Superior Energy Services, Inc. Announces Fourth Quarter 2012 Results and Provides 2013 Earnings and Capital Expenditures

   Superior Energy Services, Inc. Announces Fourth Quarter 2012 Results and
           Provides 2013 Earnings and Capital Expenditures Guidance

PR Newswire

HOUSTON, Feb. 26, 2013

HOUSTON, Feb. 26, 2013 /PRNewswire/ -- Superior Energy Services, Inc. (NYSE:
SPN) today announced net income of $76.3 million, or $0.48 per diluted share,
on revenue of $1,178.2 million for the fourth quarter of 2012, and non-GAAP
adjusted net income of $77.6 million, or $0.49 per diluted share, after
excluding pre-tax expenses of $2.1 million related to an acquisition earnout
payment.

These results compare with the fourth quarter of 2011 net income from
continuing operations of $53.3 million, or $0.67 per diluted share, and net
income of $19.4 million, or $0.24 per diluted share, on revenue of $562.4
million. Non-GAAP adjusted net income from continuing operations was $58.0
million, or $0.71 per diluted share for the fourth quarter of 2011.

For the year ended December 31, 2012, the Company recorded net income from
continuing operations of $383.1 million, or $2.54 per diluted share, and net
income of $365.9 million, or $2.42 per diluted share, on revenue of $4,568.1
million. For the year ended December 31, 2011, the Company recorded net income
from continuing operations of $159.4 million, or $1.97 per diluted share, and
net income of $142.6 million, or $1.76 per diluted share, on revenue of
$1,964.3 million.

David Dunlap, President and CEO of the Company, commented, "The fourth quarter
results were within our guidance range and reflect lower sequential activity
in the U.S. land market area offset by continued strong growth in the
international and Gulf of Mexico market areas. Our 7% sequential decline in
U.S. land market revenue was not as steep as what we experienced in the third
quarter due to increased revenue from our pressure pumping business. We were
able to offset this decline with 16% growth in international market revenue
and 12% growth in Gulf of Mexico revenue.

"While our pressure pumping business experienced a sequential increase in
profitability, our overall operating income as a percentage of revenue
declined sequentially by just under 3% primarily due to lower pricing and
utilization for coiled tubing and remedial pumping services, and changes in
job mix for hydraulic workover and snubbing as well as pressure control
services."

Fourth Quarter 2012 Geographic Breakdown

For the fourth quarter of 2012, U.S. land revenue was approximately $730.2
million, Gulf of Mexico revenue was approximately $212.7 million and
international revenue was approximately $235.3 million.

As previously announced, the Company realigned its segment reporting beginning
with the fourth quarter of 2012, from two to four segments. The new reportable
segments are as follows: Drilling Products and Services, Onshore Completion
and Workover Services, Production Services and Subsea and Technical Solutions.
The Drilling Products and Services business segment is unchanged from prior
periods.

Drilling Products and Services Segment

Drilling Products and Services segment revenue was $192.7 million, a 13%
increase from fourth quarter 2011 revenue of $170.2 million and a 1% decline
from third quarter 2012 revenue of $194.9 million.

The primary factor driving the lower sequential revenue in this segment was an
11% decrease in U.S. land market revenue to $75.6 million as a result of
decreased demand for premium drill pipe, bottom hole assemblies and
accessories. Gulf of Mexico market revenue increased 12% sequentially to $68.7
million due to increased rentals of premium drill pipe and specialty rentals.
International revenue was essentially unchanged at $48.4 million with
increased rentals of premium drill pipe offsetting a decline in accommodation
rentals and other surface and downhole specialty rentals.

Onshore Completions and Workover Services Segment

Onshore Completions and Workover Services segment revenue in the fourth
quarter was $417.7 million, a 1% decline from third quarter of 2012 revenue of
$421.2 million.  This segment had no revenue in the fourth quarter of 2011.
Virtually all of the revenue in this segment during the fourth quarter was
generated from U.S. land market areas.

On a sequential basis, an increase in pressure pumping revenue was offset by
declines in revenue from fluid management and well service rigs. The increase
in pressure pumping revenue was due to higher utilization of contracted
fleets. The decline in fluid management revenue was associated with lower
utilization for storage assets (transportation and frac tanks) due to a
decline in completion activity. Lower revenue for well service rigs was
primarily related to job mix as more rigs were performing production-related
workover activity rather than completion-related work.

Production Services Segment

Production Services segment revenue was $369.3 million, a 59% increase from
fourth quarter 2011 revenue of $232.2 million and a 1% decline from third
quarter 2012 revenue of $373.9 million.

U.S. land market revenue declined 16% sequentially to $222.4 million primarily
due to reduced demand for coiled tubing, cased hole wireline and remedial
pumping services.  Gulf of Mexico market revenue increased 46% sequentially to
$56.8 million as a result of increased demand for cased hole wireline,
snubbing and pressure control tools. International market revenue increased
27% to $90.1 million due to business mix and increased demand for coiled
tubing and snubbing services.

Subsea and Technical Solutions Segment

Subsea and Technical Solutions segment revenue was $198.5 million, a 24%
increase from fourth quarter 2011 revenue of $160.0 million and a 5% increase
from third quarter 2012 revenue of $189.7 million.

International market revenue increased 16% to $96.2 million due to increased
demand for subsea construction, well platform and decommissioning and pressure
control services. Gulf of Mexico market revenue decreased 2% sequentially to
$87.2 million as a result of lower activity for well platform and
decommissioning services partially offset by increased demand for completion
tools. U.S. land market revenue declined 15% sequentially to $15.0 million
primarily due to reduced demand for pressure control services partially offset
by increased demand for completion tools.

2013 Earnings Guidance and Capital Expenditures Plan

The Company has established a 2013 earnings per share guidance range of $1.85
to $2.35 and a planned capital expenditures range of $600 million to $700
million.  The Company expects to fund its capital expenditures from operating
cash flow.

Dunlap commented, "We anticipate revenue from international and Gulf of Mexico
market areas to grow by more than 25%. U.S. land activity levels are the
variables in our 2013 guidance. We anticipate moderate increases in
utilization and rig activity during the course of the year. The timing and
intensity of those increases, which has not initiated as yet, will dictate our
performance in the U.S. land markets. We do not anticipate a recovery in
pricing, which declined for many of our U.S. land services during the last
half of 2012."

Growth capital expenditures are anticipated to be approximately $375 million
to $425 million, while maintenance capital expenditures are anticipated to be
$225 million to $275 million. Approximately 60% of the growth capital
expenditures will be directed toward the international market areas, 30% of
the growth capital expenditures to the Gulf of Mexico market area, and 10% to
U.S. land market area.  Most of the maintenance capital expenditures are
allocated to the U.S. land market area.

By segment, approximately 40% of the growth capital expenditures will be
allocated to the Drilling Products and Services Segment, 15% to the Onshore
Completion and Workover Segment, 25% to the Production Services Segment, and
20% to the Subsea and Technical Solutions Segment.

Dunlap added, "Our 2013 capital expenditures plan is directed to those
geographic markets that we believe will generate the highest growth for us
this year. We will maintain flexibility in both the timing and amount of our
expenditures with the goal of generating free cash flow in 2013."

Conference Call Information

The Company will host a conference call at 10 a.m. Central Time on Wednesday,
February 27, 2013.  The call can be accessed from Company's website at
www.superiorenergy.com, or by telephone at 480-629-9818.  For those who cannot
listen to the live call, a telephonic replay will be available through
Wednesday, March 13, 2013 and may be accessed by calling 303-590-3030 and
using the pass code 4593412#. An archive of the webcast will be available
after the call for a period of 60 days at www.superiorenergy.com.

Superior Energy Services, Inc. serves the drilling, completion and
production-related needs of oil and gas companies worldwide through its brand
name drilling products and its integrated completion and well intervention
services and tools, supported by an engineering staff who plan and design
solutions for customers.

This press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 which involve
known and unknown risks, uncertainties and other factors.  Among the factors
that could cause actual results to differ materially are volatility of the oil
and gas industry, including the level of exploration, production and
development activity; risks associated with the uncertainty of macroeconomic
and business conditions worldwide, as well as the global credit markets; risks
associated with the Company's rapid growth; changes in competitive factors and
other material factors that are described from time to time in the Company's
filings with the Securities and Exchange Commission. Actual events,
circumstances, effects and results may be materially different from the
results, performance or achievements expressed or implied by the
forward-looking statements.  Consequently, the forward-looking statements
contained herein should not be regarded as representations by the Company or
any other person that the projected outcomes can or will be achieved.  

FOR FURTHER INFORMATION CONTACT:
David Dunlap, President and CEO, (281) 999-0047;
Robert Taylor, CFO or Greg Rosenstein, EVP of Corporate Development, (504)
587-7374

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Twelve Months Ended December 31, 2012 and 2011
(in thousands, except earnings per share amounts)
(unaudited)
                         Three Months Ended         Twelve Months Ended
                         December 31,               December 31,
                         2012           2011        2012          2011
Revenues                 $ 1,178,247    $ 562,400   $ 4,568,068   $ 1,964,332
Cost of services
(exclusive of items      722,814        293,596     2,689,473     1,046,409
shown separately below)
Depreciation,
depletion, amortization  143,009        67,264      509,281       244,915
and accretion
General and              165,794        104,376     662,792       376,619
administrative expenses
Income from continuing   146,630        97,164      706,522       296,389
operations
Other income (expense):
  Interest expense, net  (25,558)       (20,281)    (113,659)     (67,590)
  Loss on early          -              -           (2,294)       -
extinguishment of debt
  Earnings (losses)
from equity-method       -              2,670       (287)         16,394
investments, net
  Gain on sale of
equity-method            -              -           17,880        -
investment
Income from continuing
operations before        121,072        79,553      608,162       245,193
income taxes
Income taxes             44,797         26,215      225,020       85,804
Net income from          76,275         53,338      383,142       159,389
continuing operations
Loss from discontinued
operations, net of       -              (33,976)    (17,207)      (16,835)
income tax
Net income               $      76,275  $   19,362  $    365,935  $    142,554
Basic earnings per
share:
Net income from          $              $           $             $        
continuing operations     0.49          0.67         2.57          2.00
Income (loss) from       -              (0.43)      (0.12)        (0.21)
discontinued operations
Net income               $              $           $             $        
                          0.49          0.24         2.45          1.79
Diluted earnings per
share:
Net income from          $              $           $             $        
continuing operations     0.48          0.67         2.54          1.97
Income (loss) from       -              (0.43)      (0.12)        (0.21)
discontinued operations
Net income               $              $           $             $        
                          0.48          0.24         2.42          1.76
Weighted average common
shares used
  in computing earnings
per share:
    Basic                157,266        80,004      149,288       79,654
    Diluted              158,709        81,149      151,106       81,095

 

 

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2012 and 2011
(in thousands)
                                                 12/31/2012      12/31/2011
                                                 (Unaudited)     (Audited)
ASSETS
Current assets:
  Cash and cash equivalents                      $       91,199  $      80,274
  Accounts receivable, net                       1,027,218       540,602
  Deferred income taxes                          34,120          -
  Prepaid expenses                               93,190          34,037
  Inventory and other current assets             214,630         228,309
        Total current assets                     1,460,357       883,222
Property, plant and equipment, net               3,255,220       1,507,368
Goodwill                                         2,532,065       581,379
Notes receivable                                 44,838          73,568
Equity-method investments                        -               72,472
Intangible and other long-term assets, net       510,406         930,136
        Total assets                             $  7,802,886    $ 4,048,145
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                               $     252,363   $    178,645
  Accrued expenses                               346,490         197,574
  Income taxes payable                           153,212         717
  Deferred income taxes                          -               831
  Current portion of decommissioning             -               14,956
liabilities
  Current maturities of long-term debt           20,000          810
        Total current liabilities                772,065         393,533
Deferred income taxes                            745,144         297,458
Decommissioning liabilities                      93,053          108,220
Long-term debt, net                              1,814,500       1,685,087
Other long-term liabilities                      147,045         110,248
Total stockholders' equity                       4,231,079       1,453,599
        Total liabilities and stockholders'      $  7,802,886    $ 4,048,145
equity

 

Superior Energy Services, Inc. and Subsidiaries
Segment Highlights
Three months ended December 31, 2012, September 30, 2012 and December 31, 2011
(1)
(Unaudited)
(in thousands)
                         Three months ended,
Revenue                  December 31, 2012  September 30,      December 31,
                                            2012               2011
Drilling Products and    $                  $                  $              
Services                 192,677            194,882                170,208
Onshore Completion and   417,738            421,194            -
Workover Services
Production Services      369,341            373,868            232,241
Subsea and Technical     198,491            189,721            159,951
Solutions
Total Revenues           $                  $                  $              
                          1,178,247          1,179,665             562,400
Gross Profit (2)         December 31, 2012  September 30,      December 31,
                                            2012               2011
Drilling Products and    $                  $                  $              
Services                 127,834            132,923                111,422
Onshore Completion and   144,626            143,414            -
Workover Services
Production Services      120,228            136,362            103,926
Subsea and Technical     62,745             58,358             53,456
Solutions
Total Gross Profit       $                  $                  $              
                         455,433            471,057                268,804
Income from Continuing   December 31, 2012  September 30,      December 31,
Operations               (3)                2012               2011 (4)
Drilling Products and    $                  $                  $              
Services                   57,424             62,759                 43,843
Onshore Completion and   46,904             52,197             (2,866)
Workover Services
Production Services      32,015             49,023             44,022
Subsea and Technical     10,287             15,460             12,165
Solutions
Total Income from        $                  $                  $              
Continuing Operations    146,630            179,439                  97,164

(1) Adjusted for discontinued operations.
    Gross profit is calculated by subtracting cost of services (exclusive of
(2) depreciation, depletion, amortization and accretion) from revenue for each
    of the Company's segments.
(3) Includes $2.1 million of additional consideration for an acquisition based
    on the acquired company exceeding performance goals.
    Includes $4.1 million of transaction expenses related to acquisitions
(4) recorded in general and administrative expenses of the Onshore Completion
    and Workover Services Segment ($2.9 million) and Production Services
    Segment ($1.2 million).

NON-GAAP RECONCILIATION

We report our financial results in conformity with U.S. generally accepted
accounting principles (GAAP). However, the Company provides non-GAAP adjusted
net income and non-GAAP adjusted earnings per share because certain items are
customarily excluded by analysts in published estimates and management
believes, for purposes of comparability to financial performance in other
periods and to evaluate the Company's trends, that it is appropriate for these
items to be excluded. Management uses adjusted net income and adjusted diluted
earnings per share to evaluate the Company's operational trends and historical
performance on a consistent basis. The adjusted amounts are not measures of
financial performance under GAAP.

A reconciliation of net income, the GAAP measure most directly comparable to
non-GAAP adjusted earnings and non-GAAP adjusted earnings per share, is
below.  In making any comparisons to other companies, investors need to be
aware that the non-GAAP financial measures used by the Company may be
calculated differently from, and therefore may not be directly comparable to,
similarly titled measures used by other companies. Investors should pay close
attention to the specific definition being used and to the reconciliation
between such measures and the corresponding GAAP measures provided by each
company under applicable SEC rules. Non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, or superior to, the
Company's reported results prepared in accordance with GAAP.

 

Reconciliation of Net Income from Continuing Operations 
to Non-GAAP Adjusted Net Income from Continuing Operations and Earnings per
Share
For the three months ended December 31, 2012 and 2011
(in thousands, except earnings per share amounts)
                                                         Three months ended 
                                                         December 31, 
                                                        2012        2011
Net income from continuing operations as reported       $ 76,275    $ 53,338
Pre-tax adjustments:
Earnout from acquisition activity                       2,088       -
Cost related to the acquisition of Complete Production  -           4,093
Services
Additional interest expense related to $800 million     -           4,056
senior notes
Equity-method investments' hedging activities           -           1,507
Total pre-tax adjustments                               2,088       9,656
Income tax effect of adjustments                        (773)       (3,380)
Cumulative effect of tax rate change from 36% to 35%    -           (1,624)
in 2011
Non-GAAP adjusted net income from continuing            $ 77,590    $ 57,990
operations
Non-GAAP adjusted diluted earnings per share from       $     0.49  $     0.71
continuing operations
Weighted average common shares used in computing
diluted earnings per share                              158,709     81,149

 

 

 

 

SOURCE Superior Energy Services, Inc.

Website: http://www.superiorenergy.com