HOUSTON, July 25,
2023 /PRNewswire/ -- NexTier Oilfield Solutions Inc.
(NYSE: NEX) ("NexTier" or the "Company") today reported second
quarter 2023 financial and operational results.
Shareholder return program
- Repurchased 2.3 million shares for $17.9
million in the second quarter of 2023
- Through Q2, repurchased a total of 19.7 million shares for
$184.2 million, representing 8% of
shares outstanding before the commencement of the program in
October 2022
Second Quarter 2023 Results and Recent
Highlights
- Total revenue of $945.1 million,
a 1% sequential increase
- Net income of $150.1 million, or
$0.64 per diluted share, compared to
$254.0 million, or $1.07 per diluted share in the prior quarter. Net
income for the second and first quarter was inclusive of a tax
valuation allowance release of $5.5
million and $107.4 million,
respectively
- Adjusted net income(1) of $157.5 million, or $0.68 per diluted share, compared to $156.4 million, or $0.66 per diluted share in the prior quarter
- Adjusted EBITDA(1) of $233.9
million, compared to $227.6
million in the prior quarter
- Net cash from operations of $226.0
million and free cash flow(1) of $127.5 million
- Exited second quarter of 2023 with total liquidity of
$721.5 million, including
$310.2 million of cash and undrawn
ABL; no term loan maturities until 2025
Management Commentary
"NexTier's second quarter results demonstrate the resilience of
our business model and the strength of our commercial and
operations teams. Quarterly revenue grew sequentially amid a
slowdown in activity industry-wide," commented Robert Drummond, President and Chief Executive
Officer of NexTier. "Our differentiated solutions and a higher
level of performance through our integrated platform allowed us to
maintain relatively consistent activity levels while helping
customers reduce costs at the wellsite. We believe the current
market slowdown is transitory, and by early 2024 we think demand
for our services will need to increase as higher drilling and
completion activity will be needed for US land production to help
fill growing global oil and natural gas demand."
Mr. Drummond concluded, "We are making progress on completing
our pending combination with Patterson-UTI, which we believe will
create a stronger, more diversified leader in US land oilfield
services that is well positioned to capitalize on the anticipated
market upswing. Together, we will have a strengthened financial
profile and expanded resources to continue to effectively allocate
capital and invest in next-generation technologies to advance
customers' sustainability objectives and reduce costs, while also
accelerating shareholder returns. We believe this transaction will
allow us to remain at the forefront and help keep the US shale oil
and gas industry positioned as a low-cost producer within the
global cost curve."
"We delivered another quarter of strong returns and free cash
flow growth, building on our considerable momentum since the
beginning of the recent industry recovery," said Kenny Pucheu, Executive Vice President and Chief
Financial Officer of NexTier. "Our free cash flow accelerated in
the second quarter even as we made the final earnout payment
associated with the Alamo
acquisition. We continue to prudently allocate capital to drive
shareholder returns and strengthen our balance sheet, and we expect
to exceed our goal of zero net debt by the end of the third
quarter. As we look into the future, we are confident that together
with Patterson-UTI, we can drive even more value creation for our
employees, customers and shareholders."
Second Quarter 2023 Financial Results
Revenue totaled $945.1 million in the second quarter of
2023, compared to $935.7 million
in the first quarter of 2023. The 1% sequential increase
in revenue was primarily driven by modestly higher pricing compared
to the first quarter as well as strong execution and continued
progress in our wellsite integration strategy, partially offset by
a lower deployed fleet count relative to the first quarter.
Net income totaled $150.1 million, or $0.64 per diluted share, in the second quarter of
2023, compared to net income of $254.0 million, or $1.07 per diluted share, in the first quarter of
2023. The Company recognized a $5.5
million and $107.4 million
non-cash tax benefit related to the partial release of a valuation
allowance on our deferred tax assets in the second quarter and
first quarter of 2023, respectively. This release reflects improved
market conditions and the Company's expectation to utilize these
deferred tax assets in the coming years. Adjusted net income
totaled $157.5 million, or
$0.68 per diluted share, in the
second quarter of 2023, compared to adjusted net income of
$156.4 million, or $0.66 per diluted share, in the first quarter of
2023.
Selling, general and administrative expenses ("SG&A") of
$39.7 million in the second
quarter of 2023, remained unchanged compared to the first quarter
of 2023. Adjusted SG&A(1) totaled $30.9 million in the second quarter of 2023,
compared to adjusted SG&A of $30.3
million in the first quarter of 2023.
Adjusted EBITDA totaled $233.9
million in the second quarter of 2023, compared to adjusted
EBITDA of $227.6 million in the first
quarter of 2023.
Second Quarter 2023 Management
Adjustments
EBITDA(1) for the second quarter of 2023 was
$221.0 million. When excluding net
management adjustments of $13.0
million, adjusted EBITDA for the second quarter was
$233.9 million. Management
adjustments included $8.2 million in
non-cash stock compensation expense and a net $4.8 million in other adjustments, including
$5.3 million in acquisition,
integration, and expansion costs mostly associated with the pending
merger with Patterson-UTI, partially offset by a $1.1 million gain on insurance recovery.
Completion Services
Revenue in our Completion Services segment totaled $905.5 million in the second quarter of
2023, compared to $895.6 million
in the first quarter of 2023. Adjusted gross profit(1)
in this segment totaled $260.1 million in the second quarter of
2023, compared to $252.6 million
in the first quarter of 2023.
Well Construction and Intervention Services
Revenue in our Well Construction and Intervention Services
segment, totaled $39.6 million
in the second quarter of 2023, compared to $40.1 million in the first quarter of 2023.
Adjusted gross profit in this segment totaled $8.7 million in the second quarter of 2023,
compared to adjusted gross profit of $9.1 million in the first quarter of
2023.
Balance Sheet and Capital
Total debt outstanding as of June 30,
2023 was $354.5 million,
net of debt discounts and deferred financing costs and excluding
finance lease obligations. As of June 30,
2023, total available liquidity was $721.5 million, comprised of cash of
$310.2 million and $411.3 million of available borrowing
capacity under our asset-based credit facility, which remains
undrawn.
Total cash provided by operating activities during the second
quarter of 2023 was $226.0 million and cash used by investing
activities was $98.4 million,
resulting in free cash flow of $127.5 million in the second quarter of
2023.
Net debt at the end of the second quarter was approximately
$44.3 million, down $95.1 million from the prior quarter.
Outlook
Given the pending merger with Patterson-UTI, we will not provide
detailed financial guidance. On activity, we anticipate we could
see our deployed fleet count fall by as many as 3 fleets by the end
of the third quarter, and we also expect to see increased
whitespace, with our average pumping hours per fleet also expected
to decline slightly.
For the third quarter of 2023, we expect capital expenditures
will be down, sequentially, to $85
million. We expect to reduce capital expenditures
further in the fourth quarter. Free cash flow should be strong
again and we expect that we will exceed our target of zero net debt
by the end of the third quarter.
Mr. Drummond concluded, "We view the current slowdown in
industry activity as transitory, and by 2024, we see a path for US
land completion activity to recover to levels that we saw in the
first quarter of this year. Considering our view that newbuilds
have been insufficient to entirely replace attrition, we believe
frac equipment could once again be the bottleneck to US oil and gas
production growth by next year. We have no intention to accelerate
the depreciation of our equipment to hold work in the near-term,
and as such, we will use any downtime as an opportunity to invest
to upgrade and fully maintain our fleet to ensure we are prepared
for a recovery."
Conference Call Information
On July 26, 2023, NexTier will hold a conference call for
investors at 10:00 a.m. Central Time
(11:00 a.m. Eastern Time) to discuss
second quarter 2023 financial and operating results. Hosting the
call will be Robert Drummond,
President and Chief Executive Officer, Kenneth Pucheu, Executive Vice President and
Chief Financial Officer, and Matt
Gillard, Executive Vice President and Chief Operating
Officer. The call can be accessed via a live webcast accessible on
the IR Event Calendar page in the Investor Relations section of our
website at www.nextierofs.com, or live over the telephone by
dialing (855) 560-2574, or for international callers, (412)
542-4160 and referencing NexTier Oilfield Solutions. 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 6236648. The replay will be available
until August 2, 2023. 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 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.
(1) Non-GAAP
Financial Measures. The Company has included in this press
release or discussed on the conference call described above certain
non-GAAP financial measures, some of which are calculated on
segment basis or product line basis. These measurements provide
supplemental information which management believes is useful to
analysts and investors to evaluate our ongoing results of
operations, when considered alongside GAAP measures such as net
income and operating income. You should not consider them in
isolation from, or as a substitute for, analysis of our results
under GAAP.
Non-GAAP financial measures include EBITDA,
adjusted EBITDA, adjusted EBITDA margin, incrementals, adjusted
gross profit, adjusted net income, adjusted net income per share,
free cash flow, adjusted SG&A, net debt, invested capital,
average invested capital, return on invested capital, annualized
return on invested capital, and adjusted annualized return on
invested capital. 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 EBITDA, adjusted EBITDA, adjusted EBITDA margin,
incrementals, adjusted gross profit, adjusted net income, adjusted
net income per share, and adjusted SG&A provide helpful
information to analysts and investors to facilitate a comparison of
its operating performance to that of other companies. Management
also uses adjusted EBITDA to set targets and to assess the
performance of the Company. The Company believes free cash flow,
and net debt provide investors a useful measure to assess
management's effectiveness in the areas of profitability and
capital management. Invested capital, average invested capital,
return on invested capital, annualized return on invested capital,
and adjusted annualized return on invested capital are presented
based on the Company's belief that these non-GAAP measures are
useful information to investors and management when comparing
profitability and the efficiency with which capital has been
employed over time relative to other companies.
For a reconciliation of these non-GAAP measures,
please see the tables at the end of this press release.
Reconciliations of forward-looking non-GAAP financial measures to
comparable GAAP measures are not available due to the challenges
and impracticability with estimating some of the items,
particularly with estimates for certain contingent liabilities, and
estimating non-cash unrealized fair value losses and gains which
are subject to market variability and therefore a reconciliation is
not available without unreasonable effort.
Non-GAAP Measure Definitions: EBITDA is defined
as net income adjusted to eliminate the impact of interest, income
taxes, depreciation and amortization. Adjusted EBITDA is defined as
EBITDA as further adjusted with certain items management does not
consider in assessing ongoing performance. Adjusted EBITDA margin
is defined as (i) Revenue divided by (ii) Adjusted EBITDA.
Incrementals is defined as the change in adjusted EBITDA quarter
over quarter divided by the change in revenue quarter over quarter.
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 net income is defined as net income adjusted with certain
items management does not consider in assessing ongoing
performance. Adjusted net income per share is defined as (i)
adjusted net income, (ii) divided by the number of weighted average
shares outstanding. Free cash flow is defined as the net increase
(decrease) in cash and cash equivalents before financing
activities, excluding any acquisitions. Adjusted SG&A is
defined as selling, general and administrative expenses adjusted
for non-cash stock compensation and other non-routine items. Net
debt is defined as (i) total debt, net of unamortized debt discount
and unamortized deferred financing costs, (ii) subtracting cash and
cash equivalents. Invested capital is defined as the sum of (a)
long-term operating lease liabilities, less current maturities, (b)
plus long-term finance lease liabilities, less current maturities,
(c) plus long-term debt, net of unamortized deferred financing cost
and unamortized debt discounts, less current maturities (d) plus
total stockholder's equity. Average invested capital is defined as
the average of the beginning and ending invested capital. Return on
invested capital is defined as (i) net income, (ii) divided by
average invested capital during the period. Annualized return on
invested capital is defined as (i) annualized net income for a
given quarter (ii) divided by average invested capital during the
period. Adjusted annualized return on invested capital is defined
as (i) annualized adjusted net income for a given quarter, (ii)
divided by average invested capital during the period.
Forward-Looking Statements and Where to Find Additional
Information
This press release and discussion in the conference call
described above contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
(the "PSLRA"). 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 or made during the conference call described above,
including guidance for 2023 and beyond and other outlook
information (including with respect to the industry in which
NexTier conducts its business), statements regarding our future
operating results, financial position, business strategy, plans and
objectives of management for future operations, and expectation
regarding the capabilities and impact of our products and services
on our operating results and financial position, are
forward-looking statements within the meaning of the PSLRA.
Statements of assumptions underlying or relating to our
forward-looking statements are also forward-looking statements.
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 "anticipate," "believe,"
"contemplate," "continue," "could," "estimate," "expect,"
"forecast," "future," "goal," "intend," "may," "outlook," "plan,"
"potential," "predict," "project," "reflect," "see," "should,"
"target," "will," and "would," or the negative or plural thereof,
and similar expressions, are intended to identify such
forward-looking statements. Any forward-looking statements
contained in this presentation or in oral statements made in
connection with this presentation speak only as of the date on
which we make them and are based upon our historical performance
and on current plans, estimates and expectations. These factors and
risks include, but are not limited to, (i) NexTier's business
strategy, plans, objectives, expectations and intentions; (ii)
NexTier's future operating results; (iii) dependence on capital
spending and well completion by the onshore oil and natural gas
industry and demand for services in the industry in which NexTier
conducts its business; (iv) the variability of crude oil and
natural gas commodity prices; (v) changing regional, national or
global economic conditions, including oil and gas supply and demand
and the impact of geopolitical conditions on those prices; (vi) the
competitive nature of the industry in which NexTier conducts its
business, including pricing pressures; (vii) the impact of pipeline
capacity constraints and adverse weather conditions in oil or gas
producing regions; (viii) the effect of government regulation,
including regulations of hydraulic fracturing, and the operating
hazards of NexTier's business; (ix) the effect of a loss of, or the
financial distress of, or interruption in operations of one or more
NexTier suppliers, materials or customers; (x) the ability to
maintain the right level of commitments under NexTier's supply
agreements; (xi) impact of new technology on NexTier's business;
(xii) impact of any legal proceedings, liability claims and
external investigations; (xiii) the ability to obtain permits,
approvals and authorizations from governmental and third parties;
(xiv) the ability to identify, effect and integrate acquisitions,
divestitures and future capital expenditures and the impact of such
transactions; (xv) environmental, social, and governance matters,
including investor focus and industry perception; (xvi) the ability
to employ a sufficient number of skilled and qualified workers;
(xvii) the ability to service debt obligations and access capital;
(xviii) the market volatility of our stock; (xix) the impact of our
stock buyback program, (xx) our ability to maintain effective
information technology systems and the impact of cybersecurity
incidents on our business, (xxi) the impact of inflation on our
business, (xxii) risks associated with our ability to consummate
the Mergers with Patterson-UTI and the timing and closing of the
Mergers including, among other things, the ability of the Company
to obtain shareholder approval required to consummate the Mergers,
the satisfaction or waiver of other conditions to closing in the
Merger Agreement, unanticipated difficulties or expenditures
relating to the Mergers, potential difficulties in employee
retention as a result of the Mergers, the occurrence of any event,
change or other circumstances that could give rise to the
termination of the Mergers and the outcome of legal proceedings
instituted against the Company, its directors and others related to
the Mergers, and (xxiii) other risks detailed in NexTier's latest
Annual Report on Form 10-K, including, but not limited to "Part I,
Item 1A. Risk Factors" and "Part II, Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and our other filings with the Securities and Exchange
Commission (the "SEC"), which are available on the SEC website or
www.NexTierOFS.com. "Forward-looking statements" also include,
among other things, (a) statements about NexTier's ability to
participate in any shareholder return program and (b) statements
regarding NexTier's business strategy, its business and operation
plan (including its ability to execute on its well site integration
strategy), its future performance (including expected financial
results), and its capital allocation strategy. There may be other
factors of which NexTier is currently unaware or deem immaterial
that may cause its actual results to differ materially from the
forward-looking statements. NexTier 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 laws. Investors
should not assume that any lack of update to a previously issued
"forward-looking statement" constitutes a reaffirmation of that
statement. The contents of any website referenced in this
presentation are not incorporated herein by reference.
Additional information about the Company can be found in its
periodic reports and other filings with the SEC, available at
www.sec.gov or www.NexTierOFS.com. The contents of the Company's
website is not incorporated herein by reference.
Investor Contact:
Kenneth Pucheu
Executive Vice President - Chief Financial Officer
Michael Sabella
Vice President - Investor Relations and Business Development
michael.sabella@nextierofs.com
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, amounts in
thousands, except per share data)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
|
|
|
|
|
|
|
Revenue
|
|
$
945,091
|
|
$
935,672
|
|
$
842,912
|
Operating costs and
expenses:
|
|
|
|
|
|
|
Cost of
services
|
|
676,299
|
|
673,944
|
|
649,866
|
Depreciation and
amortization
|
|
63,502
|
|
58,645
|
|
58,794
|
Selling, general and
administrative expenses
|
|
39,699
|
|
39,681
|
|
35,855
|
Merger and
integration
|
|
5,275
|
|
161
|
|
23,682
|
Loss (gain) on
disposal of assets
|
|
5,772
|
|
3,770
|
|
(866)
|
Total operating costs
and expenses
|
|
790,547
|
|
776,201
|
|
767,331
|
Operating
income
|
|
154,544
|
|
159,471
|
|
75,581
|
Other
expense:
|
|
|
|
|
|
|
Other expense,
net
|
|
2,927
|
|
(280)
|
|
1,461
|
Interest expense,
net
|
|
(7,307)
|
|
(6,198)
|
|
(7,344)
|
Total other
expense
|
|
(4,380)
|
|
(6,478)
|
|
(5,883)
|
Income before income
taxes
|
|
150,164
|
|
152,993
|
|
69,698
|
Income tax benefit
(expense)(1)
|
|
(100)
|
|
101,000
|
|
(1,240)
|
Net
income
|
|
$
150,064
|
|
$
253,993
|
|
$
68,458
|
|
|
|
|
|
|
|
Net income per share:
basic
|
|
$
0.66
|
|
$
1.09
|
|
$
0.28
|
Net income per share:
diluted
|
|
$
0.64
|
|
$
1.07
|
|
$
0.27
|
|
|
|
|
|
|
|
Weighted-average
shares: basic
|
|
229,033
|
|
233,158
|
|
243,969
|
Weighted-average
shares: diluted
|
|
233,222
|
|
237,072
|
|
250,775
|
|
|
(1)
|
During the three months
ended June 30, 2023 and March 31, 2023, the Company recognized a
$5.5 million and $107.4 million tax benefit, respectively,
associated with the partial releases of a valuation allowance on
its deferred tax assets based on improved market conditions and the
Company's expectation to utilize these deferred tax assets in the
coming years.
|
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(amounts in
thousands)
|
|
|
|
June 30,
2023
|
|
December 31,
2022
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
310,166
|
|
$
218,476
|
Trade and other
accounts receivable, net
|
|
443,741
|
|
397,197
|
Inventories,
net
|
|
73,415
|
|
66,395
|
Prepaid and other
current assets
|
|
49,571
|
|
43,947
|
Total current
assets
|
|
876,893
|
|
726,015
|
Operating lease
right-of-use assets
|
|
29,178
|
|
18,659
|
Finance lease
right-of-use assets
|
|
93,565
|
|
43,714
|
Property and equipment,
net
|
|
796,197
|
|
679,513
|
Goodwill
|
|
192,780
|
|
192,780
|
Intangible
assets
|
|
48,373
|
|
50,586
|
Deferred income
taxes
|
|
112,926
|
|
—
|
Other noncurrent
assets
|
|
13,654
|
|
15,901
|
Total
assets
|
|
$
2,163,566
|
|
$
1,727,168
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
347,589
|
|
$
202,936
|
Accrued
expenses
|
|
191,053
|
|
281,715
|
Customer contract
liabilities
|
|
19,377
|
|
19,377
|
Current maturities of
operating lease liabilities
|
|
9,930
|
|
6,083
|
Current maturities of
finance lease liabilities
|
|
52,605
|
|
19,855
|
Current maturities of
long-term debt
|
|
14,176
|
|
14,004
|
Other current
liabilities
|
|
5,446
|
|
9,368
|
Total current
liabilities
|
|
640,176
|
|
553,338
|
Long-term operating
lease liabilities, less current maturities
|
|
17,856
|
|
13,267
|
Long-term finance lease
liabilities, less current maturities
|
|
21,479
|
|
11,925
|
Long-term debt, net of
unamortized deferred financing costs and
unamortized debt discount, less current maturities
|
|
340,327
|
|
347,425
|
Other non-current
liabilities
|
|
14,477
|
|
11,294
|
Total non-current
liabilities
|
|
394,139
|
|
383,911
|
Total
liabilities
|
|
1,034,315
|
|
937,249
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
2,285
|
|
2,340
|
Paid-in capital in
excess of par value
|
|
942,563
|
|
1,007,492
|
Retained earnings
(deficit)
|
|
177,862
|
|
(226,195)
|
Accumulated other
comprehensive income
|
|
6,541
|
|
6,282
|
Total stockholders'
equity
|
|
1,129,251
|
|
789,919
|
Total liabilities
and stockholders' equity
|
|
$
2,163,566
|
|
$
1,727,168
|
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
ADDITIONAL SELECTED
FINANCIAL AND OPERATING DATA
(unaudited, amounts in
thousands)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
Completion
Services:
|
|
|
|
|
Revenue
|
|
$
905,518
|
|
$
895,564
|
Cost of
services
|
|
645,438
|
|
642,929
|
Depreciation and
amortization and (gain) loss on sale of assets, net
|
|
65,292
|
|
58,823
|
Net income
|
|
194,788
|
|
193,812
|
Adjusted gross
profit(1)
|
|
$
260,080
|
|
$
252,635
|
|
|
|
|
|
Well Construction
and Intervention Services:
|
|
|
|
|
Revenue
|
|
$
39,573
|
|
$
40,108
|
Cost of
services
|
|
30,861
|
|
31,015
|
Depreciation and
amortization and (gain) loss on sale of assets, net
|
|
700
|
|
603
|
Net income
|
|
8,012
|
|
8,490
|
Adjusted gross
profit(1)
|
|
$
8,712
|
|
$
9,093
|
|
|
(1)
|
The Company uses
adjusted gross profit as its measure of profitability for segment
reporting.
|
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL
MEASURES
(unaudited, amounts in
thousands)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Net
income
|
|
$
150,064
|
|
$
253,993
|
|
68,458
|
Interest expense,
net
|
|
7,307
|
|
6,198
|
|
7,344
|
Income tax (benefit)
expense
|
|
100
|
|
(101,000)
|
|
1,240
|
Depreciation and
amortization
|
|
63,502
|
|
58,645
|
|
58,794
|
EBITDA
|
|
$
220,973
|
|
$
217,836
|
|
135,836
|
Plus management
adjustments:
|
|
|
|
|
|
|
Acquisition,
integration and expansion(1)
|
|
$
5,275
|
|
$
161
|
|
23,682
|
Non-cash stock
compensation(2)
|
|
8,226
|
|
8,853
|
|
7,547
|
Divestiture of
business(3)
|
|
479
|
|
547
|
|
905
|
Gain on equity
security investment(4)
|
|
—
|
|
—
|
|
(2,111)
|
Litigation(5)
|
|
120
|
|
—
|
|
416
|
Insurance recovery,
net(6)
|
|
(1,133)
|
|
204
|
|
—
|
Other
|
|
9
|
|
22
|
|
(390)
|
Adjusted
EBITDA
|
|
$
233,949
|
|
$
227,623
|
|
$
165,885
|
|
|
(1)
|
Represents transaction
and integration costs, including earnout payments, related to
acquisitions.
|
(2)
|
Represents non-cash
amortization of equity awards issued under the Company's Incentive
Award Plan.
|
(3)
|
Represents bad debt
expense on the sale of the Well Support Services segment to, and
related to the bankruptcy filing of, Basic Energy
Services.
|
(4)
|
Represents a realized
gain on an equity security investment composed primarily of common
equity shares in a public company.
|
(5)
|
Represents increases in
accruals related to contingencies acquired in business acquisitions
or exceptional material events.
|
(6)
|
Represents
(gains)/losses associated with assets that were damaged in fires
that occurred in the second quarter of 2023 and third quarter of
2022.
|
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL
MEASURES
(unaudited, amounts in
thousands)
|
|
|
|
Three Months
Ended
|
|
Variance
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
Adjusted
EBITDA
|
|
$
233,949
|
|
$
227,623
|
|
$
6,326
|
Revenue
|
|
$
945,091
|
|
$
935,672
|
|
$
9,419
|
Adjusted EBITDA
margin
|
|
25 %
|
|
24 %
|
|
|
Incrementals
|
|
|
|
|
|
67 %
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
Selling, general and
administrative expenses
|
|
$
39,699
|
|
$
39,681
|
Less management
adjustments:
|
|
|
|
|
Non-cash stock
compensation
|
|
(8,226)
|
|
(8,853)
|
Litigation
|
|
(120)
|
|
—
|
Divestiture of
business
|
|
(479)
|
|
(547)
|
Other
|
|
(9)
|
|
(22)
|
Adjusted selling,
general and administrative expenses
|
|
$
30,865
|
|
$
30,259
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2023
|
|
|
Completion
Services
|
|
WC&I
|
|
Total
|
Revenue
|
|
$
905,518
|
|
$
39,573
|
|
$
945,091
|
Cost of
services
|
|
645,438
|
|
30,861
|
|
676,299
|
Gross profit
excluding depreciation and amortization
|
|
260,080
|
|
8,712
|
|
268,792
|
Management adjustments
associated with cost of services
|
|
—
|
|
—
|
|
—
|
Adjusted gross
profit
|
|
$
260,080
|
|
$
8,712
|
|
$
268,792
|
|
|
Three Months Ended
March 31, 2023
|
|
|
Completion
Services
|
|
WC&I
|
|
Total
|
Revenue
|
|
$
895,564
|
|
$
40,108
|
|
$
935,672
|
Cost of
services
|
|
642,929
|
|
31,015
|
|
673,944
|
Gross profit
excluding depreciation and amortization
|
|
252,635
|
|
9,093
|
|
261,728
|
Management adjustments
associated with cost of services
|
|
—
|
|
—
|
|
—
|
Adjusted gross
profit
|
|
$
252,635
|
|
$
9,093
|
|
$
261,728
|
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL
MEASURES
(unaudited, amounts in
thousands)
|
|
|
Three Months
Ended
|
|
|
|
|
June 30,
2023
|
|
March 31,
2023
|
Net cash provided by
operating activities
|
|
$
225,954
|
|
$
173,253
|
|
|
|
|
|
Net cash used in
investing activities:
|
|
|
|
|
Capital
expenditures
|
|
(101,620)
|
|
(99,121)
|
Proceeds from disposal
of assets
|
|
3,178
|
|
2,102
|
Proceeds from insurance
recoveries
|
|
—
|
|
104
|
Net cash used in
investing activities
|
|
(98,442)
|
|
(96,915)
|
|
|
|
|
|
Free cash
flow
|
|
$
127,512
|
|
$
76,338
|
|
|
Three Months
Ended
|
|
|
|
|
June 30,
2023
|
|
March 31,
2023
|
Total debt, net of
unamortized debt discount and debt issuance costs
|
|
$
354,503
|
|
$
357,981
|
Cash and cash
equivalents
|
|
310,166
|
|
218,501
|
Net
debt
|
|
$
44,337
|
|
$
139,480
|
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL
MEASURES
(unaudited, amounts in
thousands, except per share data)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
Net
income
|
|
$
150,064
|
|
$
253,993
|
|
$
68,458
|
Plus management
adjustments:
|
|
|
|
|
|
|
Acquisition,
integration and expansion(1)
|
|
$
5,275
|
|
$
161
|
|
$
23,682
|
Non-cash stock
compensation(2)
|
|
8,226
|
|
8,853
|
|
7,547
|
Divestiture of
business(3)
|
|
479
|
|
547
|
|
905
|
Gain on equity
security investment(4)
|
|
—
|
|
—
|
|
(2,111)
|
Litigation(5)
|
|
120
|
|
—
|
|
416
|
Insurance recovery,
net(6)
|
|
(1,133)
|
|
204
|
|
—
|
Income tax
benefit(7)
|
|
(5,500)
|
|
(107,426)
|
|
—
|
Other
|
|
9
|
|
22
|
|
(390)
|
Adjusted net
income
|
|
$
157,540
|
|
$
156,354
|
|
$
98,507
|
|
|
|
|
|
|
|
Adjusted net income per
share: basic
|
|
$
0.69
|
|
$
0.67
|
|
$
0.40
|
Adjusted net income per
share: diluted
|
|
$
0.68
|
|
$
0.66
|
|
$
0.39
|
|
|
|
|
|
|
|
Weighted-average
shares: basic
|
|
229,033
|
|
233,158
|
|
243,969
|
Weighted-average
shares: diluted
|
|
233,222
|
|
237,072
|
|
250,775
|
|
|
(1)
|
Represents transaction
and integration costs, including earnout payments, related to
acquisitions.
|
(2)
|
Represents non-cash
amortization of equity awards issued under the Company's Incentive
Award Plan.
|
(3)
|
Represents bad debt
expense on the sale of the Well Support Services segment to, and
related to the bankruptcy filing of, Basic Energy
Services.
|
(4)
|
Represents a realized
gain on an equity security investment composed primarily of common
equity shares in a public company.
|
(5)
|
Represents increases in
accruals related to contingencies acquired in business acquisitions
or exceptional material events.
|
(6)
|
Represents
(gains)/losses associated with assets that were damaged in fires
that occurred in the second quarter or 2023 and third quarter of
2022
|
(7)
|
Represents tax benefit
recognized by the Company related to the partial release of a
valuation allowance on our deferred tax asset.
|
NEXTIER OILFIELD
SOLUTIONS INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL
MEASURES
(unaudited, amounts in
thousands)
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
Net
income
|
|
$
150,064
|
|
$
253,993
|
Annualized net
income
|
|
600,256
|
|
1,015,972
|
|
|
|
|
|
Adjusted net
income
|
|
157,540
|
|
156,354
|
Annualized adjusted
net income
|
|
$
630,160
|
|
$
625,416
|
|
|
|
|
|
Long-term operating
lease liabilities, less current maturities
|
|
17,856
|
|
17,267
|
Long-term finance
lease liabilities, less current maturities
|
|
21,479
|
|
10,172
|
Long-term debt, net of
unamortized deferred financing costs and
unamortized debt discount, less current maturities
|
|
340,327
|
|
343,895
|
Total stockholders'
equity
|
|
1,129,251
|
|
988,116
|
Invested
capital
|
|
$
1,508,913
|
|
$
1,359,450
|
|
|
|
|
|
Average invested
capital(1)
|
|
$
1,434,182
|
|
|
|
|
|
|
|
Annualized return on
invested capital(2)
|
|
42 %
|
|
|
Adjusted annualized
return on invested capital(3)
|
|
44 %
|
|
|
|
|
(1)
|
Average invested
capital is defined as the average of the beginning and ending
invested capital.
|
(2)
|
Annualized return on
invested capital is defined as (i) annualized net income for a
given quarter, (ii) divided by average invested capital during the
period.
|
(3)
|
Adjusted annualized
return on invested capital is defined as (i) annualized adjusted
net income for a given quarter, (ii) divided by average invested
capital during the period.
|
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SOURCE NexTier Oilfield Solutions