Keane Group, Inc. (“Keane” or the “Company”) today reported
second quarter 2019 financial and operational results.
Results and Recent Highlights
- Reported second quarter 2019 revenue of $427.7 million,
compared to first quarter 2019 of $421.7 million
- Realized second quarter 2019 net loss of $5.0 million, compared
to first quarter 2019 of $21.8 million
- Achieved second quarter 2019 Adjusted EBITDA of $82.4 million,
compared to first quarter 2019 of $64.1 million
- Reported annualized Adjusted Gross Profit per fleet of $18.6
million, compared to first quarter 2019 of $16.2 million
- Achieved record efficiencies, driven by strong execution,
deployment of technology and improvements in white space
- Remain on target to complete previously announced merger with
C&J Energy Services, Inc. (“C&J”) in the fourth quarter of
2019
Second Quarter 2019 Financial Results
Revenue for the second quarter of 2019 totaled $427.7 million,
an increase of 1.4%, compared to $421.7 million for the first
quarter of 2019. Net loss per share for the second quarter of 2019
was $0.05, compared to net loss per share of $0.21 for the first
quarter of 2019. Excluding management adjustments further discussed
below, net income for the second quarter of 2019 was $6.4 million,
compared to net loss of $13.7 million for the first quarter of
2019.
Adjusted Gross Profit for the second quarter of 2019 was $103.2
million, compared to $84.0 million for the first quarter of 2019.
Selling, general and administrative expenses for the second quarter
of 2019 totaled $32.6 million, compared to $27.9 million for the
first quarter of 2019. Excluding management adjustments, selling,
general and administrative expenses for the second quarter of 2019
totaled $21.2 million, compared to $19.8 million for the first
quarter of 2019. Adjusted EBITDA for the second quarter of 2019
totaled $82.4 million, compared to $64.1 million for the first
quarter of 2019.
“I am proud of our team and how Keane continues to consistently
deliver on its commitments,” said Robert Drummond, Chief Executive
Officer of Keane. “During the second quarter, we achieved excellent
financial performance, with revenue and Adjusted EBITDA exceeding
the high-end of our guidance. We benefited from strong execution
and efficiencies during the quarter, leading to company record pump
hours. We increased our top-tier profitability per fleet and
generated attractive free cash flow, while continuing to maintain
the quality and readiness of our fleet and making investments in
new technology.”
“During the quarter, we converted one spot fleet to a dedicated
agreement with a new major customer in the Permian Basin,”
continued Mr. Drummond. “We are extremely excited to be partnering
with this new operator and are proud of our team’s ability to
further expand our portfolio of blue chip customers.”
Completion Services
Revenue for Completion Services totaled $420.4 million for the
second quarter of 2019, an increase of 2%, compared to $412.0
million for the first quarter of 2019, driven primarily by further
improvements in efficiencies, as well as a reduction of white space
in our frac calendar. For the second quarter of 2019, Keane had an
average of 23 fleets deployed, of which utilization averaged 96%,
resulting in equivalent of 22 fully-utilized fleets. Adjusted Gross
Profit for Completion Services totaled $102.1 million for the
second quarter of 2019, compared to $85.3 million for the first
quarter of 2019.
Annualized revenue per average deployed hydraulic fracturing
fleet for the second quarter of 2019 was $76.4 million, compared to
$78.5 million for the first quarter of 2019. Annualized Adjusted
Gross Profit per fleet totaled $18.6 million, compared to $16.2
million for the first quarter of 2019.
Other Services
Revenue in Other Services for the second quarter of 2019 totaled
$7.4 million, compared to $9.7 million for the first quarter of
2019. Adjusted Gross Profit for the second quarter of 2019 was $1.1
million, an increase of $2.4 million as compared to the first
quarter of 2019, driven by strong execution and the idling of
cementing activities in one of our operating regions.
Second Quarter 2019 Management Adjustments
Adjusted EBITDA for the second quarter of 2019 includes
adjustments of $11.4 million, driven by $6.1 million of transaction
costs related to the announcement of the merger with C&J and
$5.6 million of non-cash stock compensation expense.
Balance Sheet and Capital
Total debt outstanding as of June 30, 2019 was $339.0 million,
net of unamortized debt discounts and unamortized deferred charges
and excluding lease obligations, compared to $339.8 million as of
March 31, 2019. As of June 30, 2019, cash and equivalents totaled
$117.1 million, compared to $83.7 million as of March 31, 2019.
Total available liquidity as of June 30, 2019 was approximately
$290.6 million, which included availability under our asset-based
credit facility. Total operating cash flow for the second quarter
of 2019 was approximately $83.5 million. Capital expenditures, net
of asset sales, totaled approximately $48 million, resulting in
free cash flow of approximately $36 million for the second quarter
of 2019.
Stock Repurchase Program Update
As of June 17, 2019, and pursuant to the terms of the merger
agreement with C&J, Keane’s existing stock repurchase program
has been temporarily suspended.
Guidance and Outlook
For the third quarter of 2019, revenue for our Completions
Services business is expected to range between $430 million and
$450 million. Keane’s hydraulic fracturing fleet will include 29
deployable fleets, of which 24 are expected to be deployed. Keane
expects to achieve utilization of approximately 96% of its deployed
fleets, resulting in the equivalent of approximately 23
fully-utilized hydraulic fracturing fleets. Annualized Adjusted
Gross Profit per fleet, based on 23 fully-utilized fleets, is
expected to range between $18 million and $20 million.
For the third quarter of 2019, revenue for our Other Services
business is expected to range between $7 million and $8 million on
gross margins of approximately 15%.
“Our customer partnership model continues to differentiate Keane
by providing superior visibility into continued strength in
activity during the third quarter, where we are forecasting
continued improvement in performance and free cash flow” said Greg
Powell, President and Chief Financial Officer of Keane. “We
continue to focus on generating leading returns, and remain on pace
to generate more than $100 million of free cash flow in 2019.”
“We remain on track to complete our previously announced merger
with C&J during the fourth quarter of 2019,” continued Mr.
Powell. “We are excited about the value we will create by merging
our two companies to establish an industry-leading diversified
oilfield services company.”
Conference Call
On July 30, 2019, Keane will hold a conference call for
investors at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to
discuss Keane’s second quarter 2019 results. Hosting the call will
be Robert Drummond, Chief Executive Officer, 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 13692490. The replay will be available
until August 13, 2019.
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
This communication 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 Keane’s and C&J’s
control. Statements in this communication regarding Keane, C&J
and the combined company that are forward-looking, including
projections as to the anticipated benefits of the proposed
transaction, the impact of the proposed transaction on Keane’s and
C&J’s business and future financial and operating results, the
amount and timing of synergies from the proposed transaction, and
the closing date for the proposed transaction, are based on
management’s estimates, assumptions and projections, and are
subject to significant uncertainties and other factors, many of
which are beyond Keane’s and C&J’s control. These factors and
risks include, but are not limited to, (i) the competitive nature
of the industry in which Keane and C&J conduct their 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 Keane and C&J serve; (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 Keane’s and
C&J’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) Keane’s and C&J’s ability
to employ a sufficient number of skilled and qualified workers to
combat the operating hazards inherent in Keane’s and C&J’s
industry; (xiii) fluctuations in the market price of Keane’s and
C&J’s stock; (xiv) the level of, and obligations associated
with, Keane’s and C&J’s indebtedness; and (xv) 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 and the ability to achieve the
anticipated synergies and value-creation contemplated by the
proposed transaction; the risk associated with Keane’s and
C&J’s ability to obtain the approval of the proposed
transaction by their shareholders required to consummate the
proposed transaction and the timing of the closing of the proposed
transaction, including the risk that the conditions to the
transaction are not satisfied on a timely basis or at all and the
failure of the transaction to close for any other reason; the risk
that a consent or authorization that may be required for the
proposed transaction is not obtained or is obtained subject to
conditions that are not anticipated; unanticipated difficulties or
expenditures relating to the transaction, the response of business
partners and retention as a result of the announcement and pendency
of the transaction; and the diversion of management time on
transaction-related issues. For a more detailed discussion of such
risks and other factors, see Keane’s and C&J’s filings with the
Securities and Exchange Commission (the “SEC”), including under the
heading “Risk Factors” in Item 1A of Keane’s Annual Report on Form
10-K for the fiscal year ended December 31, 2018, filed on February
27, 2019, and C&J’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2018, filed on February 27, 2019 and in
other periodic filings, available on the SEC website or
www.keanegrp.com or www.cjenergy.com. Keane and C&J assume 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 communication, 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.
Important Additional Information Regarding the Merger of
Equals Will Be Filed With the SEC
In connection with the proposed merger, Keane has filed a
registration statement on Form S 4 that includes a joint proxy
statement of Keane and C&J that also constitutes a prospectus
of Keane with the Securities and Exchange Commission (the “SEC”).
Each of Keane and C&J have also filed other relevant documents
with the SEC regarding the proposed transaction. No offering of
securities shall be made, except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
MERGER. Investors and stockholders may obtain free copies of these
documents and other documents containing important information
about Keane and C&J through the website maintained by the SEC
at http://www.sec.gov. Copies of the documents filed with the SEC
by Keane are available free of charge on Keane’s website at
http://www.keanegrp.com or by contacting Keane’s Investor Relations
Department by email at investors@keanegrp.com or by phone at
281-929-0370. Copies of the documents filed with the SEC by C&J
are available free of charge on C&J’s website at
www.cjenergy.com or by contacting C&J’s Investor Relations
Department by email at investors@cjenergy.com or by phone at
713-260-9986.
Participants in the Solicitation
C&J, Keane and certain of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information about the directors and executive officers of C&J
is set forth in its proxy statement for its 2019 annual meeting of
shareholders, which was filed with the SEC on April 9, 2019, and
C&J’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, which was filed with the SEC on February 27,
2019. Information about the directors and executive officers of
Keane is set forth in Keane’s proxy statement for its 2019 annual
meeting of shareholders, which was filed with the SEC on April 1,
2019, and Keane’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2018, which was filed with the SEC on February
27, 2019. Other information regarding the participants in the proxy
solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, is contained in the
joint proxy statement/prospectus and other relevant materials filed
with the SEC regarding the proposed merger. Investors should read
the joint proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions. You may
obtain free copies of these documents from C&J or Keane using
the sources indicated above.
No Offer or Solicitation
This document is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote in any jurisdiction pursuant to the
proposed transaction or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. Subject to certain exceptions to
be approved by the relevant regulators or certain facts to be
ascertained, the public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
KEANE GROUP, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS &
COMPREHENSIVE INCOME (LOSS) (in thousands, except per share
data)
Three Months Ended June 30,
2019
Three Months Ended March
31,
2019
2018
2019
(Unaudited)
(Unaudited)
(Unaudited)
Revenue
$
427,733
$
578,533
$
421,654
Operating costs and expenses:
Cost of services
324,503
447,685
337,646
Depreciation and amortization
69,886
59,404
71,476
Selling, general and administrative
expenses
32,571
24,125
27,936
(Gain) loss on disposal of assets
(330
)
3,287
481
Total operating costs and expenses
426,630
534,501
437,539
Operating income (loss)
1,103
44,032
(15,885
)
Other income (expenses):
Other income (expense), net
(43
)
16
448
Interest expense
(5,477
)
(14,317
)
(5,395
)
Total other expenses
(5,520
)
(14,301
)
(4,947
)
Income (loss) before income taxes
(4,417
)
29,731
(20,832
)
Income tax benefit (expense)
(564
)
936
(974
)
Net income (loss)
(4,981
)
30,667
(21,806
)
Other comprehensive income (loss):
Foreign currency translation
adjustments
—
(31
)
(29
)
Hedging activities
(3,682
)
99
(2,862
)
Total comprehensive income
(loss)
$
(8,663
)
$
30,735
$
(24,697
)
Net income (loss) per share: basic
$
(0.05
)
$
0.28
$
(0.21
)
Weighted-average shares: basic
104,837
111,319
104,422
KEANE GROUP, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS &
COMPREHENSIVE INCOME (LOSS) (in thousands, except per share
data)
Six Months Ended June
30,
2019
2018
(Unaudited)
(Unaudited)
Revenue
$
849,387
$
1,091,549
Operating costs and expenses:
Cost of services
662,149
851,093
Depreciation and amortization
141,362
119,455
Selling, general and administrative
expenses
60,507
58,009
Loss on disposal of assets
151
4,056
Total operating costs and expenses
864,169
1,032,613
Operating income (loss)
(14,782
)
58,936
Other income (expenses):
Other income (expense), net
405
(12,973
)
Interest expense
(10,872
)
(21,307
)
Total other income (expenses)
(10,467
)
(34,280
)
Income (loss) before income taxes
(25,249
)
24,656
Income tax expense
(1,538
)
(2,232
)
Net income (loss)
(26,787
)
22,424
Other comprehensive income (loss):
Foreign currency translation
adjustments
(29
)
(65
)
Hedging activities
(6,544
)
2,310
Total comprehensive income
(loss)
$
(33,360
)
$
24,669
Net income (loss) per share: basic
$
(0.26
)
$
0.20
Weighted-average shares, basic
104,631
111,663
KEANE GROUP, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands)
ASSETS
June 30,
December 31,
2019
2018
(Unaudited)
(Audited)
Current Assets:
Cash and cash equivalents
117,092
80,206
Accounts receivable
199,099
210,428
Inventories, net
26,620
35,669
Assets held for sale
582
176
Prepaid and other current assets
5,940
5,784
Total current assets
349,333
332,263
Operating lease right-of-use assets
46,411
—
Finance lease right-of-use assets
8,876
—
Property and equipment, net
470,266
531,319
Goodwill
132,524
132,524
Intangible assets
50,941
51,904
Other noncurrent assets
6,486
6,569
Total Assets
1,064,837
1,054,579
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable
119,914
106,702
Accrued expenses
74,391
101,539
Current maturities of operating lease
liabilities
20,453
—
Current maturities of finance lease
liabilities
4,359
4,928
Current maturities of long-term debt
2,561
2,776
Customer contract liabilities
471
60
Stock based compensation - current
—
4,281
Other current liabilities
1,309
294
Total current liabilities
223,458
220,580
Long-term operating lease liabilities,
less current maturities
25,750
—
Long-term finance lease liabilities, less
current maturities
5,709
5,581
Long-term debt, net(1) less current
maturities
336,417
337,954
Other non-current liabilities
8,247
3,283
Total non-current liabilities
376,123
346,818
Total liabilities
599,581
567,398
Shareholders’ equity:
Stockholders’ equity
467,034
456,485
Retained earnings (deficit)
6,037
31,494
Accumulated other comprehensive (loss)
(7,815
)
(798
)
Total shareholders’ equity
465,256
487,181
Total liabilities and shareholders’
equity
1,064,837
1,054,579
(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 June 30,
2019
Three Months Ended March
31,
2019
2018
2019
Completion Services:
Revenues
$
420,363
$
569,929
$
411,975
Cost of services
318,232
438,684
326,670
Gross profit
102,130
131,245
85,305
Depreciation and amortization
65,672
54,618
66,747
Operating income
$
36,857
$
75,694
$
17,967
Average hydraulic fracturing fleets
deployed
23.0
26.3
23.0
Average hydraulic fracturing fleet
utilization(1)
96
%
100
%
91
%
Wireline - fracturing fleet integration
percentages
79
%
73
%
78
%
Average annualized revenue per fleet
deployed(2)
$
76,430
$
86,681
$
78,471
Average annualized adjusted gross profit
per fleet deployed(2)
$
18,569
$
19,961
$
16,248
Adjusted gross profit
$
102,130
$
131,245
$
85,305
Other Services:
Revenues
$
7,370
$
8,604
$
9,679
Cost of services
6,271
9,001
10,976
Gross profit (loss)
1,099
(397
)
(1,297
)
Depreciation and amortization
631
1,319
873
Operating income (loss)
468
(1,716
)
(2,170
)
Adjusted gross profit (loss)
$
1,099
$
(397
)
$
(1,297
)
(1) Average hydraulic frac fleet utilization is calculated using
fully-utilized fleets divided by deployed fleets.
(2) For the second quarter of 2019, average annualized revenue
per fleet deployed and average annualized adjusted gross profit per
fleet deployed was calculated using the equivalent of 22.0
fully-utilized hydraulic fracturing fleets. For the first quarter
of 2019, average annualized revenue per fleet deployed and average
annualized adjusted gross profit per fleet deployed was calculated
using the equivalent of 21.0 fully-utilized hydraulic fracturing
fleets.
KEANE GROUP, INC. AND
SUBSIDIARIES ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA
(unaudited, amounts in thousands, except for non-financial
statistics)
Six Months Ended June
30,
2019
2018
Completion Services:
Revenues
$
832,338
$
1,077,380
Cost of services
644,903
835,748
Gross profit
187,435
241,632
Depreciation and amortization
132,419
109,798
Operating income
$
54,824
$
129,959
Average hydraulic fracturing fleets
deployed
23.0
26.1
Average hydraulic fracturing fleet
utilization(1)
94
%
100
%
Wireline - fracturing fleet integration
percentages
78
%
75
%
Average annualized revenue per fleet
deployed(2)
$
76,997
$
82,558
Average annualized adjusted gross profit
per fleet deployed(2)
$
17,339
$
18,516
Adjusted gross profit
$
187,435
$
241,632
Other Services:
Revenues
$
17,049
$
14,169
Cost of services
17,246
15,345
Gross loss
(198
)
(1,176
)
Depreciation, amortization and
administrative expenses, and impairment
1,504
2,717
Operating loss
(1,702
)
(3,893
)
Adjusted gross loss
$
(198
)
$
(1,176
)
(1) Average hydraulic frac fleet utilization is calculated using
fully-utilized fleets divided by deployed fleets.
(2) For the six months ended June 30, 2019, average annualized
revenue per fleet deployed and average annualized adjusted gross
profit per fleet deployed was calculated using the equivalent of
21.6 fully-utilized hydraulic fracturing fleets.
KEANE GROUP, INC. AND
SUBSIDIARIES NON-U.S. GAAP FINANCIAL MEASURES (unaudited, in
thousands)
Three Months Ended June 30,
2019
Completion Services
Other Services
Corporate and Other
Total
Net Income (loss)
$
36,856
$
468
$
(42,305
)
$
(4,981
)
Interest expense, net
—
—
5,477
5,477
Income tax expense
—
—
564
564
Depreciation and amortization
65,672
631
3,583
69,886
EBITDA
$
102,528
$
1,099
$
(32,681
)
$
70,946
Plus Management Adjustments:
Acquisition, integration and
expansion(1)
—
—
6,108
6,108
Non-cash stock compensation (2)
—
—
5,637
5,637
Other
—
—
(326
)
(326
)
Adjusted EBITDA
$
102,528
$
1,099
$
(21,262
)
$
82,364
Selling, general and administrative
—
—
32,571
32,571
(Gain) loss on disposal of assets
(398
)
—
68
(330
)
Other expense
—
—
43
43
Less Management Adjustments not associated
with cost of services
—
—
(11,419
)
(11,419
)
Adjusted gross profit
$
102,130
$
1,099
$
—
$
103,229
(1) Represents transaction costs related to the Merger with
C&J Energy Services.
(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.
KEANE GROUP, INC. AND
SUBSIDIARIES NON-U.S. GAAP FINANCIAL MEASURES (unaudited, in
thousands)
Three Months Ended March 31,
2019
Completion Services
Other Services
Corporate and Other
Total
Net Income (loss)
$
17,967
$
(2,170
)
$
(37,603
)
$
(21,806
)
Interest expense, net
—
—
5,395
5,395
Income tax benefit
—
—
974
974
Depreciation and amortization
66,747
873
3,856
71,476
EBITDA
$
84,714
$
(1,297
)
$
(27,378
)
$
56,039
Plus Management Adjustments:
Non-cash stock compensation (1)
—
—
3,973
3,973
Other (2)
—
—
4,120
4,120
Adjusted EBITDA
$
84,714
$
(1,297
)
$
(19,285
)
$
64,132
Selling, general and administrative
—
—
27,936
27,936
(Gain) loss on disposal of assets
591
—
(110
)
481
Other income
—
—
(448
)
(448
)
Less Management Adjustments not associated
with cost of services
—
—
(8,093
)
(8,093
)
Adjusted gross profit (loss)
$
85,305
$
(1,297
)
$
—
$
84,008
(1) 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.
(2) Represents legal contingencies, which is 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 expense
—
—
(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
Others (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 (gain) loss on disposal of
assets.
(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 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)
Six Months Ended June 30,
2019
Completion Services
Other Services
Corporate and Other
Total
Net Income (loss)
$
54,823
$
(1,702
)
$
(79,908
)
$
(26,787
)
Interest expense, net
—
—
10,872
10,872
Income tax expense
—
—
1,538
1,538
Depreciation and amortization
132,419
1,504
7,439
141,362
EBITDA
$
187,242
$
(198
)
$
(60,059
)
$
126,985
Plus Management Adjustments:
Acquisition, integration and expansion
(1)
—
—
6,108
6,108
Non-cash stock compensation (2)
—
—
9,610
9,610
Others (3)
—
—
3,794
3,794
Adjusted EBITDA
$
187,242
$
(198
)
$
(40,547
)
$
146,497
Selling, general and administrative
—
—
60,507
60,507
(Gain) loss on disposal of assets
193
—
(42
)
151
Other income
—
—
(405
)
(405
)
Less Management Adjustments not associated
with cost of services
—
—
(19,513
)
(19,513
)
Adjusted gross profit (loss)
$
187,435
$
(198
)
$
—
$
187,237
(1) Represents transaction costs related to the Merger with
C&J Energy Services.
(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 legal contingencies, which is recorded in
selling, general and administrative expenses.
KEANE GROUP, INC. AND
SUBSIDIARIES NON-U.S. GAAP FINANCIAL MEASURES (unaudited, in
thousands)
Six Months Ended June 30,
2018
Completion Services
Other Services
Corporate and Other
Total
Net Income (loss)
$
129,959
$
(3,893
)
$
(103,642
)
$
22,424
Interest expense, net
—
—
21,307
21,307
Income tax expense
—
—
2,232
2,232
Depreciation and amortization
109,798
2,717
6,940
119,455
EBITDA
$
239,757
$
(1,176
)
$
(73,163
)
$
165,418
Plus Management Adjustments:
Acquisition, integration and expansion
(1)
—
—
16,081
16,081
Offering-related expenses (2)
—
—
12,969
12,969
Non-cash stock compensation (3)
—
—
7,113
7,113
Others (4)
—
—
989
989
Adjusted EBITDA
$
239,757
$
(1,176
)
$
(36,011
)
$
202,570
Selling, general and administrative
—
—
58,009
58,009
Loss on disposal of assets
1,875
—
2,181
4,056
Other income
—
—
12,973
12,973
Less Management Adjustments not associated
with cost of services
—
—
(37,152
)
(37,152
)
Adjusted gross profit (loss)
$
241,632
$
(1,176
)
$
—
$
240,456
(1) Represents adjustment to the Contingent Value Right (CVR)
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 during the acquisition of the Acquired Trican Operations,
which was recorded in (gain) loss on disposal of assets.
(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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190729005709/en/
Investor Relations (713) 893-3602 Marc Silverberg, ICR
marc.silverberg@icrinc.com
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