadership team,” said Robert Drummond, Chief Executive Officer of
Keane. “I have long been impressed by Keane’s platform, and my
experience in the first 90 days has underscored to me the quality of
personnel, the strength of relationships and the consistency of
execution. I look forward to partnering with our customers and building
upon Keane’s track-record of success.”
“We executed well during the third quarter, delivering financial results
slightly above the guidance ranges provided in September,” said Greg
Powell, President and Chief Financial Officer of Keane. “While we were
successful in maintaining annualized Adjusted Gross Profit per fleet,
the record-high efficiencies we continue to achieve led to white space
on our frac schedule, resulting in approximately 90% utilization on the
27 average fleets deployed during the quarter.”
Completions Services
Revenue for Completion Services totaled $548.4 million for the third
quarter of 2018, a decrease of 4% compared to the second quarter of 2018
of $569.9 million, driven by reduced utilization from unanticipated
white space in the frac calendar. For the third quarter of 2018, Keane
had an average of 27.0 fleets deployed, of which, utilization averaged
89%, resulting in the equivalent of 24.0 average fully-utilized fleets
during the quarter. Adjusted Gross Profit in Completion Services totaled
$122.7 million for the third quarter of 2018, compared to $131.2 million
for the second quarter of 2018.
Annualized revenue per average deployed hydraulic fracturing fleet for
the third quarter of 2018 was $91.4 million, compared to $86.7 million
for the second quarter of 2018. Annualized Adjusted Gross Profit per
fleet totaled $20.5 million, compared to $20.0 million for the second
quarter of 2018.
Other Services
Revenue in Other Services for the third quarter of 2018 totaled $10.5
million, compared to $8.6 million for the second quarter of 2018, driven
by the continued ramp of the Company’s cementing business.
Third Quarter 2018 One-Time Items and Other Adjustments
Adjusted EBITDA for the third quarter of 2018 excludes $6.8 million of
one-time items, driven by insurance proceeds received for the previously
disclosed incident in July 2018, partially offset by non-cash stock
compensation expense, legal contingencies and costs associated with the
recently completed asset acquisition from Refinery Specialties,
Incorporated ("RSI").
Balance Sheet and Capital
Total debt outstanding as of September 30, 2018 was $341.0 million, net
of unamortized debt discounts and unamortized deferred charges and
excluding capital lease obligations, compared to $341.3 million as of
June 30, 2018. As of September 30, 2018, cash and equivalents totaled
$82.8 million, compared to $109.5 million as of June 30, 2018.
Total available liquidity as of September 30, 2018 was approximately
$290.7 million, which included cash and availability under our
asset-based credit facility. Total operating cash flow for the third
quarter of 2018 was approximately $108 million. These operating cash
flows, combined with balance sheet cash, were primarily used to fund
capital expenditures of approximately $90 million, stock repurchases of
$29 million, acquisition costs net of insurance proceeds of
approximately $17 million, and debt service of approximately $7 million.
Stock Repurchase Program Update
During the third quarter of 2018, Keane repurchased approximately 2.4
million of its common shares for $29 million, and thus far in the fourth
quarter of 2018, repurchased an additional 1.6 million common shares for
$18 million. Since the program’s initiation earlier this year and
through October 31, 2018, Keane has repurchased a total of approximately
6.6 million common shares for approximately $88 million.
Effective October 26, 2018, Keane’s Board of Directors authorized a
reset of capacity on its existing stock repurchase program back to $100
million and extended the program’s expiration date to September 2019,
from a previous expiration of February 2019.
“We are pleased to repurchase a significant amount of shares at
attractive value for shareholders,” said Mr. Powell. “The repurchases
completed to date represent approximately 6.6 million shares, or roughly
6% of outstanding shares prior to the program’s implementation. We
remain committed to stock repurchases as part of our capital allocation
strategy, as evidenced by the Board’s second increased capacity
authorization.”
The stock repurchase program does not obligate Keane to purchase any
shares of common stock during any period and the program may be modified
or suspended at any time at the Company's discretion.
Outlook
For the fourth quarter of 2018, total revenue is expected to range
between $470 million and $500 million. Keane’s hydraulic fracturing
fleet for the fourth quarter of 2018 will include 29.0 fleets, of which,
25.0 are expected to be deployed. Of this amount, Keane expects to
achieve average utilization of approximately 90%, resulting in the
equivalent of approximately 22.0 average fully-utilized hydraulic
fracturing fleets during the quarter. Annualized Adjusted Gross Profit
per fleet, based on approximately 22.0 average fully-utilized fleets, is
expected to range between $16.0 million and $18.0 million, including
approximately $15 million of labor and maintenance costs associated with
keeping our fleets market-ready.
Keane’s cementing business continues to ramp activity. By the end of
2018, Keane expects run-rate revenue of its cementing business of
between $50 million and $60 million on margins of approximately 15%.
This compares to Keane’s previous forecast of run-rate revenue by the
end of 2018 of between $70 million and $90 million and margins of 20% to
25%, which it now expects to achieve in the first half of 2019.
“While I am pleased with the efficiency we are seeing across our
portfolio, driven by our partnership with high quality operators, we
expect the fourth quarter to be impacted by the same efficiency-driven
challenges faced in the third quarter, as well as customer budget
exhaustion, some early-achievement of production targets, commodity
price differentials and typical seasonality,” said Mr. Drummond. “While
our business is not immune to these challenges, we believe they are
temporary, and we’re utilizing the near-term market dynamics to invest
in our people and equipment, ensuring that we are well-positioned to
take advantage of the opportunities anticipated on the horizon. I am
very optimistic about the long term fundamentals for our business over
the next few years.”
Conference Call
On November 1, 2018, 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 third
quarter 2018 results. Hosting the call will be Robert Drummond, Chief
Executive Officer, James Stewart, Executive Chairman, 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 13683543. The
replay will be available until November 15, 2018.
About Keane Group, Inc.
Headquartered in Houston, Texas, Keane is one of the largest pure-play
providers of integrated well completion services in the U.S., with a
focus on complex, technically demanding completion solutions. Keane's
primary service offerings include horizontal and vertical fracturing,
wireline perforation and logging, engineered solutions and cementing, as
well as other value-added service offerings.
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,” 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)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
June 30,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenue
|
|
|
|
$
|
558,908
|
|
|
$
|
477,302
|
|
|
$
|
578,533
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
|
436,799
|
|
|
391,089
|
|
|
447,685
|
|
Depreciation and amortization
|
|
|
|
68,287
|
|
|
46,204
|
|
|
59,404
|
|
Selling, general and administrative expenses
|
|
|
|
27,783
|
|
|
28,592
|
|
|
24,125
|
|
Loss on disposal of assets
|
|
|
|
1,113
|
|
|
302
|
|
|
3,287
|
|
Total operating costs and expenses
|
|
|
|
533,982
|
|
|
466,187
|
|
|
534,501
|
|
Operating income
|
|
|
|
24,926
|
|
|
11,115
|
|
|
44,032
|
|
Other income (expenses):
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
14,454
|
|
|
942
|
|
|
16
|
|
Interest expense
|
|
|
|
(5,978
|
)
|
|
(7,195
|
)
|
|
(14,317
|
)
|
Total other income (expense)
|
|
|
|
8,476
|
|
|
(6,253
|
)
|
|
(14,301
|
)
|
Income before income taxes
|
|
|
|
33,402
|
|
|
4,862
|
|
|
29,731
|
|
Income tax benefit (expense)
|
|
|
|
(2,623
|
)
|
|
(797
|
)
|
|
936
|
|
Net income
|
|
|
|
30,779
|
|
|
4,065
|
|
|
30,667
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
|
28
|
|
|
64
|
|
|
(31
|
)
|
Hedging activities
|
|
|
|
1,119
|
|
|
(178
|
)
|
|
99
|
|
Total comprehensive income
|
|
|
|
$
|
31,926
|
|
|
$
|
3,951
|
|
|
$
|
30,735
|
|
|
|
|
|
|
|
|
|
|
Net income per share, basic
|
|
|
|
$
|
0.28
|
|
|
$
|
0.04
|
|
|
$
|
0.28
|
|
Weighted average shares, basic
|
|
|
|
108,825
|
|
|
111,509
|
|
|
111,319
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE
INCOME (LOSS)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
Revenue
|
|
|
|
$
|
1,650,457
|
|
|
|
$
|
1,040,591
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
Cost of services
|
|
|
|
1,287,892
|
|
|
|
893,465
|
|
Depreciation and amortization
|
|
|
|
187,742
|
|
|
|
109,316
|
|
Selling, general and administrative expenses
|
|
|
|
85,792
|
|
|
|
68,915
|
|
(Gain) loss on disposal of assets
|
|
|
|
5,169
|
|
|
|
(137
|
)
|
Total operating costs and expenses
|
|
|
|
1,566,595
|
|
|
|
1,071,559
|
|
Operating income (loss)
|
|
|
|
83,862
|
|
|
|
(30,968
|
)
|
Other income (expenses):
|
|
|
|
|
|
|
|
Other income
|
|
|
|
1,481
|
|
|
|
4,647
|
|
Interest expense
|
|
|
|
(27,285
|
)
|
|
|
(51,905
|
)
|
Total other expenses
|
|
|
|
(25,804
|
)
|
|
|
(47,258
|
)
|
Income (loss) before income taxes
|
|
|
|
58,058
|
|
|
|
(78,226
|
)
|
Income tax expense
|
|
|
|
(4,855
|
)
|
|
|
(1,862
|
)
|
Net income (loss)
|
|
|
|
53,203
|
|
|
|
(80,088
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
|
(37
|
)
|
|
|
108
|
|
Hedging activities
|
|
|
|
3,429
|
|
|
|
(167
|
)
|
Total comprehensive income (loss)
|
|
|
|
$
|
56,595
|
|
|
|
$
|
(80,147
|
)
|
|
|
|
|
|
|
|
|
Net income (loss) per share, basic
|
|
|
|
$
|
0.48
|
|
|
|
$
|
(0.77
|
)
|
Weighted average shares, basic
|
|
|
|
110,706
|
|
|
|
104,496
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
ASSETS
|
|
|
(Unaudited)
|
|
|
(Audited)
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
82,848
|
|
|
|
$
|
96,120
|
|
Accounts receivable
|
|
|
246,345
|
|
|
238,018
|
|
Inventories, net
|
|
|
28,772
|
|
|
33,437
|
|
Prepaid and other current assets
|
|
|
9,982
|
|
|
8,519
|
|
Total current assets
|
|
|
367,947
|
|
|
376,094
|
|
Property and equipment, net
|
|
|
550,273
|
|
|
468,000
|
|
Goodwill
|
|
|
132,524
|
|
|
134,967
|
|
Intangible assets
|
|
|
53,253
|
|
|
57,280
|
|
Other noncurrent assets
|
|
|
10,332
|
|
|
6,775
|
|
Total Assets
|
|
|
$
|
1,114,329
|
|
|
|
$
|
1,043,116
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
125,524
|
|
|
|
$
|
92,348
|
|
Accrued expenses
|
|
|
113,877
|
|
|
135,175
|
|
Customer contract liabilities
|
|
|
1,280
|
|
|
5,000
|
|
Current maturities of capital lease obligations
|
|
|
4,173
|
|
|
3,097
|
|
Current maturities of long-term debt
|
|
|
2,116
|
|
|
|
1,339
|
|
Stock based compensation - current
|
|
|
4,281
|
|
|
4,281
|
|
Other current liabilities
|
|
|
217
|
|
|
914
|
|
Total current liabilities
|
|
|
251,468
|
|
|
242,154
|
|
Capital lease obligations, less current maturities
|
|
|
6,522
|
|
|
4,796
|
|
Long-term debt, net(1) less current maturities
|
|
|
338,915
|
|
|
273,715
|
|
Stock based compensation – non-current
|
|
|
—
|
|
|
|
4,281
|
|
Other non-current liabilities
|
|
|
4,849
|
|
|
5,078
|
|
Total non-current liabilities
|
|
|
350,286
|
|
|
287,870
|
|
Total liabilities
|
|
|
601,754
|
|
|
530,024
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
486,826
|
|
|
542,192
|
|
Retained earnings (deficit)
|
|
|
24,558
|
|
|
(27,372
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
1,191
|
|
|
(1,728
|
)
|
Total shareholders’ equity
|
|
|
512,575
|
|
|
513,092
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
1,114,329
|
|
|
|
$
|
1,043,116
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Three Months Ended June 30,
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
Completion Services:
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
548,418
|
|
|
$
|
468,479
|
|
|
|
$
|
569,929
|
|
Cost of services
|
|
|
425,928
|
|
|
384,007
|
|
|
|
438,684
|
|
Gross profit
|
|
|
122,490
|
|
|
84,472
|
|
|
|
131,245
|
|
Depreciation, amortization and administrative expenses, and
impairment
|
|
|
64,579
|
|
|
41,542
|
|
|
|
54,618
|
|
Operating income
|
|
|
$
|
56,771
|
|
|
$
|
42,362
|
|
|
|
$
|
75,694
|
|
|
|
|
|
|
|
|
|
|
Average hydraulic fracturing fleets deployed
|
|
|
27.0
|
|
|
24.7
|
|
|
|
26.3
|
|
Average hydraulic fracturing fleet utilization
|
|
|
89
|
%
|
|
99
|
%
|
|
|
100
|
%
|
Wireline - fracturing fleet bundling percentages
|
|
|
77
|
%
|
|
81
|
%
|
|
|
73
|
%
|
Average annualized revenue per fleet deployed (1)
|
|
|
$
|
91,403
|
|
|
$
|
75,867
|
|
|
|
$
|
86,681
|
|
Average annualized adjusted gross profit per fleet deployed (1)
|
|
|
$
|
20,453
|
|
|
$
|
14,239
|
|
|
|
$
|
19,961
|
|
Adjusted gross profit (loss)
|
|
|
$
|
122,717
|
|
|
$
|
87,926
|
|
|
|
$
|
131,245
|
|
|
|
|
|
|
|
|
|
|
Other Services (2):
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
10,490
|
|
|
$
|
8,823
|
|
|
|
$
|
8,604
|
|
Cost of services
|
|
|
10,871
|
|
|
7,082
|
|
|
|
9,001
|
|
Gross profit (loss)
|
|
|
(381
|
)
|
|
1,741
|
|
|
|
(397
|
)
|
Depreciation, amortization and administrative expenses, and
impairment
|
|
|
840
|
|
|
1,586
|
|
|
|
1,319
|
|
Operating income (loss)
|
|
|
(1,221
|
)
|
|
1,055
|
|
|
|
(1,716
|
)
|
Adjusted gross profit (loss)
|
|
|
$
|
(381
|
)
|
|
$
|
1,798
|
|
|
|
$
|
(397
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For the third quarter of 2018, average annualized revenue per fleet
deployed and average annualized adjusted gross profit per fleet
deployed was calculated using the equivalent of 24.0 average
fully-utilized fleets, which represents 89% utilization of the
Company's 27.0 average fleets deployed.
|
|
(2)
|
|
Other Services segment includes exclusively the cementing division
from January 1, 2018. The Company’s workover rigs were sold during
the third and fourth quarters of 2017. The Company’s coiled tubing
assets were sold during the fourth quarter of 2017.
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA
(unaudited, amounts in thousands, except for non-financial
statistics)
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2018
|
|
2017
|
Completion Services:
|
|
|
|
|
|
Revenues
|
|
|
$
|
1,625,798
|
|
|
$
|
1,031,768
|
|
Cost of services
|
|
|
1,261,676
|
|
|
886,383
|
|
Gross profit
|
|
|
364,122
|
|
|
145,385
|
|
Depreciation, amortization and administrative expenses, and
impairment
|
|
|
174,376
|
|
|
96,674
|
|
Operating income
|
|
|
$
|
186,730
|
|
|
$
|
49,807
|
|
|
|
|
|
|
|
Average hydraulic fracturing fleets deployed
|
|
|
26.4
|
|
|
19.5
|
|
Average hydraulic fracturing fleet utilization
|
|
|
96
|
%
|
|
78
|
%
|
Wireline - fracturing fleet bundling percentages
|
|
|
75
|
%
|
|
69
|
%
|
Average annualized revenue per fleet deployed (1)
|
|
|
$
|
85,344
|
|
|
$
|
70,548
|
|
Average annualized adjusted gross profit per fleet deployed (1)
|
|
|
$
|
19,126
|
|
|
$
|
10,944
|
|
Adjusted gross profit
|
|
|
$
|
364,349
|
|
|
$
|
160,060
|
|
|
|
|
|
|
|
Other Services (2):
|
|
|
|
|
|
Revenues
|
|
|
$
|
24,659
|
|
|
$
|
8,823
|
|
Cost of services
|
|
|
26,216
|
|
|
7,082
|
|
Gross profit (loss)
|
|
|
(1,557
|
)
|
|
1,741
|
|
Depreciation, amortization and administrative expenses, and
impairment
|
|
|
3,557
|
|
|
4,323
|
|
Operating loss
|
|
|
(5,114
|
)
|
|
(1,894
|
)
|
Adjusted gross profit (loss)
|
|
|
$
|
(1,557
|
)
|
|
$
|
1,798
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For the nine months ended September 30, 2018, average annualized
revenue per fleet deployed and average annualized adjusted gross
profit per fleet deployed was calculated using the equivalent of
24.0 average fully-utilized fleets for the third quarter of 2018,
which represents 89% utilization of the Company's 27.0 average
fleets deployed in the third quarter of 2018.
|
|
(2)
|
|
Other Services segment includes exclusively the cementing division
from January 1, 2018. The Company’s workover rigs were sold during
the third and fourth quarters of 2017. The Company’s coiled tubing
assets were sold during the fourth quarter of 2017.
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
|
Completion
Services
|
|
Other
Services
|
|
Corporate and
Other
|
|
Total
|
Net Income (loss)
|
|
|
$
|
56,771
|
|
|
$
|
(1,221
|
)
|
|
$
|
(24,771
|
)
|
|
$
|
30,779
|
|
Interest expense, net
|
|
|
—
|
|
|
—
|
|
|
5,978
|
|
|
5,978
|
|
Income tax expense
|
|
|
—
|
|
|
—
|
|
|
2,623
|
|
|
2,623
|
|
Depreciation and amortization
|
|
|
64,579
|
|
|
840
|
|
|
2,868
|
|
|
68,287
|
|
EBITDA
|
|
|
$
|
121,350
|
|
|
$
|
(381
|
)
|
|
$
|
(13,302
|
)
|
|
$
|
107,667
|
|
Plus Management Adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition, integration and expansion (1)
|
|
|
227
|
|
|
—
|
|
|
301
|
|
|
528
|
|
Non-cash stock compensation (2)
|
|
|
—
|
|
|
—
|
|
|
4,809
|
|
|
4,809
|
|
Other (3)
|
|
|
—
|
|
|
—
|
|
|
(12,127
|
)
|
|
(12,127
|
)
|
Adjusted EBITDA
|
|
|
$
|
121,577
|
|
|
$
|
(381
|
)
|
|
$
|
(20,319
|
)
|
|
$
|
100,877
|
|
Selling, general and administrative
|
|
|
—
|
|
|
—
|
|
|
27,783
|
|
|
27,783
|
|
(Gain) loss on disposal of assets
|
|
|
1,140
|
|
|
—
|
|
|
(27
|
)
|
|
1,113
|
|
Other income
|
|
|
—
|
|
|
—
|
|
|
(14,454
|
)
|
|
(14,454
|
)
|
Less Management Adjustments not associated with cost of services
|
|
|
—
|
|
|
—
|
|
|
7,017
|
|
|
7,017
|
|
Adjusted gross profit (loss)
|
|
|
$
|
122,717
|
|
|
$
|
(381
|
)
|
|
$
|
—
|
|
|
$
|
122,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents integration costs related to the asset acquisition from
RSI, of which $0.2 million was recorded in cost of services and $0.3
million was recorded in selling, general and administrative expenses.
|
|
(2)
|
|
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.
|
|
(3)
|
|
Represents gain of $14.9 million recognized for insurance proceeds
received in connection with a fire that damaged a portion of one
hydraulic fracturing fleet on July 1, 2018, which was recorded in
(gain) loss on disposal of assets, offset by $2.8 million of legal
contingencies, which were recorded in selling, general and
administrative expenses.
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
|
Completion
Services
|
|
Other
Services
|
|
Corporate
and Other
|
|
Total
|
Net Income (loss)
|
|
|
$
|
75,694
|
|
|
$
|
(1,716
|
)
|
|
$
|
(43,311
|
)
|
|
$
|
30,667
|
|
Interest expense, net
|
|
|
—
|
|
|
—
|
|
|
14,317
|
|
|
14,317
|
|
Income tax benefit
|
|
|
—
|
|
|
—
|
|
|
(936
|
)
|
|
(936
|
)
|
Depreciation and amortization
|
|
|
54,618
|
|
|
1,319
|
|
|
3,467
|
|
|
59,404
|
|
EBITDA
|
|
|
$
|
130,312
|
|
|
$
|
(397
|
)
|
|
$
|
(26,463
|
)
|
|
$
|
103,452
|
|
Plus Management Adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition, integration and expansion (1)
|
|
|
—
|
|
|
—
|
|
|
2,827
|
|
|
2,827
|
|
Non-cash stock compensation (2)
|
|
|
—
|
|
|
—
|
|
|
4,040
|
|
|
4,040
|
|
Other (3)
|
|
|
—
|
|
|
—
|
|
|
989
|
|
|
989
|
|
Adjusted EBITDA
|
|
|
$
|
130,312
|
|
|
$
|
(397
|
)
|
|
$
|
(18,607
|
)
|
|
$
|
111,308
|
|
Selling, general and administrative
|
|
|
—
|
|
|
—
|
|
|
24,125
|
|
|
24,125
|
|
Loss on disposal of assets
|
|
|
933
|
|
|
—
|
|
|
2,354
|
|
|
3,287
|
|
Other income
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(16
|
)
|
Less Management Adjustments not associated with cost of services
|
|
|
—
|
|
|
—
|
|
|
(7,856
|
)
|
|
(7,856
|
)
|
Adjusted gross profit (loss)
|
|
|
$
|
131,245
|
|
|
$
|
(397
|
)
|
|
$
|
—
|
|
|
$
|
130,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents primarily a markdown to fair value of idle real estate
pending for sale in Mathis, Texas acquired during the acquisition of
a majority of the U.S. assets and assumed certain liabilities of
Trican Well Service, L.P. (the "Acquired Trican Operations"). This
loss was recorded in loss on disposal of assets.
|
|
(2)
|
|
Represents non-cash amortization of equity awards issued under the
Equity Plan, which is recorded in selling, general and
administrative expenses.
|
|
(3)
|
|
Represents primarily rating agency fees for establishing initial
ratings in connection with entering into a new $350 million senior
secured term facility. These expenses were recorded in selling,
general and administrative expenses.
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
|
|
|
Completion
Services
|
|
Other
Services
|
|
Corporate and
Other
|
|
Total
|
Net Income (loss)
|
|
|
$
|
42,362
|
|
|
$
|
1,055
|
|
|
$
|
(39,352
|
)
|
|
$
|
4,065
|
|
Interest expense, net
|
|
|
—
|
|
|
—
|
|
|
7,195
|
|
|
7,195
|
|
Income tax expense
|
|
|
—
|
|
|
—
|
|
|
797
|
|
|
797
|
|
Depreciation and amortization
|
|
|
41,542
|
|
|
1,586
|
|
|
3,076
|
|
|
46,204
|
|
EBITDA
|
|
|
$
|
83,904
|
|
|
$
|
2,641
|
|
|
$
|
(28,284
|
)
|
|
$
|
58,261
|
|
Plus Management Adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition, integration and expansion (1)
|
|
|
1,835
|
|
|
57
|
|
|
5,998
|
|
|
7,890
|
|
Offering-related expenses (2)
|
|
|
—
|
|
|
—
|
|
|
98
|
|
|
98
|
|
Commissioning costs
|
|
|
1,619
|
|
|
—
|
|
|
—
|
|
|
1,619
|
|
Non-cash stock compensation (3)
|
|
|
—
|
|
|
—
|
|
|
3,263
|
|
|
3,263
|
|
Other (4)
|
|
|
—
|
|
|
—
|
|
|
470
|
|
|
470
|
|
Adjusted EBITDA
|
|
|
$
|
87,358
|
|
|
$
|
2,698
|
|
|
$
|
(18,455
|
)
|
|
$
|
71,601
|
|
Selling, general and administrative
|
|
|
—
|
|
|
—
|
|
|
28,592
|
|
|
28,592
|
|
(Gain) loss on disposal of assets
|
|
|
568
|
|
|
(900
|
)
|
|
634
|
|
|
302
|
|
Other income
|
|
|
—
|
|
|
—
|
|
|
(942
|
)
|
|
(942
|
)
|
Less Management Adjustments not associated with cost of services
|
|
|
—
|
|
|
—
|
|
|
(9,829
|
)
|
|
(9,829
|
)
|
Adjusted gross profit
|
|
|
$
|
87,926
|
|
|
$
|
1,798
|
|
|
$
|
—
|
|
|
$
|
89,724
|
|
(1)
|
|
Represents primarily professional fees, integration costs, lease
termination costs, severance and other costs associated with our
acquisition and integration of RockPile Energy Services and its
subsidiaries (“RockPile”).
|
|
(2)
|
|
Represents fees related to the organizational (legal entities)
restructuring to ready the Company for its initial public offering
("IPO"). These expenses were recorded in selling, general and
administrative expenses.
|
|
(3)
|
|
Represents non-cash amortization of equity awards issued under the
Equity Plan, which is recorded in selling, general and
administrative expenses.
|
|
(4)
|
|
Represents an adjustment to a contingent accrual and readiness costs
associated with the Company's initial internal controls design
documentation for Sarbanes-Oxley compliance, using COSO 2013
framework, beginning in 2018. These costs were recorded in selling,
general and administrative expenses. Also represents net (gain) loss
on disposals of assets, which is recorded in (gain) loss on disposal
of assets.
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
|
|
|
Completion
Services
|
|
Other
Services
|
|
Corporate and
Other
|
|
Total
|
Net Income (loss)
|
|
|
$
|
186,731
|
|
|
$
|
(5,114
|
)
|
|
$
|
(128,414
|
)
|
|
$
|
53,203
|
|
Interest expense, net
|
|
|
—
|
|
|
—
|
|
|
27,285
|
|
|
27,285
|
|
Income tax expense
|
|
|
—
|
|
|
—
|
|
|
4,855
|
|
|
4,855
|
|
Depreciation and amortization
|
|
|
174,376
|
|
|
3,557
|
|
|
9,809
|
|
|
187,742
|
|
EBITDA
|
|
|
$
|
361,107
|
|
|
$
|
(1,557
|
)
|
|
$
|
(86,465
|
)
|
|
$
|
273,085
|
|
Plus Management Adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition, integration and expansion (1)
|
|
|
227
|
|
|
—
|
|
|
16,382
|
|
|
16,609
|
|
Offering-related expenses (2)
|
|
|
—
|
|
|
—
|
|
|
12,969
|
|
|
12,969
|
|
Non-cash stock compensation (3)
|
|
|
—
|
|
|
—
|
|
|
11,924
|
|
|
11,924
|
|
Other (4)
|
|
|
—
|
|
|
—
|
|
|
(11,138
|
)
|
|
(11,138
|
)
|
Adjusted EBITDA
|
|
|
$
|
361,334
|
|
|
$
|
(1,557
|
)
|
|
$
|
(56,328
|
)
|
|
$
|
303,449
|
|
Selling, general and administrative
|
|
|
—
|
|
|
—
|
|
|
85,792
|
|
|
85,792
|
|
Loss on disposal of assets
|
|
|
3,015
|
|
|
—
|
|
|
2,154
|
|
|
5,169
|
|
Other income
|
|
|
—
|
|
|
—
|
|
|
(1,481
|
)
|
|
(1,481
|
)
|
Less Management Adjustments not associated with cost of services
|
|
|
—
|
|
|
—
|
|
|
(30,137
|
)
|
|
(30,137
|
)
|
Adjusted gross profit (loss)
|
|
|
$
|
364,349
|
|
|
$
|
(1,557
|
)
|
|
$
|
—
|
|
|
$
|
362,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents adjustment to the contingent value right liability based
on the final agreed-upon settlement, which was recorded in other
income (expense), net and a markdown to fair value of idle real
estate pending for sale in Mathis, Texas acquired as part of the
Acquired Trican Operations, which was recorded in (gain) loss on
disposal of assets. Also represents integration costs related to the
asset acquisition from RSI, of which $0.2 million was recorded in
cost of services and $0.3 million was recorded in selling, general
and administrative expenses.
|
|
(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.
|
|
(4)
|
|
Represents gain recognized for insurance proceeds received in
connection with a fire that damaged a portion of one hydraulic
fracturing fleet on July 1, 2018, which was recorded in (gain) loss
on disposal of assets. Also represents legal contingencies and
rating agency fees for establishing initial ratings in connection
with entering into a new $350 million senior secured term facility,
which were recorded in selling, general and administrative expenses.
|
|
|
|
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017
|
|
|
|
Completion
Services
|
|
Other
Services
|
|
Corporate and
Other
|
|
Total
|
Net Income (loss)
|
|
|
$
|
49,807
|
|
|
$
|
(1,894
|
)
|
|
$
|
(128,001
|
)
|
|
$
|
(80,088
|
)
|
Interest expense, net
|
|
|
—
|
|
|
—
|
|
|
51,905
|
|
|
51,905
|
|
Income tax expense
|
|
|
—
|
|
|
—
|
|
|
1,862
|
|
|
1,862
|
|
Depreciation and amortization
|
|
|
96,674
|
|
|
4,323
|
|
|
8,319
|
|
|
109,316
|
|
EBITDA
|
|
|
$
|
146,481
|
|
|
$
|
2,429
|
|
|
$
|
(65,915
|
)
|
|
$
|
82,995
|
|
Plus Management Adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition, integration and expansion (1)
|
|
|
1,835
|
|
|
57
|
|
|
5,786
|
|
|
7,678
|
|
Offering-related expenses (2)
|
|
|
1,266
|
|
|
—
|
|
|
4,619
|
|
|
5,885
|
|
Commissioning costs
|
|
|
11,574
|
|
|
—
|
|
|
197
|
|
|
11,771
|
|
Non-cash stock compensation (3)
|
|
|
—
|
|
|
—
|
|
|
7,334
|
|
|
7,334
|
|
Other (4)
|
|
|
—
|
|
|
—
|
|
|
5,031
|
|
|
5,031
|
|
Adjusted EBITDA
|
|
|
$
|
161,156
|
|
|
$
|
2,486
|
|
|
$
|
(42,948
|
)
|
|
$
|
120,694
|
|
Selling, general and administrative
|
|
|
—
|
|
|
—
|
|
|
68,915
|
|
|
68,915
|
|
(Gain) loss on disposal of assets
|
|
|
(1,096
|
)
|
|
(688
|
)
|
|
1,647
|
|
|
(137
|
)
|
Other income
|
|
|
—
|
|
|
—
|
|
|
(4,647
|
)
|
|
(4,647
|
)
|
Less Management Adjustments not associated with cost of services
|
|
|
—
|
|
|
—
|
|
|
(22,967
|
)
|
|
(22,967
|
)
|
Adjusted gross profit (loss)
|
|
|
$
|
160,060
|
|
|
$
|
1,798
|
|
|
$
|
—
|
|
|
$
|
161,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents primarily professional fees, due diligence expenses and
other costs associated with the acquisition and integration of
RockPile, the acquisition of the Acquired Trican Operations and
costs associated with the wind-down of certain other acquisitions.
|
|
(2)
|
|
Represents fees and other miscellaneous expenses required to carry
out the reporting, prior years' audits and organizational (legal
entities) restructuring to ready the Company for its IPO and the
eventual consummation of the offering. These expenses were recorded
in selling, general and administrative expenses. Also represents
one-time IPO bonuses paid out to key operational and corporate
employees. These expenses were recorded in selling, general and
administrative expenses, of which $1.3 million was recorded in cost
of services for operations employees and the remaining in selling
general and administrative expenses. The bonuses were paid out
during the first quarter of 2017.
|
|
(3)
|
|
Represents non-cash amortization of equity awards issued under the
Equity Plan, which is recorded in selling, general and
administrative expenses.
|
|
(4)
|
|
Represents contingency accruals related to certain litigation claims
and readiness costs associated with Keane's initial internal control
design documentation for Sarbanes-Oxley compliance, using COSO 2013
framework, beginning in 2018. These costs were recorded in selling,
general and administrative expenses. Also represents net (gain) loss
on disposal of assets, which was recorded in (gain) loss on disposal
of assets.
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181031005868/en/ Copyright Business Wire 2018
Source: Business Wire
(October 31, 2018 - 5:00 PM EDT)
News by QuoteMedia
www.quotemedia.com
|