USWS - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to the U.S. Well Services First Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Josh Shapiro, Vice President of Finance and Investor Relations. Mr. you, Thank begin. may Shapiro, you

Josh Shapiro

Thank you, joining call We you results. afternoon, webcast and for the good XXXX us quarter conference review everyone. U.S. to appreciate first operator, Well and Services

call us Kyle and Financial this Joining Chief the afternoon Joel Executive O'Neill, Broussard, are Officer. Officer; Chief on

coordinating for forgive from social to Following team distancing, responses opened will is their any different with keeping joining call the In prepared call locations, the please so best issues remarks, this questions. be Q&A. practices your for

as This The Well with www.uswellservices.com. XX-Q information XX, first and time transcript Services Please company's found XXXX note that no the may morning, of information its released U.S. Form or reported at its as today, earnings on the quarter SEC only any therefore, first XXXX, of of time-sensitive on reading. The website be be filed XXXX speaks longer earnings. accurate this listening company the this also release afternoon. replay can May call quarter the

addition, call views within management. may management the forward-looking contain during U.S. laws. statements current Services the of this reflect United These Well statements meaning of the the by forward-looking comments In federal States securities made

in and today's actual comparable uncertainties release contingencies. and the from SEC the company's However, directly could measures Reconciliations during are the we various to non-GAAP differ earnings uncertainties today's management. encouraged release. the reference those measures financial review made Also, results, to risks, GAAP earnings and certain performance measures. these with included The of to cause by to understand will those call, non-GAAP risks, our most achievements our statements or in contingencies materially expressed listeners are filings

turn the CEO, to would I Broussard. Well call Services' over now And like Mr. Joel U.S. to

Joel Broussard

demand sharply from that come at some in there industry. the are operating slowed most Josh, history XXX few resulting and global frac and The with activity no as time in has year. pandemic surprise the environment of as beginning afternoon, analysts approximately our It at disruption the that should this challenging year as COVID-XX hydraulic created fracturing approximately fleets XX crude last oil the versus this good estimating everyone. operation XXX Thanks, of

review and highlights like started as I'd I ensure to first spread in the and top we USWS' monitored shop steps of work. to distributed to employees customers position safety extraordinary cleaning supplies our moving developed operating the with what against protect the we the safety locations of field new to forward. from plan priority. sanitizers doing these We our our and U.S. is Well Before additional the developing key all of Services where to to challenges quarter, began the COVID-XX. and late response discuss are company health and We response as February PPE, spread and virus we best the procedures

are will procedures We well-being are at enabled our to leaving to guidelines screening home checks corporate in man with place, customers for collaborating prior follow of put all our locations. ensure including USWS business wellsites. and from we hotels to the working local work reopening of camps, everyone employees nonessential and and Well temperature

operation executive X,XXX between employees from our headcount we than nearly teams. XXX bringing Since employees of and their crude we shifted safety challenging aggressively to it protocols to We and by headcount oil concerns end conversations declining layers quickly customers enhance costs from March, liquidity. demand total of programs. global mid-March, the cut completions February. with In field on have to and early moved would eliminating ahead, regarding the By our at management overhead active over times implications senior team, for restructured potential and anticipation XX%, fewer our reduced

starting benefits Additionally, reduction a management for remaining XX% and and our with to compensation in employees, Board. we made for across-the-board senior salary cuts

use, vendors will Our goods balance with is cost to expenditures of of we services and team all for maintenance-related working the be the we year. to strictly the critical and reduce expenditures procurement limiting capital

for importantly, specifics principal maturity and boosting payments completed later, XX that both extended raise and through are amend term to Kyle that to this the a allowed capital the interest giving cash of agreements through and XXXX but work on the Finally, for and scheduled we key substantial credit our liquidity points market suspended to go us will we most runway date downturn. our us credit loan months. agreements,

XX, over payment that June XXXX, on loan preserving period. the As principal term million scheduled and a $XX cash, our approximately is of result, next payments interest

This The have Their of enables to employees us hasn't the the been up hard our dedication challenge take on. downturn magnitude us speed to action. extreme but easy, stepped differentiation. required and ahead technologically to this and ingenuity quality best-in-class meet what and has service are work, offer

the from the to poised be for stronger an downturn leader industry U.S. long-term. Well will and emerge Services

results quarter months. reflect XXXX the several nature of past Our the first for rollercoaster the of

While a the a in the end electric the in position company new from started quarter, off we fleet to XX.X from of X to QX work active of January the count grew faced Shell challenges strength. of and fleet for quarter toward XXXX. our We deployed

in the to $XXX the fleets. XX% margins March, from We in utilized utilization or February of in period. and up levels million revenue relative the grew from in quarter before fourth profit XX% for million January resulting quarter fully X.X same an to XXXX $XX XX% picked utilization gross declining grew Our over QX and to

frac testament exercise services all to congratulate to I EQT want capabilities. extensions. to win. This In up is assuming optional of early this my April, huge team for we with a and contract technology the provide finalized operational X years, for the our electric to

million U.S. or Well will $XX.X on reserve Services touch receivables, EBITDA accounts adjusted for which generated quarter including later. in first $XX.X million the a of Kyle

likely and succeed to focus reality demand Hydraulic imbalance X We for began completing positioning to force the supply that With muted will growing gas of to of in as remain fraction to production current depressed company Marcellus exposure improve. activity severely producers is shutting to with and drilling the and the XXXX we contracted oil many area. end the said, likely region basins increase rather wells. on than are XXXX currently and of combined crude electric fleets conditions to prices new through have our adapting QX reallocating resources in to market early in the working the as

strong strategy, our Going and and a so operational focus plan on demand remain maintaining disciplined activity levels to that technological forward, pricing improve. we fleets we'll for as our advantages efficiencies use

our will Officer. Chief I turn call the that, to With over Kyle, Financial

Kyle O'Neill

by XX% including an increase $XXX million, the chemicals sale to we Revenue of and and had by to the of fourth quarter, active Service sand, number trucking services. a the in sequential everyone. we driven afternoon, Good during XX% equipment Joel. also increased experienced the increased compared working sequentially revenues consumables, increase quarter. in Thanks, fleets XX%

$XX.X expense to activity Our when policy accounting XX% only quarter-over-quarter. repair hours levels to in the sales increased increased compared and XX% our customers. quarter-over-quarter of our consumables fluid cost Despite million cost XXXX, sold a driven change to maintenance a or expense by of and X% to ends, to QX increase and pumping

of quarter first the XXXX. for million $XX.X totaled SG&A

approximately market, has decision we placed receivable. an the XX% As our made the a we price stress equal accounts evaluated commodity of create allowance environment the on to to outstanding that current reserve

severance million receivable the for fourth was reserve, accounts Excluding to $X.X as quarter for quarter XXXX. stock-based compared the and compensation, $X.X SG&A of million the

under long-lived professional The review assets primarily triggered also increased sudden of in our impairment increase drastic was decline by and driven rules. GAAP an fees. The prices commodity accounting

a noncash result, booked impairment million period. As we during the $XXX charge

adjusted reported Reported EBITDA discussed first from includes $XX.X EBITDA Services of XXXX, up QX accounts receivable the for the X% adjusted earlier. quarter of Well U.S. $XX.X million sequentially allowance million. for

that fully of charge adjusted for the generated which reserve, - EBITDA EBITDA, company to fleet. million adjusted $X.X this utilized per million the Excluding equates of $XX.X

fewer the to of fleets, a spent growth maintenance year not Services expect was During $XX for working we which the was We cost incur of CapEx new CapEx reduction to during quarter. majority deployed CapEx. do to other period. in the the will expect electric any the CapEx, which related The additional quarter, million initiated maintenance $XX balance fleet million as result U.S. during electric the during and decrease of measures and be Well

sales SG&A. estimate annualized $XX the other impacts and pandemic the we those and salaried senior savings XXX(k) be restructuring last for the layoffs, suspended cut team compensation paying field expenses number will other to of workforce matching align our our all activity. including action XX% structure, relative by cost clear, we cost labor benefits these to current employees to attributable certain remaining of to changes savings in targeting approximately a respectively. our will We approximately pays conjunction the rationalize In took of hourly reduction perks, became diem employee We salary reduction is base XX% cost and We And and of cuts starting with XX% labor These of made attributable to months. contribute in believe that reduced levels to X%, to swift million Board with reduced active and management our As and program. XX% per of reorganization $XX for expense is fleets. to and employees. a XX% first. We COVID-XX our total, million practices. and attributable with XX compensation and In

materials of including Additionally, proactively components, working consumables. used, and spare reduce cost critical the we have parts been to

on to fees These $XX working should million overhead rental are associated professional or with contribute going costs contract substantially and cost We basis. reductions labor, other equipment, reduce forward. over annualized an eliminate

we have fleet-enhancing would equipment Finally, approximately canceled throughout $XX million with on delivered orders XXXX. CapEx, to have respect that been of

and exceptional earlier, equity loan. manage that interest issued boost in to to on $XX amendments to cycle amendments with loan we term fund to and expenses suspending by reducing same XX of related and liquidity million months, down period. flexibility runway, over over our million us convertible These for rate X% which term through ABL April, and amortization of fees the extend provide preserving As discussed cash preferred Joel our to payments this effort $XX scheduled concurrent used to our in was an

us increased the essentially our added concentration borrowing our a base. which of increases limits more allowing on rate FILO and facility, We access to feature, certain ABL advance under the ABL

XXXX. the we Finally, facilities pushed maturity dates of out into both

boost recovery. costs, not swift to In reduce market liquidity capitalize on taken withstand to and summary, action U.S. Services only company the to turmoil, position but the Well current has future

back the With that, over I'll concluding to remarks. for call Joel turn

Joel Broussard

to this and and thank Thanks, front like to working hard I this We like also during the extremely from line keep tested, on dedicated market Services emerges Well are to everyone express period. to U.S. safe crisis for would team at just sure leader. a for cycle their communities dedication The our Kyle. thanks pandemic as our fully is would employees persists. we efforts us difficult our tireless our making as COVID-XX and company

we'll over for turn to it Now, operator questions.

Operator

[Operator Instructions].

line comes Stifel. of with Our first question the Gengaro from Stephen

Stephen Gengaro

I everybody I I there's two to things want well. address. is guess hope

those The you contract. under your Can with just utilization a first are is, of the a should contract activity And and electric we that EQT. I that of conventional how believe Or baseload think the - signed should fleets, three is about assets four going of we that contract? a you contracts? the sort talk that put new of under expect forward? about

Joel Broussard

the be the the into for Thanks joining baseload. Thanks of It Yes. Those call. will going question. end a XXXX. is and for year at contracted the

Stephen Gengaro

year? be dynamic utilization the a within largely will there X fleets contracts? utilized throughout Is Or those those

Joel Broussard

Largely utilized.

other One try simply hour we were give to companies - the outperformed an basis, of going to opportunity And a they trials as January X. thought what a do which fleets. that month kicks stage to then them break the we us on pump for some on to per it quarter, do fourth want off going is electric test because a back in

Stephen Gengaro

about it, when were X you the floor? Okay. But press think about so release fleets there said you the working. fleet work, a I think in putting there additional think kind think work about assumed it we And was fleets should you then is mean I and those. I thought as think - were we popularized? said I put remain an EBITDA of you on there to it a process back cash to number flow equipment breakeven per is that

Joel Broussard

No.

Stephen Gengaro

are this fleets many manned How actually point? at

Joel Broussard

Yes.

X every have that work And X equipment electric on low to we seeing We of still especially breakeven, we flow few even fleets not cash with we on to - is. - with fuel week. they - some put are still manned evidently. furlough it still the because savings diesel have price other we're have plan for we work going And back to four as

would be I to million fleet plus. EBITDA $XX - per diesel imagine and $XX So should million X of fleet $X electric million

Operator

with Rice from comes & of Our line next question Johnson Company. Daniel the Burke

Daniel Burke

Kyle. for one Maybe

effort year loan talk will account job impressive as level Just well relief though, you on liquidity, with advances? the that access address particular. the term and what balance about And of What expect? do Could you the the in for ABL receivable to then mean as this ABL? declining AR maybe

Joel Broussard

ahead. go Kyle,

Kyle O'Neill

economics, structure. we All contract XX And at market over and different out service we with navigate of different package really able that looked and for Sure. through kind ABL sliced led our obviously thanks. any be scenarios that went loan modeling relief that we this and any is to period right, putting term next I type Sure, scenarios XX together able we an months. and the cost what mean easily lot incredibly and can have ways think and of diced work it lenders. to we're that tightness of worst-case us that And to cash and baseload variable withstand given liquidity forward of going time, by the removing debt a

Daniel Burke

that here utilized? mean guys, expect then helpful. least QX question conclusion? active. fleets had in sounded be moment, like X right you All the the to that fully a return will that based other much it I towards active have back upon the I of really, to to And X visibility fleets Stephen's those you come to Is only pretty sort the at maybe are just was Okay. That's that right. Joel, for And one

Joel Broussard

of be Yes. will Except But a for our test budget. break months taking in work - outpaced their don't see on fourth quarter, because currently we're Shell the for brand-new we trial electric we looking a fleet. X

Operator

of with the question next Simmons Glosser Our from Dylan Energy. comes line

Dylan Glosser

the in but pricing few in guys those missed to within might the and moving through have next contracts this, place the quarters. the utilization have contracts you I regards in forward

profitability fleet in you about the seen today? just that to talk quarters - As the fleets relative far ability your as in have remaining that guys your have place profitability you goes, can maintain a previous you guys with

Joel Broussard

Go Kyle. ahead,

Kyle O'Neill

think economics being of stayed have cost contracts Sure. fixed the said, same. That does had obviously, I mean, some I components. those the business the

out. So spread out fleets, fixed total Even taken overall, is steps that will. it's base, dramatic a lower to being while you though amount, we have dollar cost four reduce if is it being it spread over

contraction So I EBITDA in some would expect fleet. to per see

with I it's a that be think us. think competitive conclusion. it a reasonable for those would huge I having huge in But - that having is customers place going to benefit, contracts key advantage -

Dylan Glosser

as through about you release helping being you load you free cash quarters, talk next capital potential just base. benefit Can working a as there? some guys with few flow generate And the your for expectations far the guys

Joel Broussard

Go ahead, Kyle?

Kyle O'Neill

- think you over obviously, I work its like - see take timing do we'll any a down, the come release likely, this, largely place given receivable. I release sure. of would mean our see - of that things balance you'll yes, markets your see most Yes, of payments. the way in I think, will would think that I then time kind it a largely the And be huge of it kind into accounts quarter second next stabilize. you work that just

liquidity of the and down. So maintain Obviously, line. to availability come want our plenty will ABL we balance on

come error. as we'll to think I able - you'll liquidity adequate a So with balance our continue ABL, both down of see be that margin to still but maintain as well

Dylan Glosser

talk moving impairment depreciation the expectation guys can your And charge, Okay. forward? about lastly, with you for

Kyle O'Neill

will QX rate. that run going forward down Yes. relative likely or our our come XX% mean think to XX% I DD&A I

Operator

We Gengaro do question of from with line follow-up Stifel. Stephen the have

Stephen Gengaro

Just a follow-up.

million think quarter? $X I the my sort EBITDA and I to when you response others. about million mentioned, do e-fleet to Are on of You question in $XX second the an think in - going forward, be activity on - expect positive about you

Joel Broussard

I to don't nearly. got yes, do here, guidance but not don't to We EBITDA - we expect be don't do. positive. - We you I provide - want

Operator

to There for hand remarks. in Broussard I'd are questions queue. back closing no it to Joel like further

Joel Broussard

all, a for Thank gentlemen. it, ladies. Have today, the you, afternoon. joining nice call Appreciate

Operator

does this Thank for your conclude gentlemen, today's and teleconference. you Ladies participation.

have lines this and You wonderful time, at day. may disconnect a your

U.S. Well Services (USWS) 11 May 202020 Q1 Earnings call transcript