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Keane Announces Second Quarter 2018 Financial and Operational Results

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Keane Group, Inc. ("Keane" or the "Company") today reported second
quarter 2018 financial and operational results.

Results and Recent Highlights

  • Reported second quarter 2018 revenue of $578.5 million, compared to
    first quarter 2018 of $513.0 million
  • Realized second quarter 2018 net income of $30.7 million, compared to
    first quarter 2018 net loss of $8.2 million
  • Achieved second quarter 2018 Adjusted EBITDA of $111.3 million,
    compared to first quarter 2018 of $91.3 million
  • Reported annualized Adjusted Gross Profit per fleet of $20.0 million,
    compared to first quarter 2018 of $17.0 million
  • Averaged 26.3 deployed hydraulic fracturing fleets during second
    quarter 2018; exited quarter with 27 deployed fleets
  • Newbuild fleet 28 deployed in July; entered dedicated agreement for
    fleet 29 to be deployed in fourth quarter of 2018
  • Completed second quarter 2018 stock repurchases of $40.1 million;
    Board authorized program reset to $100 million
  • In July 2018, acquired approximately 90,000 HHP for cash consideration
    of $34.6 million

Second Quarter 2018 Financial Results

Revenue for the second quarter of 2018 totaled $578.5 million, an
increase of 13% compared to revenue for the first quarter of 2018 of
$513.0 million. Net income for the second quarter of 2018 was $0.28 per
share, compared to net loss of $0.07 per share for the first quarter of
2018. Excluding one-time items and other adjustments further discussed
below, net income for the second quarter of 2018 was $38.5 million,
compared to net income of $21.1 million for the first quarter of 2018.

Adjusted EBITDA for the second quarter of 2018 totaled $111.3 million,
compared to $91.3 million for the first quarter of 2018. Adjusted Gross
Profit for the second quarter of 2018 was $130.8 million, compared to
$109.6 million for the first quarter of 2018.

Selling, general and administrative expenses for the second quarter of
2018 totaled $24.1 million, compared to $33.9 million for the first
quarter of 2018. Excluding one-time items, selling, general and
administrative expenses for the second quarter of 2018 totaled $18.9
million compared to $17.8 million for the first quarter of 2018.

"Our business continues to perform at a high level," said James Stewart,
Chairman and Chief Executive Office of Keane. "Our strong second quarter
results were driven by leading execution and utilization, the deployment
of additional horsepower at attractive pricing, and the abatement of
transitory issues impacting the industry during the first quarter. Our
dedicated fleet model of partnering with top-tier customers continues to
prove its strength and resilience, differentiating our business and its
outlook."

"Ahead of our previous guidance, we increased average annualized gross
profit per fleet to $20 million during the second quarter," said Greg
Powell, President and Chief Financial Officer of Keane. "Our ability to
deliver is supported by the caliber of our customers and their shared
commitment to safety, efficiency, and returns."

Completions Services

Revenue for Completion Services totaled $569.9 million for the second
quarter of 2018, an increase of 12% compared to the first quarter of
2018 of $507.5 million, driven by price increases from contract
re-openers on a portion of our portfolio, improved efficiency following
the abatement of transitory issues experienced in the first quarter of
2018, and contribution from a newbuild fleet added in June 2018. Keane
averaged 26.3 deployed hydraulic fracturing fleets for the second
quarter of 2018. Adjusted Gross Profit in Completion Services totaled
$131.2 million for the second quarter of 2018, compared to $110.4
million for the first quarter of 2018.

Annualized revenue per average deployed hydraulic fracturing fleet for
the second quarter of 2018 was $86.7 million, compared to $78.1 million
for the first quarter of 2018. Annualized Adjusted Gross Profit per
fleet totaled $20.0 million, compared to $17.0 million for the first
quarter of 2018.

Other Services

Revenue in Other Services for the second quarter of 2018 totaled $8.6
million, compared to $5.6 million for the first quarter of 2018, driven
by the continued ramp of the Company's cementing business.

Second Quarter 2018 One-Time Items and Other Adjustments

Adjusted EBITDA for the second quarter of 2018 excludes $7.9 million of
one-time items, primarily driven by non-cash stock compensation expense,
a non-cash book loss on the sale of idle real estate and fees related to
establishing initial agency ratings associated with the Company's new
term loan facility.

Balance Sheet and Capital

Total debt outstanding as of June 30, 2018 was $341.3 million, net of
unamortized debt discounts and unamortized deferred charges and
excluding capital lease obligations, compared to $274.7 million as of
March 31, 2018. During the second quarter of 2018, Keane entered into a
new $350 million senior secured term loan facility, of which, $282.5
million was used to pay the company's existing term loan facility. In
the quarter, we used cash on hand to fund the $19.9 million payment of
the contingent value right ("CVR") associated with the acquisition of
RockPile in July 2017, and $40.1 million of stock repurchases during the
second quarter of 2018. As of June 30, 2018, cash and equivalents
totaled $109.5 million, compared to $95.5 million as of March 31, 2018.

Total available liquidity as of June 30, 2018 was approximately $324.0
million, which included availability under our asset-based credit
facility. Total operating cash flow for the second quarter of 2018 was
approximately $109.2 million. Capital expenditures totaled a $75.4
million use of cash for the second quarter of 2018, driven by spending
on our previously announced newbuild fleets, as well as maintenance
capital expenditures.

"Our strong balance sheet position remains a top priority," said Greg
Powell. "Our new term loan facility extended our maturity profile and
reduced our interest cost, which is expected to result in annualized
interest savings of approximately $4 million."

Acquisition of Hydraulic Fracturing Equipment

On July 24, 2018, Keane acquired approximately 90,000 hydraulic
horsepower and related support equipment from Refinery Specialties, Inc.
("RSI") for cash consideration of $34.6 million. Acquired horsepower
will be used to replace equipment damaged as part of a recent fire
previously announced, with the remainder to be integrated into the
company's fleet, including the addition of one new hydraulic fracturing
fleet in the future. The equipment impacted during the fire was insured
at replacement cost, and we expect to recover proceeds in the third
quarter of 2018.

"We are pleased to complete this consolidation opportunity at an
extremely attractive value," said Mr. Powell. "This completions
equipment, which has been operating at low utilization levels in the
northern Eagle Ford, is high-quality, well-maintained, and capable of
performing across our operating footprint. Keane has a strong
track-record in identifying and integrating strategic M&A targets, and
we believe this acquisition reflects a unique opportunity to replace
damaged equipment in an efficient manner and supplement our fleet."

Stock Repurchase Program Update

During the second quarter of 2018, Keane completed $40.1 million of
total share repurchases, representing a total of approximately 2.6
million common shares. Repurchases were made as part of the Company's
$100 million stock repurchase program previously announced on February
26, 2018. The stock repurchase program does not obligate Keane to
purchase any particular number of shares of common stock during any
period and the program may be modified or suspended at any time at the
Company's discretion.

On July 26, 2018, Keane's Board of Directors authorized additional
capacity to the Company's existing stock repurchase program, increasing
repurchase capacity to a total of $100 million, up from approximately
$60 million available at the end of the second quarter of 2018. The
expiration of the stock repurchase program is unchanged at February 2019.

"We continue to view stock repurchases as a compelling use of capital,
particularly at current values, and expect to opportunistically execute
on our program, as evidenced by our Board's decision to reset our
authorized repurchases back to $100 million," said Mr. Powell.

Newbuild Update

Keane previously announced the order for 150,000 newbuild hydraulic
horsepower, representing three additional hydraulic fracturing fleets.
The first of its newbuild hydraulic fracturing fleets was deployed in
early June 2018 with an existing customer in the Marcellus / Utica
Basin. The second of its newbuild hydraulic fracturing fleets was
deployed in July 2018 with a new customer in the Permian Basin.

Today, Keane announces a new dedicated agreement with an existing
customer for its third newbuild hydraulic fracturing fleet to be
deployed in the Permian during the fourth quarter of 2018.

Dedicated agreements for Keane's newbuild fleets reflect annualized
Adjusted Gross Profit per fleet of greater than $20 million.

Outlook

Keane expects to average approximately 27 deployed hydraulic fracturing
fleets during the third quarter of 2018. Keane will integrate a portion
of the recently acquired horsepower to enable the reactivation of the
partially damaged fleet, expected by the end of the third quarter of
2018. Total revenue is expected to range between $565 million and $590
million for the third quarter of 2018. Annualized Adjusted Gross Profit
per fleet is expected to be in-line with the second quarter of 2018.
Keane expects to further ramp activity in its cementing business during
the third quarter of 2018 and the remainder of the year. By the end of
2018, Keane continues to expect from the cementing business run-rate
revenue of between $70 million and $90 million on margins of between 20%
and 25%.

Conference Call

On Tuesday, July 31, 2018, Keane will hold a conference call for
investors at 7:30 a.m. Central Time (8:30 a.m. Eastern Time) to discuss
Keane's second quarter 2018 results. Hosting the call will be James
Stewart, Chairman and Chief Executive Officer and Greg Powell, President
and Chief Financial Officer. The call can be accessed live over the
telephone by dialing (877) 407-9208, or for international callers, (201)
493-6784. A replay will be available shortly after the call and can be
accessed by dialing (844) 512-2921, or for international callers (412)
317-6671. The passcode for the replay is 13680823. The replay will be
available until August 14, 2018.

About Keane Group, Inc.

Headquartered in Houston, Texas, Keane is one of the largest pure-play
providers of integrated well completion services in the U.S., with a
focus on complex, technically demanding completion solutions. Keane's
primary service offerings include horizontal and vertical fracturing,
wireline perforation and logging, engineered solutions and cementing, as
well as other value-added service offerings.

Definitions of Non-GAAP Financial Measures and Other Items

Keane has included both financial measures compiled in accordance with
GAAP and certain non-GAAP financial measures in this press release,
including Adjusted EBITDA and Adjusted Gross Profit and ratios based on
these financial measures. These measurements provide supplemental
information which Keane believes is useful to analysts and investors to
evaluate its ongoing results of operations, when considered alongside
GAAP measures such as net income and operating income. These non-GAAP
financial measures exclude the financial impact of items management does
not consider in assessing Keane's ongoing operating performance, and
thereby facilitate review of Keane's operating performance on a
period-to-period basis. Other companies may have different capital
structures, and comparability to Keane's results of operations may be
impacted by the effects of acquisition accounting on its depreciation
and amortization. As a result of the effects of these factors and
factors specific to other companies, Keane believes Adjusted EBITDA and
Adjusted Gross Profit provide helpful information to analysts and
investors to facilitate a comparison of its operating performance to
that of other companies.

Adjusted EBITDA is defined as net income (loss) adjusted to eliminate
the impact of interest, income taxes, depreciation and amortization,
along with certain items management does not consider in assessing
ongoing performance. Adjusted Gross Profit is defined as Adjusted
EBITDA, further adjusted to eliminate the impact of all activities in
the Corporate segment, such as selling, general and administrative
expenses, along with cost of services that management does not consider
in assessing ongoing performance.

Forward-Looking Statements

The statements contained in this release that are not historical
facts are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995.
Words such as "may,"
"will," "could," "should," "expect," "plan," "project," "intend,"
"anticipate," "believe," "estimate," "predict," "potential," "pursuant,"
"target," "continue," and similar expressions are intended to identify
such forward-looking statements. The statements in this press release
that are not historical statements, including statements regarding the
Company's plans, objectives, future opportunities for the Company's
services, future financial performance and operating results and any
other statements regarding Keane's future expectations, beliefs, plans,
objectives, financial conditions, assumptions or future events or
performance that are not historical facts, are forward-looking
statements within the meaning of the federal securities laws. These
statements are subject to numerous risks and uncertainties, many of
which are beyond Keane's control, which could cause actual results to
differ materially from the results expressed or implied by the
statements. These risks and uncertainties include, but are not limited
to the operations of Keane; the Company's future financial condition,
results of operations, strategy and plans; results of litigation,
settlements and investigations; actions by third parties, including
governmental agencies; volatility in customer spending and in oil and
natural gas prices, which could adversely affect demand for Keane's
services and their associated effect on rates, utilization, margins and
planned capital expenditures; global economic conditions; excess
availability of pressure pumping equipment, including as a result of low
commodity prices, reactivation or construction; liabilities from
operations; weather; decline in, and ability to realize, backlog;
equipment specialization and new technologies; shortages, delays in
delivery and interruptions of supply of equipment and materials; ability
to hire and retain personnel; loss of, or reduction in business with,
key customers; difficulty with growth and in integrating acquisitions;
product liability; political, economic and social instability risk;
ability to effectively identify and enter new markets; cybersecurity
risk; dependence on our subsidiaries to meet our long-term debt
obligations; variable rate indebtedness risk; and anti-takeover measures
in our charter documents.

Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking
statements is contained from time to time in Keane's Securities and
Exchange Commission ("SEC") filings, including the most recently filed
Forms 10-Q and 10-K. Keane's filings may be obtained by contacting Keane
or the SEC or through Keane's website at
http://www.keanegrp.com
or through the SEC's Electronic Data Gathering and Analysis Retrieval
System (EDGAR) at
http://www.sec.gov.
Keane undertakes no obligation to publicly update or revise any
forward-looking statement.

       
KEANE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE
INCOME (LOSS)

(in thousands, except per share data)

 

Three Months Ended
June 30,

Three Months Ended
March 31,

2018   2017 2018
(Unaudited) (Unaudited) (Unaudited)
Revenue $ 578,533 $ 323,136 $ 513,016
Operating costs and expenses:
Cost of services 447,685 278,384 403,408
Depreciation and amortization 59,404 32,739 60,051
Selling, general and administrative expenses 24,125 22,334 33,884
(Gain) loss on disposal of assets 3,287   (2 ) 769  
Total operating costs and expenses 534,501   333,455   498,112  
Operating income (loss) 44,032 (10,319 ) 14,904
Other income (expenses):
Other income (expense), net 16 3,701 (12,989 )
Interest expense (14,317 ) (4,349 ) (6,990 )
Total other expenses (14,301 ) (648 ) (19,979 )
Income (loss) before income taxes 29,731 (10,967 ) (5,075 )
Income tax benefit (expense) 936   (931 ) (3,168 )
Net income (loss) 30,667 (11,898 ) (8,243 )
Other comprehensive income (loss):
Foreign currency translation adjustments (31 ) 31 (34 )
Hedging activities 99     2,211  
Total comprehensive income (loss) $ 30,735   $ (11,867 ) $ (6,066 )
 
Net income (loss) per share, basic $ 0.28 $ (0.12 ) $ (0.07 )
Weighted average shares, basic 111,319 103,013 112,010
 
     
KEANE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE
INCOME (LOSS)

(in thousands, except per share data)

 
Six Months Ended

June 30,

2018   2017
(Unaudited) (Unaudited)
Revenue $ 1,091,549 $ 563,289
Operating costs and expenses:
Cost of services 851,093 502,376
Depreciation and amortization 119,455 63,112
Selling, general and administrative expenses 58,009 40,322
(Gain) loss on disposal of assets 4,056   (438 )
Total operating costs and expenses 1,032,613   605,372  
Operating income (loss) 58,936 (42,083 )
Other income (expenses):
Other income (expense), net (12,973 ) 3,705
Interest expense (21,307 ) (44,710 )
Total other expenses (34,280 ) (41,005 )
Income (loss) before income taxes 24,656 (83,088 )
Income tax expense (2,232 ) (1,065 )
Net income (loss) 22,424 (84,153 )
Other comprehensive income (loss):
Foreign currency translation adjustments (65 ) 44
Hedging activities 2,310   11  
Total comprehensive income (loss) $ 24,669   $ (84,098 )
 
Net income (loss) per share, basic $ 0.20 $ (0.83 )
Weighted average shares, basic 111,663 100,932
 
       
KEANE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 
ASSETS June 30, December 31,
2018 2017
(Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $ 109,525 $ 96,120
Accounts receivable 246,812 238,018
Inventories, net 40,561 33,437
Assets held for sale 1,200
Prepaid and other current assets 11,256   8,519  
Total current assets 409,354 376,094
Property and equipment, net 493,406 468,000
Goodwill 132,524 134,967
Intangible assets 54,141 57,280
Other noncurrent assets 9,580   6,775  
Total Assets $ 1,099,005   $ 1,043,116  
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 123,426 $ 92,348
Accrued expenses 107,356 135,175
Customer contract liabilities 2,540 5,000
Current maturities of capital lease obligations 3,771 3,097
Current maturities of long-term debt 2,133 1,339
Stock based compensation - current 4,281 4,281
Other current liabilities 634   914  
Total current liabilities 244,141   242,154  
Capital lease obligations, less current maturities 5,641 4,796
Long-term debt, net(1) less current maturities 339,144 273,715
Stock based compensation – non-current 4,281
Other non-current liabilities 4,698   5,078  
Total non-current liabilities 349,483   287,870  
Total liabilities 593,624 530,024
Shareholders' equity:
Stockholders' equity 511,396 542,192
Retained (deficit) (6,221 ) (27,372 )
Accumulated other comprehensive income (loss) 206   (1,728 )
Total shareholders' equity 505,381   513,092  
Total liabilities and shareholders' equity $ 1,099,005   $ 1,043,116  
 

(1)

 

Net of unamortized deferred financing costs and unamortized debt
discounts.

 
       
KEANE GROUP, INC. AND SUBSIDIARIES
ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA

(unaudited, amounts in thousands, except for non-financial
statistics)

 
Three Months Ended
June 30,
Three Months Ended
March 31,
2018   2017 2018
Completion Services:
Revenues $ 569,929 $ 323,136 $ 507,451
Cost of services 438,684 278,384 397,064
Gross profit (loss) 131,245 44,752 110,387
Depreciation, amortization and administrative expenses, and
impairment
54,618 28,534 55,180
Operating income $ 75,694 $ 15,770 $ 54,265
 
Average hydraulic fracturing fleets deployed 26.3 18.3 26.0
Average hydraulic fracturing fleet utilization 100 % 80 % 100 %
Wireline - fracturing fleet bundling percentages 73 % 64 % 76 %
Average annualized revenue per fleet deployed $ 86,681 $ 70,631 $ 78,069
Average annualized adjusted gross profit per fleet deployed $ 19,961 $ 10,450 $ 16,983
Adjusted gross profit (loss) $ 131,245 $ 47,807 $ 110,387
 
Other Services (1):
Revenues $ 8,604 $ $ 5,565
Cost of services 9,001 6,344
Gross profit (loss) (397 )

(779

)
Depreciation, amortization and administrative expenses, and
impairment
1,319 1,254 1,398
Operating loss (1,716 ) (1,247 ) (2,177 )
Adjusted gross profit (loss) $ (397 ) $ $ (779 )
 
(1)  

Other Services segment includes exclusively the cementing division
from January 1, 2018. The company's workover rigs were sold during
the third and fourth quarters of 2017. The company's coiled tubing
assets were sold during the fourth quarter of 2017.

 
     
KEANE GROUP, INC. AND SUBSIDIARIES
ADDITIONAL SELECTED FINANCIAL AND OPERATING DATA
 

(unaudited, amounts in thousands, except for non-financial
statistics)

 
Six Months Ended
June 30,
2018   2017
Completion Services:
Revenues $ 1,077,380 $ 563,289
Cost of services 835,748 502,376
Gross profit (loss) 241,632 60,913
Depreciation, amortization and administrative expenses, and
impairment
109,798 55,132
Operating income $ 129,959 $ 7,445
 
Average hydraulic fracturing fleets deployed 26.1 16.9
Average hydraulic fracturing fleet utilization 100 % 73 %
Wireline - fracturing fleet bundling percentages 75 % 61 %
Average annualized revenue per fleet deployed $ 82,558 $ 66,661
Average annualized adjusted gross profit per fleet deployed $ 18,516 $ 8,536
Adjusted gross profit (loss) $ 241,632 $ 72,133
 
Other Services (1):
Revenues $ 14,169 $
Cost of services 15,345
Gross profit (loss) (1,176 )
Depreciation, amortization and administrative expenses, and
impairment
2,717 2,737
Operating loss (3,893 ) (2,949 )
Adjusted gross profit (loss) $ (1,176 ) $
 
(1)  

Other Services segment includes exclusively the cementing division
from January 1, 2018. The company's workover rigs were sold during
the third and fourth quarters of 2017. The company's coiled tubing
assets were sold during the fourth quarter of 2017.

 
           
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES

(unaudited, in thousands)

 
Three Months Ended June 30, 2018

Completion
Services

Other
Services

Corporate
and Other

Total
Net Income (loss) $ 75,694 $ (1,716 ) $ (43,311 ) $ 30,667
Interest expense, net 14,317 14,317
Income tax expense (936 ) (936 )
Depreciation and amortization 54,618 1,319   3,467   59,404  
EBITDA $ 130,312 $ (397 ) $ (26,463 ) $ 103,452
Plus Management Adjustments:
Acquisition, integration and expansion (1) 2,827 2,827
Non-cash stock compensation (2) 4,040 4,040
Other (3)   989   989  
Adjusted EBITDA $ 130,312 $ (397 ) $ (18,607 ) $ 111,308
Selling, general and administrative 24,125 24,125
(Gain) loss on disposal of assets 933 2,354 3,287
Other expense (16 ) (16 )
Less Management Adjustments not associated with cost of services   (7,856 ) (7,856 )
Adjusted gross profit (loss) $ 131,245 $ (397 ) $ $ 130,848
 
(1)   Represents primarily a markdown to fair value of idle real estate
pending for sale in Mathis, Texas acquired during the acquisition of
a majority of the U.S. assets and assumed certain liabilities of
Trican Well Service, L.P. (the "Acquired Trican Operations"). This
loss was recorded in (gain) loss on disposal of assets.
(2) Represents non-cash amortization of equity awards issued under Keane
Group, Inc.'s Equity and Incentive Award Plan (the "Equity Plan").
According to the Equity Plan, the Compensation Committee of the
Board of Directors can approve awards in the form of restricted
stock, restricted stock units, and/or other deferred compensation.
Consistent with prior policy, amortization of awards is made ratably
over the vesting periods, beginning with the grant date, based on
the total fair value determined on grant date and recorded in
selling, general and administrative expenses.
(3) Represents primarily rating agency fees for establishing initial
ratings in connection with entering into a new $350 million senior
secured term facility. These expenses were recorded in selling,
general and administrative expenses.
 
           
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES

(unaudited, in thousands)

 
Three Months Ended March 31, 2018

Completion
Services

Other
Services

Corporate
and Other

Total
Net Income (loss) $ 54,265 $ (2,177 ) $ (60,331 ) $ (8,243 )
Interest expense, net 6,990 6,990
Income tax benefit 3,168 3,168
Depreciation and amortization 55,180 1,398   3,473   60,051  
EBITDA $ 109,445 $ (779 ) $ (46,700 ) $ 61,966
Plus Management Adjustments:
Acquisition, integration and expansion (1) 13,254 13,254
Offering-related expenses (2) 12,969 12,969
Non-cash stock compensation (3)   3,073   3,073  
Adjusted EBITDA $ 109,445 $ (779 ) $ (17,404 ) $ 91,262
Selling, general and administrative 33,884 33,884
(Gain) loss on disposal of assets 942 (173 ) 769
Other income 12,989 12,989
Less Management Adjustments not associated with cost of services   (29,296 ) (29,296 )
Adjusted gross profit (loss) $ 110,387 $ (779 ) $ $ 109,608
 
(1)   Represents adjustment to the CVR liability based on the final
agreed-upon settlement.
(2) Represents primarily professional fees and other miscellaneous
expenses to consummate the secondary common stock offering completed
in January 2018. These expenses were recorded in selling, general
and administrative expenses, as Keane did not receive any proceeds
in the offering to offset the expenses.
(3) Represents non-cash amortization of equity awards issued under the
Equity Plan, which is recorded in selling, general and
administrative expenses.
 
           
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES

(unaudited, in thousands)

 
Three Months Ended June 30, 2017

Completion
Services

Other
Services

Corporate
and Other

Total
Net Income (loss) $ 15,770 $ (1,247 ) $ (26,421 ) $ (11,898 )
Interest expense, net 4,349 4,349
Income tax expense 931 931
Depreciation and amortization 28,534 1,254   2,951   32,739  
EBITDA $ 44,304 $ 7 $ (18,190 ) $ 26,121
Plus Management Adjustments:
Acquisition, integration and expansion (1) (1,194 ) (1,194 )
Offering-related expenses (2) 109 109
Commissioning costs 3,055 3,055
Non-cash stock compensation (3) 2,933 2,933
Other (4)   4,970   4,970  
Adjusted EBITDA $ 47,359 $ 7 $ (11,372 ) $ 35,994
Selling, general and administrative 22,335 22,335
(Gain) loss on disposal of assets 448 (7 ) (443 ) (2 )
Other income (3,701 ) (3,701 )
Less Management Adjustments not associated with cost of services   (6,819 ) (6,819 )
Adjusted gross profit (loss) $ 47,807 $ $ $ 47,807
 
(1)   Represents professional fees, integration costs and other costs
associated with the acquisition and integration of RockPile and a
one-time indemnification receipt related to the acquisition of the
Acquired Trican Operations.
(2) Represents miscellaneous costs associated with the marketing of the
initial public offering ("IPO") for Keane Group, Inc.
(3) Represents non-cash amortization of equity awards issued under the
Equity Plan, which is recorded in selling, general and
administrative expenses.
(4) Represents contingency accruals related to certain litigation
claims. These costs were recorded in selling, general and
administrative expenses.
 
           
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES

(unaudited, in thousands)

 
Six Months Ended June 30, 2018

Completion
Services

Other
Services

Corporate
and Other

Total
Net Income (loss) $ 129,959 $ (3,893 ) $ (103,642 ) $ 22,424
Interest expense, net 21,307 21,307
Income tax expense 2,232 2,232
Depreciation and amortization 109,798 2,717   6,940   119,455  
EBITDA $ 239,757 $ (1,176 ) $ (73,163 ) $ 165,418
Plus Management Adjustments:
Acquisition, integration and expansion (1) 16,081 16,081
Offering-related expenses (2) 12,969 12,969
Non-cash stock compensation (3) 7,113 7,113
Others (4)   989   989  
Adjusted EBITDA $ 239,757 $ (1,176 ) $ (36,011 ) $ 202,570
Selling, general and administrative 58,009 58,009
(Gain) loss on disposal of assets 1,875 2,181 4,056
Other income 12,973 12,973
Less Management Adjustments not associated with cost of services   (37,152 ) (37,152 )
Adjusted gross profit (loss) $ 241,632 $ (1,176 ) $ $ 240,456
 
(1)   Represents adjustment to the CVR liability based on the final
agreed-upon settlement, which was recorded in other income
(expense), net and a markdown to fair value of idle real estate
pending for sale in Mathis, Texas acquired during the acquisition of
the Acquired Trican Operations, which was recorded in (gain) loss on
disposal of assets.
(2) Represents primarily professional fees and other miscellaneous
expenses to consummate the secondary common stock offering completed
in January 2018. These expenses were recorded in selling, general
and administrative expenses, as Keane did not receive any proceeds
in the offering to offset the expenses.
(3) Represents non-cash amortization of equity awards issued under the
Equity Plan, which is recorded in selling, general and
administrative expenses.
(4) Represents primarily rating agency fees for establishing initial
ratings in connection with entering into a new $350 million senior
secured term facility. These expenses were recorded in selling,
general and administrative expenses
 
           
KEANE GROUP, INC. AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES

(unaudited, in thousands)

 
Six Months Ended June 30, 2017
Completion Services Other Services Corporate and Other Total
Net Income (loss) $ 7,445 $ (2,949 ) $ (88,649 ) $ (84,153 )
Interest expense, net 44,710 44,710
Income tax expense 1,065 1,065
Depreciation and amortization 55,132   2,737   5,243   63,112  
EBITDA $ 62,577 $ (212 ) $ (37,631 ) $ 24,734
Plus Management Adjustments:
Acquisition, integration and expansion (1) (214 ) (214 )
Offering-related expenses (2) 1,266 4,519 5,785
Commissioning costs 9,954 197 10,151
Non-cash stock compensation (3) 4,071 4,071
Others (4)     4,562   4,562  
Adjusted EBITDA $ 73,797 $ (212 ) $ (24,496 ) $ 49,089
Selling, general and administrative 40,322 40,322
(Gain) loss on disposal of assets (1,664 ) 212 1,014 (438 )
Other income (3,705 ) (3,705 )
Less Management Adjustments not associated with cost of services     (13,135 ) (13,135 )
Adjusted gross profit (loss) $ 72,133 $ $ $ 72,133
 
(1)   Represents professional fees, integration costs and other costs
associated with our acquisition of the Acquired Trican Operations
and RockPile and organic growth initiatives. These costs were
recorded in selling, general and administrative expenses. Also
represents a $3.6 million gain on the indemnification settlement
with Trican, which was recorded in other income.
(2) Represents fees and other miscellaneous expenses required to carry
out the reporting, prior years' audits and organizational (legal
entities) restructuring to ready the Company for its IPO and the
eventual consummation of the offering. Also represents one-time IPO
bonuses paid out to key operational and corporate employees. These
expenses were recorded in selling, general and administrative
expenses.
(3) Represents non-cash amortization of equity awards issued under the
Equity Plan, which is recorded in selling, general and
administrative expenses.
(4) Represents contingency accruals related to certain litigation
claims. These costs were recorded in selling, general and
administrative expenses.

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