Author: Newsdesk

ProPetro Reports FinancialResults for the First Quarter of 2021

MIDLAND, Texas–(BUSINESS WIRE)–
ProPetro Holding Corp. (“ProPetro” or “the Company”) (NYSE: PUMP) today announced financial and operational results for the first quarter of 2021.

First Quarter 2021 and Recent Highlights

• Total revenue for the quarter was $161 million compared to $154 million for the fourth quarter of 2020.
• Net loss for the quarter was $20 million, or $0.20 per diluted share, compared to net loss of $44 million, or $0.44 per diluted share, for the fourth quarter of 2020.
• Adjusted EBITDA⁽¹⁾ for the quarter was $20 million compared to $24 million for the fourth quarter of 2020.
• Financial results were negatively impacted by eight days of lost revenue during extreme winter weather in Texas during February, and the Company absorbing certain operational costs, including expenses related to fleet reactivations.
• Effective utilization for the first quarter was 10.3 fleets compared to 9.6 fleets for the fourth quarter of 2020.
• Net cash provided by operating activities for the quarter of $17 million as compared to $21 million for the fourth quarter of 2020.
• Negative Free Cash Flow⁽²⁾ of approximately $5 million as compared to positive Free Cash Flow of approximately $9 million for the fourth quarter of 2020.

  ⁽¹⁾ Adjusted EBITDA is a Non-GAAP financial measure and is described and reconciled to net income (loss) in the table under “Non-GAAP Financial Measures.”

  ⁽²⁾ Free cash flow (“FCF”) is a Non-GAAP financial measure and is defined as net cash flow provided from operating activities less net cash used in investing activities. During the quarter ended March 31, 2021, net cash provided by operating activities of $17 million less net cash used in investing activities of $22 million resulted in free cash flow of $(5) million. During the quarter ended December 31, 2020, net cash provided by operating activities of $21 million less net cash used in investing activities of $12 million resulted in free cash flow of $9 million.

Phillip Gobe, Chief Executive Officer, commented, “Despite challenges posed by extreme weather, our customer-focused culture once again drove our operational efficiencies to new heights through the continued strong collaboration between our teammates and customers as we began 2021. The best-in-class ProPetro operating team delivered another quarter of excellent execution at the wellhead, further proving our competitive advantage in the premier oil play in the United States, the Permian Basin.”

First Quarter 2021 Financial Summary

Revenue for the first quarter of 2021 was $161 million compared to revenue of $154 million for fourth quarter of 2020. The 5% increase was primarily attributable to increased effectively utilized fleet count, which was partially offset by approximately $16 million of lost revenue during the eight days of suspended operations during the freeze in February.

Cost of services, excluding depreciation and amortization of approximately $33 million, for the first quarter of 2021 increased slightly to $123 million from $116 million during the fourth quarter of 2020. Contributing to the increase were higher activity levels, direct labor and certain other operational costs that were not passed through to customers as a result of downtime from severe weather along with additional fleet reactivation costs.

General and administrative expense of $20 million for the first quarter of 2021 was flat with the fourth quarter of 2020. General and administrative expense, exclusive of $2 million of non-recurring items, was $18 million, or 11% of revenue, for the first quarter of 2021 compared to $15 million in the fourth quarter of 2020, or 10% of revenue. The slight increase in general and administrative expense, net of non-recurring items, of approximately $3 million was a result of an increase in certain costs, including insurance and compensation-related expenses.

Net loss for the first quarter of 2021 totaled $20 million, or $0.20 per diluted share, versus net loss of $44 million, or $0.44 per diluted share, for the fourth quarter of 2020. The fourth quarter 2020 financial results were impacted by an approximate $21 million impairment expense.

Adjusted EBITDA decreased to $20 million for the first quarter of 2021 from $24 million for the fourth quarter of 2020. The sequential decline in Adjusted EBITDA was primarily attributable to lost profitability during the extreme winter weather event in February and fleet reactivation costs, which we believe adversely impacted Adjusted EBITDA by approximately $5 million.

Liquidity and Capital Spending

As of March 31, 2021, total cash was $56 million and the Company remained debt free. Total liquidity at the end of the first quarter of 2021 was $114 million including cash and $58 million of available capacity under the Company’s revolving credit facility. As of May 3, 2021 total cash was $51 million and had no debt outstanding. Total liquidity as of May 3, 2021 was $111 million including cash and $60 million of available capacity under the Company’s revolving credit facility.

Capital expenditures incurred during the first quarter of 2021 were $32 million, $18 million of which was maintenance spending, with the remainder allocated to Tier IV DGB purchases and conversions. Capital expenditures paid (as appears in the Investing Activities section of the Statement of Cash Flows) in the first quarter were $22 million. Based on our current and projected activity levels for 2021, and consistent with prior guidance, which is highly dependent on market conditions, the Company expects full year 2021 incurred capital expenditures to be between $115 million and $130 million. Our full year incurred capital expenditure guidance includes approximately $37 million allocated to our investment in 90,000 HHP of Tier IV DGB dual-fuel equipment and the remainder mostly comprised of maintenance spending. Full Year capital expenditures paid may differ slightly due to the timing of payments.

Outlook

Mr. Gobe concluded, “As the COVID-19 vaccine rollout continues to progress, the strengthening outlook for crude oil demand has positive implications for the oilfield services sector. While we are excited to see signs of improvement in the broader economy, we remain disciplined in our approach to enhancing shareholder value. Our conservative, debt-free balance sheet, combined with our unique advantages in collaboration and wellsite execution, will continue to differentiate our Company as we move through the remainder of the year and into a multi-year recovery in the Permian Basin. Supporting this outlook is our unwavering commitment to efficient operations and sustainability in support of our customers’ long-term goals. ProPetro remains positioned as a premier oilfield services partner for leading operators in the Permian Basin.”

Updated Conference Call Information

The Company will host a conference call at 8:30 AM Central Time on Wednesday, May 5, 2021 to discuss financial and operating results for the first quarter of 2021. The call will also be webcast on ProPetro’s website at www.propetroservices.com. To access the conference call, U.S. callers may dial toll free 1-844-340-9046 and international callers may dial 1-412-858-5205. Please call ten minutes ahead of the scheduled start time to ensure a proper connection. A replay of the conference call will be available for one week following the call and can be accessed toll free by dialing 1-877-344-7529 for U.S. callers, 1-855-669-9658 for Canadian callers, as well as 1-412-317-0088 for international callers. The access code for the replay is 10155044.

About ProPetro

ProPetro Holding Corp. is a Midland, Texas-based oilfield services company providing pressure pumping and other complementary services to leading upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources. For more information visit www.propetroservices.com.

Forward-Looking Statements

Except for historical information contained herein, the statements and information in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “may,” “could,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” and other expressions that are predictions of, or indicate, future events and trends and that do not relate to historical matters identify forward‑looking statements. Our forward‑looking statements include, among other matters, statements about our business strategy, industry, future profitability, expected fleet utilization, sustainability efforts, the future performance of newly improved technology (such as our DuraStim® fleets), expected capital expenditures and the impact of such expenditures on our performance and capital programs. A forward‑looking statement may include a statement of the assumptions or bases underlying the forward‑looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable.

Although forward‑looking statements reflect our good faith beliefs at the time they are made, forward-looking statements are subject to a number of risks and uncertainties that may cause actual events and results to differ materially from the forward-looking statements. Such risks and uncertainties include the volatility of and recent declines in oil prices, the operational disruption and market volatility resulting from the COVID-19 pandemic and other factors described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, particularly the “Risk Factors” sections of such filings, and other filings with the Securities and Exchange Commission (the “SEC”). In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse impact on it, including matters related to shareholder litigation and the SEC investigation. Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements and are urged to carefully review and consider the various disclosures made in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings made with the SEC from time to time that disclose risks and uncertainties that may affect the Company’s business. The forward-looking statements in this news release are made as of the date of this news release. ProPetro does not undertake, and expressly disclaims, any duty to publicly update these statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure is required by law.

PROPETRO HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
		Three Months Ended
		March 31, 2021					December 31, 2020					March 31, 2020
REVENUE – Service revenue		$	161,458				154,343					395,069
COSTS AND EXPENSES
Cost of services (exclusive of depreciation and amortization)		123,378					115,646					300,848
General and administrative (inclusive of stock-based compensation)		20,201					19,681					24,937
Depreciation and amortization		33,478					35,445					40,205
Impairment Expense		—					21,349					16,654
Loss on disposal of assets		13,052					18,262					19,854
Total costs and expenses		190,109					210,382					402,498
OPERATING LOSS		(28,651		)			(56,039		)			(7,429		)
OTHER INCOME (EXPENSE):
Interest expense		(176		)			(174		)			(1,281		)
Other income (expense)		1,789					(291		)			(3		)
Total other income (expense)		1,613					(465		)			(1,284		)
LOSS BEFORE INCOME TAXES		(27,038		)			(56,504		)			(8,713		)
INCOME TAX EXPENSE		6,663					12,393					909
NET LOSS		(20,375		)			(44,111		)			(7,804		)
NET LOSS PER COMMON SHARE:
Basic		$	(0.20	)			$	(0.44	)			$	(0.08	)
Diluted		$	(0.20	)			$	(0.44	)			$	(0.08	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		101,550					100,897					100,687
Diluted		101,550					100,897					100,687

PROPETRO HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
		March 31, 2021				December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	55,859			$	68,772
Accounts receivable – net of allowance for credit losses of $0 and $1,497, respectively		110,386				84,244
Inventories		2,329				2,729
Prepaid expenses		7,853				11,199
Other current assets		14				782
Total current assets		176,441				167,726
PROPERTY AND EQUIPMENT – net of accumulated depreciation		866,050				880,477
OPERATING LEASE RIGHT-OF-USE ASSETS		636				709
OTHER NONCURRENT ASSETS:
Other noncurrent assets		1,656				1,827
Total other noncurrent assets		1,656				1,827
TOTAL ASSETS		$	1,044,783			$	1,050,739
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	108,931			$	79,153
Accrued and other current liabilities		19,186				24,676
Operating lease liabilities		342				334
Total current liabilities		128,459				104,163
DEFERRED INCOME TAXES		68,677				75,340
NONCURRENT OPERATING LEASE LIABILITIES		378				465
Total liabilities		$	197,514			$	179,968
COMMITMENTS AND CONTINGENCIES (Note 10)
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.001 par value, 30,000,000 shares authorized, none issued, respectively		—				—
Common stock, $0.001 par value, 200,000,000 shares authorized, 102,057,815 and 100,912,777 shares issued, respectively		102				101
Additional paid-in capital		831,987				835,115
Retained earnings		15,180				35,555
Total shareholders’ equity		847,269				870,771
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,044,783			$	1,050,739

PROPETRO HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
		Three Months Ended March 31,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(20,375)			$	(7,804)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		33,478				40,205
Impairment expense		—				16,654
Deferred income tax benefit		(6,663)				(1,312)
Amortization of deferred debt issuance costs		134				135
Stock-based compensation		2,487				471
Provision for credit losses		—				4,291
Loss on disposal of assets		13,052				19,854
Changes in operating assets and liabilities:
Accounts receivable		(25,698)				(14,486)
Other current assets		325				1,138
Inventories		401				(860)
Prepaid expenses		3,383				2,920
Accounts payable		18,579				10,080
Accrued and other current liabilities		(2,095)				(9,431)
Accrued interest		—				(131)
Net cash provided by operating activities		17,008				61,724
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(22,494)				(47,290)
Proceeds from sale of assets		224				733
Net cash used in investing activities		(22,270)				(46,557)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings		—				(20,000)
Payment of finance lease obligation		—				(30)
Repayments of insurance financing		(2,037)				—
Tax withholdings paid for net settlement of equity awards		(5,614)				(456)
Net cash used in financing activities		(7,651)				(20,486)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(12,913)				(5,319)
CASH AND CASH EQUIVALENTS – Beginning of period		68,772				149,036
CASH AND CASH EQUIVALENTS – End of period		$	55,859			$	143,717

Reportable Segment Information
	Three Months Ended
	March 31, 2021													December 31, 2020
	Pressure Pumping				All Other					Total				Pressure Pumping				All Other					Total
($ In thousands)
Service revenue	$	158,191			$	3,267				$	161,458			$	151,418			$	2,925				$	154,343
Adjusted EBITDA	31,870				(11,853		)			20,017				34,672				(10,896		)			23,776
Depreciation and amortization	32,513				965					33,478				34,453				992					35,445
Capital expenditures	$	30,023			$	2,305				$	32,328			$	21,109			$	48				$	21,158

Non-GAAP Financial Measures

Adjusted EBITDA is not a financial measure presented in accordance with GAAP. We believe that the presentation of this non-GAAP financial measure provides useful information to investors in assessing our financial condition and results of operations. Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. Non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Non-GAAP financial measures have important limitations as analytical tools because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider Adjusted EBITDA in isolation or as a substitute for an analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Reconciliation of Net Loss to Adjusted EBITDA
		Three Months Ended
		March 31, 2021															December 31, 2020
		Pressure Pumping					All Other					Total					Pressure Pumping					All Other					Total
Net loss		$	(13,675	)			$	(6,700	)			$	(20,375	)			$	(38,130	)			$	(5,981	)			$	(44,111	)
Depreciation and amortization		32,513					965					33,478					34,453					992					35,445
Impairment expense		—					—					—					21,349					—					21,349
Interest expense		—					176					176					—					174					174
Income tax benefit		—					(6,663		)			(6,663		)			—					(12,393		)			(12,393		)
Loss on disposal of assets		13,032					20					13,052					17,000					1,261					18,262
Stock-based compensation		—					2,487					2,487					—					3,132					3,132
Other expense		—					(1,789		)			(1,789		)			—					291					291
Other general and administrative expense, net (1)		—					(961		)			(961		)			—					620					620
Severance expense		—					612					612					—					1,007					1,007
Adjusted EBITDA		$	31,870				$	(11,853	)			$	20,017				$	34,672				$	(10,896	)			$	23,776

(1) Other general and administrative expense, (net) relates to nonrecurring professional fees paid to external consultants in connection with the Company’s pending SEC investigation and shareholder litigation, net of insurance recoveries.

		Three Months Ended
($ In thousands)		March 31, 2021					December 31, 2020
Cash from Operating Activities		$	17,008				$	21,098
Cash used in Investing Activities		(22,270		)			(12,038		)
Free Cash Flow		$	(5,262	)			$	9,060

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504006160/en/

ProPetro Holding Corp

David Schorlemer, 432-688-0012

Chief Financial Officer

[email protected]

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Oil/Gas Energy

MEDIA:

Logo

Solid Start to 2021 Along with Continued Margin Strength

Utz Brands, Inc. Comments on Recent SEC Statement Related to Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)

HANOVER, Pa.–(BUSINESS WIRE)–
Utz Brands, Inc. (NYSE:UTZ), a leading U.S. manufacturer, marketer and distributor of high-quality, branded snacking products, today announced in a Current Report on Form 8-K, that as a result of recently issued guidance provided by the staff of the Securities and Exchange Commission on April 12, 2021 for all SPAC-related companies regarding the classification of their warrants for accounting and reporting purposes (the “Statement”), it will restate its previously issued fiscal year 2020 consolidated financial statements and third fiscal quarter 2020 unaudited consolidated financial statements.

The restatement pertains to the accounting treatment for public warrants, forward purchase warrants and private placement warrants (collectively, the “Warrants”) that were outstanding at the time of the business combination between Collier Creek Holdings and Utz Brands Holdings, LLC on August 28, 2020 (the “Business Combination”). Consistent with market practice among SPACs, we had been accounting for the Warrants as equity under a fixed accounting model. However, consistent with the SEC’s recently issued Statement, we intend to restate historical financial statements such that the Warrants are accounted for as liabilities and marked-to-market each reporting period (the “restatement”). In general, under the mark-to-market accounting model, as the stock price of our Class A Common Stock increases, the warrant liability increases, and we recognize additional non-operating, non-cash expense in our income statement – with the opposite when the stock price of our Class A Common Stock declines. We do not anticipate the restatement to impact our previously communicated non-GAAP operating metrics for fiscal years 2020 (actual) or 2021 (guidance), including Adjusted EBITDA.

As a result of the restatement and the increase in the stock price of our Class A Common Stock over the applicable period, we expect to recognize incremental fiscal year 2020 non-operating expense between $90 million to $100 million. There will be no impact to our previously reported net cash flow or Adjusted EBITDA. These estimates are subject to change as management completes the restatement, and our independent registered public accounting firm has not audited or reviewed these estimates. As a result, the expected financial impact described above is preliminary and subject to change.

The following provides additional detail regarding how we currently anticipate the restatement will impact our various financial statements:

• Opening Balance Sheet Impact: As of the date of the Business Combination (August 28, 2020), the fair value of the Warrants will be reflected as warrant liabilities in our balance sheet with a corresponding offset within equity of the accounting successor.
• Income Statement Impact: Subsequent to the close of the Business Combination, any change in the fair value of the Warrants is recognized in our income statement below operating profit as “Change in fair value of warrant liabilities” with a corresponding amount recognized in our balance sheet. In our case, this is recognized as warrant liabilities in our balance sheet.
• Balance Sheet Impact: As is noted above, the change in the balance of the warrant liabilities on our balance sheet is impacted by the fair value changes of the Warrants. When Warrants are exercised, the fair value of the liability is reclassified within equity. The cash received for the exercise of Warrants is reflected in cash and cash equivalents, and the corresponding offset is also reflected in equity.
• Cash Flow Impact: The impact of the changes in fair value of the Warrants has no impact on net cash provided by (used for) operating activities. The cash received for the exercise of Warrants is reflected in cash flows from financing activities.
• Statement of Equity Impact: The impact to the equity portion of the balance sheet as of the opening balance sheet is highlighted above. Subsequent exercises of the Warrants result in a reduction of our warrant liabilities with a corresponding increase to equity.

Finally, as of today, we have approximately 7.2 million private placement warrants outstanding, which represents approximately one-third of the warrants originally issued, as all public warrants and forward purchase warrants have since been exercised or redeemed.

About Utz Brands, Inc.

Utz Brands, Inc. (NYSE: UTZ) manufactures a diverse portfolio of savory snacks through popular brands including Utz®, On The Border® Chips & Dips, Golden Flake®, Zapp’s®, Good Health®, Boulder Canyon®, Hawaiian® Brand, and TORTIYAHS!®, among others.

After a century with strong family heritage, Utz continues to have a passion for exciting and delighting consumers with delicious snack foods made from top-quality ingredients. Utz’s products are distributed nationally through grocery, mass merchandisers, club, convenience, drug and other channels. Based in Hanover, Pennsylvania, Utz operates fourteen facilities located in Pennsylvania, Alabama, Arizona, Illinois, Indiana, Louisiana, Washington, and Massachusetts. For more information, please visit www.utzsnacks.com or call 1-800-FOR-SNAX.

Investors and others should note that Utz announces material financial information to its investors using its investor relations website (https://investors.utzsnacks.com/investors/default.aspx), SEC filings, press releases, public conference calls and webcasts. Utz uses these channels, as well as social media, to communicate with our stockholders and the public about the Company, the Company’s products and other issues. It is possible that the information that Utz posts on social media could be deemed to be material information. Therefore, Utz encourages investors, the media, and others interested in the Company to review the information posted on the social media channels listed on Utz’s investor relations website.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Utz’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Utz’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside Utz’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: the risk that the recently completed business combination with Collier Creek Holdings and other acquisitions recently completed by Utz (collectively, the “Business Combinations”) disrupt plans and operations; the ability to recognize the anticipated benefits of such Business Combinations, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably and retain its key employees; the outcome of any legal proceedings that may be instituted against the Company following the consummation of such Business Combinations; changes in applicable law or regulations; costs related to the Business Combinations; the inability of the Company to maintain the listing of the Company’s Class A Common Stock on the New York Stock Exchange; the inability of the Company to develop and maintain effective internal controls; the risk that the Company’s gross profit margins may be adversely impacted by a variety of factors, including variations in raw materials pricing, retail customer requirements and mix, sales velocities and required promotional support; changes in consumers’ loyalty to the Company’s brands due to factors beyond the Company’s control; changes in demand for the Company’s products affected by changes in consumer preferences and tastes or if the Company is unable to innovate or market its products effectively; costs associated with building brand loyalty and interest in the Company’s products, which may be affected by the Company’s competitors’ actions that result in the Company’s products not suitably differentiated from the products of competitors; fluctuations in results of operations of the Company from quarter to quarter because of changes in promotional activities; the possibility that the Company may be adversely affected by other economic, business or competitive factors; and other risks and uncertainties set forth in the section entitled “Risk Factors” and “Forward-Looking Statements” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “Commission”) for the fiscal year ended January 3, 2021 and other reports filed by the Company with the Commission. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that Utz considers immaterial or which are unknown. It is not possible to predict or identify all such risks. Utz cautions that the foregoing list of factors is not exclusive. Utz cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Utz does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, except as otherwise required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504006142/en/

Investor Contact

Kevin Powers

Utz Brands, Inc.

[email protected]

Media Contact

Kevin Brick

Utz Brands, Inc.

[email protected]

KEYWORDS: United States North America Pennsylvania

INDUSTRY KEYWORDS: Professional Services Retail Convenience Store Supermarket Food/Beverage Accounting

MEDIA:

Logo

Pros Holdings, Inc. Reports First Quarter 2021 Financial Results

HOUSTON–(BUSINESS WIRE)–PROS Holdings, Inc. (NYSE: PRO), a provider of AI-powered solutions that optimize selling in the digital economy, today announced financial results for the first quarter ended March 31, 2021.

“I’m incredibly proud of how our team executed in the first quarter,” stated CEO Andres Reiner. “We exceeded the high end of our guidance range across all metrics and welcomed some amazing new customers to the PROS family. We’re confident in our business and the momentum we’re seeing, and as a result, we’re happy to be able to provide annual guidance once again.”

First Quarter 2021 Financial Highlights

Key financial results for the first quarter 2021 are shown below. Throughout this press release, all dollar figures are in millions, except net loss per share. Unless otherwise noted, all results are on a reported basis and are compared with the prior-year period.

	GAAP						Non-GAAP
	Q1 2021		Q1 2020		Change		Q1 2021		Q1 2020		Change
Revenue:
Total Revenue	$61.4		$66.3		(7)%		n/a		n/a		n/a
Subscription Revenue	$42.6		$43.2		(1)%		n/a		n/a		n/a
Subscription and Maintenance Revenue	$52.3		$55.7		(6)%		n/a		n/a		n/a
Profitability:
Gross Profit	$34.9		$37.6		(7)%		$36.1		$39.1		(8)%
Operating Loss	$(20.6)		$(21.4)		$0.8		$(11.6)		$(13.1)		$1.5
Net Loss	$(22.0)		$(22.7)		$0.7		$(9.7)		$(9.8)		$0.1
Net Loss Per Share	$(0.50)		$(0.53)		$0.03		$(0.22)		$(0.23)		$0.01
Adjusted EBITDA	n/a		n/a		n/a		$(9.4)		$(11.4)		$2.1
Cash:
Net Cash Used in Operating Activities	$(4.4)		$(24.2)		$19.7		n/a		n/a		n/a
Free Cash Flow	n/a		n/a		n/a		$(4.6)		$(25.5)		$20.9

The attached table provides a summary of PROS results for the period, including a reconciliation of GAAP to non-GAAP metrics.

Recent Business Highlights

• Welcomed new customers that are adopting our digital selling technology such as Dedalus, Deluxe, Florida Water Products, and United Airlines, among others.

• Designated as one of the 2021 Best Workplaces in Texas by Great Place to Work, in recognition of PROS people first culture and commitment to creating an inclusive environment where employees can bring their authentic selves to work.

• Named inaugural winner of the 2021 Artificial Intelligence Excellence Award for Machine Learning, in recognition of our market-leading AI-powered digital selling innovations.

• Named a Microsoft Top 350 U.S. Partner by Redmond Channel Partner, placing PROS in the top 1% of Microsoft partners, continued proof of our successful partnership.

• Appointed Katrina Klier as Chief Marketing Officer to lead PROS global marketing strategy, responsible for fueling revenue growth by optimizing demand generation, increasing engagement, and amplifying brand visibility.

Financial Outlook

PROS currently anticipates the following based on an estimated 44.3 million basic weighted average shares outstanding for the second quarter of 2021 and a 22% non-GAAP estimated tax rate for the second quarter and a full year 2021.

	Q2 2021 Guidance		v. Q2 2020 at Mid-Point		Full Year 2021 Guidance		v. Prior Year at Mid-Point
Total Revenue	$61.0 to $62.0		(4)%		$250.5 to $253.5		—%
Subscription Revenue	$43.0 to $43.5		2%		$176.5 to $179.5		4%
ARR	n/a		n/a		$211.0 to $216.0		2%
Non-GAAP Loss Per Share	$(0.23) to $(0.21)		$(0.08)		n/a		n/a
Adjusted EBITDA	$(10.0) to $(9.0)		$(3.8)		$(36.0) to $(33.0)		$(6.9)
Free Cash Flow	n/a		n/a		$(39.0) to $(35.0)		$16.3

Conference Call

In conjunction with this announcement, PROS Holdings, Inc. will host a conference call on Thursday, May 4, 2021, at 4:45 p.m. ET to discuss the Company’s financial results and business outlook. To access this call, dial 1-877-407-9039 (toll-free) or 1-201-689-8470. The live and archived webcasts of this call can be accessed under the “Investor Relations” section of the Company’s website at www.pros.com.

A telephone replay will be available until Tuesday, May 18, 2021, at 1-844-512-2921 (toll-free) or 1-412-317-6671 using the pass code 13718107.

About PROS

PROS Holdings, Inc. (NYSE: PRO) provides AI-powered solutions that optimize selling in the digital economy. PROS solutions make it possible for companies to price, configure and sell their products and services in an omnichannel environment with speed, precision and consistency. Our customers, who are leaders in their markets, benefit from decades of data science expertise infused into our industry solutions. To learn more, visit www.pros.com.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the business impact and duration of the coronavirus (COVID-19) pandemic; our financial outlook; expectations; ability to achieve future growth and profitability; management’s confidence and optimism; positioning; customer successes; demand for our software solutions; pipeline; business expansion; revenue; subscription revenue; ARR; non-GAAP loss per share; adjusted EBITDA; free cash flow; shares outstanding and effective tax rate. The forward-looking statements contained in this press release are based upon our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates or expectations will be achieved. Factors that could cause actual results to differ materially from those described herein include, among others, risks related to: (a) the impact of the COVID-19 pandemic, such as the scope and duration of the outbreak and timeframe for recovery of the travel industry, (b) cybersecurity, (c) increasing business from customers and maintaining subscription renewal rates, (d) managing our growth effectively, (e) disruptions from our third party data center, software, data, and other unrelated service providers, (f) implementing our solutions, (g) cloud operations, (h) intellectual property and third-party software, (i) acquiring and integrating businesses and/or technologies, (j) catastrophic events, (k) operating globally, including economic and commercial disruptions, (l) potential downturns in sales, (m) software innovation, (n) competition, (o) market acceptance of our software innovations, (p) maintaining our corporate culture, (q) personnel risks including loss of any key employees, (r) expanding and training our direct and indirect sales force, (s) evolving data privacy, cyber security and data localization laws, (t) our debt repayment obligations, (u) the timing of revenue recognition and cash flow from operations, (v) migrating customers to our latest cloud solutions, and (w) returning to profitability. Additional information relating to the risks and uncertainties affecting our business is contained in our filings with the SEC. These forward-looking statements represent our expectations as of the date hereof. Subsequent events may cause these expectations to change, and PROS disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

PROS has provided in this release certain non-GAAP financial measures, including non-GAAP gross profit and margin, non-GAAP income (loss) from operations or non-GAAP operating loss, annual recurring revenue, adjusted EBITDA, free cash flow, non-GAAP subscription revenue, non-GAAP tax rate, non-GAAP net income (loss) or non-GAAP net loss, and diluted earnings (loss) per share or non-GAAP net loss per share. PROS uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating PROS’ ongoing operational performance and cloud transition. Non-GAAP gross margin can be compared to gross margin which can be calculated from the condensed consolidated statements of income (loss) by dividing gross profit by total revenue. Non-GAAP gross margin is similarly calculated but first adds back to gross profit the portion of certain of the non-GAAP adjustments described below attributable to cost of revenue. Non-GAAP subscription margin can be compared to subscription margin which can be calculated from the condensed consolidated statements of income (loss) by dividing subscription gross profit (subscription revenue minus subscription cost) by subscription revenue. Non-GAAP subscription margin is similarly calculated but first subtracts out from subscription cost the portion of certain of the non-GAAP adjustments described below attributable to cost of subscription. These items and amounts are presented in the Supplemental Schedule of Non-GAAP Financial Measures.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure as detailed above. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release, and can be found, along with other financial information, in the investor relations portion of our website. PROS’ use of non-GAAP financial measures may not be consistent with the presentations by similar companies in PROS’ industry. PROS has also provided in this release certain forward-looking non-GAAP financial measures, including non-GAAP income (loss) from operations, annual recurring revenue, non-GAAP loss per share, adjusted EBITDA, free cash flow, non-GAAP tax rates, and calculated billings (collectively the “non-GAAP financial measures”) as follows:

Non-GAAP income (loss) from operations: Non-GAAP income (loss) from operations excludes the impact of share-based compensation, amortization of acquisition-related intangibles and new headquarters noncash rent expense. Non-GAAP income (loss) from operations excludes the following items from non-GAAP estimates:

• Share-Based Compensation: Although share-based compensation is an important aspect of compensation for our employees and executives, our share-based compensation expense can vary because of changes in our stock price and market conditions at the time of grant, varying valuation methodologies, and the variety of award types. Since share-based compensation expense can vary for reasons that are generally unrelated to our performance during any particular period, we believe this could make it difficult for investors to compare our current financial results to previous and future periods. Therefore, we believe it is useful to exclude share-based compensation in order to better understand our business performance and allow investors to compare our operating results with peer companies.
• Amortization of Acquisition-Related Intangibles: We view amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s research and development efforts, trade names, customer lists and customer relationships, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period.
• New Headquarters Noncash Rent Expense: Noncash rent expense is related to our new corporate headquarters and is incurred prior to occupation of this facility. These amounts are unrelated to our core performance during any particular period and we believe this could make it difficult for investors to compare our current financial results to previous and future periods. Therefore, we believe it is useful to exclude the noncash rent expense on the preoccupied new headquarters in order for investors to better understand our business performance and allow investors to compare our operating results with peer companies.

Non-GAAP loss per share: Non-GAAP net income (loss) excludes the items listed above as excluded from non-GAAP income (loss) from operations and also excludes amortization of debt discount and issuance costs and the taxes related to these items and the items excluded from non-GAAP income (loss) from operations. Estimates of non-GAAP loss per share are calculated by dividing estimates for non-GAAP loss by our estimate of shares outstanding for the future period. In addition to the items listed above as excluded from non-GAAP income (loss) from operations, non-GAAP net income (loss) excludes the following items from non-GAAP estimates:

• Amortization of Debt Discount and Issuance Costs: Amortization of debt discount and issuance costs are related to our convertible notes. These amounts are unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.
• Taxes: We exclude the tax consequences associated with non-GAAP items to provide investors with a useful comparison of our operating results to prior periods and to our peer companies because such amounts can vary significantly. In the fourth quarter of 2014, we concluded that it is more likely than not that we will be unable to fully realize our deferred tax assets and accordingly, established a valuation allowance against those assets. The ongoing impact of the valuation allowance on our non-GAAP effective tax rate has been eliminated to allow investors to better understand our business performance and compare our operating results with peer companies.

Annual Recurring Revenue: Annual Recurring Revenue (“ARR”) is used to assess the trajectory of our cloud business. ARR means, as of a specified date, the contracted recurring revenue, including contracts with a future start date, together with annualized overage fees incurred above contracted minimum transactions, and excluding perpetual and term license agreements recognized as license revenue in accordance with GAAP. ARR should be viewed independently of revenue and any other GAAP measure.

Non-GAAP Tax Rate: The estimated non-GAAP effective tax rate adjusts the tax effect to quantify the impact of the excluded non-GAAP items.

Adjusted EBITDA: Adjusted EBITDA is defined as GAAP net income (loss) before interest expense, provision for income taxes, depreciation and amortization, as adjusted to eliminate the effect of stock-based compensation cost, amortization of acquisition-related intangibles, depreciation and amortization, new headquarters noncash rent expense, debt extinguishment fees and capitalized internal-use software development costs. Adjusted EBITDA should not be considered as an alternative to net income (loss) as an indicator of our operating performance.

Free Cash Flow: Free cash flow is a non-GAAP financial measure which is defined as net cash provided by (used in) operating activities, less capital expenditures (excluding expenditures for PROS new headquarters), purchases of other (non-acquisition-related) intangible assets and capitalized internal-use software development costs.

Calculated Billings: Calculated billings is defined as total subscription, maintenance and support revenue plus the change in recurring deferred revenue in a given period.

These non-GAAP estimates are not measurements of financial performance prepared in accordance with GAAP, and we are unable to reconcile these forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information described above which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.

PROS Holdings, Inc. Condensed Consolidated Balance Sheets (In thousands, except share and per share amounts) (Unaudited)
		March 31, 2021					December 31, 2020
Assets:
Current assets:
Cash and cash equivalents		$	323,929				$	329,134
Trade and other receivables, net of allowance of $3,563 and $4,122, respectively		53,665					49,578
Deferred costs, current		5,883					5,941
Prepaid and other current assets		10,668					9,647
Total current assets		394,145					394,300
Property and equipment, net		35,629					36,504
Operating lease right-of-use assets		29,044					30,689
Deferred costs, noncurrent		11,735					12,544
Intangibles, net		7,467					8,341
Goodwill		49,563					50,044
Other assets, noncurrent		7,505					7,549
Total assets		$	535,088				$	539,971
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable and other liabilities		$	6,317				$	4,246
Accrued liabilities		16,734					13,065
Accrued payroll and other employee benefits		17,958					25,514
Operating lease liabilities, current		5,897					5,937
Deferred revenue, current		113,478					99,156
Total current liabilities		160,384					147,918
Deferred revenue, noncurrent		8,528					11,372
Convertible debt, net, noncurrent		287,169					218,028
Operating lease liabilities, noncurrent		42,529					44,099
Other liabilities, noncurrent		1,449					1,517
Total liabilities		500,059					422,934
Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued		—					—
Common stock, $0.001 par value, 75,000,000 shares authorized; 48,933,488 and 48,142,267 shares issued, respectively; 44,252,765 and 43,461,544 shares outstanding, respectively		49					48
Additional paid-in capital		518,338					589,040
Treasury stock, 4,680,723 common shares, at cost		(29,847		)			(29,847		)
Accumulated deficit		(449,472		)			(438,773		)
Accumulated other comprehensive loss		(4,039		)			(3,431		)
Total stockholders’ equity		35,029					117,037
Total liabilities and stockholders’ equity		$	535,088				$	539,971

PROS Holdings, Inc. Condensed Consolidated Statements of Income (Loss) (In thousands, except per share data) (Unaudited)
		Three Months Ended March 31,
		2021					2020
Revenue:
Subscription		$	42,648				$	43,170
Maintenance and support		9,674					12,523
Total subscription, maintenance and support		52,322					55,693
Services		9,056					10,618
Total revenue		61,378					66,311
Cost of revenue:
Subscription		13,801					12,864
Maintenance and support		2,258					2,790
Total cost of subscription, maintenance and support		16,059					15,654
Services		10,433					13,073
Total cost of revenue		26,492					28,727
Gross profit		34,886					37,584
Operating expenses:
Selling and marketing		21,564					24,920
Research and development		20,458					19,136
General and administrative		13,454					14,880
Loss from operations		(20,590		)			(21,352		)
Convertible debt interest and amortization		(1,576		)			(2,062		)
Other income, net		286					831
Loss before income tax provision		(21,880		)			(22,583		)
Income tax provision		149					152
Net loss		$	(22,029	)			$	(22,735	)
Net loss per share:
Basic and diluted		$	(0.50	)			$	(0.53	)
Weighted average number of shares:
Basic and diluted		44,245					43,102

PROS Holdings, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Three Months Ended March 31,
		2021					2020
Operating activities:
Net loss		$	(22,029	)			$	(22,735	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,068					3,420
Amortization of debt discount and issuance costs		373					1,712
Share-based compensation		8,170					6,347
Provision for doubtful accounts		(559		)			2,596
Changes in operating assets and liabilities:
Accounts and unbilled receivables		(3,610		)			8,889
Deferred costs		867					763
Prepaid expenses and other assets		(395		)			(701		)
Operating lease right-of-use assets and liabilities		(173		)			868
Accounts payable and other liabilities		2,012					579
Accrued liabilities		3,918					(3,840		)
Accrued payroll and other employee benefits		(7,573		)			(20,055		)
Deferred revenue		11,502					(2,016		)
Net cash used in operating activities		(4,429		)			(24,173		)
Investing activities:
Purchases of property and equipment		(1,300		)			(10,993		)
Capitalized internal-use software development costs		—					(412		)
Purchase of equity securities		(501		)			—
Net cash used in investing activities		(1,801		)			(11,405		)
Financing activities:
Proceeds from employee stock plans		1,596					1,364
Tax withholding related to net share settlement of stock awards		(352		)			(20,172		)
Net cash provided by (used in) financing activities		1,244					(18,808		)
Effect of foreign currency rates on cash		(219		)			91
Net change in cash and cash equivalents		(5,205		)			(54,295		)
Cash and cash equivalents:
Beginning of period		329,134					306,077
End of period		$	323,929				$	251,782

PROS Holdings, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share data) (Unaudited) We use these non-GAAP financial measures to assist in the management of the Company because we believe that this information provides a more consistent and complete understanding of the underlying results and trends of the ongoing business due to the uniqueness of these charges. See breakdown of the reconciling line items on page 10.
		Three Months Ended March 31,										Year over Year
		2021					2020					% change
GAAP gross profit		$	34,886				$	37,584				(7	)%
Non-GAAP adjustments:
New headquarters noncash rent expense		—					162
Amortization of acquisition-related intangibles		421					842
Share-based compensation		826					524
Non-GAAP gross profit		$	36,133				$	39,112				(8	)%
Non-GAAP gross margin		58.9		%			59.0		%
GAAP loss from operations		$	(20,590	)			$	(21,352	)			(4	)%
Non-GAAP adjustments:
New headquarters noncash rent expense		—					555
Amortization of acquisition-related intangibles		867					1,383
Share-based compensation		8,170					6,347
Total Non-GAAP adjustments		9,037					8,285
Non-GAAP loss from operations		$	(11,553	)			$	(13,067	)			(12	)%
Non-GAAP loss from operations % of total revenue		(18.8		)%			(19.7		)%
GAAP net loss		$	(22,029	)			$	(22,735	)			(3	)%
Non-GAAP adjustments:
Total Non-GAAP adjustments affecting loss from operations		9,037					8,285
Amortization of debt discount and issuance costs		373					1,702
Tax impact related to non-GAAP adjustments		2,895					2,923
Non-GAAP net loss		$	(9,724	)			$	(9,825	)			(1	)%
Non-GAAP diluted loss per share		$	(0.22	)			$	(0.23	)
Shares used in computing non-GAAP loss per share		44,245					43,102

PROS Holdings, Inc. Supplemental Schedule of Non-GAAP Financial Measures Increase (Decrease) in GAAP Amounts Reported (In thousands) (Unaudited)
		Three Months Ended March 31,
		2021				2020
Cost of Subscription Items
New headquarters noncash rent expense		—				14
Amortization of acquisition-related intangibles		408				683
Share-based compensation		148				87
Total cost of subscription items		$	556			$	784
Cost of Maintenance Items
New headquarters noncash rent expense		—				26
Amortization of acquisition-related intangibles		13				159
Share-based compensation		104				66
Total cost of maintenance items		$	117			$	251
Cost of Services Items
New headquarters noncash rent expense		—				122
Share-based compensation		574				371
Total cost of services items		$	574			$	493
Sales and Marketing Items
New headquarters noncash rent expense		—				104
Amortization of acquisition-related intangibles		446				541
Share-based compensation		2,224				1,866
Total sales and marketing items		$	2,670			$	2,511
Research and Development Items
New headquarters noncash rent expense		—				190
Share-based compensation		1,826				1,507
Total research and development items		$	1,826			$	1,697
General and Administrative Items
New headquarters noncash rent expense		—				99
Share-based compensation		3,294				2,450
Total general and administrative items		$	3,294			$	2,549

PROS Holdings, Inc. Supplemental Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands) (Unaudited)
		Three Months Ended March 31,
		2021					2020
Adjusted EBITDA
GAAP Loss from Operations		$	(20,590	)			$	(21,352	)
Amortization of acquisition-related intangibles		867					1,383
New headquarters noncash rent expense		—					555
Share-based compensation		8,170					6,347
Depreciation and other amortization		2,201					2,037
Capitalized internal-use software development costs		—					(412		)
Adjusted EBITDA		$	(9,352	)			$	(11,442	)
Net cash used in operating activities		$	(4,429	)			$	(24,173	)
Purchase of property and equipment (excluding new headquarters)		(203		)			(957		)
Capitalized internal-use software development costs		—					(412		)
Free Cash Flow		$	(4,632	)			$	(25,542	)
Guidance
		Q2 2021 Guidance
		Low					High
Adjusted EBITDA
GAAP Loss from Operations		$	(22,200	)			$	(21,200	)
Amortization of acquisition-related intangibles		900					900
Share-based compensation		9,100					9,100
Depreciation and other amortization		2,200					2,200
Adjusted EBITDA		$	(10,000	)			$	(9,000	)
		Full Year 2021 Guidance
		Low					High
Adjusted EBITDA
GAAP Loss from Operations		$	(84,400	)			$	(81,400	)
Amortization of acquisition-related intangibles		3,400					3,400
Share-based compensation		36,700					36,700
Depreciation and other amortization		8,300					8,300
Adjusted EBITDA		$	(36,000	)			$	(33,000	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504006136/en/

Investor Contact:

PROS Investor Relations

Belinda Overdeput

713-335-5895

[email protected]

Media Contact:

Amanda Parrish

832-924-4731

[email protected]

KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: Mobile/Wireless Technology Security Other Technology Software Networks Internet Data Management Retail Online Retail

MEDIA:

Logo