C&J Energy (CJ) Tops Q1 EPS by 14c, Revenues Beat

C&J Energy (NYSE: CJ) reported Q1 EPS of ($0.28), $0.14 better than the analyst estimate of ($0.42). Revenue for the quarter came in at $510.77 million versus the consensus estimate of $478.95 million.

"The sequential improvement in our consolidated revenue was driven by the strong operational execution of our fracturing business. The momentum from increasing our dedicated fleet count at the end of 2018 positioned us well as we entered the new year. We capitalized on refreshed E&P capital budgets from our customers that drove utilization improvement across our deployed fracturing fleets. This increase in utilization coupled with customer efficiencies resulted in a 22% sequential increase in fracturing revenue with solid improvement in profitability per deployed fleet. As we communicated when announcing our fourth quarter 2018 earnings in late February, our other service lines were negatively impacted by inclement weather and lower activity levels for much of the first quarter. These businesses also experienced varying degrees of pricing pressure, and we had unexpected downtime with several of our large diameter coiled tubing units. Since March, activity levels have been increasing, supported by better weather conditions and growth in the drilling rig count. We currently expect to deliver improved sequential results in all of our operating segments in the second quarter. We continue to focus on driving utilization by partnering with high efficiency customers who value our superior service quality and the safety record of our operations. As always, and regardless of market conditions, we are committed to creating long-term value for our shareholders by executing a disciplined capital deployment strategy to achieve superior returns, maintaining a strong balance sheet and generating free cash flow," commented C&J's President and Chief Executive Officer, Don Gawick.

Forward Outlook

Focusing on the second quarter of 2019, we currently expect improved financial results in each of our operating segments. At the end of the first quarter, we experienced a rebound in activity levels and many of the challenges experienced earlier in the quarter subsided. In our Completion Services segment, customer demand for our fracturing operations is stable, and wireline and pumpdown activity levels have improved nicely off the bottom reached during the first quarter. While the pricing environment remains challenged in our cementing business, we believe the drilling rig count with our smaller public and private customers in West Texas will continue to recover from the low point reached late in the first quarter. Our WC&I segment is expected to also benefit from the deployment of all our large diameter coiled tubing fleet during the second quarter. Now that the seasonally driven weather delays that are typical in both the fourth and first quarters have passed, our Well Support Services segment is experiencing steady customer demand for workover and well maintenance services. Clearly, the outlook is more favorable, and we are well positioned to grow both revenue and profitability across our service lines and for each of our operating segments. With that said, the oilfield services environment remains extremely competitive and customers remain very price sensitive. We will remain focused on the things that we can control and stay committed to generating targeted returns, maintaining capital spending discipline, and generating free cash flow in 2019.

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