Superior Energy Services, Inc. Announces Fourth Quarter 2013 Results
The specific charges incurred during the fourth quarter of 2013 that are excluded from adjusted net income were as follows:
- A non-cash, pre-tax charge of
$419.4 million ($342.4 million after-tax) primarily attributable to a reduction in the value of assets and goodwill impairment in the Subsea and Technical Solutions segment and the diminished value of assets inLatin America , including the write down of assets inVenezuela due to the Company's exit from this non-core market. - A pre-tax charge of
$23.6 million ($15.6 million after-tax) due to increases to the estimated total cost of an ongoing specialized platform decommissioning project in the Gulf ofMexico accounted for using the percentage-of-completion method. - A pre-tax restructuring charge of
$5.6 million ($3.7 million after-tax) primarily related to cost savings initiatives in certain U.S. land markets from which the Company anticipates annualized savings of approximately$20 million to $30 million .
The Company estimates that weather-related disruptions in the U.S. land market further adversely impacted adjusted earnings per diluted share by
During the fourth quarter of 2013, the Company repurchased and retired 427,000 shares of its common stock for a total purchase price of
The Company intends to pursue strategic alternatives for its
"Product-line portfolio optimization and critical evaluation of expansion strategies are ongoing efforts. We believe that this approach will produce more predictable results, enhanced returns and improved resource allocation and focus.
"We've pursued a subsea well intervention strategy for several years, which has included participation in the subsea construction business. To date, we have not advanced the strategy as expected and have decided to seek strategic alternatives with our subsea construction business.
"The Gulf of
"We believe that these two strategic decisions will not adversely impact our income from continuing operations in 2014.
"2013 certainly has been challenging. While 2013 earnings did not meet our expectations, we did achieve several notable financial goals that we outlined at the beginning of the year, including strong free cash flow generation, repayment of debt, share repurchases and announcement of a dividend. In addition, we are confident that our core strategies for growth are demonstrating good progress as we are positioned to take advantage of anticipated U.S. activity growth."
For the year ended
Excluding the specific charges described above, the Company had non-GAAP adjusted net income from continuing operations of
Fourth Quarter 2013 Geographic Breakdown
U.S. land revenue was approximately
Drilling Products and Services Segment
Drilling Products and Services segment revenue in the fourth quarter of 2013 was
The primary factor driving the higher sequential revenue in this segment was an 18% increase in Gulf of
Onshore Completion and Workover Services Segment
Onshore Completion and Workover Services segment revenue in the fourth quarter of 2013 was
On a sequential basis, lower pressure pumping and well services rig revenue in this segment was partially offset by higher revenue in fluid management due to increased volumes hauled and increased water heating-related activity. Pressure pumping revenue was lower due to weather and job mix.
Production Services Segment
Production Services segment revenue in the fourth quarter of 2013 was
U.S. land revenue in this segment decreased 5% sequentially to
Subsea and Technical Solutions Segment
Subsea and Technical Solutions segment revenue in the fourth quarter of 2013 was
International revenue in this segment decreased 21% sequentially to
Conference Call Information
The Company will host a conference call at
Statements in this press release other than statement of historical facts, including statements regarding our estimates, expectations, beliefs, targets, goals, plans, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, targets, goals, plans, intentions, projections and strategies reflected in or suggested by the forward-looking statements. Among the factors that could cause actual results to differ materially are risks inherent in acquiring businesses, including the ability to successfully integrate acquired businesses into the Company's legacy operations and the costs incurred in doing so; the effect of regulatory programs and environmental matters on our performance, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for our pressure pumping services; risks associated with business growth outpacing the capabilities of the Company's infrastructure and workforce; risks associated with the uncertainty of macroeconomic and business conditions worldwide; the cyclical nature and volatility of the oil and gas industry, including the level of exploration, production and development activity and the volatility of oil and gas prices; changes in competitive factors affecting our operations; political, economic and other risks and uncertainties associated with international operations; the lingering impact on exploration and production activities in the U.S. coastal waters following the Deepwater Horizon incident; the impact that unfavorable or unusual weather conditions could have on the Company's operations; the potential shortage of skilled workers; the Company's dependence on certain customers; the risks inherent in long-term fixed-price contracts; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage; and other material factors that are described in detail in Item 1A of the Company's Annual Report on Form 10-K for the year ended
FOR FURTHER INFORMATION CONTACT:
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES |
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Consolidated Statements of Operations |
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Three and Twelve Months Ended December 31, 2013 and 2012 |
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(in thousands, except earnings per share amounts) |
||||||||
(unaudited) |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
December 31, |
December 31, |
|||||||
2013 |
2012 |
2013 |
2012 |
|||||
Revenues |
$ 1,128,017 |
$ 1,178,247 |
$ 4,611,824 |
$ 4,568,068 |
||||
Cost of services (exclusive of items shown separately below) |
734,428 |
722,814 |
2,901,850 |
2,689,473 |
||||
Depreciation, depletion, amortization and accretion |
163,301 |
143,009 |
625,928 |
509,281 |
||||
General and administrative expenses |
168,842 |
165,794 |
633,877 |
662,792 |
||||
Reduction in value of assets |
419,380 |
- |
419,380 |
- |
||||
Income (loss) from operations |
(357,934) |
146,630 |
30,789 |
706,522 |
||||
Other income (expense): |
||||||||
Interest expense, net |
(25,461) |
(26,320) |
(106,954) |
(117,682) |
||||
Interest income |
431 |
758 |
2,978 |
3,170 |
||||
Other income |
424 |
4 |
2,486 |
853 |
||||
Loss on early extinguishment of debt |
- |
- |
(884) |
(2,294) |
||||
Losses from equity-method investments, net |
- |
- |
- |
(287) |
||||
Gain on sale of equity method investment |
- |
- |
- |
17,880 |
||||
Income (loss) from continuing operations before income taxes |
(382,540) |
121,072 |
(71,585) |
608,162 |
||||
Income taxes |
(69,001) |
44,797 |
39,833 |
225,020 |
||||
Net income (loss) from continuing operations |
(313,539) |
76,275 |
(111,418) |
383,142 |
||||
Loss from discontinued operations, net of income tax |
- |
- |
- |
(17,207) |
||||
Net income (loss) |
$ (313,539) |
$ 76,275 |
$ (111,418) |
$ 365,935 |
||||
Basic earnings (loss) per share: |
||||||||
Net income (loss) from continuing operations |
$ (1.97) |
$ 0.49 |
$ (0.70) |
$ 2.57 |
||||
Loss from discontinued operations |
- |
- |
- |
(0.12) |
||||
Net income (loss) |
$ (1.97) |
$ 0.49 |
$ (0.70) |
$ 2.45 |
||||
Diluted earnings (loss)per share: |
||||||||
Net income (loss) from continuing operations |
$ (1.97) |
$ 0.48 |
$ (0.70) |
$ 2.54 |
||||
Loss from discontinued operations |
- |
- |
- |
(0.12) |
||||
Net income (loss) from continuing operations |
$ (1.97) |
$ 0.48 |
$ (0.70) |
$ 2.42 |
||||
Weighted average common shares used in computing earnings (loss) per share: |
||||||||
Basic |
159,228 |
157,266 |
159,206 |
149,288 |
||||
Diluted |
159,228 |
158,709 |
159,206 |
151,106 |
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
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DECEMBER 31, 2013 AND 2012 |
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(in thousands) |
||||
12/31/2013 |
12/31/2012 |
|||
(Unaudited) |
(Audited) |
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ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 196,047 |
$ 91,199 |
||
Accounts receivable, net |
937,195 |
1,027,218 |
||
Deferred income taxes |
8,785 |
34,120 |
||
Income taxes receivable |
5,532 |
- |
||
Prepaid expenses |
70,421 |
93,190 |
||
Inventory and other current assets |
258,449 |
214,630 |
||
Total current assets |
1,476,429 |
1,460,357 |
||
Property, plant and equipment, net |
3,002,194 |
3,255,220 |
||
Goodwill |
2,458,109 |
2,532,065 |
||
Notes receivable |
23,708 |
44,838 |
||
Intangible and other long-term assets, net |
450,867 |
510,406 |
||
Total assets |
$ 7,411,307 |
$ 7,802,886 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Accounts payable |
$ 216,029 |
$ 252,363 |
||
Accrued expenses |
376,049 |
346,490 |
||
Income taxes payable |
- |
153,212 |
||
Current portion of decommissioning liabilities |
27,322 |
- |
||
Current maturities of long-term debt |
20,000 |
20,000 |
||
Total current liabilities |
639,400 |
772,065 |
||
Deferred income taxes |
736,080 |
745,144 |
||
Decommissioning liabilities |
56,197 |
93,053 |
||
Long-term debt, net |
1,646,535 |
1,814,500 |
||
Other long-term liabilities |
201,651 |
147,045 |
||
Total stockholders' equity |
4,131,444 |
4,231,079 |
||
Total liabilities and stockholders' equity |
$ 7,411,307 |
$ 7,802,886 |
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES SEGMENT HIGHLIGHTS THREE MONTHS ENDED DECEMBER 31, 2013, SEPTEMBER 30, 2013, AND DECEMBER 31, 2012 (unaudited) (in thousands) |
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Three months ended, |
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Revenue |
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
|||
Drilling Products and Services |
$ 223,591 |
$ 215,522 |
$ 192,677 |
|||
Onshore Completion and Workover Services |
374,489 |
398,016 |
417,738 |
|||
Production Services |
349,370 |
359,722 |
369,341 |
|||
Subsea and Technical Solutions |
180,567 |
215,355 |
198,491 |
|||
Total Revenues |
$ 1,128,017 |
$ 1,188,615 |
$ 1,178,247 |
|||
Gross Profit (1) |
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
|||
Drilling Products and Services |
$ 152,963 |
$ 141,648 |
$ 127,834 |
|||
Onshore Completion and Workover Services |
110,467 |
122,340 |
144,626 |
|||
Production Services |
94,391 |
108,147 |
120,228 |
|||
Subsea and Technical Solutions |
35,768 |
68,428 |
62,745 |
|||
Total Gross Profit |
$ 393,589 |
$ 440,563 |
$ 455,433 |
|||
Income (Loss) from Operations (As Reported) |
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
|||
Drilling Products and Services |
$ 66,736 |
$ 62,242 |
$ 57,424 |
|||
Onshore Completion and Workover Services |
(3,071) |
33,458 |
46,904 |
|||
Production Services |
(28,901) |
15,707 |
32,015 |
|||
Subsea and Technical Solutions |
(392,698) |
13,246 |
10,287 |
|||
Total Income (Loss) from Operations |
$ (357,934) |
$ 124,653 |
$ 146,630 |
|||
Income from Operations (as Adjusted) |
December 31, 2013 (2) |
September 30, 2013 |
December 31, 2012 |
|||
Drilling Products and Services |
$ 69,028 |
$ 62,242 |
$ 57,424 |
|||
Onshore Completion and Workover Services |
14,391 |
33,458 |
46,904 |
|||
Production Services |
4,078 |
15,707 |
32,015 |
|||
Subsea and Technical Solutions |
3,147 |
13,246 |
10,287 |
|||
Total Income from Operations |
$ 90,644 |
$ 124,653 |
$ 146,630 |
(1) |
Gross profit is calculated by subtracting cost of services (exclusive of depreciation, depletion, amortization and accretion) from revenue for each of the Company's segments. |
(2) |
See "Items Included in Income from Operations by Segment" table in "Reconciliation of Non-GAAP Information to GAAP Information" section for a list of specific charges excluded from Income (Loss) from Operations by segment. |
RECONCILIATION OF NON-GAAP INFORMATION TO GAAP INFORMATION
($ in thousands)
We report our financial results in conformity with U.S. generally accepted accounting principles (GAAP). However, the Company has provided non-GAAP adjusted net income and non-GAAP adjusted earnings per share because those items are customarily excluded by analysts in published estimates and management believes, for purposes of comparability to financial performance in other periods and to evaluate the Company's trends, that it is appropriate for these items to be excluded. Management uses adjusted net income and adjusted diluted earnings per share to evaluate the Company's operational trends and historical performance on a consistent basis. The adjusted amounts are not measures of financial performance under GAAP.
A reconciliation of net income, the GAAP measure most directly comparable to non-GAAP adjusted earnings and non-GAAP adjusted earnings per share, is below. In making any comparisons to other companies, investors need to be aware that the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable
RECONCILIATION OF AS REPORTED INCOME FROM CONTINUING OPERATIONS TO |
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Three Months Ended |
Three Months Ended |
||||
December 31, 2013 |
December 31, 2012 |
||||
Value |
Per Share |
Value |
Per Share |
||
As reported net income (loss) from continuing operations |
($313,539) |
($1.97) |
$76,275 |
$0.48 |
|
Reduction in value of assets |
342,444 |
$2.15 |
- |
$0.00 |
|
Percentage of completion project charge |
15,647 |
$0.10 |
- |
$0.00 |
|
Restructuring charge |
3,711 |
$0.02 |
- |
$0.00 |
|
Adjusted net income from continuing operations |
$48,263 |
$0.30 |
$76,275 |
$0.48 |
|
As reported diluted weighted average common shares outstanding |
159,228 |
158,709 |
|||
As reported net income (loss) from continuing operations, per diluted share |
($1.97) |
$0.48 |
|||
Adjusted net income from continuing operations, per diluted share |
$0.30 |
$0.48 |
|||
Year Ended |
Year Ended |
||||
December 31, 2013 |
December 31, 2012 |
||||
Value |
Per Share |
Value |
Per Share |
||
As reported net income (loss) from continuing operations |
($111,418) |
($0.70) |
$383,142 |
$2.54 |
|
Reduction in value of assets |
342,444 |
$2.15 |
- |
$0.00 |
|
Percentage of completion project charge |
15,647 |
$0.10 |
- |
$0.00 |
|
Restructuring charge |
3,711 |
$0.02 |
- |
$0.00 |
|
Adjusted net income from continuing operations |
$250,384 |
$1.57 |
$383,142 |
$2.54 |
|
As reported diluted weighted average common shares outstanding |
159,206 |
151,106 |
|||
As reported net income (loss) from continuing operations, per diluted share |
($0.70) |
$2.54 |
|||
Adjusted net income from continuing operations, per diluted share |
$1.57 |
$2.54 |
ITEMS INCLUDED IN INCOME FROM OPERATIONS BY SEGMENT |
|||
Three Months Ended |
|||
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
|
Drilling Products and Services |
|||
Reduction in value of assets |
(2,292) |
- |
- |
Onshore Completion and Workover Services |
|||
Reduction in value of assets |
(16,975) |
- |
- |
Restructuring charges |
(487) |
- |
- |
Production Services |
|||
Reduction in value of assets |
(28,568) |
- |
- |
Restructuring charges |
(4,411) |
- |
- |
Subsea and Technical Services |
|||
Reduction in value of assets |
(371,545) |
- |
- |
Percentage of completion project charge |
(23,600) |
- |
- |
Restructuring charge |
(700) |
- |
SOURCE