Superior Energy Services, Inc. Announces Third Quarter 2013 Results PR Newswire HOUSTON, Oct. 24, 2013 HOUSTON, Oct. 24, 2013 /PRNewswire/ --Superior Energy Services, Inc. (NYSE: SPN) today announced third quarter 2013 net income of $69.8 million, or $0.43 per diluted share, on revenue of $1,188.6 million. These results compare with third quarter 2012 net income of $93.9 million, or $0.59 per diluted share, on revenue of $1,179.7 million. For the nine months ended September 30, 2013, the Company recorded net income of $202.1 million, or $1.26 per diluted share, on revenue of $3,483.8 million. For the nine months ended September 30, 2012, the Company recorded net income from continuing operations of $306.9 million, or $2.07 per diluted share, and net income of $289.7 million, or $1.95 per diluted share, on revenue of $3,389.8 million. During the third quarter of 2013 the Company reduced its annual effective income tax rate from 37% to 35%, resulting in a benefit of approximately $6.0 million. David Dunlap, President and CEO of the Company, commented, "As previously announced, the persistent flat horizontal rig count in the U.S. land markets has created a market environment characterized by oversupply and increased competition for several completions and production-related services. As a result, our U.S. land revenue declined about 1% from the second quarter and gross profit margins for several service lines were lower than the second quarter. "We continue to experience strong growth in Gulf of Mexico and international market areas. Our Gulf revenue increased 7% sequentially as demand for our drilling products and services and completion tools in the deepwater continue to be the main drivers. In addition, we successfully completed multiple well control projects. International revenue grew 8% sequentially, with the main catalysts being continued expansion of our drilling products and services, as well as improved activity levels for our subsea inspection, repair and maintenance services in the Asia Pacific market area. Year-to-date, our Gulf of Mexico revenue has increased 32% and international revenue has grown 13%. As a result, our revenue from these market areas represents almost 40% of our total revenue for the first nine months of 2013. "We expect margin pressure to continue through the fourth quarter in the U.S. land market areas. In addition, we anticipate typical, end-of-year seasonal factors will impact U.S. land and Gulf of Mexico activity." Third Quarter 2013 Geographic Breakdown U.S. land market revenue was approximately $718.2 million in the third quarter of 2013, as compared with $787.6 million in the third quarter of 2012 and $723.3 million in the second quarter of 2013. Gulf of Mexico revenue was approximately $241.8 million, as compared with $189.4 million in the third quarter of 2012 and $225.1 million in the second quarter of 2013. International revenue was approximately $228.6 million, as compared with $202.7 million in the third quarter of 2012 and $211.3 million in the second quarter of 2013. Drilling Products and Services Segment Drilling Products and Services segment revenue in the third quarter was $215.5 million, an 11% increase from third quarter 2012 revenue of $194.9 million and a 5% increase from second quarter 2013 revenue of $205.4 million. The primary factor driving the higher sequential revenue in this segment was a 16% increase in international market revenue to $64.9 million due to increased rentals of premium drill pipe in Africa and bottom hole assemblies in Latin America. Gulf of Mexico market revenue in this segment increased 3% sequentially to $77.7 million due to increased rentals of premium drill pipe, accommodations and specialty rentals. U.S. land market revenue in this segment declined 2% sequentially to $72.9 million due to a decrease in rentals of premium drill pipe. Onshore Completion and Workover Services Segment Onshore Completion and Workover Services segment revenue in the third quarter was $398.0 million, a 6% decrease from third quarter 2012 revenue of $421.2 million, and was virtually unchanged from second quarter 2013 revenue of $398.2 million. All of the revenue in this segment is generated from U.S. land market areas. On a sequential basis, revenue in this segment was unchanged in pressure pumping and slightly higher for well service rigs and fluid management Income from operations as a percentage of revenue in this segment was 8.4% as compared with 11.8% in the second quarter of 2013, resulting from lower margins for fluid management and well service rigs, and lower service intensity in pressure pumping. Production Services Segment Production Services segment revenue was $359.7 million, a 4% decrease from third quarter 2012 revenue of $373.9 million and a 3% decrease from second quarter 2013 revenue of $369.1 million. U.S. land market revenue in this segment decreased 3% sequentially to $225.1 million, primarily due to decreased demand for coiled tubing, cased hole wireline and pressure control tools. International revenue in this segment decreased 3% sequentially to $82.1 million primarily due to lower coiled tubing activity in Mexico and lower demand for snubbing services in Latin America. Gulf of Mexico revenue in this segment was 2% lower sequentially at $52.5 million with increases in cased hole wireline services offset by decreases in coiled tubing and snubbing services. Subsea and Technical Solutions Segment Subsea and Technical Solutions segment revenue was $215.4 million, a 14% increase from third quarter 2012 revenue of $189.7 million and a 15% increase from second quarter 2013 revenue of $187.0 million. International revenue in this segment increased 15% sequentially to $81.6 million due to activity increases in subsea construction. Gulf of Mexico market revenue in this segment increased 16% sequentially to $111.5 million due to increased demand for pressure control services as the Company successfully completed multiple, one-time well control projects. In addition, completion tools also increased. U.S. land market revenue in this segment increased 12% sequentially to $22.3 million primarily related to increases in completion tools. Conference Call Information The Company will host a conference call at 11 a.m. Eastern Time on Friday, October 25, 2013. The call can be accessed from the Company's website at www.superiorenergy.com, or by telephone at 480-629-9645. For those who cannot listen to the live call, a telephonic replay will be available through November 8, 2013 and may be accessed by calling 303-590-3030 and using the access code 4643634#. 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. Statements in this press release other than statement of historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. Among the factors that could cause actual results to differ materially are risks inherent in acquiring businesses, including the ability to successfully integrate Complete Production Services Inc.'s operations into the Company's legacy operations and the costs incurred in doing so; the effect of regulatory programs and environmental matters on our performance, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for our pressure pumping services; risks associated with business growth outpacing the capabilities of the Company's infrastructure and workforce; risks associated with the uncertainty of macroeconomic and business conditions worldwide; the cyclical nature and volatility of the oil and gas industry, including the level of exploration, production and development activity and the volatility of oil and gas prices; changes in competitive factors affecting our operations; political, economic and other risks and uncertainties associated with international operations; the lingering impact on exploration and production activities in the U.S. coastal waters following the Deepwater Horizon incident; the impact that unfavorable or unusual weather conditions could have on the Company's operations; the potential shortage of skilled workers; the Company's dependence on certain customers; the risks inherent in long-term fixed-price contracts; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage; and other material factors that are described in detail in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2012, as subsequently updated by the Company's filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which the Company's forward-looking statements are based are likely to change after such forward-looking statements are made, including for example the market prices of oil and natural gas and regulations affecting oil and gas operations, which the Company cannot control or anticipate. Further, the Company may make changes to its business plans that could or will affect its results. The Company undertakes no obligation to update any of its forward-looking statements and the Company does not intend to update its forward-looking statements more frequently than quarterly, notwithstanding any changes in its assumptions, changes in its business plans, its 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. FOR FURTHER INFORMATION CONTACT: David Dunlap, President and CEO, (713) 654-2200; 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 Nine Months Ended September 30, 2013 and 2012 (in thousands, except earnings per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 Revenues $ 1,188,615 $ 1,179,665 $ 3,483,807 $ 3,389,821 Cost of services (exclusive of items 748,052 708,608 2,167,422 1,966,659 shown separately below) Depreciation, depletion, 158,006 128,160 462,627 366,272 amortization and accretion General and administrative 157,904 163,458 465,035 496,998 expenses Income from operations 124,653 179,439 388,723 559,892 Other income (expense): Interest expense, (24,464) (28,585) (78,946) (88,950) net Other 789 467 2,062 562 Loss on early - (2,294) (884) (2,294) extinguishment of debt Gain on sale of equity method - - - 17,880 investment Income from continuing operations before 100,978 149,027 310,955 487,090 income taxes Income taxes 31,143 55,140 108,834 180,223 Net income from 69,835 93,887 202,121 306,867 continuing operations Loss from discontinued operations, net of - - - (17,207) income tax Net income $ 69,835 $ $ 202,121 $ 289,660 93,887 Basic earnings per share: Net income from $ $ $ $ continuing operations 0.44 0.60 1.27 2.09 Loss from discontinued - - - (0.11) operations Net income $ $ $ $ 0.44 0.60 1.27 1.98 Diluted earnings per share: Net income from $ $ $ $ continuing operations 0.43 0.59 1.26 2.07 Loss from discontinued - - - (0.12) operations Net income $ $ $ $ 0.43 0.59 1.26 1.95 Weighted average common shares used in computing earnings per share: Basic 159,326 157,153 159,204 146,611 Diluted 160,883 158,576 160,804 148,369 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2013 AND DECEMBER 31, 2012 (in thousands) 9/30/2013 12/31/2012 (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $ 90,651 $ 91,199 Accounts receivable, net 1,030,232 1,027,218 Deferred income taxes 18,424 34,120 Income taxes receivable 28,658 - Prepaid expenses 89,851 93,190 Inventory and other current assets 272,537 214,630 Total current assets 1,530,353 1,460,357 Property, plant and equipment, net 3,237,350 3,255,220 Goodwill 2,548,910 2,532,065 Notes receivable 47,033 44,838 Intangible and other long-term assets, net 484,217 510,406 Total assets $ 7,847,863 $ 7,802,886 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 250,374 $ 252,363 Accrued expenses 361,927 346,490 Income taxes payable - 153,212 Deferred income taxes - - Current maturities of long-term debt 20,000 20,000 Total current liabilities 632,301 772,065 Deferred income taxes 845,228 745,144 Decommissioning liabilities 97,595 93,053 Long-term debt, net 1,650,000 1,814,500 Other long-term liabilities 168,932 147,045 Total stockholders' equity 4,453,807 4,231,079 Total liabilities and stockholders' $ 7,847,863 $ 7,802,886 equity SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES SEGMENT HIGHLIGHTS THREE MONTHS ENDED SEPTEMBER 30, 2013, JUNE 30, 2013, AND SEPTEMBER 30, 2012 (unaudited) (in thousands) Three months ended, Revenue September 30, 2013 June 30, 2013 September 30, 2012 Drilling Products and $ $ 205,422 $ Services 215,522 194,882 Onshore Completion 398,016 398,216 421,194 and Workover Services Production Services 359,722 369,066 373,868 Subsea and Technical 215,355 187,009 189,721 Solutions Total Revenues $ $ 1,159,713 $ 1,188,615 1,179,665 Gross Profit (1) September 30, 2013 June 30, 2013 September 30, 2012 Drilling Products and $ $ 138,438 $ Services 141,648 132,923 Onshore Completion 122,340 136,159 143,414 and Workover Services Production Services 108,147 116,742 136,362 Subsea and Technical 68,428 56,491 58,358 Solutions Total Gross Profit $ $ 447,830 $ 440,563 471,057 Income from September 30, 2013 June 30, 2013 September 30, Continuing Operations 2012 Drilling Products and $ $ 59,635 $ Services 62,242 62,759 Onshore Completion 33,458 46,809 52,197 and Workover Services Production Services 15,707 20,845 49,023 Subsea and Technical 13,246 8,587 15,460 Solutions Total Income from $ $ 135,876 $ Continuing Operations 124,653 179,439 Gross profit is calculated by subtracting cost of services (exclusive of (1) depreciation, depletion, amortization and accretion) from revenue for each of the Company's segments. SOURCE Superior Energy Services, Inc. Website: http://www.superiorenergy.com
Superior Energy Services, Inc. Announces Third Quarter 2013 Results
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