8-K: ProPetro Announces Fourth Quarter and Full Year 2024 Results, Highlights PROPWR Growth

ProPetro reports a net loss for 2024 but highlights strong free cash flow and the launch of its new power generation business, PROPWR.

Summary

• ProPetro Holding Corp. announced its financial results for the fourth quarter and full year of 2024.
• Full year revenue was $1.4 billion, an 11% decrease from 2023.
• The company reported a net loss of $138 million for the year, compared to a net income of $86 million in 2023.
• Adjusted EBITDA was $283 million, a 30% decrease from the previous year.
• ProPetro launched PROPWR, a new power generation business, with 140 megawatts of ordered capacity.
• The company completed the acquisition of Aqua Prop, LLC.
• ProPetro repurchased and retired 7.2 million shares during 2024, totaling 13.0 million shares since May 2023.
• Capital expenditures were reduced to $133 million, a 57% decrease from 2023.
• Free cash flow adjusted for acquisition consideration was $118 million.
• Four FORCE electric-powered hydraulic fracturing fleets are operating under contract, with a fifth expected in 2025.
• Fourth quarter revenue was $321 million, compared to $361 million in the prior quarter.
• The net loss for the fourth quarter was $17 million, or $0.17 per diluted share.
• Adjusted EBITDA for the fourth quarter was $53 million, compared to $71 million in the prior quarter.
• The company divested its Vernal, Utah, cementing operations on November 1, 2024.
• The company expects to run between 14 and 15 frac fleets in the first quarter of 2025.
• Full-year 2025 capital expenditures are anticipated to be between $300 million and $400 million.

Sentiment

Score: 6

Explanation: The sentiment is mixed. While the company highlights strong free cash flow and new ventures like PROPWR, the overall financial results show a net loss and decreased revenue compared to the previous year. The forward-looking statements are optimistic, but the current performance tempers the positive outlook.

Positives

• ProPetro generated strong free cash flow, with $118 million adjusted for acquisition consideration.
• The company reduced capital expenditures by 57% compared to 2023.
• ProPetro repurchased and retired 7.2 million shares during 2024, returning capital to shareholders.
• The company launched PROPWR, a new power generation business, opening a new avenue for growth.
• The company's FORCE electric and Tier IV DGB Dual-fuel fleets now represent approximately 75% of its hydraulic fracturing capacity.
• The company improved its working capital position year-over-year.
• The company divested its Vernal, Utah, cementing operations to focus on the Permian Basin.

Negatives

• ProPetro reported a net loss of $138 million for the full year 2024, compared to a net income of $86 million in 2023.
• Revenue decreased by 11% compared to 2023.
• Adjusted EBITDA decreased by 30% compared to 2023.
• The fourth quarter was impacted by typical seasonality and extended customer holiday shutdowns.
• The net loss for the fourth quarter included a noncash impairment expense of $24 million related to full impairment of the goodwill in the wireline reporting unit.

Risks

• The company faces risks associated with the volatility of oil prices.
• There are risks associated with the establishment of a new service line, including delays, lack of customer acceptance, and cost overruns related to PROPWR.
• The company is subject to global macroeconomic uncertainty related to the conflict in the Middle East region and the Russia-Ukraine war.
• General economic conditions, including the impact of continued inflation and central bank policy actions, pose a risk.
• Changes in U.S. trade policy, including proposed tariffs, could impact the company.
• A ProPetro employee tragically lost their life, and another was seriously injured at a job site.

Future Outlook

ProPetro anticipates full-year 2025 capital expenditures to be between $300 million and $400 million, with $150 million to $200 million allocated for growth capital expenditures in the PROPWR business. The company expects to run between 14 and 15 frac fleets in the first quarter of 2025. The company is excited about the opportunities in front of them and enter 2025 with great momentum, a strong foundation, and a clear vision for the future.

Management Comments

• Sam Sledge, Chief Executive Officer, commented, 'Thanks to the hard work and dedication of the ProPetro team, our fourth-quarter and fiscal year results reflect the merits of our strategy and the resilience of our business model.'
• Sam Sledge stated that the company's strategy continues to yield results and demonstrates how their industrialized approach to the oilfield services business is both sustainable and profitable through-cycle.
• David Schorlemer, Chief Financial Officer, said, 'Despite the expected seasonal slowdown in the fourth quarter, the Company continued to demonstrate strong financial performance, maintaining free cash flow generation and a healthy balance sheet.'

Industry Context

ProPetro is positioning itself as a leader in the North American onshore oilfield services market, particularly in the Permian Basin, by focusing on quality service, strong customer relationships, and best-in-class equipment. The company is also expanding into the power generation market with PROPWR, aiming to capitalize on the increasing demand for reliable, low-emission power solutions.

Comparison to Industry Standards

• ProPetro is transforming to an industrialized model, which the company believes deserves a valuation rerate.
• The company is focused on cash flow generation (FCFPS) and has improved capital discipline and industry consolidation.
• ProPetro is differentiating its fleet with dual-fuel and electric technology, aiming for lower capital intensity and higher operating efficiency.
• The company is expanding into power generation with PROPWR, targeting the growing demand in the oil field, industrial, and data center sectors.
• ProPetro is valued at a discount relative to other energy service companies, according to Bloomberg valuation metrics as of February 14, 2025.

Stakeholder Impact

• Shareholders: The share repurchase program aims to return capital to shareholders and increase long-term value.
• Employees: The company acknowledges the hard work and dedication of its employees, but also notes a recent tragic safety incident.
• Customers: The company aims to provide high-quality service and support to major E&P producers in the Permian Basin.
• Suppliers: The company is placing orders for power generation equipment, creating opportunities for suppliers.
• Creditors: The company maintains a healthy balance sheet and liquidity profile, ensuring its ability to meet its obligations.

Next Steps

• ProPetro will continue to scale PROPWR, leveraging a combination of cash on hand and targeted financing structures.
• The company will continue to execute on its strategy, grow its FORCE fleet presence, and maintain a disciplined approach to capital allocation.
• The company plans to place further orders for additional power generation capacity in the coming weeks and months as it finalizes customer contracts and assesses future demand from its customers.
• The company expects to deploy a fifth FORCE fleet in 2025 under a similar structure.

Key Dates