Superior Energy Services Announces Second Quarter 2022 Results and Conference Call

Houston, Texas, UNITED STATES


HOUSTON, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Superior Energy Services, Inc. (the “Company”) filed its Form 10-Q for the period ending June 30, 2022 on August 4, 2022.  In accordance with the Company’s Shareholders Agreement, it will host a conference call with shareholders on Tuesday, August 9, 2022. 

The Company reported net income from continuing operations for the second quarter of 2022 of $43.6 million, or $2.17 per diluted share, on revenue of $224.6 million. This compares to a net income from continuing operations of $24.0 million, or $1.20 per diluted share, for the first quarter of 2022, on revenues of $197.9 million. 

Net income from continuing operations includes a gain of $17.4 million in Other (gains) and losses within operating income related to a gain from revisions to our estimated Decommissioning Liability in the second quarter.  This gain was offset by an expense of $13.5 million in Other income (expense) primarily related to unfavorable foreign exchange rate changes and both realized gains and unrealized losses on the value of our stock holdings in Select Energy Services.

The Company’s Adjusted EBITDA (a non-GAAP measure) was $74.0 million for the quarter, an increase of 40% compared to $53.0 million in first quarter 2022. Refer to page 10 for a Reconciliation of Adjusted EBITDA to GAAP results.

Brian Moore, Chief Executive Officer, commented, “Our performance and margin expansion demonstrated by second quarter results further validates the strength of our brands, their leaders, and teams as well as our strategy. Our continued execution of last year’s transformation initiatives has changed our competitive position and our operational focus to businesses with strong market positions, particularly in our Rentals segment. The significantly reduced cost structure was apparent in the second quarter as our pricing leverage and high utilization of desirable assets outpaced inflation despite challenges relating to the labor market and our supply chain costs.  Our significantly reduced cost structure further enabled solid margin expansion in the second quarter. We will continue to leverage our sustainable lower cost structure and leading market positions to deliver compelling margins and returns.  In addition, we will remain committed to converting operating margin to free cash flow generation with continued discipline in our capital expenditure and market participation decisions.

We remain encouraged by our prospects for near-term and long-term market opportunities and will continue to be opportunistic in maintaining and enhancing our strong market positions. The second quarter performance reflects not only our strategy and focus on businesses critical to our customers' operations but also showcases the capabilities of our business unit leaders and their teams.  We appreciate the contributions and dedication of our approximately 2,300 employees and continue to implement compensation programs that motivate, reward and retain our people while striving to grow shareholder value.” 

Second Quarter 2022 Geographic Breakdown

U.S. land revenue was $47.9 million in the second quarter of 2022, an increase of 24% compared to revenue of $38.5 million in the first quarter of 2022 driven by increased utilization, activity, and pricing in our Rentals Segment. Our premium drill pipe and downhole assemblies businesses continue to benefit from increased market activity and need for ancillary services coupled with a tight tool rental market where the most desirable assets within our substantial tool inventories were near full utilization.

U.S. offshore revenue was $68.9 million in the second quarter of 2022, up 13% compared to revenue of $61.1 million in the first quarter of 2022.  U.S. offshore results were positively impacted by increased completions activity in both our Well Services and Rentals segments.

International revenue was $107.8 million in the second quarter of 2022, an increase of 10% compared to revenue of $98.3 million in the first quarter of 2022.  International results were positively impacted by an improvement in the Latin American market, particularly within our Well Services segment, offset by the wind-down of a Well Services project in the Middle East.   Targeting markets with core customers and long-term contracts ensures development of competitive returns while limiting participation in low-margin and sub-scale markets.

Segment Reporting

The Rentals segment revenue in the second quarter of 2022 was $103.7 million, a 17% increase compared to revenue of $88.8 million in the first quarter of 2022.  Adjusted EBITDA of $61.1 million contributed 70% of the Company’s total Adjusted EBITDA before including corporate costs.  Second quarter Adjusted EBITDA Margin (a non-GAAP measure further defined on page 9) within Rentals was 59% benefiting from increased activity with improved revenue mix.

The Well Services segment revenue in the second quarter of 2022 was $120.9 million, an 11% increase compared to revenue of $109.2 million in the first quarter of 2022.  Adjusted EBITDA for the second quarter was $25.4 million for an Adjusted EBITDA Margin of 21%. Savings realized from the strategic shift of our more labor-intensive service businesses to U.S. offshore and international operations improved revenue mix, with completions applications, and increased Latin American activity have driven margins higher.

Decommissioning Liability Revision

In the second quarter of 2022, the Company changed our decommissioning program, whereby we intend to convert the offshore platform to an artificial reef (“reef in place”) and no longer expect to fully decommission the platform.  Based on this change, the Company revised the timing and cost estimates under the reef-in-place program, resulting in a decrease of $53 million in our decommissioning liability. Please see the Company’s Form 10-Q filed on August 4, 2022 for further details.

Liquidity

As of June 30, 2022, the Company had cash, cash equivalents, and restricted cash of approximately $470.8 million and the availability remaining under our ABL Credit Facility was approximately $85.6 million, assuming continued compliance with the covenants under our ABL Credit Facility.

Total cash proceeds received from the sale of non-core assets during the quarter were $1.8 million and proceeds from the sale of equity securities were $6.0 million.  Additionally, at June 30, 2022, the Company owned approximately 2.4 million shares of Select Energy Services Class A common stock (NYSE: WTTR).  

The Company remains focused on cash conversion.  Year to date net cash provided by operating activities was $68.2 million, offset by a capital expenditure spend of $20.5 million. 

Second quarter capital expenditures were $9.2 million.  The Company expects total capital expenditures for 2022 to be between $75 - $85 million with a substantial portion of the remaining spend occurring in the third quarter.  Approximately 70% of total 2022 capital expenditures are targeted for the replacement of existing assets.  Of the total capital expenditures, over 70% will be invested in the Rentals segment.

Both segments are experiencing supply chain tightness and inflation, particularly for raw materials associated with downhole completion and drilling bottom hole accessory components. This primarily impacts our ability to bring new tools to market in late 2022 and beyond as we experience long delivery lead times and increased pricing for capital expenditures. We continue to be diligent and are working with our suppliers to ensure delivery of necessary materials.

2022 Guidance

Based on our strong performance in the second quarter, and increased visibility into the remainder of 2022, we now expect revenue for 2022 to come in between $840 million and $900 million.  Full year EBITDA (a Non-GAAP measure) is now expected to be in a range of $250 million to $280 million.

Strategic Initiatives

As noted in our First Quarter Earnings Release, the Company has engaged Evercore to review potential strategic alternatives focused on maximizing shareholder value.

The Board has continued to evaluate strategic alternatives in the second quarter.  We now expect to pay a distribution and return of capital to shareholders in the second half of 2022.

Conference Call Information

The Company will host a conference call on Tuesday, August 9, 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 10170151. You may also listen to the call by dialing in at 1-877-870-4263 in the United States and Canada or 1-412-317-0790 for International calls and using access code 10170151. The call will be available for replay until September 3, 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 Jamie Spexarth 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 and Adjusted EBITDA Margin. Management uses Adjusted EBITDA and Adjusted EBITDA Margin internally for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company also believes these non-GAAP measures provide investors useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow 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 and Adjusted EBITDA Margin should be considered as supplements to, and not as substitutes for, or superior to, the corresponding measures 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. We define Adjusted EBITDA Margin as Adjusted EBITDA by segment as a percentage of segment revenues.  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 11 of this press release.

Forward-Looking Statements

This press release contains, and future oral or written statements or press releases by the Company and its management may contain, certain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact regarding the Company’s financial position, financial performance, depreciation expense, liquidity, strategic alternatives (including dispositions and the timing thereof), market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company’s management in light of its experience and prevailing circumstances on the date such statements are made. Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties, including but not limited to conditions in the oil and gas industry and the availability of third party  buyers, that could cause the Company’s actual results to differ materially from such statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements.

While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in the Company’s Form 10-K for the year ended December 31, 2021 and Form 10-Q filed on August 4, 2022 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.

The Company is unable to provide a reconciliation of the forward-looking non-GAAP financial measure, EBITDA, contained in this Current Report on Form 8-K to its most directly comparable GAAP financial measure, net income (loss), because the information necessary for a quantitative reconciliation of the forward-looking non-GAAP financial measure to its respective most directly comparable GAAP financial measure is not (and was not, when prepared) available to the Company without unreasonable efforts due to the inherent difficulty and impracticability of predicting certain amounts required by GAAP with a reasonable degree of accuracy. Net income (loss) includes the impact of depreciation, income taxes and certain other items that impact comparability between periods, which may be significant and are difficult to project with a reasonable degree of accuracy. In addition, we believe such reconciliation could imply a degree of precision that might be confusing or misleading to investors. The probable significance of providing this forward-looking non-GAAP financial measure without the directly comparable GAAP financial measure is that such GAAP financial measure may be materially different from the corresponding non-GAAP financial measure.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(in thousands, except earnings per share amounts) 
(unaudited) 
         
 Three Months Ended  Six Months Ended 
 June 30,  March 31,  June 30,  June 30,  June 30, 
 2022  2022  2021  2022  2021(1) 
               
Revenues$224,640  $197,930  $165,892  $422,570  $317,663 
               
Cost of revenues 120,968   112,380   103,045   233,348   200,855 
Depreciation, depletion, amortization and accretion 23,346   34,085   59,018   57,431   107,406 
General and administrative expenses 30,231   32,018   32,308   62,249   61,798 
Restructuring expenses 1,663   1,555   7,438   3,218   17,091 
Other (gains) and losses, net (18,013)  1,147   534   (16,866)  365 
Income (loss) from operations 66,445   16,745   (36,451)  83,190   (69,852)
               
Other income (expense):              
Interest income, net 1,459   1,179   535   2,638   949 
Reorganization items, net -   -   -   -   335,560 
Other income (expense) (13,471)  13,947   2,570   476   (2,380)
Income (loss) from continuing operations before income taxes 54,433   31,871   (33,346)  86,304   264,277 
Income tax benefit (expense) (10,871)  (7,884)  1,747   (18,755)  (53,971)
Net income (loss) from continuing operations 43,562   23,987   (31,599)  67,549   210,306 
Income (loss) from discontinued operations, net of income tax (1,944)  1,739   (19,400)  (205)  (29,158)
Net income (loss)$41,618  $25,726  $(50,999) $67,344  $181,148 
               
Income (loss) per share -basic              
Net income (loss) from continuing operations$2.18  $1.20     $3.38    
Income (loss) from discontinued operations, net of income tax (0.10)  0.09      (0.01)   
Net income (loss)$2.08  $1.29     $3.37    
               
Income (loss) per share - diluted:              
Net income (loss) from continuing operations$2.17  $1.20     $3.37    
Income (loss) from discontinued operations, net of income tax (0.10)  0.08      (0.01)   
Net income (loss)$2.07  $1.28     $3.36    
               
Weighted-average shares outstanding - basic 20,024   19,999      20,011    
Weighted-average shares outstanding - diluted 20,076   20,056      20,065    
               
(1)Combines results from periods prior to our emergence from bankruptcy on February 2, 2021 and periods subsequent to emergence which is a non-GAAP financial measure.  For further information regarding the breakdown of results, see our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022. 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
(in thousands) 
(unaudited) 
 June 30,  December 31, 
 2022  2021 
ASSETS     
Current assets:     
Cash and cash equivalents$391,219  $314,974 
Accounts receivable, net 211,014   182,432 
Income taxes receivable 5,091   5,099 
Prepaid expenses 18,513   15,861 
Inventory 67,201   60,603 
Investment in equity securities 16,524   25,735 
Other current assets 5,349   6,701 
Assets held for sale 25,629   37,528 
Total current assets 740,540   648,933 
Property, plant and equipment, net 286,927   356,274 
Notes receivable 65,140   60,588 
Restricted cash 79,595   79,561 
Other long-term assets, net 50,374   54,152 
Total assets$1,222,576  $1,199,508 
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
Current liabilities:     
Accounts payable$44,334  $43,080 
Accrued expenses 111,839   108,610 
Income taxes payable 10,449   8,272 
Liabilities held for sale 4,200   5,607 
Total current liabilities 170,822   165,569 
Decommissioning liabilities 142,740   190,380 
Deferred income taxes 16,225   12,441 
Other long-term liabilities 82,169   89,385 
Total liabilities 411,956   457,775 
Total stockholders' equity 810,620   741,733 
Total liabilities and stockholders' equity$1,222,576  $1,199,508 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands) 
(unaudited) 
      
 Six Months Ended 
 June 30, 
 2022  2021(1) 
Cash flows from operating activities     
Net income$67,344  $181,148 
Adjustments to reconcile net income to net cash provided by operating activities     
Depreciation, depletion, amortization and accretion 57,431   140,903 
Reorganization items, net -   (354,279)
Other non-cash items (22,358)  48,304 
Changes in operating assets and liabilities (34,173)  1,810 
Net cash from operating activities 68,244   17,886 
      
Cash flows from investing activities     
Payments for capital expenditures (20,514)  (14,030)
Proceeds from sales of assets 15,183   16,975 
Proceeds from sales of equity securities 13,366   - 
Net cash from investing activities 8,035   2,945 
      
Cash flows from financing activities     
Other -   (3,419)
Net cash from financing activities -   (3,419)
Effect of exchange rate changes on cash -   311 
Net change in cash, cash equivalents and restricted cash 76,279   17,723 
Cash, cash equivalents and restricted cash at beginning of period 394,535   268,184 
Cash, cash equivalents and restricted cash at end of period$470,814  $285,907 
      
(1)Combines results from periods prior to our emergence from bankruptcy on February 2, 2021 and periods subsequent to emergence which is a non-GAAP financial measure.  For further information regarding the breakdown of results, see our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022. 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
REVENUE BY GEOGRAPHIC REGION BY SEGMENT 
(in thousands, except per share data) 
(unaudited) 
         
 Three Months Ended 
 June 30,  March 31,  June 30, 
 2022  2022  2021 
         
U.S. land        
Rentals$43,791  $33,962  $20,789 
Well Services 4,151   4,548   6,781 
Total U.S. land 47,942   38,510   27,570 
         
U.S. offshore        
Rentals 36,331   32,753   26,890 
Well Services 32,569   28,321   26,574 
Total U.S. offshore 68,900   61,074   53,464 
         
International        
Rentals 23,607   22,041   19,558 
Well Services 84,191   76,305   65,300 
Total International 107,798   98,346   84,858 
Total Revenues$224,640  $197,930  $165,892 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
SEGMENT HIGHLIGHTS 
(in thousands) 
(unaudited) 
         
 Three Months Ended 
 June 30,  March 31,  June 30, 
 2022  2022  2021 
Revenues        
Rentals$103,729  $88,756  $67,237 
Well Services 120,911   109,174   98,655 
Corporate and other -   -   - 
Total Revenues$224,640  $197,930  $165,892 
         
Income (Loss) from Operations        
Rentals$48,559  $28,785  $(9,232)
Well Services 33,147   4,135   (5,226)
Corporate and other (15,261)  (16,175)  (21,993)
Total Income (Loss) from Operations$66,445  $16,745  $(36,451)
         
Adjusted EBITDA        
Rentals$61,115  $49,774  $32,851 
Well Services 25,400   16,502   9,987 
Corporate and other (12,470)  (13,252)  (12,833)
Total Adjusted EBITDA$74,045  $53,024  $30,005 
         
Adjusted EBITDA Margin        
Rentals 59%  56%  49%
Well Services 21%  15%  10%
Corporate and othern/a  n/a  n/a 
Total Adjusted EBITDA Margin 33%  27%  18%
         
We define EBITDA as income (loss) from continuing operations excluding the impact of depreciation, depletion, amortization and accretion, interest and income taxes.  Additionally, our definition of Adjusted EBITDA adjusts for the impact of restructuring expenses, other gains and losses, other (income) expenses and other adjustments. 
         
Adjusted EBITDA Margin represents Adjusted EBITDA by segment as a percentage of segment revenues 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
RECONCILIATION OF ADJUSTED EBITDA 
(in thousands) 
(unaudited) 
         
 Three Months Ended 
 June 30,  March 31,  June 30, 
 2022  2022  2021 
         
Net income (loss) from continuing operations$43,562  $23,987  $(31,599)
Depreciation, depletion, amortization and accretion 23,346   34,085   59,018 
Interest income, net (1,459)  (1,179)  (535)
Income taxes 10,871   7,884   (1,747)
Restructuring expenses 1,663   1,555   7,438 
Other (gains) and losses, net (18,013)  1,147   - 
Other (income) expense 13,471   (13,947)  (2,570)
Other adjustments(1) 604   (508)  - 
Adjusted EBITDA$74,045  $53,024  $30,005 
         
         
We define EBITDA as income (loss) from continuing operations excluding the impact of depreciation, depletion, amortization and accretion, interest and income taxes.  Additionally, our definition of Adjusted EBITDA adjusts for the impact of restructuring expenses, other gains and losses, other (income) expenses and other adjustments. 
         
(1)Adjustments for exit activities related to SES Energy Services India Pvt. Ltd. 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT 
(in thousands) 
(unaudited) 
            
 Three months ended June 30, 2022 
    Well  Corporate  Consolidated 
 Rentals  Services  and Other  Total 
            
Income (loss) from operations$48,559  $33,147  $(15,261) $66,445 
Depreciation, depletion, amortization and accretion 12,556   9,662   1,128   23,346 
Restructuring expenses -   -   1,663   1,663 
Other adjustments(1) -   (17,409)  -   (17,409)
Adjusted EBITDA$61,115  $25,400  $(12,470) $74,045 
            
 Three months ended March 31, 2022 
    Well  Corporate  Consolidated 
 Rentals  Services  and Other  Total 
            
Income (loss) from operations$28,785  $4,135  $(16,175) $16,745 
Depreciation, depletion, amortization and accretion 20,989   11,728   1,368   34,085 
Restructuring expenses -   -   1,555   1,555 
Other adjustments(1) -   639   -   639 
Adjusted EBITDA$49,774  $16,502  $(13,252) $53,024 
            
 Three months ended June 30, 2021 
    Well  Corporate  Consolidated 
 Rentals  Services  and Other  Total 
            
Income (loss) from operations$(9,232) $(5,226) $(21,993) $(36,451)
Depreciation, depletion, amortization and accretion 42,083   15,213   1,722   59,018 
Restructuring expenses -   -   7,438   7,438 
Other adjustments -   -   -   - 
Adjusted EBITDA$32,851  $9,987  $(12,833) $30,005 
            
  
We define EBITDA as income (loss) from continuing operations excluding the impact of depreciation, depletion, amortization and accretion, interest and income taxes.  Additionally, our definition of Adjusted EBITDA adjusts for the impact of restructuring expenses, other gains and losses, other (income) expenses and other adjustments. 
            
(1) Adjustments for exit activities related to SES Energy Services India Pvt. Ltd and the residual gain from revisions to our estimated decommissioning liability 

FOR FURTHER INFORMATION CONTACT:
Jamie Spexarth, Chief Financial Officer
1001 Louisiana St., Suite 2900
Houston, TX 77002
Investor Relations, ir@superiorenergy.com, (713) 654-2200