Superior Energy Services Announces Fourth Quarter and Full Year 2021 Results and Conference Call

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Superior Energy Services Announces Fourth Quarter and Full Year 2021 Results and Conference Call

HOUSTON, March 21, 2022 (GLOBE NEWSWIRE) -- Superior Energy Services, Inc. (the “Company”) filed its Form 10-K for the period ending December 31, 2021 on March 21, 2022. In accordance with the Company’s Shareholders Agreement, it will host a conference call with shareholders on Friday, March 25, 2022.

Brian Moore, Chief Executive Officer, commented, “In March 2021, we initiated a significant transformation effort which has positioned the Company to now build on a simplified business model which is delivering improved margins and returns through operational efficiencies and G&A cost controls, accompanied by increased pricing and utilization associated with higher activity levels. Our results for the fourth quarter reflect our focus on a more disciplined approach, both operationally and financially. Our well established, high quality products and services delivered from key locations positioned in our target markets continue to be attractive to our customers. We remain committed not only to the performance our people and equipment are known for delivering, but also to adding value for stakeholders.”

Mike McGovern, Executive Chairman of the Board, added “Superior is well positioned to take advantage of the commodity price increases you’re seeing in the market today. The Company emerged from bankruptcy without any debt, significant cash, and is generating free cash flow putting it in position to be a value-adding participant in the oilfield service sector. Our growing cash balance and industry leading brands provide the Company optionality to participate in further sector consolidation.”

Moore further commented, “Demand is high and increasing for our less labor-intensive rental businesses, especially premium drill pipe and bottom hole drill assembly accessories, where we benefit from significant capacity accumulated through consistent investments over time. The availability of tools to the market is expected to be tested and we will continue to invest the majority of our 2022 capital spending into these businesses. Following our disciplined approach, our businesses will remain primarily focused on markets and geographies with a proven track record of success through the cycles.”

Fourth Quarter 2021 Results

The Company reported a loss from operations of $41.3 million for the fourth quarter of 2021 on revenue of $198.4 million. This compares to a loss from operations of $44.0 million for the third quarter of 2021 on revenues of $178.6 million. In the fourth quarter of 2020, the Company reported a loss from operations of $36.5 million on revenues of $145.5 million.

The Company’s Adjusted EBITDA (a non-GAAP measure) was $40.1 million for the quarter, an increase compared to $31.4 million in third quarter 2021. Refer to page 10 for a Reconciliation of Adjusted EBITDA to GAAP results.

The valuation process under fresh start accounting caused certain fully depreciated assets to be assigned an estimated fair value of $197.5 million and remaining useful life of less than 36 months. Depreciation expense for the full year was $214.0 million. Depreciation expense for the years ended December 31, 2022 and 2023 is expected to be approximately $86.8 million and $57.8 million, respectively.

Full Year 2021 Results

For the year ended December 31, 2021, the Company’s loss from operations was $155.1 million, on revenue of $694.7 million as compared with loss from operations of $133.3 million on revenue of $667.2 million for the year ended December 31, 2020. The Company’s Adjusted EBITDA (a non-GAAP measure) for the full year was $126.2 million. Refer to page 10 for a Reconciliation of Adjusted EBITDA to GAAP results.

Fourth Quarter 2021 Geographic Breakdown

U.S. land revenue was $34.5 million in the fourth quarter of 2021, an increase of 7% compared to revenue of $32.3 million in the third quarter of 2021. U.S. offshore revenue was $52.0 million in the fourth quarter of
2021, generally flat compared to revenue of $51.8 million in the third quarter of 2021. International revenue was $111.9 million in the fourth quarter of 2021, an increase of 18% compared to revenue of $94.6 million in the third quarter of 2021.

Segment Reporting

The Rentals segment revenue in the fourth quarter of 2021 was $82.8 million, a 9% increase from third quarter 2021 revenue of $76.2 million. The Well Services segment revenue in the fourth quarter of 2021 was $115.6 million, a 13% increase from the third quarter 2021 revenue of $102.4 million.

Discontinued Operations

The Company reported a net loss from discontinued operations for the fourth quarter of 2021 of $6.1 million on revenue of $5.3 million.   This compares to a net loss from discontinued operations for the third quarter of 2021 of $5.2 million on revenue of $17.0 million.

At the end of the fourth quarter 2021, assets held for sale totaled $37.5 million, which includes approximately $23.5 million of assets relating to various real estate holdings across US basins that we expect to monetize in 2022.

Total cash proceeds received from the sale of non-core assets through December 31, 2021 are $98.3 million. Additionally, at December 31, 2021 the Company owned 4.1 million shares of Select Energy Services Class A common stock (NYSE: WTTR).

Liquidity

As of February 28, 2022, the Company had cash, cash equivalents, and restricted cash of approximately $427.8 million and the availability remaining under our ABL Credit Facility was approximately $79.8 million, assuming continued compliance with the covenants under our ABL Credit Facility.

As of February 28, 2022, the Company owned 3.1 million shares of Select Energy Services Class A common stock (NYSE: WTTR).

Conference Call Information

The Company will host a conference call on Friday, March 25, 2022 at 10:00 a.m. Eastern Time. To listen to the call via a live webcast, please visit Superior’s website at ir.superiorenergy.com and use access code 2473345. You may also listen to the call by dialing in at 1-877-800-3682 in the United States and Canada or 1-615-622-8047 for International calls and using access code 2473345. The call will be available for replay until April 18, 2022 on Superior’s website at ir.superiorenergy.com. If you are a shareholder and would like to submit a question, please email your question beforehand to Wendell York at ir@superiorenergy.com.

About Superior Energy Services

Superior Energy Services serves the drilling, completion and production-related needs of oil and gas companies worldwide through a diversified portfolio of specialized oilfield services and equipment that are used throughout the economic life cycle of oil and gas wells. For more information, visit: www.superiorenergy.com.

Non-GAAP Financial Measure

To supplement Superior’s consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also uses Adjusted EBITDA. Management uses Adjusted EBITDA internally for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company also believes that this non-GAAP measure provides investors useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. Non-GAAP financial measures are not recognized measures for financial statement presentation under U.S. GAAP and do not have standardized meanings and may not be comparable to similar measures presented by other public companies. Adjusted EBITDA should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measure calculated in accordance with GAAP. We define Adjusted EBITDA as net income (loss) before net interest expense, income tax expense (benefit) and depreciation, amortization and depletion, adjusted for reduction in value of assets and other charges, which management does not consider representative of our ongoing operations. For a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, please see the tables under “―Superior Energy Services, Inc. and Subsidiaries Reconciliation of Adjusted EBITDA” included on pages 10 through 12 of this press release.

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, depreciation expense, liquidity, strategic alternatives (including dispositions and the timing thereof), 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, including but not limited to conditions in the oil and gas industry and the availability of third party buyers, 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.

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 for the year ended December 31, 2021 and those set forth from time to time in the Company’s other periodic filings with the Securities and Exchange Commission, which are available at www.superiorenergy.com. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share amounts)
(unaudited)
 
    Three Months Ended   Twelve Months Ended
    December 31,   September 30,   December 31,
    2021   2020   2021   2021(1)   2020
                     
Revenues   $ 198,436     $ 145,453     $ 178,583     $ 694,682     $ 667,249  
                     
Cost of revenues     124,844       90,118       126,071       452,025       408,131  
Depreciation, depletion, amortization and accretion     61,603       26,879       59,208       228,217       115,771  
General and administrative expenses     33,158       56,052       33,671       128,627       205,773  
Restructuring expenses     2,419       4,787       4,712       24,222       47,055  
Other expenses     17,714       -       (1,098 )     16,726       -  
Reduction in value of assets     -       4,165       -       -       23,775  
                     
Loss from operations     (41,302 )     (36,548 )     (43,981 )     (155,135 )     (133,256 )
                     
Other income (expense):                    
Interest income (expense), net     937       (17,727 )     647       2,533       (92,426 )
Reorganization items, net     -       -       -       335,560       (19,520 )
Other expense     (629 )     (23,940 )     (6,224 )     (9,233 )     (9,229 )
                     
Income (loss) from continuing operations before income taxes     (40,994 )     (78,215 )     (49,558 )     173,725       (254,431 )
                     
Income tax benefit (expense)     17,748       14,543       9,518       (26,705 )     26,888  
                     
Net income (loss) from continuing operations     (23,246 )     (63,672 )     (40,040 )     147,020       (227,543 )
                     
Loss from discontinued operations, net of income tax     (6,102 )     (30,686 )     (5,161 )     (40,421 )     (168,687 )
                     
Net income (loss)   $ (29,348 )   $ (94,358 )   $ (45,201 )   $ 106,599     $ (396,230 )
                     
(1)Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence which is a non-GAAP financial measure. For further information regarding the breakdown of results, see our Annual Report on Form 10-K for the twelve months ended December 31, 2021.
                                         
No earnings per share information is presented due to the change in reporting entity as a result of our emergence from bankruptcy in the first quarter of 2021.
                                         

 

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
         
    12/31/2021   12/31/2020
ASSETS        
         
Current assets:        
Cash and cash equivalents   $ 314,974     $ 188,006  
Accounts receivable, net     182,432       158,516  
Income taxes receivable     5,099       8,891  
Prepaid expenses     15,861       31,793  
Inventory     60,603       77,027  
Other current assets     6,701       9,171  
Investment in equity securities     25,735       -  
Assets held for sale     37,528       242,104  
Total current assets     648,933       715,508  
         
Property, plant and equipment, net     356,274       408,107  
Operating lease right-of-use assets     25,154       33,317  
Goodwill     -       138,677  
Notes receivable     60,588       72,129  
Restricted cash     79,561       80,178  
Intangible and other long-term assets, net     28,998       53,163  
Total assets   $ 1,199,508     $ 1,501,079  
         
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)    
         
Current liabilities:        
Accounts payable   $ 43,080     $ 50,330  
Accrued expenses     116,882       114,777  
Liabilities held for sale     5,607       46,376  
Total current liabilities     165,569       211,483  
         
Decommissioning liabilities     190,380       134,436  
Operating lease liabilities     19,193       29,464  
Deferred income taxes     12,441       5,288  
Other long-term liabilities     70,192       123,261  
Total non-current liabilities     292,206       292,449  
Liabilities Subject to Compromise     -       1,335,794  
Total Liabilities     457,775       1,839,726  
         
Total stockholders' equity (deficit)     741,733       (338,647 )
Total liabilities and stockholders' equity   $ 1,199,508     $ 1,501,079  
         

 

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
         
    Twelve months ended
    December 31,
    2021(1)   2020
Cash flows from operating activities        
Net income (loss)   $ 106,599     $ (396,230 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities        
Depreciation, depletion, amortization and accretion     261,860       146,793  
Reduction in value of assets     -       141,110  
Reorganization items, net     (354,279 )     18,087  
Other non-cash items     48,645       29,057  
Changes in operating assets and liabilities     1,442       63,400  
Net cash from operating activities     64,267       2,217  
         
Cash flows from investing activities        
Payments for capital expenditures     (37,187 )     (47,653 )
Proceeds from sales of assets     98,280       50,039  
Proceeds from sales of equity securities     4,099       -  
Net cash from investing activities     65,192       2,386  
         
Cash flows from financing activities        
Other     (3,419 )     (14,194 )
Net cash from financing activities     (3,419 )     (14,194 )
Effect of exchange rate changes on cash     311       2,387  
Net change in cash, cash equivalents and restricted cash     126,351       (7,204 )
Cash, cash equivalents and restricted cash at beginning of period     268,184       275,388  
Cash, cash equivalents and restricted cash at end of period   $ 394,535     $ 268,184  
         
         
(1)Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence which is a non-GAAP financial measure. A reconciliation for the full year 2021 consolidated cash flows presented above to the Successor and Predecessor periods can be found on page 12 of this document. For further information regarding the breakdown of results, see our Annual Report on Form 10-K for the twelve months ended December 31, 2021.
                 

 

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
REVENUE BY GEOGRAPHIC REGION BY SEGMENT
(in thousands, except per share data)
(unaudited)
             
    Three months ended
    December 31,   September 30,
    2021   2020   2021
             
U.S. land            
Rentals   $ 29,907     $ 11,885     $ 25,627  
Well Services     4,588       7,912       6,638  
Total U.S. land     34,495       19,797       32,265  
             
U.S. offshore            
Rentals     27,356       25,285       28,997  
Well Services     24,661       21,065       22,756  
Total U.S. offshore     52,017       46,350       51,753  
             
International            
Rentals     25,530       21,638       21,593  
Well Services     86,394       57,668       72,972  
Total International     111,924       79,306       94,565  
Total Revenues   $ 198,436     $ 145,453     $ 178,583  
             

 

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
(in thousands)
(unaudited)
             
             
    Three months ended   Year ended
    December 31, September 30, December 31,
    2021   2021   2021
Revenues            
Rentals   $ 82,793     $ 76,217     $ 287,034  
Well Services     115,643       102,366       407,648  
Corporate and other     -       -       -  
Total Revenues   $ 198,436     $ 178,583     $ 694,682  
             
Income (Loss) from Operations            
Rentals   $ 2,309     $ (6,046 )   $ (13,147 )
Well Services     (25,560 )     (18,229 )     (59,913 )
Corporate and other     (18,051 )     (19,706 )     (82,075 )
Total loss from Operations   $ (41,302 )   $ (43,981 )   $ (155,135 )
             
Adjusted EBITDA            
Rentals   $ 44,179     $ 35,595     $ 144,775  
Well Services     9,511       8,894       32,323  
Corporate and other     (13,581 )     (13,042 )     (50,897 )
Total Adjusted EBITDA   $ 40,109     $ 31,447     $ 126,201  
             
We define EBITDA as income (loss) from continuing operations adjusted for the impact of depreciation, depletion, amortization and accretion, interest and income taxes. Additionally, our definition of Adjusted EBITDA adjusts for the impact of reorganization items and restructuring and other expenses, other income/expense and other adjustments.
                         

 

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(in thousands)
(unaudited)
             
    Three months ended   Year ended
    December 31, September 30,   December 31,
    2021   2021   2021
             
Net income (loss) from continuing operations   $ (23,246 )   $ (40,040 )   $ 147,020  
Depreciation, depletion, amortization and accretion   61,603       59,208       228,217  
Interest (income) expense, net     (937 )     (647 )     (2,533 )
Income taxes     (17,748 )     (9,518 )     26,705  
Reorganization items     -       -       (335,560 )
Restructuring expenses     2,419       4,712       24,222  
Other expenses(1)     17,714       (1,098 )     16,726  
Other (income) expense     629       6,224       9,233  
Other adjustments(2)     (325 )     12,606       12,171  
Adjusted EBITDA   $ 40,109     $ 31,447     $ 126,201  
             
             
We define EBITDA as income (loss) from continuing operations adjusted for the impact of depreciation, depletion, amortization and accretion, interest and income taxes. Additionally, our definition of Adjusted EBITDA adjusts for the impact of reorganization items and restructuring and other expenses, other income/expense and other adjustments.
                         
(1)Other expenses for the fourth quarter comprised $15.5 million related to our Wells Services segment, which includes approximately $11.7 million from exit activities related to SES Energy Services India Pvt. Ltd, and $2.2 million related to our Rentals segment. Other expenses primarily relate to charges recorded as part of our strategic disposal of low margin assets in line with our Transformation Project strategy and includes gains/losses on asset sales, as well as impairments primarily related to long-lived assets.
                         
(2)Other adjustments relate to costs associated with our Transformation Project which are included in cost of revenues in our condensed consolidated statements of operations. These costs primarily relate to shut down costs incurred at certain locations and include severance of personnel and the write-down of inventory.
                         

 

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT
(in thousands)
(unaudited)
                 
    Three months ended December 31, 2021
        Well   Corporate   Consolidated
    Rentals   Services   and Other   Total
                 
Loss from continuing operations   $ 2,309     $ (25,560 )   $ (18,051 )   $ (41,302 )
Depreciation, depletion, amortization and accretion     40,469       19,083       2,051       61,603  
Restructuring expenses     -       -       2,419       2,419  
Other expenses and adjustments(1) (2)     1,401       15,988       -       17,389  
Adjusted EBITDA   $ 44,179     $ 9,511     $ (13,581 )   $ 40,109  
                 
    Three months ended September 30, 2021
        Well   Corporate   Consolidated
    Rentals   Services   and Other   Total
                 
Loss from continuing operations   $ (6,046 )   $ (18,229 )   $ (19,706 )   $ (43,981 )
Depreciation, depletion, amortization and accretion     41,641       15,615       1,952       59,208  
Restructuring expenses     -       -       4,712       4,712  
Other expenses and adjustments(2)     -       11,508       -       11,508  
Adjusted EBITDA   $ 35,595     $ 8,894     $ (13,042 )   $ 31,447  
                 
    Year ended December 31, 2021
        Well   Corporate   Consolidated
    Rentals   Services   and Other   Total
                 
Loss from continuing operations   $ (13,147 )   $ (59,913 )   $ (82,075 )   $ (155,135 )
Depreciation, depletion, amortization and accretion     156,521       64,740       6,956       228,217  
Restructuring expenses     -       -       24,222       24,222  
Other expenses and adjustments(1) (2)     1,401       27,496       -       28,897  
Adjusted EBITDA   $ 144,775     $ 32,323     $ (50,897 )   $ 126,201  
                 
                 
We define EBITDA as income (loss) from continuing operations adjusted for the impact of depreciation, depletion, amortization and accretion, interest and income taxes. Additionally, our definition of Adjusted EBITDA adjusts for the impact of reorganization items and restructuring and other expenses, other income/expense and other adjustments.
                                 
(1)Other expenses for the fourth quarter comprised $15.5 million related to our Wells Services segment, which includes approximately $11.7 million from exit activities related to SES Energy Services India Pvt. Ltd, and $2.2 million related to our Rentals segment. Other expenses primarily relate to charges recorded as part of our strategic disposal of low margin assets in line with our Transformation Project strategy and includes gains/losses on asset sales, as well as impairments primarily related to long-lived assets.
                                 
(2)Other adjustments relate to costs associated with our Transformation Project which are included in cost of revenues in our condensed consolidated statements of operations. These costs primarily relate to shut down costs incurred at certain locations and include severance of personnel and the write-down of inventory.
                                 

 

 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED STATEMENTS OF CASH FLOWS TO PREDECESSOR AND SUCCESSOR PERIODS
(in thousands)
(unaudited)
               
    Successor     Predecessor   Combined
               
    For the Period February 3, 2021 through December 31, 2021     For the Period January 1, 2021 through February 2, 2021   Year Ended December 31, 2021(1)
Cash flows from operating activities              
Net income (loss)   $ (162,178 )     $ 268,777     $ 106,599  
Adjustments to reconcile net income (loss) to net cash provided by operating activities              
Depreciation, depletion, amortization and accretion     251,361         10,499       261,860  
Reduction in value of assets     -         -       -  
Reorganization items, net     -         (354,279 )     (354,279 )
Other non-cash items     (7,477 )       56,122       48,645  
Changes in operating assets and liabilities     (22,822 )       24,264       1,442  
Net cash from operating activities     58,884         5,383       64,267  
               
Cash flows from investing activities              
Payments for capital expenditures     (34,152 )       (3,035 )     (37,187 )
Proceeds from sales of assets     97,505         775       98,280  
Proceeds from sales of equity securities     4,099         -       4,099  
Net cash from investing activities     67,452         (2,260 )     65,192  
               
Cash flows from financing activities              
Other     (1,499 )       (1,920 )     (3,419 )
Net cash from financing activities     (1,499 )       (1,920 )     (3,419 )
Effect of exchange rate changes on cash     -         311       311  
Net change in cash, cash equivalents and restricted cash     124,837         1,514       126,351  
Cash, cash equivalents and restricted cash at beginning of period     269,698         268,184       268,184  
Cash, cash equivalents and restricted cash at end of period   $ 394,535       $ 269,698     $ 394,535  
               
               
(1)Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence which is a non-GAAP financial measure. For further information regarding the breakdown of results, see our Annual Report on Form 10-K for the twelve months ended December 31, 2021.
                           

 

FOR FURTHER INFORMATION CONTACT:
Wendell York, VP – IR, Corporate Development & Treasury
1001 Louisiana St., Suite 2900
Houston, TX 77002
Investor Relations, ir@superiorenergy.com, (713) 654-2200