Eco-stim Energy Solutions (ESES) Misses Q2 EPS by 15c, Revenues Miss

Eco-stim Energy Solutions (NASDAQ: ESES) reported Q2 EPS of ($0.22), $0.15 worse than the analyst estimate of ($0.07). Revenue for the quarter came in at $18.2 million versus the consensus estimate of $28.3 million.

• Revenues for Q2 2018 grew 114% over Q2 2017 to $18.2 million from $8.5 million; revenues for Q2 2018 increased by $0.4 million as compared with Q1 2018
• Two U.S. fleets combined into one “super fleet” to improve efficiency; resulted in new Company record with 130 stages completed in June 2018 and Company record fleet revenue set in July 2018
• U.S. gross margin improved from a loss of $3.4 million in Q1 2018 to a $2.4 million loss in Q2 2018; ~95% of Q2 2018 loss was incurred prior to formation of the “super fleet”
• CNG-fueled turbine pumps put to work in July in the pump down market to leverage lower fuel cost advantage
• Gross margin in Argentina improved from a loss of $0.3 million in Q1 2018 to a positive gross margin in Q2 2018 of $0.1 million

J. Chris Boswell, President and Chief Executive Officer stated, “In June we combined our two U.S. frac fleets into one larger “super fleet” to improve our cash flow following poor performance in April and May while attempting to operate two fleets simultaneously in a weakening spot market. We are pleased with the efforts of the “super fleet” to date as evidenced by the completion of a Company record 130 stages in June and a Company record revenue generation in July. The creation of the “super fleet” has improved the cash flow profile as ~95% of the U.S. gross margin losses for Q2 2018 were experienced prior to the formation of the “super fleet.” We have continued to reduce costs and generated strong revenues in July which should provide further improvements in our U.S. gross margin.

Our Argentina fleet generated a positive gross margin for the quarter. We continue to work under a transition agreement, and we expect to continue providing services for a transition period ending on or before December 2018, depending on the volume of work to be performed for our customer. The Company has hired an Investment Bank to help evaluate strategic alternatives for its Argentina business including a sale, merger or joint venture. The Company believes that the Argentina market is growing and undersupplied, and we look forward to recognizing the value inherent in this business.

Lastly, we are working hard to maximize shareholder value and take advantage of the significant hard asset value of our businesses, our high-quality workforce and the recent improvements in our operational performance. In that regard, the Company has engaged Johnson Rice & Company to provide advice regarding various initiatives to enhance shareholder value.”

For earnings history and earnings-related data on Eco-stim Energy Solutions (ESES) click here.

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