Electric frac spreads set to join the portfolio: In Q2 2023, ProPetro’s (PUMP) effective frac spread utilization increased to 15.9 frac spreads compared to 15.5 in Q1. In Q3, it expects utilization to remain nearly unchanged, varying between 14 and 15 frac spreads in 2H 2023. However, by Q2-end, it idled one frac spread owing to pricing pressure. It plans to deploy its first electric frac fleet in August and another in Q4 2023. Read more about this in our recent article here.
Margin metrics weakened in Q2: Quarter-over-quarter, PUMP’s revenues increased by 2.8% in Q2, while its adjusted EBITDA margin contracted by 280 basis points. The idling of one frac spread led to higher unabsorbed labor costs in Q2. Also, higher weather-related downtime and revenue loss due to the frac idling resulted in performance deterioration in Q2.
PUMP’s cash flows and leverage: PUMP’s cash flow from operations increased by 81% in 1H 2023 compared to a year ago. Despite such impressive gains, free cash flow stayed negative. Higher maintenance expenditures and the continued conversion of Tier IV DGB pumps contributed to higher capex in 1H 2023. Its debt-to-equity has remained low but has doubled to 0.06x as of June 30, 2023.
Thanks for reading the PUMP take three, designed to give you three critical takeaways from PUMP’s earnings report. Soon we will present a second update on PUMP earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
