Superior Energy Services Announces First Quarter 2020 Results
The Company reported pre-tax charges of
“A significant consequence of the global pandemic was the precipitous decline in both oil demand and price. In turn, our customers have rapidly and dramatically reduced their spending, causing us to take significant steps to respond to a much smaller market. To date, we have:
- Implemented actions to reduce our payroll costs by an estimated annual net amount of approximately
$115 million through a combination of salary reductions, reductions in force and furloughs; - Reduced 2020 capital expenditures to no more than
$50 million for the full year; and - Leveraged governmental relief efforts to defer payroll and other tax payments, including an anticipated tax refund of approximately
$30 million
“We will continue to appropriately scale the cost structure of the Company as we experience changes in customer spending and activity.
“With the secular change to the global oil and gas market beginning in earnest in 2015, our organization embarked on a rigorous evaluation of options to enhance stakeholder value. As a result of our efforts, we have determined the best way to maximize stakeholder value is to separate the Company into two publicly traded companies - one focused on the consolidation of the
"In
First Quarter 2020 Geographic Breakdown
Drilling Products and Services Segment
The Drilling Products and Services segment revenue in the first quarter of 2020 was
Onshore Completion and Workover Services Segment
The Onshore Completion and Workover Services segment revenue in the first quarter of 2020 was
Production Services Segment
The Production Services segment revenue increased in the first quarter of 2020 by 1% to
Technical Solutions Segment
The Technical Solutions segment revenue in the first quarter of 2020 was
Conference Call Information
The Company will host a conference call at
About
Forward-Looking Statements
This press release contains, and future oral or written statements or press releases by the Company and its management may contain, certain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact regarding the Company’s financial position, financial performance, liquidity, strategic alternatives, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company’s management in light of its experience and prevailing circumstances on the date such statements are made. Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties that could cause the Company’s actual results to differ materially from such statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements.
While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the conditions in the oil and gas industry; the effects of public health threats, pandemics and epidemics, like the recent COVID-19 pandemic, and the adverse impact thereof on our business, financial condition, results of operations and liquidity, including, but not limited to, our growth, operating costs, supply chain, labor availability, logistical capabilities, customer demand and industry demand generally, margins, utilization, cash position, taxes, the price of our securities, the ability to access capital markets; the ability of the members of the
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in the Company’s Form 10-K, the Company’s Form 8-K filed on
FOR FURTHER INFORMATION CONTACT:
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(in thousands, except earnings per share amounts) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
2020 | 2019 | 2019 | |||||||||||
Revenues | $ | 321,497 | $ | 365,274 | $ | 336,072 | |||||||
Cost of revenues (exclusive of depreciation, depletion, amortization and accretion) | 211,686 | 240,053 | 223,570 | ||||||||||
Depreciation, depletion, amortization and accretion | 41,355 | 56,343 | 43,741 | ||||||||||
General and administrative expenses | 65,157 | 71,112 | 65,211 | ||||||||||
Reduction in value of assets | 16,522 | - | - | ||||||||||
Income/(Loss) from operations | (13,223 | ) | (2,234 | ) | 3,550 | ||||||||
Other income (expense): | |||||||||||||
Interest expense, net | (25,134 | ) | (25,121 | ) | (24,038 | ) | |||||||
Other income (expense) | (4,232 | ) | (1,612 | ) | 1,993 | ||||||||
Loss from continuing operations before income taxes | (42,589 | ) | (28,967 | ) | (18,495 | ) | |||||||
Income taxes | (10,254 | ) | 3,677 | (12,333 | ) | ||||||||
Net loss from continuing operations | (32,335 | ) | (32,644 | ) | (6,162 | ) | |||||||
Income from discontinued operations, net of income tax | (47,129 | ) | (15,061 | ) | (92,362 | ) | |||||||
Net loss | $ | (79,464 | ) | $ | (47,705 | ) | $ | (98,524 | ) | ||||
Basic and diluted loss per share | |||||||||||||
Net loss from continuing operations | $ | (2.18 | ) | $ | (2.10 | ) | $ | (0.42 | ) | ||||
Income from discontinued operations | (3.18 | ) | (0.97 | ) | (6.26 | ) | |||||||
Basic and diluted loss per share | $ | (5.36 | ) | $ | (3.07 | ) | $ | (6.68 | ) | ||||
Weighted average shares outstanding | 14,809 | 15,578 | 14,745 | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 252,221 | $ | 272,624 | ||||
Accounts receivable, net | 310,902 | 332,047 | ||||||
Income taxes receivable | 29,914 | 740 | ||||||
Prepaid expenses | 38,902 | 49,132 | ||||||
Inventory and other current assets | 125,718 | 117,629 | ||||||
Assets held for sale | 121,080 | 216,197 | ||||||
Total current assets | 878,737 | 988,369 | ||||||
Property, plant and equipment, net | 620,017 | 664,949 | ||||||
Operating lease right-of-use assets | 76,533 | 80,906 | ||||||
136,155 | 137,695 | |||||||
Notes receivable | 69,245 | 68,092 | ||||||
Restricted cash | 2,773 | 2,764 | ||||||
Intangible and other long-term assets, net | 47,431 | 50,455 | ||||||
Total assets | $ | 1,830,891 | $ | 1,993,230 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 73,144 | $ | 92,966 | ||||
Accrued expenses | 164,883 | 182,934 | ||||||
Current portion of decommissioning liabilities | 3,677 | 3,649 | ||||||
Liabilities held for sale | 8,226 | 44,938 | ||||||
Total current liabilities | 249,930 | 324,487 | ||||||
Long-term debt, net | 1,284,008 | 1,286,629 | ||||||
Decommissioning liabilities | 134,031 | 132,632 | ||||||
Operating lease liabilities | 57,948 | 62,354 | ||||||
Deferred income taxes | 7,129 | 3,247 | ||||||
Other long-term liabilities | 129,955 | 134,308 | ||||||
Total stockholders' equity (deficit) | (32,110 | ) | 49,573 | |||||
Total liabilities and stockholders' equity (deficit) | $ | 1,830,891 | $ | 1,993,230 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
THREE MONTHS ENDED |
||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (79,464 | ) | $ | (47,705 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and accretion | 41,355 | 82,439 | ||||||
Reduction in value of assets | 16,522 | - | ||||||
Reduction in value of assets held for sale | 46,358 | - | ||||||
Other noncash items | 13,615 | 4,467 | ||||||
Changes in working capital and other | (70,626 | ) | (11,822 | ) | ||||
Net cash provided by operating activities | (32,240 | ) | 27,379 | |||||
Cash flows from investing activities: | ||||||||
Payments for capital expenditures | (18,563 | ) | (41,160 | ) | ||||
Proceeds from sales of assets | 33,045 | 5,066 | ||||||
Net cash provided by (used in) investing activities | 14,482 | (36,094 | ) | |||||
Cash flows from financing activities: | ||||||||
Other | (208 | ) | (1,667 | ) | ||||
Net cash used in financing activities | (208 | ) | (1,667 | ) | ||||
Effect of exchange rate changes in cash | (2,428 | ) | 924 | |||||
Net change in cash, cash equivalents, and restricted cash | (20,394 | ) | (9,458 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 275,388 | 163,748 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 254,994 | $ | 154,290 | ||||
REVENUE BY GEOGRAPHIC REGION BY SEGMENT | ||||||||||
(unaudited) | ||||||||||
Three months ended, | ||||||||||
Drilling Products and Services | $ | 36,656 | $ | 36,271 | $ | 48,217 | ||||
Onshore Completion and Workover Services | 61,218 | 67,571 | 103,136 | |||||||
Production Services | 30,667 | 26,205 | 40,666 | |||||||
Technical Solutions | 6,137 | 7,774 | 11,920 | |||||||
Total |
$ | 134,678 | $ | 137,821 | $ | 203,939 | ||||
Drilling Products and Services | $ | 37,224 | $ | 34,056 | $ | 29,067 | ||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 11,299 | 14,632 | 19,272 | |||||||
Technical Solutions | 31,533 | 46,655 | 20,933 | |||||||
Total |
$ | 80,056 | $ | 95,343 | $ | 69,272 | ||||
International | ||||||||||
Drilling Products and Services | $ | 30,113 | $ | 28,299 | $ | 23,795 | ||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 59,538 | 59,754 | 43,512 | |||||||
Technical Solutions | 17,112 | 14,855 | 24,756 | |||||||
$ | 106,763 | $ | 102,908 | $ | 92,063 | |||||
Total Revenues | $ | 321,497 | $ | 336,072 | $ | 365,274 | ||||
SEGMENT HIGHLIGHTS | |||||||||||||
(in thousands) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
Revenues | (1) | (1) | (1) | ||||||||||
Drilling Products and Services | $ | 103,993 | $ | 98,626 | $ | 101,079 | |||||||
Onshore Completion and Workover Services | 61,218 | 67,571 | 103,136 | ||||||||||
Production Services | 101,504 | 100,591 | 103,450 | ||||||||||
Technical Solutions | 54,782 | 69,284 | 57,609 | ||||||||||
Total Revenues | $ | 321,497 | $ | 336,072 | $ | 365,274 | |||||||
Income (Loss) from Operations | |||||||||||||
Drilling Products and Services | $ | 36,867 | $ | 27,631 | $ | 21,279 | |||||||
Onshore Completion and Workover Services | (1,870 | ) | 4,263 | 1,958 | |||||||||
Production Services | 756 | (8,764 | ) | 1,617 | |||||||||
Technical Solutions | (4,638 | ) | 8,047 | (916 | ) | ||||||||
Corporate and other | (17,457 | ) | (21,636 | ) | (26,172 | ) | |||||||
Total Income from Operations | $ | 13,658 | $ | 9,541 | $ | (2,234 | ) | ||||||
EBITDA | |||||||||||||
Drilling Products and Services | $ | 54,657 | $ | 46,946 | $ | 44,305 | |||||||
Onshore Completion and Workover Services | 4,443 | 10,023 | 13,605 | ||||||||||
Production Services | 11,594 | 3,288 | 15,757 | ||||||||||
Technical Solutions | 707 | 13,514 | 5,394 | ||||||||||
Corporate and other | (16,388 | ) | (20,489 | ) | (24,952 | ) | |||||||
Total EBITDA | $ | 55,013 | $ | 53,282 | $ | 54,109 | |||||||
(1) Income (loss) from operations and EBITDA exclude the impact of special items for the three months ended |
|||||||||||||
Reconciliation of Consolidated Adjusted Net Loss From Continuing Operations | ||||||||||||||||
(in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Table 1 | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, 2020 | December 31, 2019 | |||||||||||||||
Consolidated | Per Share | Consolidated | Per Share | |||||||||||||
Reported net loss from continuing operations | $ | (32,335 | ) | $ | (2.18 | ) | $ | (6,162 | ) | $ | (0.42 | ) | ||||
Reduction in value of assets | 16,522 | 1.12 | - | - | ||||||||||||
Restructuring costs | 6,020 | 0.41 | 2,896 | 0.20 | ||||||||||||
Merger-related transaction costs | 4,339 | 0.29 | 3,095 | 0.21 | ||||||||||||
Income taxes | (6,236 | ) | (0.42 | ) | (1,390 | ) | (0.10 | ) | ||||||||
Adjusted net loss from continuing operations | $ | (11,690 | ) | $ | (0.78 | ) | $ | (1,561 | ) | $ | (0.11 | ) | ||||
Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA by Segment | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Table 1 | ||||||||||||||||||||||||
Three months ended |
||||||||||||||||||||||||
Drilling Products and Services | Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated | |||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 36,727 | $ | (2,998 | ) | $ | (3,897 | ) | $ | (17,329 | ) | $ | (44,838 | ) | $ | (32,335 | ) | |||||||
Restructuring costs | 140 | 1,128 | 557 | 3,784 | 411 | 6,020 | ||||||||||||||||||
Merger-related costs | - | - | - | - | 4,339 | 4,339 | ||||||||||||||||||
Reduction in value of assets | - | - | 4,096 | 12,426 | - | 16,522 | ||||||||||||||||||
Interest expense, net | - | - | - | (1,173 | ) | 26,307 | 25,134 | |||||||||||||||||
Other expense | - | - | - | - | 4,232 | 4,232 | ||||||||||||||||||
Income taxes | - | - | - | - | (10,254 | ) | (10,254 | ) | ||||||||||||||||
Income (loss) from operations | $ | 36,867 | $ | (1,870 | ) | $ | 756 | $ | (2,292 | ) | $ | (19,803 | ) | $ | 13,658 | |||||||||
Depreciation, depletion, amortization and accretion |
17,790 | 6,313 | 10,838 | 5,345 | 1,069 | 41,355 | ||||||||||||||||||
EBITDA | $ | 54,657 | $ | 4,443 | $ | 11,594 | $ | 3,053 | $ | (18,734 | ) | $ | 55,013 | |||||||||||
Three months ended |
||||||||||||||||||||||||
Drilling Products and Services | Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated | |||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 27,618 | $ | 3,187 | $ | (10,068 | ) | $ | 8,612 | $ | (35,511 | ) | $ | (6,162 | ) | |||||||||
Restructuring costs | 13 | 1,076 | 1,304 | 503 | - | 2,896 | ||||||||||||||||||
Merger-related costs | - | - | - | - | 3,095 | 3,095 | ||||||||||||||||||
Interest expense, net | - | - | - | (1,068 | ) | 25,106 | 24,038 | |||||||||||||||||
Other expense | - | - | - | - | (1,993 | ) | (1,993 | ) | ||||||||||||||||
Income taxes | - | - | - | - | (12,333 | ) | (12,333 | ) | ||||||||||||||||
Adjusted income (loss) from operations | $ | 27,631 | $ | 4,263 | $ | (8,764 | ) | $ | 8,047 | $ | (21,636 | ) | $ | 9,541 | ||||||||||
Depreciation, depletion, amortization and accretion |
19,315 | 5,760 | 12,052 | 5,467 | 1,147 | 43,741 | ||||||||||||||||||
Adjusted EBITDA | $ | 46,946 | $ | 10,023 | $ | 3,288 | $ | 13,514 | $ | (20,489 | ) | $ | 53,282 | |||||||||||
Three months ended |
||||||||||||||||||||||||
Drilling Products and Services | Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated | |||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 21,279 | $ | 1,958 | $ | 1,617 | $ | 102 | $ | (57,600 | ) | $ | (32,644 | ) | ||||||||||
Interest expense, net | - | - | - | (1,018 | ) | 26,139 | 25,121 | |||||||||||||||||
Other expense | - | - | - | - | 1,612 | 1,612 | ||||||||||||||||||
Income taxes | - | - | - | - | 3,677 | 3,677 | ||||||||||||||||||
Adjusted income (loss) from operations | $ | 21,279 | $ | 1,958 | $ | 1,617 | $ | (916 | ) | $ | (26,172 | ) | $ | (2,234 | ) | |||||||||
Depreciation, depletion, amortization and accretion |
23,026 | 11,647 | 14,140 | 6,310 | 1,220 | 56,343 | ||||||||||||||||||
EBITDA | $ | 44,305 | $ | 13,605 | $ | 15,757 | $ | 5,394 | $ | (24,952 | ) | $ | 54,109 |
Source: Superior Energy Services, Inc.