Business Wire | Feb 23, 2021 04:37PM EST

ProPetro Reports Full Year and Fourth Quarter 2020 Results

Feb. 23, 2021

MIDLAND, Texas--(BUSINESS WIRE)--Feb. 23, 2021--ProPetro Holding Corp. ("ProPetro" or "the Company") (NYSE: PUMP) today announced financial and operational results for the full year and fourth quarter of 2020.

Full Year 2020 and Recent Operational Highlights

* Initiated transition towards lower emissions equipment with investment in fully electric DuraStim(r) and commitment to purchase Tier IV Dynamic Gas Blending (DGB) dual-fuel pumps. * Set company safety record with Full Year 2020 Total Recordable Incident Rate (TRIR) of 0.49. * All time company high operational efficiencies in 2020, including record pumping hours per day and record low downtime per day. * Reduced Hydraulic Horsepower (HHP) emissions footprint through recent commitment to permanently retire 150,000 HHP of Tier II Diesel equipment.

Full Year 2020 Financial Highlights

* Total revenue of $789 million as compared to the $2.1 billion in the full year 2019. * Net loss of $107 million as compared to net income of $163 million in the full year 2019. * Net cash provided by operating activities of $139 million as compared to $455 million in the full year 2019. * Adjusted EBITDA(1) of $141 million as compared to $519 million in the full year 2019. * Free Cash Flow(2) of approximately $45 million as compared to an approximately $40 million loss in 2019. * Effective Utilization of 10.2 fleets as compared to 23.9 fleets in the full year 2019. * Capital expenditures incurred(3) of $81 million as compared to $401 million in 2019 (capital expenditures paid as shown on the Statement of Cash Flows of $101 million during 2020).

Fourth Quarter 2020 Highlights

* Total revenue of $154 million as compared to the $134 million in the third quarter. * Net Loss of $44 million as compared to net loss of $29 million in the third quarter. * Net cash provided by operating activities of $21 million, consistent with the third quarter. * Adjusted EBITDA(1) increased to $24 million from $17 million in the third quarter. * Free Cash Flow(2) of approximately $9 million as compared to approximately $17 million in the third quarter. * Effective Utilization of 9.6 fleets compared to 8.5 fleets in the third quarter. * Impairment expense of $21 million related to the retirement of approximately 150,000 HHP of Tier II diesel pumping equipment. * Capital expenditures incurred(3) were $21 million as compared to $8 million in the third quarter (capital expenditures paid as shown on the Statement of Cash Flows of $14 million during the fourth quarter).

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

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 year ended December 31, 2020, net cash provided by operating activities of $139 million less net cash used in investing activities of $94 million result in a free cash flow of $45 million. During the year ended December 31, 2019, net cash provided by(2) operating activities of $455 million less net cash used in investing activities of $495 million result in a loss of $40 million. During the three months ended December 31, 2020, net cash provided by operating activities of $21 million less net cash used in investing activities of $12 million result in a free cash flow of $9 million. During the three months ended September 30, 2020, net cash provided by operating activities of $21 million less net cash used in investing activities of $4 million result in a free cash flow of $17 million.

Capital expenditures incurred represents all maintenance, growth and(3) conversion expenditures in the period, which may differ from the capital expenditures line in the Investing section of the Statement of Cash Flows.

Phillip Gobe, Chief Executive Officer, commented, "I would like to thank our customers and dedicated workforce for their resilience throughout 2020. Our best-in-class operations team steered our company to record efficiencies and safety performance despite a challenging market for oilfield services. We worked with our customers in the depths of a historic disruption to keep their operations going at a level that fit their needs, pulling through the downturn together as our relationships are designed to do. The innovation and teamwork I observed were impressive to say the least, especially considering the uncertainty we faced in our day to day lives. The accomplishments of ProPetro can be directly attributed to the close collaborative efforts of our teammates, customers and supply chain partners."

Fourth Quarter 2020 Financial Summary

Revenue for the fourth quarter of 2020 was $154 million, or 15% higher than $134 million for the third quarter of 2020. The increase was primarily attributable to increased activity. During the fourth quarter of 2020, 98.1% of total revenue was associated with pressure pumping services, consistent with the third quarter.

Costs of services, excluding depreciation and amortization of approximately $35.4 million, for the fourth quarter of 2020 increased to $116 million from $100 million during the third quarter of 2020 primarily due to increased activity. As a percentage of pressure pumping segment revenues, pressure pumping costs of services increased to 74.5% from 72.7% in the third quarter of 2020 primarily due to reactivation of fleets.

General and administrative expense was $20 million as compared to $22 million in the third quarter of 2020. General and administrative expense, exclusive of $3 million of stock-based compensation and $2 million of other general and administrative expense, was $15 million, or 10% of revenue, for the fourth quarter of 2020.

Net loss for the fourth quarter of 2020 totaled $44 million, or $0.44 per diluted share, versus a net loss of $29 million, or $0.29 per diluted share, for the third quarter of 2020.

Adjusted EBITDA increased to $24 million for the fourth quarter of 2020 from $17 million in the previous quarter.

Liquidity and Capital Spending

As of December 31, 2020, total cash was $69 million, and the Company was debt free. Total liquidity at the end of 2020 was $121 million, including cash and $52 million of available capacity under the Company's revolving credit facility.

Capital expenditures incurred during the fourth quarter of 2020 were $21 million mainly consisting of maintenance capital. Capital expenditures paid (as would appear in the investing section of the Statement of Cash Flows) in the fourth quarter were $14 million.

Operational Update

Consistent with the Company's previously announced plans, ProPetro has initiated a transition to lower emissions equipment through its commitment to purchase 50,000 HHP, or one fleet, of Tier IV DGB equipment as well as an additional investment of $17 million to convert legacy Tier II equipment to Tier IV DGB. The Company also plans to permanently retire 150,000 HHP of Tier II conventional equipment resulting in a $21 million impairment in the fourth quarter.

In the fourth quarter of 2020, the Company had an effective utilization of 9.6 fleets. In the first quarter of 2021 the Company now expects effective utilization of 9.5-11 fleets, which includes the recent extreme winter weather events in the Permian Basin.

Outlook

Mr. Gobe concluded, "Notwithstanding recent extreme weather impacts in Texas, we are excited for the opportunities ahead in 2021 as we work to capitalize on our competitive advantages of efficiency and collaboration. Considering the global recovery in commodity prices, ProPetro is well-positioned to benefit from increasing activity and service pricing in the Permian Basin. Importantly, we will strive to enhance our efficiencies and lean on our strong customer relationships to reinvest in technologies that improve the sustainability of our business. Our team is excited to prove, yet again, their ability to adapt and thrive in all conditions. Along with our customers, supply chain partners and stakeholders, we look forward to the opportunity to develop our sustainable, efficient and resilient business model."

Conference Call Information

The Company will host a conference call at 8:00 AM Central Time on Wednesday, February 24, 2021 to discuss financial and operating results for the full year and fourth quarter of 2020 and recent developments. This call will also be webcast, along with a presentation slide deck on ProPetro's website at www.propetroservices.com. The slide deck will be published on the website the morning of the call. 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 10151285.

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, please 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(r) 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 Years Ended

December September December December 31, December 31, 31, 30, 31,

2020 2020 2019 2020 2019

REVENUE - $ 154,343 $ 133,710 $ 434,793 $ 789,232 $ 2,052,314 ServicerevenueCOSTS ANDEXPENSESCost ofservices(exclusive of 115,646 99,592 305,693 584,330 1,470,356 depreciationandamortization)General andadministrative 19,681 21,817 31,103 86,717 105,076 (inclusive ofstock-basedcompensation)Depreciation 35,445 37,467 39,052 153,290 145,304 andamortizationLoss on 18,262 11,286 25,233 58,136 106,811 disposal ofassetsImpairment 21,349 - 3,405 38,002 3,405 ExpenseTotal costs 210,382 170,162 404,486 920,475 1,830,952 and expensesOPERATING (56,039 ) (36,452 ) 30,307 (131,243 ) 221,362 INCOME (LOSS)OTHER EXPENSE:Interest (174 ) (137 ) (1,463 ) (2,383 ) (7,141 )expenseOther expense (291 ) (312 ) (178 ) (874 ) (717 )

Total other (465 ) (449 ) (1,642 ) (3,257 ) (7,858 )expenseINCOME (LOSS) (56,504 ) (36,901 ) 28,666 (134,500 ) 213,504 BEFORE INCOMETAXESINCOME TAX 12,393 7,717 (5,990 ) 27,480 (50,494 )(EXPENSE)BENEFITNET INCOME $ (44,111 ) $ (29,184 ) $ 22,675 $ (107,020 ) $ 163,010 (LOSS) NET INCOME(LOSS) PERCOMMON SHARE:Basic $ (0.44 ) $ (0.29 ) $ 0.23 $ (1.06 ) $ 1.62

Diluted $ (0.44 ) $ (0.29 ) $ 0.22 $ (1.06 ) $ 1.57

WEIGHTEDAVERAGE COMMONSHARESOUTSTANDING:Basic 100,897 100,897 100,618 100,829 100,472

Diluted 100,897 100,897 103,055 100,829 103,750

PROPETRO HOLDING CORP.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share data)(Unaudited)December 31, 2020

December 31, 2019

ASSETSCURRENT ASSETS:Cash and cash equivalents$

68,772

$

149,036

Accounts receivable - net of allowance for credit losses of $1,497 and $1,049, respectively84,244

212,183

Inventories2,729

2,436

Prepaid expenses11,199

10,815

Other current assets782

1,121

Total current assets167,726

375,591

PROPERTY AND EQUIPMENT - Net of accumulated depreciation880,477

1,047,535

OPERATING LEASE RIGHT-OF-USE ASSETS709

989

OTHER NONCURRENT ASSETS:Goodwill-

9,425

Other noncurrent assets1,827

2,571

Total other noncurrent assets1,827

11,996

TOTAL ASSETS$

1,050,739

$

1,436,111

LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Accounts payable$

79,153

$

193,096

Operating lease liabilities334

302

Finance lease liabilities-

2,831

Accrued and other current liabilities24,676

36,343

Accrued interest payable-

394

Total current liabilities104,163

232,966

DEFERRED INCOME TAXES75,340

103,041

LONG-TERM DEBT-

130,000

NONCURRENT OPERATING LEASE LIABILITIES465

799

Total liabilities179,968

466,806

COMMITMENTS AND CONTINGENCIESSHAREHOLDERS' 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, 100,898,445 and 100,624,099 shares issued, respectively101

101

Additional paid-in capital835,115

826,629

Retained earnings35,555

142,575

Total shareholders' equity870,771

969,305

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$

1,050,739

$

1,436,111

PROPETRO HOLDING CORP.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share data)(Unaudited) December 31, December 31, 2020 2019

ASSETSCURRENT ASSETS:Cash and cash equivalents $ 68,772 $ 149,036

Accounts receivable - net of allowance for 84,244 212,183 credit losses of $1,497 and $1,049, respectivelyInventories 2,729 2,436

Prepaid expenses 11,199 10,815

Other current assets 782 1,121

Total current assets 167,726 375,591

PROPERTY AND EQUIPMENT - Net of accumulated 880,477 1,047,535 depreciationOPERATING LEASE RIGHT-OF-USE ASSETS 709 989

OTHER NONCURRENT ASSETS:Goodwill - 9,425

Other noncurrent assets 1,827 2,571

Total other noncurrent assets 1,827 11,996

TOTAL ASSETS $ 1,050,739 $ 1,436,111

LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Accounts payable $ 79,153 $ 193,096

Operating lease liabilities 334 302

Finance lease liabilities - 2,831

Accrued and other current liabilities 24,676 36,343

Accrued interest payable - 394

Total current liabilities 104,163 232,966

DEFERRED INCOME TAXES 75,340 103,041

LONG-TERM DEBT - 130,000

NONCURRENT OPERATING LEASE LIABILITIES 465 799

Total liabilities 179,968 466,806

COMMITMENTS AND CONTINGENCIESSHAREHOLDERS' EQUITY:Preferred stock, $0.001 par value, 30,000,000 - - shares authorized, none issued, respectivelyCommon stock, $0.001 par value, 200,000,000 101 101 shares authorized, 100,898,445 and 100,624,099shares issued, respectivelyAdditional paid-in capital 835,115 826,629

Retained earnings 35,555 142,575

Total shareholders' equity 870,771 969,305

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,050,739 $ 1,436,111

PROPETRO HOLDING CORP.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)Twelve Months Ended December 30,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)$

(107,020

)

$

163,010

Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization153,290

145,304

Impairment expense38,002

3,405

Deferred income taxes(27,701

)

48,758

Amortization of deferred debt issuance costs543

542

Stock-based compensation9,100

7,776

Provision for credit losses448

949

Loss on disposal of assets58,136

106,812

Changes in operating assets and liabilities:Accounts receivable127,491

(10,177

)

Other current assets1,978

1,351

Inventories(293

)

3,917

Prepaid expenses(232

)

(4,386

)

Accounts payable(95,697

)

(25,242

)

Accrued and other current liabilities(18,527

)

13,088

Accrued interest(394

)

183

Net cash provided by operating activities139,124

455,290

CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures(100,603

)

(502,894

)

Proceeds from sale of assets6,386

7,595

Net cash used in investing activities(94,217

)

(495,299

)

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from borrowings-

110,000

Repayments of borrowings(130,000

)

(50,000

)

Payment of finance lease obligations(30

)

(272

)

Proceeds from insurance financing6,821

-

Repayments of insurance financing(1,348

)

(4,547

)

Proceeds from exercise of equity awards-

1,164

Tax withholdings paid for net settlement of equity awards(614

)

-

Net cash (used in) provided by financing activities(125,171

)

56,345

NET DECREASE IN CASH AND CASH EQUIVALENTS(80,264

)

16,336

CASH AND CASH EQUIVALENTS - Beginning of period149,036

132,700

CASH AND CASH EQUIVALENTS - End of period$

68,772

$

149,036

PROPETRO HOLDING CORP.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited) Twelve Months Ended December 30,

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss) $ (107,020 ) $ 163,010

Adjustments to reconcile net income (loss) to netcash provided by operating activities:Depreciation and amortization 153,290 145,304

Impairment expense 38,002 3,405

Deferred income taxes (27,701 ) 48,758

Amortization of deferred debt issuance costs 543 542

Stock-based compensation 9,100 7,776

Provision for credit losses 448 949

Loss on disposal of assets 58,136 106,812

Changes in operating assets and liabilities:Accounts receivable 127,491 (10,177 )

Other current assets 1,978 1,351

Inventories (293 ) 3,917

Prepaid expenses (232 ) (4,386 )

Accounts payable (95,697 ) (25,242 )

Accrued and other current liabilities (18,527 ) 13,088

Accrued interest (394 ) 183

Net cash provided by operating activities 139,124 455,290

CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures (100,603 ) (502,894 )

Proceeds from sale of assets 6,386 7,595

Net cash used in investing activities (94,217 ) (495,299 )

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from borrowings - 110,000

Repayments of borrowings (130,000 ) (50,000 )

Payment of finance lease obligations (30 ) (272 )

Proceeds from insurance financing 6,821 -

Repayments of insurance financing (1,348 ) (4,547 )

Proceeds from exercise of equity awards - 1,164

Tax withholdings paid for net settlement of equity (614 ) - awardsNet cash (used in) provided by financing (125,171 ) 56,345 activitiesNET DECREASE IN CASH AND CASH EQUIVALENTS (80,264 ) 16,336

CASH AND CASH EQUIVALENTS - Beginning of period 149,036 132,700

CASH AND CASH EQUIVALENTS - End of period $ 68,772 $ 149,036

Reportable Segment InformationThree Months Ended

December 31, 2020

September 30, 2020

($ in thousands)Pressure Pumping

All Other

Total

Pressure Pumping

All Other

Total

Service revenue$

151,4180

$

2,925

$

154,343

$

131,321

$

2,389

$

133,710

Adjusted EBITDA$

34,672

$

(10,896

)

$

23,776

$

26,662

$

(9,308

)

$

17,354

Depreciation and amortization$

34,453

$

992

$

35,445

$

36,326

$

1,141

$

37,467

Capital expenditures incurred$

21,109

$

48

$

21,158

$

7,571

$

370

$

7,941

Years Ended

December 31, 2020

December 31, 2019

($ in thousands)Pressure Pumping

All Other

Total

Pressure Pumping

All Other

Total

Service revenue$

773,474

$

15,758

$

789,232

$

2,001,627

$

50,687

$

2,052,314

Adjusted EBITDA$

174,031

$

(32,570

)

$

141,461

$

533,760

$

(14,691

)

$

519,069

Depreciation and amortization$

148,659

$

4,631

$

153,290

$

139,348

$

5,956

$

145,304

Capital expenditures incurred$

78,154

$

3,091

$

81,245

$

387,119

$

13,552

$

400,671

Non-GAAP Financial Measures

This presentation references "Adjusted EBITDA" and "Free Cash Flow," which are non-GAAP financial measures. We define EBITDA as our earnings, before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets, (ii) stock-based compensation, and (iii) other unusual or nonrecurring (income)/expenses, such as impairment charges, severance, costs related to asset acquisitions, costs related to SEC investigation and class action lawsuits and one-time professional and advisory fees. Free cash flow (FCF) is defined as net cash flow provided by operating activities less net cash used in investing activities. These non-GAAP financial measures are not intended to be an alternative to any measure calculated in accordance with GAAP. We believe the presentation of Adjusted EBITDA and Free Cash Flow provide useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to Adjusted EBITDA. Net cash flow provided from operating activities is the GAAP measure most directly comparable to Free Cash Flow. 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 these non-GAAP financial measures in isolation or as a substitute for an analysis of our results as reported under GAAP. Further, Adjusted EBITDA and Free Cash Flow may be defined differently by other companies in our industry, and our definitions of Adjusted EBITDA and Free Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Reconciliations of non-GAAP financial measures to the most directly comparable measures calculated in accordance with GAAP, are set forth in the Appendix hereto.

Reportable SegmentInformation Three Months Ended

December 31, 2020 September 30, 2020

Pressure All Other Total Pressure All Other Total($ in thousands) Pumping Pumping

Service revenue $ 151,4180 $ 2,925 $ 154,343 $ 131,321 $ 2,389 $ 133,710

Adjusted EBITDA $ 34,672 $ (10,896 ) $ 23,776 $ 26,662 $ (9,308 ) $ 17,354

Depreciation and $ 34,453 $ 992 $ 35,445 $ 36,326 $ 1,141 $ 37,467 amortizationCapital expenditures $ 21,109 $ 48 $ 21,158 $ 7,571 $ 370 $ 7,941 incurred Years Ended

December 31, 2020 December 31, 2019

Pressure All Other Total Pressure All Other Total($ in thousands) Pumping Pumping

Service revenue $ 773,474 $ 15,758 $ 789,232 $ 2,001,627 $ 50,687 $ 2,052,314

Adjusted EBITDA $ 174,031 $ (32,570 ) $ 141,461 $ 533,760 $ (14,691 ) $ 519,069

Depreciation and $ 148,659 $ 4,631 $ 153,290 $ 139,348 $ 5,956 $ 145,304 amortizationCapital expenditures $ 78,154 $ 3,091 $ 81,245 $ 387,119 $ 13,552 $ 400,671 incurred Non-GAAP Financial Measures

This presentation references "Adjusted EBITDA" and "Free Cash Flow," which are non-GAAP financial measures. We define EBITDA as our earnings, before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets, (ii) stock-based compensation, and (iii) other unusual or nonrecurring (income)/expenses, such as impairment charges, severance, costs related to asset acquisitions, costs related to SEC investigation and class action lawsuits and one-time professional and advisory fees. Free cash flow (FCF) is defined as net cash flow provided by operating activities less net cash used in investing activities. These non-GAAP financial measures are not intended to be an alternative to any measure calculated in accordance with GAAP. We believe the presentation of Adjusted EBITDA and Free Cash Flow provide useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to Adjusted EBITDA. Net cash flow provided from operating activities is the GAAP measure most directly comparable to Free Cash Flow. 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 these non-GAAP financial measures in isolation or as a substitute for an analysis of our results as reported under GAAP. Further, Adjusted EBITDA and Free Cash Flow may be defined differently by other companies in our industry, and our definitions of Adjusted EBITDA and Free Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Reconciliations of non-GAAP financial measures to the most directly comparable measures calculated in accordance with GAAP, are set forth in the Appendix hereto.

Reconciliation of Net Income (loss) to Adjusted EBITDA Three Months Ended

December 31, 2020 September 30, 2020

($ in Pressure All Total Pressure All Other Totalthousands) Pumping Other Pumping

Net (loss) $ $ $ $ $ (8,264) $income (38,130) (5,981) (44,111) (20,920) (29,184)

Depreciation 34,453 992 35,445 36,326 1,141 37,467andamortizationInterest - 174 174 - 137 137expenseIncome taxe - (12,393) (12,393) - (7,717) (7,717)expenseLoss on 17,000 1,261 18,262 11,256 30 11,286disposal ofassetsImpairment 21,349 - 21,349 - - -expenseStock-based - 3,132 3,132 - 2,535 2,535compensationOther expense - 291 291 - 312 312

Other generaland - 620 620 - 2,481 2,481administrativeexpense ^(1)Retentionbonus and - 1,007 1,007 - 37 37severanceexpenseAdjusted $ 34,672 $ $ 23,776 $ 26,662 $ (9,308) $ 17,354EBITDA (10,896)

Years Ended

December 31, 2020 December 31, 2019

($ in Pressure All Total Pressure All Other Totalthousands) Pumping Other Pumping

Net (loss) $ $ $ $ $ $income (68,271) (38,749) (107,020) 281,090 (118,080) 163,010

Depreciation 148,659 4,631 153,290 139,348 5,956 145,304andamortizationInterest 1 2,381 2,382 51 7,090 7,141expenseIncome tax - (27,480) (27,480) - 50,494 50,494expenseLoss on 56,659 1,477 58,136 106,178 633 106,811disposal ofassetsImpairment 36,908 1,095 38,003 - 3,405 3,405expenseStock-based - 9,100 9,100 - 7,776 7,776compensationOther expense - 874 874 - 717 717

Other generaland - 13,038 13,038 - 25,208 25,208administrativeexpenseDeferred IPObonus,Retention 75 1,065 1,140 7,093 2,110 9,203bonus andseveranceexpenseAdjusted $ $ $ 141,463 $ $ $EBITDA 174,031 (32,568) 533,760 (14,691) 519,069

(1) Other general and administrative expense relates to nonrecurring professional fees paid to external consultants in connection with the Company's expanded audit committee review, SEC investigation and shareholders' litigation.^(1) Other general and administrative expense relates to nonrecurringprofessional fees paid to external consultants in connection with theCompany's expanded audit committee review, SEC investigation andshareholders' litigation.Reconciliation of Cash from Operating Activities to Free Cash FlowThree Months Ended

March 31,

June 30,

September 30,

December 31,

($ in thousands)2020

2020

2020

2020

Cash from Operating Activities$

61,724

$

35,186

$

21,116

$

21,098

Cash used in Investing Activities(46,557

)

(31,468

)

(4,154

)

(12,038

)

Free Cash Flow$

15,167

$

3,718

$

16,962

$

9,060

View source version on businesswire.com: https://www.businesswire.com/news/home/20210223006143/en/

CONTACT: ProPetro Holding Corp Sam Sledge, 432-688-0012 Chief Strategy and Administrative Officer sam.sledge@propetroservices.com