- Revenue: $132.4 million.
- Adjusted EBITDA: $9.7 million.
- Diluted EPS: Negative $0.40.
- Cash and Cash Equivalents: $26 million.
- Total Liquidity Position: $50.8 million.
- Borrowings under ABL Credit Facility: $52 million.
- Shares Sold under ATM Program: Approximately 4.2 million shares, generating $6.8 million of net proceeds.
- Adjusted Gross Profit: $20.4 million.
- Cementing Jobs Completed: 926 jobs, a decrease of approximately 2%.
- Cementing Revenue: $45.8 million, a decrease of approximately 5%.
- Wireline Stages Completed: 6,353 stages, a decrease of approximately 2%.
- Wireline Revenue: $28 million, flat compared to Q1.
- Completion Tools Stages Completed: 23,862 stages, a decrease of approximately 10%.
- Completion Tool Revenue: $32.4 million, a decrease of approximately 8%.
- Coiled Tubing Days Worked: Decreased by approximately 23%.
- Coiled Tubing Revenue: $26.2 million, a decrease of approximately 15%.
- General and Administrative Expense: $12.5 million.
- Depreciation and Amortization Expense: $9.4 million.
- Tax Provision: Approximately $0.3 million year-to-date.
- Net Cash Provided by Operating Activities: $12.9 million.
- CapEx Spend for Q2: $2.5 million.
- Full Year 2024 CapEx Range: Decreased to $10 million to $15 million from original guidance of $15 million to $25 million.
Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for the quarter was $132.4 million, within the original guidance of $130 million to $140 million.
- Strong performance in the U.S. refrac business, with over 300 refrac jobs completed to date.
- Dissolvable and composite plugs continue to perform well, with increasing adoption by operators.
- Wireline team maintained flat revenue quarter-over-quarter despite low activity levels in the Northeast.
- Company's asset-light business model allows for quick adaptation to market changes.
Negative Points
- Adjusted EBITDA was $9.7 million, and diluted EPS was negative $0.40, indicating financial challenges.
- Continued rig declines negatively impacted revenue and earnings, with over 40 additional rigs coming out of the market since the end of 2023.
- Cementing revenue was down due to decreased activity and pricing, particularly in the Haynesville and Eagle Ford basins.
- Completion tool revenue decreased due to a reduction in tools sold related to U.S. land activity and a decrease in international sales.
- Coil tubing revenue was down due to white space in completion schedules and sustained activity declines in key regions like the Haynesville.
Q & A Highlights
Q: Ann, what service lines are being positively impacted by the refracs that you're doing?
A: We offer a full suite of services from our completion tools division, cementing division, wireline, and coiled tubing division. All these services are positively impacted by refracs. We anticipate significant growth in this market next year and believe we own the lion's share of the current market.
Q: You mentioned relatively flat revenues and profitability for Q3 compared to Q2. Given the potential decline in rig count, especially in key areas like Haynesville and Permian, what gives you confidence in this outlook?
A: We are pleased with the start to the quarter, with July coming in stronger than anticipated. This includes contributions from refracs, traction in our cementing business, and closing white space in the coiled tubing calendar. Additionally, we've pushed into remedial markets inside natural gas storage, which is helping us as well.
Q: Any early indications of where CapEx for Q3 would be?
A: We have guided for the year but haven't given exact guidance on the split between the quarters. However, we are getting leaner and more efficient in maintaining our equipment, which should keep CapEx lower even if the market returns.
Q: How do you see international sales for completion tools impacting Q3?
A: International sales are baked into our guidance, but they will be lumpy. We are pleased with the trajectory, especially with our multi-cycle barrier valve, and expect more work in 2025.
Q: Has pricing stabilized for your cementing, wireline, and coiled tubing businesses?
A: Yes, we feel that pricing has stabilized. However, there could be incremental pressures depending on commodity prices.
Q: Can you give a ballpark estimate of what percent of the 300 refrac jobs run to date are in the Eagle Ford and Bakken?
A: The vast majority of the refrac jobs are in the Eagle Ford and Bakken due to the good economics and understimulated Tier 1 acreage. We are starting in West Texas as well.
Q: How do you educate operators in other basins about refracs?
A: We have launched a massive refrac book and sent it to our customers. The personnel involved are extremely talented, and the jobs are quite technical. We see this as a growing market and are excited about the potential.
Q: How do you plan to ramp up quickly when there's a call on activity in the gas markets, given the current challenges?
A: We believe in the medium- and long-term outlook for natural gas and are retaining excellent personnel and equipment. We have ways to maintain flexibility and rebound quickly, as demonstrated in past market recoveries. We are confident in our team's ability to navigate these markets and capitalize on future opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
