Keane Group sees Q1 revenue $530M, consensus $524.22M
The company expects normalized revenue to increase driven by price increases from contract re-openers on a portion of its portfolio. Normalized annualized Adjusted Gross Profit per fleet is expected to be approximately $18M for the Q1. Normalized expectations exclude transitional factors, including inclement weather experienced early in the first quarter, combined with ongoing frac sand supply challenges. These factors are expected to impact Q1 results by up to approximately $30M of revenue and between $500,000-$2.0M of annualized Adjusted Gross Profit per fleet. Keane expects to remain at full utilization of 26 hydraulic fracturing fleets. "The industry continues to face strain in frac sand supply, driven by weather-induced rail congestion, combined with mine issues due to rail-related output constraints, flooding impacts, delays on local mine start-ups and continued growth in demand," said the company. "We are proactively managing these transitory issues facing the entire industry to limit the impact to our customers and business." Keane recently entered into a dedicated agreement with an existing customer for one of the newbuild fleets on order, and expects to deploy the fleet upon delivery by the end of the Q2. Keane remains on schedule for the remaining two of its previously ordered newbuild fleets, with one to be delivered and deployed by the end of the Q2, and a second by the end of the Q3. The company remains in advanced discussions with multiple existing and new customers for the remaining two fleets, and expect to execute dedicated agreements by the end of the Q1. Keane continues to expect all three newbuilds to initially generate annualized Adjusted Gross Profit per fleet of greater than $20M. Within the Other Services segment, Keane expects to ramp activity in its cementing business throughout the year, and by the end of 2018, expect to generate run-rate revenue of between $70M-$90M on margins of between 20%-25%.