Keane Group (FRAC) Tops Q3 EPS by 6c, Revenues Beat; Offers 4Q Revenue Outlook Below Consensus

Keane Group (NYSE: FRAC) reported Q3 EPS of $0.28, $0.06 better than the analyst estimate of $0.22. Revenue for the quarter came in at $558.9 million versus the consensus estimate of $547.65 million.

• Reported third quarter 2018 revenue of $558.9 million, compared to second quarter 2018 of $578.5 million
• Realized third quarter 2018 net income of $30.8 million, compared to second quarter 2018 net income of $30.7 million
• Achieved third quarter 2018 Adjusted EBITDA of $100.9 million compared to second quarter 2018 of $111.3 million
• Reported annualized Adjusted Gross Profit per fleet of $20.5 million, compared to second quarter 2018 of $20.0 million
• Averaged 27.0 hydraulic fracturing fleets deployed in third quarter 2018; equivalent of 24.0 fully-utilized fleets
• Executed $88 million of stock repurchases to date, representing approximately 6% of outstanding shares
• Board of Directors authorized second stock repurchase program capacity reset to $100 million

“My first few months since joining Keane have been exciting, and I am pleased to be working alongside James, Greg and the rest of the leadership team,” said Robert Drummond, Chief Executive Officer of Keane. “I have long been impressed by Keane’s platform, and my experience in the first 90 days has underscored to me the quality of personnel, the strength of relationships and the consistency of execution. I look forward to partnering with our customers and building upon Keane’s track-record of success.”

“We executed well during the third quarter, delivering financial results slightly above the guidance ranges provided in September,” said Greg Powell, President and Chief Financial Officer of Keane. “While we were successful in maintaining annualized Adjusted Gross Profit per fleet, the record-high efficiencies we continue to achieve led to white space on our frac schedule, resulting in approximately 90% utilization on the 27 average fleets deployed during the quarter.”

Outlook

“While I am pleased with the efficiency we are seeing across our portfolio, driven by our partnership with high quality operators, we expect the fourth quarter to be impacted by the same efficiency-driven challenges faced in the third quarter, as well as customer budget exhaustion, some early-achievement of production targets, commodity price differentials and typical seasonality,” said Mr. Drummond. “While our business is not immune to these challenges, we believe they are temporary, and we’re utilizing the near-term market dynamics to invest in our people and equipment, ensuring that we are well-positioned to take advantage of the opportunities anticipated on the horizon. I am very optimistic about the long term fundamentals for our business over the next few years.”

GUIDANCE:

Keane Group sees Q4 2018 revenue of $470-500 million, versus the consensus of $529.15 million.

For earnings history and earnings-related data on Keane Group (FRAC) click here.

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