NexTier Announces First Quarter 2020 Financial and Operational Results
HOUSTON, May 5, 2020 /PRNewswire/ -- NexTier Oilfield Solutions Inc. (NYSE: NEX) ("NexTier" or the "Company") today reported first quarter 2020 financial and operational results.
On October 31, 2019, NexTier completed its previously announced merger between Keane Group Inc. ("Keane") and C&J Energy Services, Inc. ("C&J"), and concurrent with closing, Keane, as the parent company, was renamed NexTier Oilfield Solutions Inc. Given the merger close date of October 31, 2019, GAAP financial results for the fourth quarter of 2019 include the full quarterly results of legacy Keane, and legacy C&J results from November 1, 2019 through December 31, 2019. Pro forma financial results((1)) for the fourth quarter of 2019 include the full quarterly results of both Keane and C&J giving effect to the merger as if it had closed on January 1, 2019.
First Quarter 2020 Results and Recent Highlights
-- Reported GAAP revenue of $627.6 million in the first quarter of 2020,
compared to $528.2 million of GAAP revenue and pro forma revenue of
$648.4 million in the fourth quarter of 2019
-- Reported GAAP net loss of $71.8 million in the first quarter of 2020,
compared to GAAP net loss of $82.9 million and pro forma net loss of
$106.6 million in the fourth quarter of 2019
-- Achieved Adjusted EBITDA((2)) of $72.0 million in the first quarter of
2020, compared to pro forma Adjusted EBITDA of $77.6 million in the
fourth quarter of 2019
-- Averaged 27 fully-utilized fracturing fleets in the first quarter of
2020, compared to 25 average pro forma fully-utilized fracturing fleets
in the fourth quarter of 2019
-- Generated Completion Services segment Adjusted Gross Profit of $97.9
million in the first quarter of 2020, compared to Adjusted Gross Profit
of $105.1 million in the fourth quarter of 2019
-- Reported revenue of $460.4 million in the first quarter of 2020 when
considering only fracturing and bundled wireline, as compared revenue of
$403.8 and to pro forma revenue of $449.7 million in the fourth quarter
of 2019
-- Achieved Adjusted Gross Profit((2)), when taking only fracturing and
bundled wireline into account, of $90.7 million in the first quarter of
2020, compared to pro forma Adjusted Gross Profit of $97.7 million in
the fourth quarter of 2019
-- Generated annualized Adjusted gross profit per fully-utilized fracturing
fleet((2)), when only taking fracturing and bundled wireline into
account, of $13.4 million in the first quarter of 2020, compared to pro
forma annualized adjusted gross profit per fully-utilized fracturing
fleet of $15.6 million in the fourth quarter of 2019
-- Nearing completion on integration program related to the merger between
Keane and C&J, and recently achieved targeted annualized run rate cost
synergies of $125 million
-- Exited the first quarter of 2020 with total liquidity of $590.8 million
and no term loan maturities through 2025
-- Divested our Well Support Services segment on March 9, 2020 to Basic
Energy Services for $93.7 million in total consideration, before
transaction costs, escrowed amounts and subject to customary working
capital adjustments
Management Commentary
"Market conditions during much of the first quarter of 2020 were as expected, as customers increased completions activity to start the year and budget exhaustion and seasonal headwinds abated, said Robert Drummond, President and Chief Executive officer of NexTier. "The environment dramatically deteriorated in the final weeks of March, driven by sudden and unexpected supply and demand shocks. We acted decisively to preserve cash and protect the balance sheet in response, idling a portion of our previously active completions fleet, and sizing our operations and cost structure to align with market demand, while positioning ourselves to act quickly and expand when activity rebounds. I am proud to lead a proven team who has banded together in the face of unprecedented challenges to uphold our safety and service commitment to customers."
"We delivered strong first quarter results, including sequentially higher frac utilization and stable Adjusted EBITDA margins, while exiting the quarter with total liquidity of $590.8 million," said Kenny Pucheu, Chief Financial Officer of NexTier. "We completed the divestiture of our Well Support Services business in early March 2020 in a transaction that streamlined our operations, unlocked further cost reductions, and accelerated approximately five years of free cash flow onto our balance sheet. We are nearing completion on our integration efforts associated with the merger between Keane and C&J, and recently achieved our targeted run-rate cost synergies of $125 million."
"While the duration and magnitude of the oil demand shock remains uncertain, I am confident in NexTier's lasting power, supported by our fortified balance sheet and playbook to navigate the challenging road ahead," continued Mr. Drummond. "NexTier is differentiated with several unique levers including our high-quality partners, leading safety and service quality, attractive gas basin exposure and international outlet. We have a proven management system, and we are proud of our track-record of meeting financial and operating commitments to investors, forging lasting partnerships, maintaining disciplined capital position, leading consolidation and achieving world-class integration. We are determined to emerge from this downturn even stronger and better prepared to meet customer demand and deliver long-term value to stakeholders."
"We honor and support the countless people across the globe that continue to be impacted by the COVID-19 pandemic, and we remain vigilant in protecting the health and well-being of our employees, partners, and the communities in which we operate. The impact on NexTier employees has been significant. We appreciate the patience, understanding and commitment exhibited by our current and separated colleagues," concluded Mr. Drummond.
First Quarter 2020 Financial Results
GAAP revenue totaled $627.6 million in the first quarter of 2020, compared to GAAP revenue of $528.2 million and pro forma revenue of $648.4 million in the fourth quarter of 2019.
GAAP net loss totaled $71.8 million, or $0.34 per diluted share, in the first quarter of 2020, compared to GAAP net loss of $82.9 million, or $0.47 per diluted share and pro forma net loss of $106.6 million, or $0.50 per diluted share, in the fourth quarter of 2019. Adjusted net loss((2)) totaled $20.1 million, or $0.09 per diluted share, in the first quarter of 2020, compared to pro forma Adjusted net loss of $19.1 million, or $0.09 per diluted share, in the fourth quarter of 2019.
GAAP selling, general and administrative expense ("SG&A") totaled $56.9 million in the first quarter of 2020, compared to GAAP SG&A((2)) of $42.7 million and pro forma SG&A of $70.1 million in the fourth quarter of 2019. Adjusted SG&A totaled $47.9 million in the first quarter of 2020, compared to pro forma Adjusted SG&A of $54.2 million in the fourth quarter of 2019.
Adjusted EBITDA totaled $72.0 million in the first quarter of 2020, compared to pro forma Adjusted EBITDA of $77.6 million in the fourth quarter of 2019.
First Quarter 2020 Management Adjustments
Adjusted EBITDA in the first quarter of 2020 includes management adjustments of approximately $51.6 million, consisting primarily of $34.3 million for impairment of assets including goodwill, $8.6 million of market adjustments, $5.5 million of non-cash stock compensation expense, and $12.8 million of merger and integration costs, partially offset by a gain from the sale of the Well Support Services business of $8.0 million.
During the first quarter of 2020, energy equity markets deteriorated and negatively impacted our market capitalization, driven by significant declines in crude oil prices resulting from demand destruction from the COVID-19 pandemic and global oversupply. These factors were deemed triggering events which led to a test for goodwill impairment and prompted us to record a non-cash impairment charge of $32.6 million within our Completions Services and Well Construction and Intervention reporting units.
Completion Services
GAAP revenue in our Completion Services segment totaled $512.9 million in the first quarter of 2020, compared to GAAP revenue of $440.3 million and pro forma revenue of $509.8 million for this segment in the fourth quarter of 2019. Increased utilization was offset by reduced prices in the first quarter of 2020, resulting in mostly unchanged revenue as compared to the fourth quarter of 2019. Adjusted Gross Profit totaled $97.9 million in the first quarter of 2020, compared to Adjusted Gross Profit of $105.1 million and pro forma Adjusted Gross Profit of $105.6 million in the fourth quarter of 2019. Net loss totaled $13.1 million in the first quarter of 2020, compared to pro forma net loss of $21.5 million in the fourth quarter of 2019.
The Company had an average of 27 fully-utilized fracturing fleets in the first quarter of 2020. When taking only fracturing and bundled wireline into account, annualized Adjusted Gross Profit per fully-utilized fracturing fleet totaled $13.4 million in the first quarter of 2020, compared to annualized pro forma Adjusted Gross Profit per fully-utilized fracturing fleet of $15.6 million in the fourth quarter of 2019.
Well Construction and Intervention Services
GAAP revenue in our Well Construction and Intervention ("WC&I") Services segment, totaled $56.8 million in the first quarter of 2020, compared to GAAP revenue of $39.4 million and pro forma revenue of $57.7 million in the fourth quarter of 2019. Adjusted Gross Profit totaled $8.8 million in the first quarter of 2020, compared to Adjusted Gross Profit of $6.8 million and pro forma Adjusted Gross Profit of $9.1 million in the fourth quarter of 2019. Net income totaled $3.0 million in the first quarter of 2020, compared to pro forma net income of $0.3 million in the fourth quarter of 2019.
Well Support Services
On March 9, 2020, the Company announced it had completed the divestiture of its Well Support Services segment. As a result, results for the first quarter of 2020 for this segment reflect operations from January 1, 2020 through the date of sale. Subsequent to this divestiture, the Company's reportable segments are (i) Completion Services and (ii) Well Construction and Intervention Services.
GAAP revenue in our Well Support Services segment totaled $57.9 million in the first quarter of 2020, compared to $48.6 million of GAAP revenue and $80.9 million of pro forma revenue in the fourth quarter of 2019. Adjusted Gross Profit totaled $12.3 million in the first quarter of 2020, compared to Adjusted Gross Profit of $8.0 million and pro forma Adjusted Gross Profit of $14.9 million in the fourth quarter of 2019. The sequential decrease in revenue was primarily driven by the divestiture of the Well Support Services business in early March 2020. Net income totaled $10.9 million in the first quarter of 2020, compared to pro forma net income of $5.3 million in the fourth quarter of 2019.
Balance Sheet and Capital
Total debt outstanding as of March 31, 2020 totaled $512.1 million, net of debt discounts and deferred finance costs and excluding lease obligations. As of March 31, 2020, total available liquidity was $590.8 million, comprised of cash and equivalents of $489.4 million, including asset-based credit facility borrowings of $175.0 million, and $101.4 million of available borrowing capacity under our asset-based credit facility.
Total operating cash flow was $48.5 million and cash flow used in investing activities was $39.3 million, resulting in free cash flow of $9.2 million in the first quarter of 2020. Excluding cash used for merger and integration related costs of $14.7 million, combined Adjusted free cash flow((2)) totaled $24.0 million in the first quarter of 2020.
On March 9, 2020, we divested our Well Support Services segment to Basic Energy Services for approximately $93.7 million in total consideration that included $59.35 million in cash consideration before transaction costs, escrowed amounts, and subject to customary working capital adjustments.
On March 23, 2020, NexTier reduced and refined its 2020 total capital expenditures guidance, which it now expects to total between $100 million and $120 million, subject to market conditions. Capital expenditures in 2020 will be driven by strategic innovation investments and maintenance capital expenditures, and reflects a reduction of more than 50% at the midpoint versus the Company's previous outlook of $210 million. The Company continues to expect its 2020 capital expenditures to be weighted to the first half of 2020, driven by the delivery of certain strategic innovation investments, with second half of 2020 spending mainly driven by maintenance.
Integration Update
The Company is nearing completion of its integration program related to the merger between Keane and C&J, including the achievement of its targeted run-rate cost synergies of $125 million. Following the successful completion of its integration program, Greg Powell, Executive Vice President and Chief Integration Officer, announced his intention to resign from NexTier later this month.
Coronavirus Monitoring and Planning
The Company is monitoring the spread and impact of the coronavirus closely, and is implementing measures in accordance with local directives, as well as internal policies, to protect employees and limit business interruption. These measures include restriction on travel and employee contact in certain regions, employee education, enhanced customer and supplier communication, alternative sourcing, and other measures. The Company is also preparing mitigation plans for further or prolonged impact from the coronavirus.
Conference Call Information
On May 6, 2020, NexTier will hold a conference call for investors at 7:30 a.m. Central Time (8:30 a.m. Eastern Time) to discuss first quarter 2020 financial and operating results. Hosting the call will be management of NexTier, including Robert Drummond, President and Chief Executive Officer and Kenny Pucheu, Senior Vice President and Chief Financial Officer. The call can be accessed via a live webcast accessible on our website at www.nextierofs.com or live over the telephone by dialing (855) 560-2574, or for international callers, (412) 542-4160. A replay will be available shortly after the call and can be accessed by dialing (877) 344-7529, or for international callers, (412) 317-0088. The passcode for the replay is 10141927. The replay will be available until May 13, 2020. An archive of the webcast will be available shortly after the call on our website at www.nextierofs.com for twelve months following the call.
About NexTier Oilfield Solutions
Headquartered in Houston, Texas, NexTier is an industry-leading U.S. land oilfield service company, with a diverse set of well completion and production services across the most active and demanding basins. Our integrated solutions approach delivers efficiency today, and our ongoing commitment to innovation helps our customers better address what is coming next. NexTier is differentiated through four points of distinction, including safety performance, efficiency, partnership and innovation. At NexTier, we believe in living our core values from the basin to the boardroom, and helping customers win by safely unlocking affordable, reliable and plentiful sources of energy.
Pro forma information and Non-GAAP Financial Measures
(1) Pro forma information before management
adjustments was determined in accordance with
Article 11 of Regulation S-X and is
presented to enhance comparability to the
prior quarter pre-merger operating results
by adjusting for the merger of Keane and C&J.
(2) The Company has included in this press release
certain non-GAAP financial measures, some of
which are calculated on a consolidated basis,
segment basis, product line basis, combined
basis or pro forma basis, including Adjusted
EBITDA, Adjusted Gross Profit, Adjusted Net
Income (loss), free cash flow, Adjusted free
cash flow, Adjusted SG&A and annualized
adjusted gross profit per fully-utilized
fracturing fleet. These measurements provide
supplemental information which the Company
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 the
Company's ongoing operating performance, and
thereby facilitate review of the Company's
operating performance on a period-to-period
basis. Other companies may have different
capital structures, and comparability to the
Company'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, the Company believes Adjusted
EBITDA, Adjusted Gross Profit, Adjusted SG&A
and Adjusted Net Income provide helpful
information to analysts and investors to
facilitate a comparison of its operating
performance to that of other companies. The
Company believes free cash flow and Adjusted
free cash flow is important to investors in
that it provides a useful measure to assess
management's effectiveness in the areas of
profitability and capital management.
Annualized Gross Profit per fully-utilized
fracturing fleet is used to evaluate the
operating performance of the business line
for comparable periods, and the Company
believes it is important as an indicator of
operating performance of our fracturing and
bundled wireline product line because it
excludes the effects of the capital structure
and certain non-cash items from the product
line's operating results. For a
reconciliation of these non-GAAP measures,
please see the tables at the end of this
press release.
(3) Non-GAAP Measure Definitions: 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 revenue
less cost of services, further adjusted to
eliminate items in cost of services that
management does not consider in assessing
ongoing performance. Adjusted Gross Profit at
the segment level is not considered to be a
non-GAAP financial measure as it is our
segment measure of profit or loss and is
required to be disclosed under GAAP pursuant
to ASC 280. Adjusted Net Income (Loss) is
defined as net income (loss) plus the after-
tax amount of merger/transaction-related
costs and other non-routine items. Adjusted
SG&A is defined as selling, general and
administrative expenses adjusted for
severance and business divestiture costs,
merger/transaction-related costs, and other
non-routine items. Free cash flow is defined
as the net increase (decrease) in cash and
cash equivalents before financing activities,
including share repurchase activity. Adjusted
free cash flow adjusts free cash flow for
certain management adjustments. Annualized
Adjusted Gross Profit per fully-utilized
fleet, is a non-GAAP measure and is defined
as (i) revenue less cost of services
attributable to the fracturing and bundled
wireline product line, further adjusted to
eliminate items in cost of services that
management does not consider in assessing
ongoing performance for the fracturing and
bundled wireline product line, (ii) divided
by the fully-utilized fracturing and bundled
wireline fleets (average deployed fleets
multiplied by fleet utilization) per quarter,
and then (iii) multiplied by four.
Forward-Looking Statements
This press release 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 the Company's control. Statements in this press release regarding the Company that are forward-looking, including projections as to the amount and timing of synergies from C&J merger and the Company's 2020 guidance and outlook information, are based on management's estimates, assumptions and projections, and are subject to significant uncertainties and other factors, many of which are beyond the Company's control. These factors and risks include, but are not limited to, (i) the competitive nature of the industry in which the Company conducts its 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 the Company serves; (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 the Company'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) the Company's ability to employ a sufficient number of skilled and qualified workers to combat the operating hazards inherent in the Company's industry; (xiii) fluctuations in the market price of the Company's stock; (xiv) the level of, and obligations associated with, the Company's indebtedness; (xv) the duration, impact and severity of the COVID-19 pandemic and the evolving response thereto, including the impact of social distancing, shelter-in-place, shutdowns of non-essential businesses and similar measures imposed or undertaken by governments, private businesses or others; and (xvi) 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 into the Company and the ability to achieve the anticipated synergies and value-creation contemplated in connection with the merger. For a more detailed discussion of such risks and other factors, see the Company's filings with the Securities and Exchange Commission (the "SEC"), including under the heading "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in the Current Report on Form 8-K dated May 5, 2019, both available on the SEC website or www.NexTierOFS.com. The Company assumes 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 hereof, 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.
Unaudited Pro Forma Financial Information
On October 31, 2019, Keane and C&J completed their business combination and concurrent with closing, Keane, as the parent company, was renamed NexTier. Keane was determined to be the accounting acquirer in the merger, and as a result, the historical financial statements of Keane, prepared under U.S. generally accepted accounting principles ("GAAP"), for the periods prior to the merger are considered to be the historical financial statements of NexTier.
In order to provide the most meaningful comparison of results of operations and results by segment, supplemental unaudited pro forma financial information has been included in the following financial schedules. The unaudited pro forma financial information is based on the historical consolidated financial statements and accompanying notes of both Keane and C&J and has been prepared to illustrate the effects of the merger, assuming the merger had been consummated on January 1, 2019. For all periods presented, adjustments have been made for (1) the preliminary acquisition accounting impact, (2) accounting policy alignment, and (3) the elimination of the impact from events that are directly attributable to the Agreement and Plan of Merger (e.g., non-routine merger and integration costs). The unaudited pro forma financial information was based on and should be read in conjunction with the separate historical financial statements and accompanying notes contained in each of the Keane and C&J Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K for the applicable periods. The pro forma financial statements were prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma financial information has been presented for informational purposes only and is not necessarily indicative of what NexTier's results of operations actually would have been had the merger been completed on January 1, 2019, nor is it indicative of the future operating results of NexTier. The unaudited pro forma financial information does not reflect any cost or growth synergies that NexTier may achieve as a result of the merger, future costs to combine the operations of Keane and C&J or the costs necessary to achieve any cost or growth synergies.
Investor Contact:
Kenneth Pucheu
Senior Vice President - Chief Financial Officer
(713) 325-6000
investors@nextierofs.com
Marc Silverberg
Managing Director (ICR)
marc.silverberg@icrinc.com
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)
(unaudited, amounts in thousands, except per share data)
Three Months Ended Three Months Ended
March 31, 2020 December 31, 2019
---
Revenue $
627,625 $
528,216
Operating costs and expenses:
Cost of services 512,226 408,345
Depreciation and
amortization 85,821 82,080
Selling, general and
administrative expenses 56,884 42,698
Merger and integration 12,182 55,972
(Gain) loss on disposal of
assets (7,962) 3,640
Impairment 34,327 12,346
Total operating costs and
expenses 693,478 605,081
Operating income (65,853) (76,865)
Other income (expenses):
Other income (expense), net 416 (7)
Interest expense (6,066) (5,769)
Total other income (expense) (5,650) (5,776)
Loss before income taxes (71,503) (82,641)
Income tax benefit (expense) (253) (287)
Net loss (71,756) (82,928)
Other comprehensive income (loss):
Foreign currency translation
adjustments 1,107 (87)
Hedging activities (2,620) 1,036
Total comprehensive loss $
(73,269) $
(81,979)
Net loss per share: basic $
(0.34) $
(0.47)
Net loss per share: diluted $
(0.34) $
(0.47)
Weighted-average shares:
basic 212,842 177,149
Weighted-average shares:
diluted 212,842 177,149
Note: The condensed consolidated
statements of operations &
comprehensive income (loss) for the
three month periods ended December
31, 2019 reflect the results of
legacy Keane for all periods
presented and the results of legacy
C&J for the period beginning on and
after November 1, 2019.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
March 31, December 31,
2020 2019
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $
489,422 $
255,015
Trade and other accounts receivable, net 341,739 350,765
Inventories, net 50,955 61,641
Assets held for sale 141
Prepaid and other current assets 47,571 20,492
Total current assets 929,687 688,054
Operating lease right-of-use assets 48,477 54,503
Finance lease right-of-use assets 6,953 9,511
Property and equipment, net 635,279 709,404
Goodwill 104,198 137,458
Intangible assets 54,801 55,021
Other noncurrent assets 7,464 10,956
Total assets $
1,786,859 $
1,664,907
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $
166,697 $
115,251
Accrued expenses 209,799 234,895
Customer contract liabilities 3,000 60
Current maturities of operating lease liabilities 20,214 23,473
Current maturities of finance lease liabilities 3,104 4,594
Current maturities of long-term debt 177,302 2,311
Other current liabilities 2,730 5,610
Total current liabilities 582,846 386,194
Long-term operating lease liabilities, less current
maturities 31,642 35,123
Long-term finance lease liabilities, less current
maturities 4,057 4,844
Long-term debt, net less current maturities 334,804 335,312
Other non-current liabilities 15,803 16,662
Total non-current liabilities 386,306 391,941
Total liabilities 969,152 778,135
Shareholders' equity:
Common stock 2,133 2,124
Paid-in capital in excess of par value 972,482 966,762
Retained deficit (146,614) (73,333)
Accumulated other comprehensive loss (10,294) (8,781)
Total shareholders' equity 817,707 886,772
Total liabilities and shareholders' equity $
1,786,859 $
1,664,907
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(amounts in thousands)
Three Months Ended
December 31, 2019
Revenue $
648,434
Operating costs and expenses:
Cost of
services 518,893
Depreciation
and
amortization 89,794
Selling,
general
and
administrative
expenses 70,104
Merger and
integration 55,023
Loss on
disposal
of assets 2,335
Impairment 12,346
Total
operating
costs and
expenses 748,495
Operating
loss (100,061)
Other income (expenses):
Other
income,
net 347
Interest
expense (5,769)
Total other
expenses (5,422)
Loss before
income
taxes (105,483)
Income tax
benefit
(expense) (1,070)
Net loss $
(106,553)
Net loss
per share:
basic $
(0.50)
Net loss
per share:
diluted $
(0.50)
Weighted-
average
shares,
basic 211,909
Weighted-
average
shares,
diluted 211,909
Note: The pro forma condensed
consolidated statements of
operations for the three month
periods ended December 31,
2019, reflect the results of
operations of legacy Keane and
legacy C&J assuming the merger
had occurred on January 1,
2019. See full unaudited pro
forma condensed consolidated
statements of operations for
the three months ended December
31, 2019 below.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA
(unaudited, amounts in thousands)
Three Months Ended
March 31, 2020 December 31, 2019
---
Completion Services:
Revenue $
512,871 $
440,253
Cost of services 417,382 335,157
Depreciation,
amortization and
administrative
expenses, and
impairment 108,591 76,728
Net income (loss) (13,102) 28,367
Adjusted gross profit(1) $
97,876 $
105,096
Well Construction and Intervention
Services:
Revenue $
56,825 $
39,380
Cost of services 49,253 32,572
Depreciation,
amortization and
administrative
expenses, and
impairment 4,561 1,950
Net income 3,011 4,858
Adjusted gross profit(1) $
8,784 $
6,808
Well Support Services:
Revenue $
57,929 $
48,583
Cost of services 45,591 40,616
Depreciation,
amortization and
administrative
expenses, and
impairment 1,398 1,008
Net income 10,940 6,959
Adjusted gross profit(1) $
12,338 $
7,967
Note: The financial and
operating data for the
three months ended December
31, 2019, reflect the
results of legacy Keane for
all periods presented and
the results of legacy C&J
for the period beginning on
and after November 1, 2019.
(1) The Company uses
adjusted gross profit as
its measure of
profitability for segment
reporting.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
ADDITIONAL SELECTED UNAUDITED PRO FORMA FINANCIAL AND
OPERATING DATA
(amounts in thousands)
Three Months Ended
December 31, 2019
Completion Services:
Revenue $
509,845
Cost of
services 404,235
Depreciation,
amortization,
administrative
expenses,
and
impairment 127,086
Operating
income
(loss) (21,476)
Pro forma
adjusted
gross
profit(1) $
105,610
Well Construction and
Intervention Services:
Revenue $
57,650
Cost of
services 48,579
Depreciation,
amortization,
administrative
expenses,
and
impairment 8,750
Operating
income
(loss) 321
Pro forma
adjusted
gross
profit(1) $
9,071
Well Support Services:
Revenue $
80,939
Cost of
services 66,079
Depreciation,
amortization,
administrative
expenses,
and
impairment 9,540
Operating
income
(loss) 5,320
Pro forma
adjusted
gross
profit(1) $
14,860
Note: The pro forma
financial and operating
data reflect the results of
legacy Keane and legacy C&J
assuming the merger had
occurred on January 1,
2019.
(1) The Company uses
adjusted gross profit as
its measure of
profitability for segment
reporting.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA
(unaudited, amounts in thousands)
Three Months Ended March 31, 2020
Completion WC&I Well Support Corporate NexTier
Services Services and Other
---
Net income (loss) $
(13,102) $
3,011 $
10,940 $
(72,605) $
(71,756)
Interest expense, net - 6,066 6,066
Income tax benefit - 253 253
Depreciation and
amortization 75,540 4,273 1,527 4,481 85,821
EBITDA $
62,438 $
7,284 $
12,467 $
(61,805) $
20,384
Plus Management Adjustments:
Acquisition, integration
and expansion(1) 3,136 142 36 9,445 12,759
Non-cash stock
compensation(2) - 5,451 5,451
Impairment of assets 32,228 372 1,727 34,327
Market-driven severance 2,994 1,393 4,224 8,611
Gain on sale of business - (8,045) (8,045)
Other - (1,460) (1,460)
Adjusted EBITDA $
100,796 $
9,191 $
12,503 $
(50,463) $
72,027
Three Months Ended
March 31, 2020
Selling, general and administrative expenses $
56,884
Less Management Adjustments:
Non-cash stock compensation (5,451)
Market-driven severance (5,011)
Other 1,460
Adjusted selling, general and administrative $
47,882
(1) Represents transaction costs
related to the merger.
(2) Represents non-cash
amortization of equity awards
issued under the Company's
Incentive Award Plan.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
Three Months Ended December 31, 2019
Completion WC&I Well Support Corporate NexTier
Services Services and Other
---
Pro forma net income
(loss)
(1) $
(21,476) $
321 $
5,320 $
(90,718) $
(106,553)
Interest expense, net - 5,769 5,769
Income tax benefit - 1,070 1,070
Depreciation and
amortization 79,243 2,801 2,123 5,627 89,794
Pro forma EBITDA $
57,767 $
3,122 $
7,443 $
(78,252) $
(9,920)
Plus Management Adjustments:
Acquisition, integration
and expansion(2) 22,676 391 76 31,880 55,023
Non-cash stock
compensation(3) 363 25 626 4,632 5,646
Inventory adjustment 2,218 2,218
Facility closure 308 635 1,043 1,986
Litigation accrual - 3,000 3,000
Tax audit 7,000 7,000
Impairment of assets - 12,346 12,346
Restructuring costs and
other - 265 265
Pro forma Adjusted EBITDA
(1) $
83,332 $
7,173 $
9,188 $
(22,129) $
77,564
Three Months Ended
December 31, 2019
Pro forma selling, general and administrative expenses
(1) $
70,104
Less Management Adjustments:
Non-cash stock compensation(3) 5,615
Litigation accrual 3,000
Tax audit 7,000
Restructuring costs 265
Pro forma adjusted selling, general and administrative $
54,224
(1) The pro forma net income (loss),
pro forma Adjusted EBITDA and pro
forma selling, general and
administrative expenses, reflect
the results of operations of
legacy Keane and legacy C&J
assuming the merger had occurred
on January 1, 2019. Pro forma
Adjusted EBITDA is calculated
using NexTier management adjusted
methodology; historical C&J
amounts have been conformed
accordingly.
(2
) Represents transaction costs
related to the merger.
(3) Represents non-cash amortization
of equity awards issued under the
Company's Incentive Award Plan.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
Year Ended
December 31, 2019
Pro forma net loss
(1) $
(196,577)
Interest expense, net 21,856
Income tax expense 1,643
Depreciation and
amortization 369,276
Pro forma EBITDA 196,198
Plus Management Adjustments:
Acquisition, integration
and expansion 67,516
Non-cash stock
compensation 36,242
Impairment of assets 92,281
Severance and stock
compensation
acceleration 5,594
Facility Closures 3,554
Inventory Adjustments 4,666
Legal 6,600
Tax Audit 29,160
Other 4,527
Pro forma Adjusted EBITDA
(1)(2) $
446,338
(1) The pro forma net loss and pro
forma Adjusted EBITDA reflect the
results of operations of legacy
Keane and legacy C&J assuming the
merger had occurred on January 1,
2019.
(2) Pro forma Adjusted EBITDA is
calculated using NexTier
management adjustment
methodology; historical C&J
amounts have been conformed
accordingly.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
Three Months Ended March 31, 2020
Completion WC&I Well Support Total
Services Services
---
Revenue $
512,871 $
56,825 57,929 $
627,625
Cost of services 417,382 49,253 45,591 512,226
Gross profit
excluding
depreciation and
amortization 95,489 7,572 12,338 115,399
Management
adjustments
associated with
cost of services 2,387 1,212 3,599
Adjusted gross
profit $
97,876 $
8,784 $
12,338 $
118,998
Three Months Ended December 31, 2019
Completion WC&I Well Support Total
Services Services
---
Pro forma revenue
(1) $
509,845 $
57,650 $
80,939 $
648,434
Pro forma cost of
services (1) 404,235 48,579 66,079 518,893
Pro forma gross
profit excluding
depreciation and
amortization 105,610 9,071 14,860 129,541
Management
adjustments
associated with
cost of services -
Pro forma adjusted
gross profit $
105,610 $
9,071 $
14,860 $
129,541
(1) The pro forma revenue and
pro forma cost of services
reflects the results of
operations of legacy Keane
and legacy C&J assuming
the merger had occurred on
January 1, 2019.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(unaudited, amounts in thousands)
Three Months Ended
March 31, 2020
Frac & Bundled Wireline
Revenue $
460,372
Cost of services 369,702
Gross profit excluding
depreciation and
amortization 90,670
Management adjustments
associated with cost of
services
Adjusted gross profit $
90,670
Average hydraulic
fracturing fleets
deployed 29
Fully-utilized hydraulic
fracturing fleets 27
Annualized adjusted gross
profit per fully-
utilized fleet $
13,433
Three Months Ended
December 31, 2019
Frac & Bundled Wireline
Revenue $
403,862
Cost of services 304,670
Gross profit excluding
depreciation and
amortization 99,192
Management adjustments
associated with cost of
services
Adjusted gross profit $
99,192
Three Months Ended
December 31, 2019
Frac & Bundled Wireline
Pro forma revenue (1) $
449,707
Pro forma cost of services
(1) 351,968
Pro forma gross profit
excluding depreciation
and amortization 97,739
Management adjustments
associated with cost of
services
Pro forma adjusted gross
profit $
97,739
Average hydraulic
fracturing fleets
deployed 30
Fully-utilized hydraulic
fracturing fleets 25
Pro forma annualized
adjusted gross profit per
fully-utilized fleet $
15,638
(1) The pro forma revenue and
pro forma cost of services
reflects the results of
operations of legacy Keane
and legacy C&J assuming
the merger had occurred on
January 1, 2019.
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(unaudited, amounts in thousands)
Three Months
Ended
March 31, 2020
Net cash provided by operating activities $
48,487
Cash flows used in investing activities (1) 39,142
Combined free cash flow generation 9,345
Acquisition, integration and expansion 14,665
Market-driven severance 137
Adjusted combined free cash flow generation $
24,147
NexTier C&J Combined
Three Months Historical Three Months
Ended Month Ended Ended
---
December 31, October 31, December 31,
2019 2019 2019
---
Net cash
provided by
(used in)
operating
activities $
79,884 $
(32,285) $
47,599
Cash flows used
in investing
activities (2) (44,102) (9,660) (53,762)
Combined free
cash flow
generation
(usage) 35,782 (41,945) (6,163)
Acquisition,
integration
and expansion 54,993 5,979 60,972
Adjusted
combined free
cash flow
generation
(usage) $
90,775 $
(35,966) $
54,809
(1) Excludes the $53.3 million of proceeds from the WSS Sale.
(2) Excludes the $68.8 million of legacy C&J cash on hand as of the merger date.
March 31, 2020
Net loss $
(71,756)
Plus Management Adjustments:
Acquisition, integration and expansion 12,759
Non-cash stock compensation 5,451
Impairment of assets 34,327
Market-driven severance 8,611
Gain on sale of business (8,045)
Other (1,460)
Adjusted net loss $
(20,113)
Adjusted net loss per share, basic and diluted $
(0.09)
Weighted-average shares, basic and diluted 212,842
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
PRO FORMA NON-GAAP FINANCIAL MEASURES
(unaudited, amounts in thousands)
December 31, 2019
Pro
forma
net
loss $
(106,553)
Plus Management
Adjustments:
Acquisition,
integration
and
expansion 55,023
Non-
cash
stock
compensation 5,646
Severance
and
stock
compensation
acceleration -
Inventory
adjustment 2,218
Facility
closure 1,986
Litigation
accrual 3,000
Tax
audit 7,000
Impairment
of
assets 12,346
Other 265
Pro
forma
adjusted
net
income
(loss) $
(19,069)
Pro
forma
adjusted
net
income
(loss)
per
share,
basic
and
diluted $
(0.09)
Weighted-
average
shares,
basic
and
diluted 211,909
NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2019
(amounts in thousands, except per share amounts)
Adjustments
NexTier (1) Historical Reclass (3) Pro forma (4) Pro Forma
C&J (2)
Revenue $
528,216 $
120,218
$
$ $
648,434
Operating costs and expenses:
Cost of services 408,345 115,516 (4,968) 518,893
Depreciation and amortization 82,081 17,673 (9,960) 89,794
Selling, general and administrative
expenses 42,698 22,007 5,399 70,104
Merger and integration 55,972 30,978 (31,927) 55,023
Research and development 431 (431)
Impairment 12,346 12,346
(Gain) loss on disposal of assets 3,639 (1,304) 2,335
Total operating costs and expenses 605,081 185,301 (41,887) 748,495
Operating loss (76,865) (65,083) 41,887 (100,061)
Other income (expenses):
Other income, net (6) 353 347
Interest expense (5,769) (55) 55 (5,769)
Total other expenses (5,775) 298 55 (5,422)
Loss before income taxes (82,640) (64,785) 41,942 (105,483)
Income tax expense (287) (783) (1,070)
Net loss $
(82,927) $
(65,568)
$ $
41,942 $
(106,553)
Net loss per share:
Basic net loss per share $
(0.50)
Diluted net loss per share $
(0.50)
Weighted-average shares outstanding - basic 211,909
Weighted-average shares outstanding - diluted 211,909
(1) The condensed consolidated statements
of operations for the three months
ended December 31, 2019, reflects the
results of legacy Keane for the
period presented and the results of
legacy C&J for the period beginning
on and after November 1, 2019.
(2) Reflects legacy C&J activity for the
period from October 1, 2019 to
October 31, 2019.
(3) Certain reclassifications were made to
historical C&J to conform to NexTier
presentation.
(4) Certain pro forma adjustments were
made to illustrate the estimated
effects of the merger, assuming the
merger had been consummated on
January 1, 2019.
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SOURCE NexTier Oilfield Solutions
