Keane Group (FRAC) Misses Q1 EPS by 7c, Q2 Rev. Guidance Misses

Keane Group (NYSE: FRAC) reported Q1 EPS of ($0.21), $0.07 worse than the analyst estimate of ($0.14). Revenue for the quarter came in at $421.7 million versus the consensus estimate of $413.86 million.

GUIDANCE:

Keane Group sees Q2 2019 revenue of $400-420 million, versus the consensus of $447.98 million.

For the second quarter of 2019, total revenue is expected to range between $400 million and $420 million. Keane’s hydraulic fracturing fleet for the second quarter of 2019 will include 29.0 deployable fleets, of which 23.0 are expected to be deployed. Keane expects to achieve utilization of approximately 90% of its deployed fleets, resulting in the equivalent of approximately 21.0 fully-utilized hydraulic fracturing fleets during the second quarter. Annualized Adjusted Gross Profit per fleet, based on 21.0 fully-utilized fleets, is expected to range between $17 million and $19 million.

Revenue for our Other Services business is expected to be in the range of $6 to $7 million on gross margins of approximately 10%. Our guidance for the second quarter of 2019 reflects our recent decision to idle cementing activities in one of our regions.

“Our first quarter performance is carrying momentum into the second quarter,” said Greg Powell. “We have realized roughly half of the approximately $20 million of adjusted EBITDA tailwinds we previously guided exiting the first quarter. The $10 million of strategic investments we have made in market-ready and staffed capacity has paid off, as we were successful in adding a dedicated agreement while further reducing our costs. Of the remaining $10 million of expected tailwinds associated with white space in the frac calendar, most remains to be realized. We remain confident that certain of our customers will be successful in eliminating these bottlenecks, resulting in additional earnings upside in future periods.”

“We are encouraged by the recent improvement in commodity prices, and are well positioned to grow as the market permits,” said Robert Drummond. “We continue to plan our business assuming a range-bound environment, but we’ll continue to stay nimble and responsive to the market. We are very well-positioned to deliver further earnings upside, including a strong base of activity, improvements in the frac calendar, and dry powder associated with our 6 idle market-ready fleets requiring no additional investment. We’re committed to generating industry leading returns, maintaining a strong balance sheet and allocating capital most efficiently, as we continue to expect more than $100 million of free cash flow generation in 2019.”

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

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