USWS - CORRECTION - U.S. Well Services Announces Second Quarter 2020 Financial and Operational Results

August, 05 2020 05:52 PM U.S. Well Services Inc.

HOUSTON, Aug. 05, 2020 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by U.S. Well Services, Inc. (NASDAQ: USWS) please note that in the Conference Call section, the time of the conference call was incorrectly stated as 10:00 am Central / 9:00 am Eastern Time, but it is at 10:00 am Central / 11:00 am Eastern Time. The corrected release follows:

U.S. Well Services, Inc. (the “Company”, “U.S. Well Services” or “we”) (NASDAQ: USWS) today reported second quarter 2020 financial and operational results.

Second Quarter 2020 Highlights

Averaged 3.4 fully-utilized fleets compared to 8.9 fully-utilized fleets during the first quarter of 2020
Total revenue of $39.8 million compared to $112.0 million in the first quarter of 2020
Net loss attributable to the Company of $18.1 million compared to net loss of $172.4 million in the first quarter of 2020
Adjusted EBITDA⁽¹⁾ of $8.5 million compared to $12.7 million in the first quarter of 2020
Reported annualized Adjusted EBITDA per fully-utilized fleet of $10.0 million compared to $4.3 million for the first quarter of 2020⁽²⁾
Total liquidity, consisting of cash and availability under the Company’s asset-backed revolving credit facility, was $13.4 million as of June 30, 2020
Each of Adjusted EBITDA and Adjusted EBITDA margin is a Non-GAAP financial measure. Please read “Non-GAAP Financial Measures.”
Adjusted EBITDA per fully-utilized fleet equivalent is defined as Adjusted EBITDA divided by the product of average active fleets during the quarter and the utilization rate for active fleets during the quarter.

“U.S. Well Services demonstrated its resiliency during the second quarter, posting solid results despite the unprecedented disruption of the global economy by the COVID-19 pandemic,” said Joel Broussard, President and CEO of U.S. Well Services. “Our performance this quarter is a testament to both the hard work and dedication of the U.S. Well Services team as well as the superior value proposition we offer to our customers.”

“We responded rapidly to the deterioration in U.S. completion activity by rightsizing our business and working to reduce costs across the board, and as such, we believe U.S. Well Services is well positioned to capitalize on any market recovery. Moreover, the utilization of our all-electric frac fleets during the second quarter far surpassed industry-wide utilization of conventional diesel-powered frac fleets, evidencing the continued demand for electric frac services. Our team will continue to be disciplined in evaluating opportunities to redeploy fleets on terms that offer attractive returns.”

Outlook

While commodity prices have improved significantly from trough pricing experienced following the global economic shutdown early in the second quarter of 2020, the recovery in completion activity for U.S. producers has only just begun. We expect demand for frac services to increase in the second half of 2020, but to remain muted relative to historical levels.

U.S. Well Services is well positioned to redeploy idled fleets in a recovering market environment, as customers high-grade their service providers to capitalize on best-in-class service quality, safety performance and technological innovation. The rationalization of the Company’s cost structure over the last two quarters provides U.S. Well Services with significant flexibility as well as an improved ability to generate profits amidst challenging market conditions.

Second Quarter 2020 Financial Summary

Revenue for the second quarter of 2020 decreased 64% to $39.8 million versus $112.0 million in the first quarter of 2020, driven by a sharp decrease in activity levels resulting from the COVID-19 pandemic. U.S. Well Services averaged 4.3 active fleets during the quarter, as compared to 10.7 for the first quarter of 2020. Utilization of the Company’s active fleets averaged 79% during the second quarter, resulting in a fully-utilized equivalent of 3.4 fleets. This compares to 84% utilization and a fully-utilized equivalent of 8.9 fleets for the first quarter of 2020.

Costs of services, excluding depreciation and amortization, for the second quarter of 2020 decreased to $29.0 million from $85.2 million during the first quarter of 2020, primarily as a result of reduced activity levels, continued customer self-sourcing of consumables and a benefit from the proactive cost cutting initiatives implemented by the Company beginning in the first quarter of 2020.

Selling, general and administrative expense (“SG&A”) decreased to $5.2 million in the second quarter of 2020 from $19.1 million in the first quarter of 2020. Excluding stock-based compensation and non-recurring transaction costs, SG&A in the second quarter of 2020 was $4.1 million compared to $8.4 million in the first quarter of 2020. This sequential decrease was primarily attributable to the reduction in compensation and professional fees.

Net loss attributable to the Company decreased sequentially to $18.1 million in the second quarter of 2020 from $172.4 million in the first quarter of 2020. Adjusted EBITDA decreased 34% in the second quarter of 2020 to $8.5 million from $12.7 million in the first quarter of 2020. Annualized Adjusted EBITDA per fully-utilized fleet was $10.0 million. Adjusted EBITDA margin increased to 21% from 11% in the first quarter of 2020.⁽¹⁾

Operational Highlights

U.S. Well Services exited the second quarter with 4 active frac fleets, of which three were new-generation electric fleets. Two of our fleets were working in the Appalachian Basin, one fleet was in the Eagle Ford and one fleet was in the Permian Basin. The Company recently redeployed a new-generation electric frac fleet to work for a previous customer in the Permian Basin, and now has all of its new-generation electric frac fleets working.

U.S. Well Services’ operating efficiency increased sequentially, with stage count per fully-utilized fleet increasing by approximately 2%, completing 1,957 frac stages during the second quarter of 2020, or 576 stages per fully-utilized fleet, as compared to 5,006 frac stages, or 562 stages per fully-utilized fleet, during the first quarter of 2020. Pumping hours per day decreased approximately 6% sequentially. USWS pumped for 3,158 hours during 267 frac days, as compared to 9,631 hours during 742 frac days in the first quarter of 2020.

U.S. Well Services continues to be the market leader in electric fracturing, with 14,667 electric fracturing stages completed since the deployment of our first Clean Fleet® in 2014. The Company continued to expand its intellectual property portfolio during the second quarter, and currently has 38 patents, with 149 patents pending.

Balance Sheet and Capital Spending

As of June 30, 2020, total liquidity was $13.4 million, consisting of $3.9 million of cash on the Company’s balance sheet and $9.5 million of availability under the Company’s asset-backed revolving credit facility, and net debt was $261.3 million.

Capital expenditures, on an accrual basis, were $4.0 million during the second quarter of 2020. The capital expenditures consisted of $0.5 million for growth initiatives and $3.5 million for maintenance capital expenditures, which equates to an annualized rate of $4.2 million per fully-utilized fleet.

Conference Call Information

The Company will host a conference call at 10:00 am Central / 11:00 am Eastern Time on Thursday, August 6, 2020 to discuss financial and operating results for the second quarter of 2020 and recent developments. This call will also be webcast and an investor presentation will be available on U.S. Well Services’ website at http://ir.uswellservices.com/events-and-presentations/events. To access the conference call, please dial 201-389-0872 and ask for the U.S. Well Services call at least 10 minutes prior to the start time or listen to the call live over the Internet by logging on to the Company’s website from the link above. A telephonic replay of the conference call will be available through August 13, 2020 and may be accessed by calling 201-612-7415 using passcode 13707596#. A webcast archive will also be available at the link above shortly after the call and will be accessible for approximately 90 days.

About U.S. Well Services, Inc.

U.S. Well Services, Inc. is a leading provider of hydraulic fracturing services and a market leader in electric fracture stimulation. The Company’s patented electric frac technology provides one of the first fully electric, mobile well stimulation systems powered by locally supplied natural gas including field gas sourced directly from the wellhead. The Company’s electric frac technology dramatically decreases emissions and sound pollution while generating exceptional operational efficiencies including significant customer fuel cost savings versus conventional diesel fleets. For more information visit: www.uswellservices.com. The information on our website is not part of this release.

Forward-Looking Statements

The information above includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included herein concerning, among other things, availability under the Company’s credit facilities, benefits obtained from the Company’s strategic financing transactions, the Company’s financial position and liquidity, business strategy and objectives for future operations, results of discussions with potential customers, benefits obtained from the Company’s patent-pending PowerPath technology, potential new contract opportunities and planned deployment and operation of fleets, are forward-looking statements. These forward-looking statements may be identified by their use of terms and phrases such as “may,” “expect,” “guidance,” “estimate,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,” “target” and similar terms and phrases. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events, and it is possible that the results described in this release will not be achieved. These forward-looking statements are subject to certain risks, uncertainties and assumptions, including those identified in this release or disclosed from time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”). Factors that could cause actual results to differ from the Company’s expectations include changes in market conditions, changes in commodity prices, changes in supply and demand for oil and gas, changes in demand for our services, availability of financing and capital, the Company’s liquidity, the Company’s compliance with covenants under its credit agreements, actions by customers and potential customers, geopolitical events, availability of equipment and personnel and other factors described in the Company’s public disclosures and filings with the SEC, including those described under “Risk Factors” in our annual report on Form 10-K filed on March 5, 2020 and in our quarterly reports on Form 10-Q. As a result of these factors, actual results may differ materially from those indicated or implied by forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contacts:

U.S. Well Services
Josh Shapiro, VP, Finance and Investor Relations
(832) 562-3730
IR@uswellservices.com

Dennard Lascar Investor Relations
Ken Dennard / Lisa Elliott
(713) 529-6600
USWS@dennardlascar.com












U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and amounts in thousands except for active fleets and per share amounts)








Three Months Ended

Six Months Ended


June 30,

March 31,

June 30,



2020



2019



2020



2020



2019













Statement of Operations Data:










Revenue
$
39,837


$
151,419


$
112,035


$
151,872


$
291,190


Costs and expenses:










Cost of services (excluding depreciation and amortization)

29,011



107,369



85,153



114,165



217,048


Depreciation and amortization

17,358



40,322



32,008



49,366



78,165


Selling, general and administrative expenses

5,220



7,638



19,058



24,277



16,258


Impairment loss on long-lived assets

-



-



147,543



147,543



-


Loss on disposal of assets

853



4,003



4,244



5,097



10,908


Income (loss) from operations

(12,605
)


(7,913
)


(175,971
)


(188,576
)


(31,189
)

Interest expense, net

(5,661
)


(7,820
)


(7,952
)


(13,613
)


(12,935
)

Loss on extinguishment of debt

-



(12,558
)


-



-



(12,558
)

Other income

45



1,686



6



51



1,712


Loss before income taxes

(18,221
)


(26,605
)


(183,917
)


(202,138
)


(54,970
)

Income tax expense

13



306



(750
)


(737
)


430


Net loss

(18,234
)


(26,911
)


(183,167
)


(201,401
)


(55,400
)

Net loss attributable to noncontrolling interest

(97
)


(5,432
)


(10,800
)


(10,897
)


(11,649
)

Net loss attributable to U.S. Well Services, Inc.

(18,137
)


(21,479
)


(172,367
)


(190,504
)


(43,751
)

Dividends accrued on Series A preferred stock

(1,845
)


(660
)


(1,751
)


(3,596
)


(660
)

Dividends accrued on Series B preferred stock

(666
)


-



-



(666
)


-


Deemed and imputed dividends on Series A preferred stock

(4,504
)


(1,560
)


(6,249
)


(10,753
)


(1,560
)

Net loss attributable to U.S. Well Services, Inc. common stockholders
$
(25,152
)

$
(23,699
)

$
(180,367
)

$
(205,519
)

$
(45,971
)












Net lost attributable to U.S. Well Services, Inc. stockholders per common share:







Basic and diluted

(0.38
)


(0.46
)


(3.00
)


(3.25
)


(0.92
)

Weighted average common shares outstanding:










Basic and diluted

65,011



49,846



58,620



61,815



48,631













Other Financial and Operational Data










Capital Expenditures (1)

3,993



87,645



23,302



27,295



242,756


Adjusted EBITDA (2)

8,466



42,584



12,748



21,214



70,568


Average Active Fleets

4.3



11.3



10.7



7.5



11.2













(1) Capital expenditures presented above are shown on an accrual basis, including capital expenditures in accounts payable, accrued liabilities and under equipment financing arrangements.




(2) Adjusted EBITDA is a Non-GAAP Financial Measure. See the tables entitled "Reconciliation and Calculation of Non-GAAP Financial and Operational Measures" below.

U.S. WELL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, amounts in thousands except share and per share amounts)







June 30, 2020

December 31, 2019
ASSETS



CURRENT ASSETS:



Cash and cash equivalents
$
3,423


$
33,794

Restricted cash

519



7,610

Accounts receivable (net of allowance for doubtful accounts of



$9,000 and $22 as of June 30, 2020 and December 31, 2019, respectively)

38,459



79,542

Inventory, net

7,779



9,052

Prepaids and other current assets

9,590



13,332

Total current assets

59,770



143,330

Property and equipment, net

258,729



441,610

Intangible assets, net

13,937



21,826

Goodwill

4,971



4,971

Deferred financing costs, net

1,425



1,045

TOTAL ASSETS
$
338,832


$
612,782

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)





CURRENT LIABILITIES:



Accounts payable
$
48,427


$
70,170

Accrued expenses and other current liabilities

13,075



40,481

Notes payable

3,959



8,068

Current portion of long-term equipment financing

3,424



5,564

Current portion of long-term capital lease obligation

7,658



10,474

Current portion of long-term debt

-



6,250

Total current liabilities

76,543



141,007

Long-term equipment financing

11,129



10,501

Long-term debt

239,065



274,391

Other long-term liabilities

1,332



215

TOTAL LIABILITIES

328,069



426,114





MEZZANINE EQUITY



Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share;



55,000 shares authorizes, issued and outstanding as of June 30, 2020 and



December 31, 2019; aggregate liquidation preference of $62,646 and $59,050



as of June 30, 2020 and December 31, 2019, respectively

53,277



38,928





Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share;



22,050 shares authorized, issued and outstanding as of June 30, 2020;



aggregate liquidation preference of $22,716 as of June 30, 2020

21,312



-





STOCKHOLDERS' EQUITY (DEFICIT)



Class A Common Stock, par value of $0.0001 per share; 400,000,000 shares



authorized; 68,361,213 shares and 62,857,624 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

7



5

Class B Common Stock, par value of $0.0001 per share; 20,000,000 shares



authorized; 5,014,897 shares and 5,500,692 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

-



1

Additional paid in capital

237,872



248,302

Accumulated deficit

(301,705
)


(111,201
)
Total stockholders' equity (deficit) attributable to U.S. Well Services, Inc.

(63,826
)


137,107

Noncontrolling interest

-



10,633

Total Stockholders' Equity (Deficit)

(63,826
)


147,740

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)
$
338,832


$
612,782

U.S. WELL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2020 AND 2020
(unaudited and amounts in thousands)








2020



2019

CASH FLOWS FROM OPERATING ACTIVITIES:




Net loss

$
(201,401
)

$
(55,400
)
Adjustments to reconcile net loss to cash provided by




operating activities:




Depreciation and amortization


49,366



78,165

Impairment of long-lived assets


147,543



-

Provision for losses on accounts receivable


9,031



285

Loss on disposal of assets


5,097



10,908

Share-based compensation expense


3,481



3,366

Loss on extinguishment of debt


-



12,558

Other noncash items


2,331



1,855

Changes in working capital


6,065



(37,726
)
Net cash provided by operating activities


21,513



14,011

CASH FLOWS FROM INVESTING ACTIVITIES:




Purchase of property and equipment


(40,756
)


(144,889
)
Proceeds from sale of property and equipment


15,036



-

Net cash used in investing activities


(25,720
)


(144,889
)
CASH FLOWS FROM FINANCING ACTIVITIES:




Proceeds from issuance of revolving credit facility


11,250



49,025

Repayments of revolving credit facility


(33,381
)


(65,000
)
Proceeds from issuance of long-term debt


-



285,000

Repayments of long-term debt


(2,500
)


(75,000
)
Loss on extinguishment of debt


-



(6,560
)
Repayments of note payable


(4,109
)


(4,387
)
Repayments of amounts under equipment financing


(1,513
)


(63,186
)
Principal payments under finance lease obligation


(2,816
)


(8,389
)
Proceeds from issuance of preferred stock and warrants, net


19,875



54,524

Deferred financing costs


(20,061
)


(13,451
)
Net cash provided (used) by financing activities


(33,255
)


152,576

Net increase (decrease) in cash and cash equivalents and restricted cash


(37,462
)


21,698

Cash and cash equivalents and restricted cash, beginning of period


41,404



30,036

Cash and cash equivalents and restricted cash, end of period

$
3,942


$
51,734

Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP. The Company believes, however, that certain non-GAAP performance measures allow external users of its consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, to more effectively evaluate its operating performance and compare the results of its operations from period to period and against the Company’s peers without regard to the Company’s financing methods, hedging positions or capital structure. Additionally, the Company believes the use of certain non-GAAP measures highlights trends in the Company’s business that may not otherwise be apparent when relying solely on GAAP measures.

Reconciliation of Net Income to Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP financial measures and should not be considered as a substitute for net income (loss), operating income (loss) or any other performance measure derived in accordance with GAAP or as an alternative to net cash provided by operating activities as a measure of the Company’s profitability or liquidity. The Company’s management believes EBITDA and Adjusted EBITDA are useful because they allow external users of its consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, to more effectively evaluate the Company’s operating performance, compare the results of its operations from period to period and against the Company’s peers without regard to the Company’s financing methods, hedging positions or capital structure and because it highlights trends in the Company’s business that may not otherwise be apparent when relying solely on GAAP measures. The Company believes EBITDA and Adjusted EBITDA are important supplemental measures of its performance that are frequently used by others in evaluating companies in its industry. Because EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income (loss) and may vary among companies, the EBITDA and Adjusted EBITDA that the Company presents may not be comparable to similarly titled measures of other companies.

The Company defines EBITDA as earnings before interest, income taxes, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA excluding the following: loss on disposal of assets; share-based compensation; impairments; and other items that the Company believes to be non-recurring in nature. The Company defines Adjusted EBITDA margin as Adjusted EBITDA as a percentage of Revenue.

U.S. WELL SERVICES, INC.



RECONCILIATION OF NET INCOME (GAAP) TO EBITDA AND ADJUSTED EBITDA (NON-GAAP)



(unaudited, amounts in thousands)














Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2020

2019

2020

2020

2019
Net loss
$
(18,234)

$
(26,911)

$
(183,167)

$
(201,401)

$
(55,400)
Interest expense, net
5,661

7,820

7,952

13,613

12,935
Income tax expense
13

306

(750)

(737)

430
Depreciation and amortization
17,358

40,322

32,008

49,366

78,165
EBITDA
4,798

21,537

(143,957)

(139,159)

36,130
Loss on disposal of assets (a)
853

4,003

4,244

5,097

10,908
Share based compensation (b)
1,403

2,307

2,078

3,481

3,366
Impairment loss (c)
-

-

147,543

147,543

-
Fleet start-up, relocation and reactivation costs (d)
573

3,170

-

573

7,162
Restructuring and transaction related costs (e)
-

303

-

-

1,738
Severance and Business Restructuring (f)
839

-

2,840

3,679

-
Loss on extinguishment of debt (g)
-

12,558

-

-

12,558
Fleet 6 fire (h)
-

(1,294)

-

-

(1,294)
Adjusted EBITDA
$
8,466

$
42,584

$
12,748

$
21,214

$
70,568










(a) Represents net losses on the disposal of property and equipment.








(b) Represents non-cash share-based compensation.









(c) Represents non-cash impairment charge on long-lived assets



(d) Represents costs related to the start-up, relocation and / or reactivation of hydraulic fracturing fleets.






(e) Represents third-party professional fees and other costs including costs related to financing transactions, the capital restructuring and the potential sale of U.S. Well Services, LLC.
(f) Represents severance and restructuring cost related to reductions in force and facility closures






(g) Represents costs related to debt extinguishment.









(h) Represents insurance reimbursement of costs related to a fleet fire previously reported as an add-back.

Company Name:	U.S. Well Services Inc.
Stock Symbol:	USWS
Market:	NASDAQ
Website:	uswellservices.com

Twitter