UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
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| (State or other jurisdiction of incorporation) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12) |
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Securities registered pursuant to Section 12(b) of the Act:
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| NONE | NONE | NONE |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On March 21, 2022, Superior Energy Services, Inc., a Delaware corporation, announced, among other things, its financial results for the fiscal quarter and full year ended December 31, 2021 and a conference call with its shareholders. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated by reference. The information contained in this Item 2.02 (including the exhibit hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The information from Item 2.02 of this Current Report on Form 8-K is hereby incorporated into this Item 7.01 by reference.
The information contained in this Item 7.01 (including the exhibit hereto) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number |
Exhibit Description | |
| 99.1 | Press release dated March 21, 2022 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Superior Energy Services, Inc. | ||||||
| Date: March 22, 2022 | By: | /s/ James W. Spexarth | ||||
| James W. Spexarth | ||||||
| Executive Vice President, Chief Financial Officer and Treasurer | ||||||
Exhibit 99.1
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
SUPERIOR ENERGY SERVICES ANNOUNCES
FOURTH QUARTER AND FULL YEAR 2021 RESULTS
AND CONFERENCE CALL
Houston, March 21, 2022 – 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.
1
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.
2
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.
3
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.
###
4
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 | |||||||||||||||
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|
|||||||||||
| 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 | ) | ||||||||||
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| 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 | ||||||||||||||
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| 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 | ) | ||||||||||
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| Net income (loss) |
$ | (29,348 | ) | $ | (94,358 | ) | $ | (45,201 | ) | $ | 106,599 | $ | (396,230 | ) | ||||||
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| (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.
5
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 | ||||||
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|
|||||
| 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 | ||||||
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|||||
| Total assets |
$ | 1,199,508 | $ | 1,501,079 | ||||
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| 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 | ||||||
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|||||
| 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 | ||||||
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| Total non-current liabilities |
292,206 | 292,449 | ||||||
| Liabilities Subject to Compromise |
— | 1,335,794 | ||||||
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| Total Liabilities |
457,775 | 1,839,726 | ||||||
| Total stockholders’ equity (deficit) |
741,733 | (338,647 | ) | |||||
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| Total liabilities and stockholders’ equity |
$ | 1,199,508 | $ | 1,501,079 | ||||
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6
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 | ||||||
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| 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 | — | ||||||
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| Net cash from investing activities |
65,192 | 2,386 | ||||||
| Cash flows from financing activities |
||||||||
| Other |
(3,419 | ) | (14,194 | ) | ||||
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| Net cash from financing activities |
(3,419 | ) | (14,194 | ) | ||||
| Effect of exchange rate changes on cash |
311 | 2,387 | ||||||
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| 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 | ||||||
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| Cash, cash equivalents and restricted cash at end of period |
$ | 394,535 | $ | 268,184 | ||||
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| (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. |
7
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 |
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| Rentals |
$ | 29,907 | $ | 11,885 | $ | 25,627 | ||||||
| Well Services |
4,588 | 7,912 | 6,638 | |||||||||
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| Total U.S. land |
34,495 | 19,797 | 32,265 | |||||||||
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| U.S. offshore |
||||||||||||
| Rentals |
27,356 | 25,285 | 28,997 | |||||||||
| Well Services |
24,661 | 21,065 | 22,756 | |||||||||
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| Total U.S. offshore |
52,017 | 46,350 | 51,753 | |||||||||
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| International |
||||||||||||
| Rentals |
25,530 | 21,638 | 21,593 | |||||||||
| Well Services |
86,394 | 57,668 | 72,972 | |||||||||
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| Total International |
111,924 | 79,306 | 94,565 | |||||||||
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| Total Revenues |
$ | 198,436 | $ | 145,453 | $ | 178,583 | ||||||
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8
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
(in thousands)
(unaudited)
| Three months ended | Year ended | |||||||||||
| December 31, 2021 |
September 30, 2021 |
December 31, 2021 |
||||||||||
| Revenues |
||||||||||||
| Rentals |
$ | 82,793 | $ | 76,217 | $ | 287,034 | ||||||
| Well Services |
115,643 | 102,366 | 407,648 | |||||||||
| Corporate and other |
— | — | — | |||||||||
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| Total Revenues |
$ | 198,436 | $ | 178,583 | $ | 694,682 | ||||||
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| 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 | ) | ||||||
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| Total loss from Operations |
$ | (41,302 | ) | $ | (43,981 | ) | $ | (155,135 | ) | |||
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| 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 | ) | ||||||
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| Total Adjusted EBITDA |
$ | 40,109 | $ | 31,447 | $ | 126,201 | ||||||
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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.
9
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 | ||||||||
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| Adjusted EBITDA |
$ | 40,109 | $ | 31,447 | $ | 126,201 | ||||||
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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. |
10
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 | ||||||||||||
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|
|
|
|
|
|
|
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| Adjusted EBITDA |
$ | 44,179 | $ | 9,511 | $ | (13,581 | ) | $ | 40,109 | |||||||
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|
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| 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 | ||||||||||||
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|
|
|
|
|
|
|
|
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| Adjusted EBITDA |
$ | 35,595 | $ | 8,894 | $ | (13,042 | ) | $ | 31,447 | |||||||
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|
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|
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| 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 | ||||||||||||
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|
|
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| Adjusted EBITDA |
$ | 144,775 | $ | 32,323 | $ | (50,897 | ) | $ | 126,201 | |||||||
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|
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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. |
11
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 | ||||||||||||
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|
|
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| 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 | |||||||||||||
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|
|
|
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| Net cash from investing activities |
67,452 | (2,260 | ) | 65,192 | ||||||||||||
| Cash flows from financing activities |
||||||||||||||||
| Other |
(1,499 | ) | (1,920 | ) | (3,419 | ) | ||||||||||
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|
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| Net cash from financing activities |
(1,499 | ) | (1,920 | ) | (3,419 | ) | ||||||||||
| Effect of exchange rate changes on cash |
— | 311 | 311 | |||||||||||||
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|
|||||||||||
| 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 | |||||||||||||
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| Cash, cash equivalents and restricted cash at end of period |
$ | 394,535 | $ | 269,698 | $ | 394,535 | ||||||||||
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| (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. |
12