SPN
$11.23
Superior Energy Services
($.59)
(4.99%)
Earnings Details
1st Quarter March 2018
Tuesday, April 24, 2018 4:15:00 PM
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Summary

Superior Energy Services Reports In-line

Superior Energy Services (SPN) reported a 1st Quarter March 2018 loss of $0.34 per share on revenue of $482.3 million. The consensus estimate was a loss of $0.35 per share on revenue of $492.5 million. The Earnings Whisper number was for a loss of $0.34 per share. Revenue grew 20.3% on a year-over-year basis.

Superior Energy Services Inc is a provider of specialized oilfield services and equipment. The Company operates four segments: Drilling Products and Services; Onshore Completion and Workover Services; Production Services; Subsea and Technical Solutions.

Results
Reported Earnings
($0.34)
Earnings Whisper
($0.34)
Consensus Estimate
($0.35)
Reported Revenue
$482.3 Mil
Revenue Estimate
$492.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Superior Energy Services Announces First Quarter 2018 Results

HOUSTON, April 24, 2018 (GLOBE NEWSWIRE) -- Superior Energy Services, Inc. (the “Company”) today announced a net loss from continuing operations for the first quarter of 2018 of $59.9 million, or $0.39 per share, on revenue of $482.3 million.  This compares to net income from continuing operations of $21.9 million, or $0.14 per diluted share for the fourth quarter of 2017, on revenue of $497.0 million and a loss from continuing operations of $89.7 million, or $0.59 per share for the first quarter of 2017, on revenue of $400.9 million

The Company recorded a pre-tax charge of $8.1 million, primarily related to restructuring charges during the first quarter.  The resulting adjusted net loss from continuing operations for the first quarter of 2018 was $52.9 million, or $0.34 per share.  This compares to an adjusted net loss from continuing operations of $51.2 million, or $0.33 per share for the fourth quarter of 2017.

David Dunlap, President and CEO, commented, “In U.S. land markets, revenue and margins were effectively unchanged from the fourth quarter of 2017.  Utilization of completion oriented products and services was challenged by periods of harsh weather and shortages of fracturing sand.  Offsetting the challenging completions environment, U.S. land revenue in our drilling products and services segment grew 16%, contributing to a 19% increase in adjusted EBITDA for the segment.  These highly differentiated product lines give us more leverage to the unfolding global oilfield recovery than many of our peers, and highlight our full cycle value proposition.

“The weather and supply chain challenges experienced in the U.S. muted the impact of increased customer demand during the quarter, limiting our financial results.  We are increasingly confident that current levels of demand create an environment for utilization to improve well into 2019.

“Activity levels in the Gulf of Mexico were relatively stable during the quarter.  Strengthening oil prices should ultimately drive higher utilization levels, but for the time being we believe our business is right sized for expected customer demand in the Gulf.

“International activity declined during what has historically been a seasonally weak quarter for our production services segment.  Well control activity was also lower sequentially.

“After more than three years of declining industry activity, the challenges we face in the oilfield today are associated with growth and expansion.  For the duration of the downturn, we have been gearing our organization for this moment.  It is anticipated that improved commodity prices will drive further market improvement in the U.S. during 2018 and our service lines will continue to benefit from higher utilization levels.  We are also prepared for Gulf of Mexico and international recovery with competitively advantaged business lines that will require minimal investment to respond to increased activity.  We believe this positioning supports our goals of generating free cash flow, reducing debt levels and improving returns through the current cycle.”

First Quarter 2018 Geographic Breakdown

U.S. land revenue was $331.5 million in the first quarter of 2018, unchanged as compared with revenue of $331.0 million in the fourth quarter of 2017, and a 28% increase compared to revenue of $258.7 million in the first quarter of 2017.  Gulf of Mexico revenue was $76.0 million, unchanged as compared with revenue of $76.4 million in the fourth quarter of 2017, and a 1% increase from revenue of $74.9 million in the first quarter of 2017.  International revenue of $74.8 million decreased 17% as compared with $89.6 million in the fourth quarter of 2017 and increased 11% as compared to revenue of $67.3 million in the first quarter of 2017.  

Drilling Products and Services Segment

The Drilling Products and Services segment revenue in the first quarter of 2018 was $85.2 million, an 8% increase from fourth quarter 2017 revenue of $79.2 million and a 25% increase from first quarter 2017 revenue of $68.4 million.

U.S. land revenue increased 16% sequentially to $40.7 million, Gulf of Mexico revenue decreased 7% sequentially to $21.0 million and international revenue increased 9% sequentially to $23.5 million.

Onshore Completion and Workover Services Segment

The Onshore Completion and Workover Services segment revenue in the first quarter of 2018 was $231.5 million, a 1% decrease from fourth quarter 2017 revenue of $232.7 million, and a 13% increase from first quarter 2017 revenue of $205.0 million.

Production Services Segment

The Production Services segment revenue in the first quarter of 2018 was $100.8 million, a 15% decrease from fourth quarter 2017 revenue of $118.2 million and a 47% increase from first quarter 2017 revenue of $68.6 million.

U.S. land revenue decreased 5% sequentially to $52.5 million as inefficiencies caused by winter weather, and supply chain tightness persisted, resulting in lower utilization for most service lines.  Gulf of Mexico revenue decreased 12% sequentially to $17.5 million due primarily to lower hydraulic workover and snubbing activity.  International revenue decreased 29% sequentially to $30.8 million due to lower levels of hydraulic workover and snubbing activity and well intervention work.

Technical Solutions Segment

The Technical Solutions segment revenue in the first quarter of 2018 was $64.8 million, a 3% decrease from fourth quarter 2017 revenue of $66.9 million and a 10% increase from first quarter 2017 revenue of $58.9 million.

U.S. land revenue decreased 17% sequentially to $6.8 million.  Gulf of Mexico revenue increased 10% sequentially to $37.5 million driven by increased completion tools activity. International revenue decreased 17% to $20.5 million due to lower levels of well control activity.

Conference Call Information

The Company will host a conference call at 9:00 a.m. Eastern Standard Time on Wednesday, April 25, 2018.  The call can be accessed from the Company’s website at www.superiorenergy.com or by telephone at 800-263-0877.  For those who cannot listen to the live call, a telephonic replay will be available through May 9, 2018 and may be accessed by calling 844-512-2921 and using the pin number 6139719.  

About Superior Energy Services

Superior Energy Services (NYSE:SPN) 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.

The press release contains, and future oral or written statements or press releases by us and our 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 our 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 our actual results to differ materially from such statements. Such uncertainties include, but are not limited to: the cyclicality and volatility of the oil and gas industry, including changes in prevailing levels of capital expenditures, exploration, production and development activity; changes in prevailing oil and gas prices or expectations about future prices; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage for which we may have limited or no insurance coverage or indemnification rights; the effect of regulatory programs (including worker health and safety laws) and environmental matters on our operations or prospects, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for our pressure pumping and fluid management services, or that future changes in climate change legislation could result in increased operating costs or reduced commodity demand globally; counter-party risks associated with reliance on key suppliers; risks associated with the uncertainty of macroeconomic and business conditions worldwide; changes in competitive and technological factors affecting our operations; credit risk associated with our customer base;  the potential inability to retain key employees and skilled workers; challenges with estimating our oil and natural gas reserves and potential liabilities related to our oil and natural gas property; risk associated with potential changes of Bureau of Ocean Energy Management security and bonding requirements for offshore platforms; risks inherent in acquiring businesses; risks associated with cyber-attacks; risks associated with business growth during an industry recovery outpacing the capabilities of our infrastructure and workforce; political, legal, economic and other risks and uncertainties associated with our international operations; potential changes in tax laws, adverse positions taken by tax authorities or tax audits impacting our operating results; risks associated with our outstanding debt obligations and the potential effect of limiting our future growth and operations; our continued access to credit markets on favorable terms; the impact that unfavorable or unusual weather conditions could have on our operations; claims, litigation or other proceedings that require cash payments or could impair financial condition; not realizing the benefits of acquisitions or divestitures and price volatility of the Company’s common stock. These risks and other uncertainties related to our business are described in our periodic reports filed with the Securities and Exchange Commission.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after such statements are made, including for example the market prices of oil and gas and regulations affecting oil and gas operations, which we cannot control or anticipate. Further, we may make changes to our business strategies and plans (including our capital spending and capital allocation plans) at any time and without notice, based on any changes in the above-listed factors, our assumptions or otherwise, any of which could or will affect our results. For all these reasons, actual events and results may differ materially from those anticipated, estimated, projected or implied by us in our forward-looking statements. We undertake no obligation to update any of our forward-looking statements for any reason and, notwithstanding any changes in our assumptions, changes in our business plans, our actual experience, or other changes.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.


 
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share amounts)
(unaudited)
 
  Three Months Ended
  March 31, December 31,
   2018   2017   2017 
       
Revenues $  482,318  $  400,936  $  497,043 
       
Cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion)    343,460     321,986     356,628 
Depreciation, depletion, amortization and accretion    105,719     114,281     107,565 
General and administrative expenses    75,820     75,493     68,934 
Reduction in value of assets    -     -     4,202 
       
Loss from operations    (42,681)    (110,824)    (40,286)
       
Other income (expense):      
  Interest expense, net    (24,887)    (24,250)    (24,776)
  Other income (expense)    (1,735)    649     (822)
       
Loss from continuing operations before income taxes    (69,303)    (134,425)    (65,884)
       
Income taxes    (9,355)    (44,764)    (87,762)
       
Net income (loss) from continuing operations    (59,948)    (89,661)    21,878 
       
Income (loss) from discontinued operations, net of income tax    224     (1,998)    (13,285)
       
Net income (loss) $  (59,724) $  (91,659) $  8,593 
       
Basic earnings (losses) per share:      
Net income (loss) from continuing operations $  (0.39) $  (0.59) $  0.14 
Loss from discontinued operations    -      (0.01)    (0.08)
Net income (loss) $  (0.39) $  (0.60) $  0.06 
       
Diluted earnings (losses) per share:      
Net income (loss) from continuing operations $  (0.39) $  (0.59) $  0.14 
Loss from discontinued operations    -      (0.01)    (0.08)
Net income (loss) $  (0.39) $  (0.60) $  0.06 
       
Weighted average common shares:      
  Basic     154,121     152,701     153,085 
  Diluted    154,121     152,701     154,277 
       

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
     
  3/31/2018 12/31/2017
ASSETS    
     
Current assets:    
  Cash and cash equivalents $  90,438 $  172,000
  Accounts receivable, net    443,253    398,056
  Income taxes receivable    -    959
  Prepaid expenses    45,330    42,128
  Inventory and other current assets    149,484    134,032
  Assets held for sale    3,860    13,644
     
  Total current assets    732,365    760,819
     
Property, plant and equipment, net     1,300,897    1,316,944
Goodwill    809,342    807,860
Notes receivable    61,087    60,149
Restricted cash    20,585    20,483
Intangible and other long-term assets, net    140,487    143,970
     
  Total assets $  3,064,763 $  3,110,225
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Current liabilities:    
  Accounts payable $  148,499 $  119,716
  Accrued expenses    215,801    221,757
  Income taxes payable     934    -
  Current portion of decommissioning liabilities    22,287    27,261
  Current maturities of long-term debt    744    -
  Liabilities held for sale    4,851    6,463
     
  Total current liabilities    393,116    375,197
     
Deferred income taxes     48,773    61,058
Decommissioning liabilities    104,088    103,136
Long-term debt, net    1,280,569    1,279,771
Other long-term liabilities    160,048    158,634
     
Total stockholders' equity    1,078,169    1,132,429
     
  Total liabilities and stockholders' equity $  3,064,763 $  3,110,225
     

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
THREE MONTHS ENDED MARCH 31, 2018 AND 2017 
(in thousands) 
(unaudited) 
   2018   2017  
      
Cash flows from operating activities:     
Net loss $  (59,724) $  (91,659) 
Adjustments to reconcile net loss to net cash used in operating activities:     
Depreciation, depletion, amortization and accretion    105,719     114,281  
Other noncash items    (5,075)    (20,486) 
Changes in working capital and other    (65,878)    (44,861) 
  Net cash used in operating activities     (24,958)    (42,725) 
      
Cash flows from investing activities:     
Payments for capital expenditures    (65,734)    (21,188) 
Other    12,135     4,090  
  Net cash used in investing activities     (53,599)    (17,098) 
      
Cash flows from financing activities:     
Other    (4,715)    (8,706) 
  Net cash used in financing activities    (4,715)    (8,706) 
      
  Effect of exchange rate changes in cash    1,812     2,194  
      
  Net decrease in cash, cash equivalents, and restricted cash    (81,460)    (66,335) 
      
Cash, cash equivalents and restricted cash at beginning of period    192,483     246,092  
      
Cash, cash equivalents, and restricted cash at end of period $  111,023  $  179,757  
      

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
REVENUE BY GEOGRAPHIC REGION BY SEGMENT
(in thousands)
(unaudited)
       
  Three months ended, 
  March 31, 2018 December 31, 2017 March 31, 2017
U.S. land      
  Drilling Products and Services $  40,717 $  35,146 $  21,162
  Onshore Completion and Workover Services    231,489    232,720    204,979
  Production Services    52,457    55,010    23,435
  Technical Solutions    6,833    8,161    9,085
Total U.S. land $  331,496 $  331,037 $  258,661
       
Gulf of Mexico      
  Drilling Products and Services $  20,989 $  22,521 $  23,485
  Onshore Completion and Workover Services    -    -    -
  Production Services    17,500    19,864    17,746
  Technical Solutions    37,562    34,027    33,717
Total Gulf of Mexico $  76,051 $  76,412 $  74,948
       
International      
  Drilling Products and Services $  23,496 $  21,559 $  23,784
  Onshore Completion and Workover Services    -    -    -
  Production Services    30,760    43,363    27,424
  Technical Solutions    20,515    24,672    16,119
Total International $  74,771 $  89,594 $  67,327
       
Total Revenues $  482,318 $  497,043 $  400,936
       

 

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
(in thousands)
(unaudited)
       
  Three months ended, 
Revenues March 31, 2018 December 31, 2017 March 31, 2017
Drilling Products and Services $  85,202  $  79,226  $  68,431 
Onshore Completion and Workover Services    231,489     232,720     204,979 
Production Services    100,717     118,237     68,605 
Technical Solutions    64,910     66,860     58,921 
Total Revenues $  482,318  $  497,043  $  400,936 
       
Adjusted Income (Loss) from Operations (1)      
Drilling Products and Services $  7,979  $  340  $  (8,322)
Onshore Completion and Workover Services    (7,141)    (9,888)    (49,128)
Production Services    (11,180)    (6,464)    (24,045)
Technical Solutions    1,817     3,176     (1,482)
Corporate and other    (26,064)    (23,248)    (27,847)
Total Adjusted Income (Loss) from Operations $  (34,589) $  (36,084) $  (110,824)
       
Adjusted EBITDA (1)       
Drilling Products and Services $  37,620  $  31,547  $  26,407 
Onshore Completion and Workover Services    40,514     41,311     19 
Production Services    8,100     12,420     (3,456)
Technical Solutions    9,547     8,022     6,894 
Corporate and other    (24,651)    (21,819)    (26,407)
Total Adjusted EBITDA $  71,130  $  71,481  $  3,457 
       
(1) Adjusted income (loss) from operations and adjusted EBITDA exclude the impact of restructuring costs for the three months ended March 31, 2018 and the impact of reduction in value of assets for the three months ended December 31, 2017.  There were no adjustments for the three months ended March 31, 2017.  For Non-GAAP reconciliations, refer to Table 2 below.

 

Non-GAAP Financial Measures

The following table reconciles net loss from continuing operations on a consolidated basis, which is the directly comparable financial result determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted income/loss from continuing operations on a consolidated basis (non-GAAP financial measure).  This financial measure is provided to enhance investors’ overall understanding of the Company’s current financial performance. 

 
Consolidated Adjusted Net Loss From Continuing Operations Reconciliation
(in thousands)
(unaudited)
Table 1
         
  Three months ended,
  March 31, 2018 December 31, 2017
  Consolidated Per Share Consolidated Per Share
         
Reported net income (loss) from continuing operations $  (59,948) $  (0.39) $  21,878  $  0.14 
         
Reduction in value of assets and other items    8,092     0.05     4,202     0.02 
Income taxes    (1,092)    -      (716)    -  
US Tax Reform (1)    -     -      (76,529)    (0.49)
         
Adjusted net loss from continuing operations $  (52,948) $  (0.34) $  (51,165) $  (0.33)
         
(1)  Recorded in Income Taxes in the condensed consolidated statement of operations.
         

The following table reconciles net income/loss from continuing operations by segment, which is the directly comparable financial results determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted income/loss from operations and adjusted EBITDA by segment (non-GAAP financial measures).  These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance. 


  
Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA by Segment 
(in thousands) 
(unaudited) 
Table 2 
              
  Three months ended, March 31, 2018 
  Drilling
Products and
Services
 Onshore
Completion
and Workover
Services
 Production
Services
 
Technical
Solutions
 Corporate and
Other
 Consolidated
 
              
Reported net income (loss) from continuing operations $  7,967  $  (10,043) $  (14,092) $  2,273  $  (46,053) $  (59,948) 
Restructuring and other costs    12     2,902     2,912     500     1,766     8,092  
Interest expense, net    -     -     -     (956)    25,843     24,887  
Other expense    -     -     -     -     1,735     1,735  
Income taxes    -     -     -     -     (9,355)    (9,355) 
Adjusted income (loss) from operations $  7,979  $  (7,141) $  (11,180) $  1,817  $  (26,064) $  (34,589) 
Depreciation, depletion, amortization
  and accretion
    29,641     47,655     19,280     7,730     1,413     105,719  
Adjusted EBITDA  $  37,620  $  40,514  $  8,100  $  9,547  $  (24,651) $  71,130  
              
              
  Three months ended, December 31, 2017 
  Drilling
Products and
Services
 Onshore
Completion
and Workover
Services
 Production
Services
 
Technical
Solutions
 Corporate and
Other
 Consolidated
 
              
Reported net income (loss) from continuing  operations $  (1,016) $  (12,734) $  (6,464) $  4,116  $  37,976  $  21,878  
Reduction in value of assets    1,356     2,846     -     -     -     4,202  
Interest expense, net    -     -     -     (940)    25,716     24,776  
Other expense    -     -     -     -     822     822  
Income taxes    -     -     -     -     (87,762)    (87,762) 
Adjusted income (loss) from operations $  340  $  (9,888) $  (6,464) $  3,176  $  (23,248) $  (36,084) 
Depreciation, depletion, amortization
  and accretion
    31,207     51,199     18,884     4,846     1,429     107,565  
Adjusted EBITDA  $  31,547  $  41,311  $  12,420  $  8,022  $  (21,819) $  71,481  
              
              
  Three months ended, March 31, 2017 
  Drilling
Products and
Services
 Onshore
Completion
and Workover
Services
 Production
Services
 
Technical
Solutions
 Corporate and
Other
 Consolidated
 
              
Reported net loss from continuing  operations $  (8,322) $  (49,128) $  (24,045) $  (692) $  (7,474) $  (89,661) 
Interest expense, net    -     -     -     (790)    25,040     24,250  
Other expense    -     -     -     -     (649)    (649) 
Income taxes    -     -     -     -     (44,764)    (44,764) 
Loss from operations $  (8,322) $  (49,128) $  (24,045) $  (1,482) $  (27,847) $  (110,824) 
Depreciation, depletion, amortization
  and accretion
    34,729     49,147     20,589     8,376     1,440     114,281  
EBITDA  $  26,407  $  19  $  (3,456) $  6,894  $  (26,407) $  3,457  
              

FOR FURTHER INFORMATION CONTACT:
Paul Vincent, VP of Investor Relations, (713) 654-2200

Source: Superior Energy Services, Inc.