Superior Energy Services Announces Second Quarter 2023 Results and Conference Call


HOUSTON, Aug. 02, 2023 (GLOBE NEWSWIRE) --



Houston, August 2, 2023 – Superior Energy Services, Inc. (the “Company”) filed its Form 10-Q for the period ending June 30, 2023. In accordance with the Company’s Shareholders Agreement, it will host a conference call with shareholders on August 3, 2023.

For the second quarter of 2023, the Company reported net income from continuing operations of $67.4 million, or $3.35 per diluted share, and revenue of $244.5 million. This compares to net income from continuing operations of $29.9 million or $1.49 per diluted share, and revenue of $220.1 million, for the first quarter of 2023. Net income from continuing operations for the second quarter of 2023 was favorably impacted by approximately $14.9 million in income tax benefits arising from reversals of uncertain tax positions related to foreign jurisdictions and adjustments to valuation allowances on foreign operations. Net income from continuing operations for the first quarter of 2023 was unfavorably impacted by the elimination of net operating losses of approximately $7.6 million.

The Company’s Adjusted EBITDA (a non-GAAP measure defined on page 4) was $92.5 million for the second quarter of 2023 compared to $72.8 million in the first quarter of 2023. Refer to pages 11 and 12 for a Reconciliation of Adjusted EBITDA to GAAP results.

Brian Moore, Chief Executive Officer, commented, “I’m pleased to report Superior’s strong financial performance for the second quarter of 2023 with Adjusted EBITDA of $92.5 million compared to $72.8 million in the first quarter of 2023. These results reflect our ongoing strategy to focus our sustainable and strong brand’s participation in the strengthening Gulf of Mexico and international offshore markets. With continued confidence in the longer-term outlook for global oil prices, our customers choose Superior for our responsive people, capabilities and desirable assets as they pursue evermore technically challenging targets in offshore markets. Our performance is also the culmination of consistent and disciplined capital investments over time, fleet optimization, and an engineering approach in the early stages of well planning with our customers, especially with our premium drill pipe business, enabling Superior to continue to deliver outstanding performance, both operationally and financially, in the markets where we are focused. By leveraging our strengths, we have positioned ourselves to take advantage of both near-term and longer-term market opportunities and will continue our strategy focused on free cash flow and shareholder returns.”


Second Quarter 2023 Geographic Breakdown

U.S. land revenue was $50.5 million in the second quarter of 2023, a 2% decrease compared to revenue of $51.5 million in the first quarter of 2023 and was driven primarily by modest declines in our bottom hole assembly accessory rentals.

U.S. offshore revenue was $60.9 million in the second quarter of 2023, an increase of 17% compared to revenue of $52.0 million in the first quarter of 2023. This change was primarily driven by our completion services business unit with some additional increases from our rental businesses.

International revenue was $133.0 million in the second quarter of 2023, an increase of 14% compared to revenue of $116.7 million in the first quarter of 2023 as rentals for premium drill pipe increased, as well as activity from our well control service line in the Well Services segment.

Second Quarter 2023 Segment Reporting

The Rentals segment revenue in the second quarter of 2023 was $112.4 million, a 3% increase compared to revenue of $108.8 million in the first quarter of 2023, driven by increases in international activity.  Adjusted EBITDA was $70.7 million, an 8% increase over the first quarter of 2023. Adjusted EBITDA Margin (a non-GAAP measure defined on page 4) was 63%, a 5% increase from the first quarter of 2023. The increase in both Adjusted EBITDA and Adjusted EBITDA Margin for the second quarter of 2023 was driven by improved results from our premium drill pipe product line in international markets.

The Well Services segment revenue in the second quarter of 2023 was $132.1 million, a 19% increase compared to revenue of $111.3 million in the first quarter of 2023. Adjusted EBITDA for the second quarter of 2023 was $34.6 million with an Adjusted EBITDA Margin of 26%, as compared to Adjusted EBITDA of $19.9 million with an Adjusted EBITDA Margin of 18% in the first quarter of 2023. The increase in both Adjusted EBITDA and Adjusted EBITDA Margin for the second quarter of 2023 was driven by better than anticipated results from our well control and completion services business units.

Liquidity

As of June 30, 2023, the Company had cash, cash equivalents, and restricted cash of approximately $410.4 million and the availability remaining under our ABL Credit Facility was approximately $85.3 million, assuming continued compliance with the covenants under our ABL Credit Facility. We had no balances outstanding under the Credit Facility on June 30, 2023.

Total cash proceeds received during the second quarter of 2023 from the sale of non-core assets were $3.6 million compared to total cash proceeds received during the first quarter of 2023 of $11.6 million.

The Company remains focused on cash conversion. Free Cash Flow (a non-GAAP measure defined on page 4) for the second quarter of 2023 totaled $2.1 million compared to $55.2 million for the first quarter of 2023. Free Cash Flow during the second quarter of 2023 was negatively impacted by our payment of the $27.1 million use tax assessment levied against us by the Washington State Department of Revenue related to a discontinued business unit.  Additionally, we incurred approximately $2.9 million in decommissioning costs associated with our oil and gas platform in the Gulf of Mexico.  Refer to page 8 for a reconciliation of Free Cash Flow to Net Cash from Operating Activities.

Second quarter capital expenditures were $27.5 million.  The Company expects total capital expenditures for 2023 to be approximately $80 to $90 million. Approximately 80% of total 2023 capital expenditures are targeted for the replacement of existing assets.  Of the total capital expenditures, approximately 75% is expected to be invested in the Rentals segment.

2023 Guidance

In looking at full year guidance a couple of factors are important to note. First, as noted in our earlier commentary, our increase in earnings for the second quarter of 2023 was largely driven by our Well Services segment, which tends to be project oriented and more uneven than our Rentals segment.  Secondly, earnings for the second half of 2023 are expected to be more heavily weighted to the fourth quarter of 2023, as similar to last year a significant amount of completion deliveries are scheduled for December 2023.  Based on this, the Company’s full year 2023 guidance will continue to have a wide range. We currently expect revenue to come in at a range of $870 million to $930 million with Adjusted EBITDA in a range of $300 million to $340 million for 2023.  The Company will provide updated guidance in our third quarter 2023 earnings release as we gain further clarity on the timing of activity.

Conference Call Information

The Company’s management team will host a conference call on Thursday, August 3, 2023, at 10:00 a.m. Eastern Time. The call will be available via live webcast in the “Events” section at ir.superiorenergy.com. To access via phone, participants can register for the call here,  where they will be provided a phone number and access code. The call will be available for replay until August 3, 2024 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 Measures

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, accretion 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 11 and 12 of this press release.

Free Cash Flow is considered a non-GAAP financial measure under the SEC’s rules. Management believes, however, that Free Cash Flow is an important financial measure for use in evaluating the Company’s financial performance, as it measures our ability to generate additional cash from our business operations. Free Cash Flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance or net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of Free Cash Flow is limited and does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations or payments made for business acquisitions. Therefore, we believe it is important to view Free Cash Flow as supplemental to our entire Statement of Cash Flows.

The Company is unable to provide a reconciliation of the forward-looking non-GAAP financial measure, Adjusted EBITDA, contained in this press release to its most directly comparable GAAP financial measure, net income, as 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 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.


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, acquisitions, 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 or other strategic partners, 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, 2022 and Form 10-Q’s for the quarters ended March 31 and June 30, 2023 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.


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(in thousands, unaudited) 
                
  Three Months Ended  Six Months Ended 
  June 30,  March 31,  June 30,  June 30,  June 30, 
  2023  2023  2022  2023  2022 
 Revenues               
 Rentals $112,411  $108,821  $103,729  $221,232  $192,485 
 Well Services  132,062   111,316   120,911   243,378   230,085 
 Total revenues  244,473   220,137   224,640   464,610   422,570 
                
 Cost of revenues               
 Rentals  35,021   36,468   35,860   71,489   67,612 
 Well Services  85,733   81,253   85,108   166,986   165,736 
 Total cost of revenues  120,754   117,721   120,968   238,475   233,348 
                
 Depreciation, depletion, amortization and accretion  20,621   20,139   23,346   40,760   57,431 
 General and administrative expenses  31,177   30,990   30,231   62,167   62,249 
 Restructuring expenses  -   1,983   1,663   1,983   3,218 
 Other (gains) and losses, net  47   (1,398)  (18,013)  (1,351)  (16,866)
 Income from operations  71,874   50,702   66,445   122,576   83,190 
                
 Other income (expense):               
 Interest income, net  6,513   5,439   1,459   11,952   2,638 
 Other income (expense)  (1,836)  (2,152)  (13,471)  (3,988)  476 
 Income from continuing operations before income taxes  76,551   53,989   54,433   130,540   86,304 
 Income tax expense  (9,147)  (24,065)  (10,871)  (33,212)  (18,755)
 Net income from continuing operations  67,404   29,924   43,562   97,328   67,549 
 Income (loss) from discontinued operations, net of income tax  (9)  289   (1,944)  280   (205)
 Net income $67,395  $30,213  $41,618  $97,608  $67,344 
                
 Income (loss) per share - basic:               
 Net income from continuing operations $3.35  $1.49  $2.18  $4.84  $3.38 
 Income (loss) from discontinued operations, net of income tax  -   0.01   (0.10)  0.01   (0.01)
 Net income $3.35  $1.50  $2.08  $4.85  $3.37 
                
 Income (loss) per share - diluted:               
 Net income from continuing operations $3.35  $1.49  $2.17  $4.83  $3.37 
 Income (loss) from discontinued operations, net of income tax  -   0.01   (0.10)  0.02   (0.01)
 Net income $3.35  $1.50  $2.07  $4.85  $3.36 
                
 Weighted-average shares outstanding               
 Basic  20,126   20,107   20,024   20,116   20,011 
 Diluted  20,143   20,131   20,076   20,136   20,065 


SUPERIOR ENERGY SERVICES, INC. 
CONSOLIDATED BALANCE SHEETS 
(in thousands, unaudited) 
       
  June 30,  December 31, 
  2023  2022 
 ASSETS      
 Current assets      
 Cash and cash equivalents $330,129  $258,999 
 Accounts receivable, net  249,479   249,808 
 Income taxes receivable  4,541   6,665 
 Prepaid expenses  19,291   17,299 
 Inventory  82,897   65,587 
 Other current assets  6,104   6,276 
 Assets held for sale  1,369   11,978 
 Total current assets  693,810   616,612 
 Property, plant and equipment, net  298,567   282,376 
 Note receivable  71,581   69,679 
 Restricted cash  80,318   80,108 
 Deferred tax assets  73,362   97,492 
 Other assets, net  42,978   44,745 
 Total assets $1,260,616  $1,191,012 
        
 LIABILITIES AND STOCKHOLDERS' EQUITY      
 Current liabilities:      
 Accounts payable $58,865  $31,570 
 Accrued expenses  100,416   116,575 
 Income taxes payable  11,687   11,682 
 Decommissioning liability  26,329   9,770 
 Liabilities held for sale  3,090   3,349 
 Total current liabilities  200,387   172,946 
 Decommissioning liability  133,591   150,901 
 Other liabilities  45,186   84,281 
 Total liabilities  379,164   408,128 
 Total stockholders' equity  881,452   782,884 
 Total liabilities and stockholders' equity $1,260,616  $1,191,012 


SUPERIOR ENERGY SERVICES, INC. 
STATEMENTS OF CASH FLOWS 
(in thousands, unaudited) 
                
  Three Months Ended  Six Months Ended 
  June 30,  March 31,  June 30,  June 30,  June 30, 
  2023  2023  2022  2023  2022 
                
 Cash flows from operating activities               
 Net income $67,395  $30,213  $41,618  $97,608  $67,344 
 Adjustments to reconcile net income to net cash from operating activities  -   -   -       
 Depreciation, depletion, amortization and accretion  20,621   20,139   23,346   40,760   57,431 
 Other non-cash items  8,392   14,399   (5,107)  22,791   (22,358)
 Washington State Tax Payment  (27,068)  -   -   (27,068)  - 
 Decommissioning Costs  (2,878)  -   -   (2,878)  - 
 Changes in operating assets and liabilities  (36,780)  8,502   (26,703)  (28,278)  (34,173)
 Net cash from operating activities  29,682   73,253   33,154   102,935   68,244 
                
 Cash flows from investing activities               
 Payments for capital expenditures  (27,540)  (18,086)  (9,217)  (45,626)  (20,514)
 Proceeds from sales of assets  3,578   11,569   1,804   15,147   15,183 
 Proceeds from sales of equity securities  -   -   6,001   -   13,366 
 Net cash from investing activities  (23,962)  (6,517)  (1,412)  (30,479)  8,035 
                
 Cash flows from financing activities               
 Distributions to Shareholders  -   -   -   -   - 
 Other  -   (1,116)  -   (1,116)  - 
 Net cash from financing activities  -   (1,116)  -   (1,116)  - 
                
 Net change in cash, cash equivalents and restricted cash  5,720   65,620   31,742   71,340   76,279 
 Cash, cash equivalents and restricted cash at beginning of period  404,727   339,107   439,072   339,107   394,535 
 Cash, cash equivalents and restricted cash at end of period $410,447  $404,727  $470,814  $410,447  $470,814 
                
 Reconciliation of Free Cash Flow               
 Net cash from operating activities $29,682  $73,253  $33,154  $102,935  $68,244 
 Payments for capital expenditures  (27,540)  (18,086)  (9,217)  (45,626)  (20,514)
 Free Cash Flow $2,142  $55,167  $23,937  $57,309  $47,730 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
REVENUE BY GEOGRAPHIC REGION BY SEGMENT 
(in thousands, unaudited) 
                
  Three Months Ended  Six Months Ended 
  June 30,  March 31,  June 30,  June 30,  June 30, 
  2023  2023   2022  2023   2022 
 U.S. land               
 Rentals $44,730  $45,133  $43,791  $89,863  $77,753 
 Well Services  5,806   6,355   4,151   12,161   8,699 
 Total U.S. land  50,536   51,488   47,942   102,024   86,452 
                
 U.S. offshore               
 Rentals  37,516   35,670   36,331   73,186   69,084 
 Well Services  23,405   16,321   32,569   39,726   60,890 
 Total U.S. offshore  60,921   51,991   68,900   112,912   129,974 
                
 International               
 Rentals  30,165  $28,018   23,607   58,183   45,648 
 Well Services  102,851   88,640   84,191   191,491   160,496 
 Total International  133,016   116,658   107,798   249,674   206,144 
 Total Revenues $244,473  $220,137  $224,640  $464,610  $422,570 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
SEGMENT HIGHLIGHTS 
(in thousands, unaudited) 
                
  Three Months Ended  Six Months Ended 
  June 30,  March 31,  June 30,  June 30,  June 30, 
  2023  2023  2022  2023  2022 
 Revenues               
 Rentals $112,411  $108,821  $103,729  $221,232  $192,485 
 Well Services  132,062   111,316   120,911   243,378   230,085 
 Total Revenues $244,473  $220,137  $224,640  $464,610  $422,570 
                
 Income from Operations               
 Rentals $58,106  $53,014  $48,559  $111,120  $77,344 
 Well Services  27,425   12,854   33,147   40,279   37,282 
 Corporate and other  (13,657)  (15,166)  (15,261)  (28,823)  (31,436)
 Total Income from Operations $71,874  $50,702  $66,445  $122,576  $83,190 
                
 Adjusted EBITDA               
 Rentals $70,659  $65,182  $61,115  $135,841  $110,889 
 Well Services  34,629   19,931   25,400   54,560   41,902 
 Corporate and other  (12,793)  (12,289)  (12,470)  (25,082)  (25,722)
 Total Adjusted EBITDA $92,495  $72,824  $74,045  $165,319  $127,069 
                
 Adjusted EBITDA Margin               
 Rentals  63%  60%  59%  61%  58%
 Well Services  26%  18%  21%  22%  18%
 Corporate and other n/a  n/a  n/a  n/a  n/a 
 Total Adjusted EBITDA Margin  38%  33%  33%  36%  30%
                
 Adjusted EBITDA is a Non-GAAP measure.  See Non-GAAP Measures for our definition of Adjusted EBITDA. 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF ADJUSTED EBITDA (Non-GAAP)  
(in thousands, unaudited)  
                 
  Three Months Ended  Six Months ended  
  June 30,  March 31,  June 30,  June 30,  June 30,  
  2023  2023  2022  2023  2022  
 Net income from continuing operations $67,404  $29,924  $43,562  $97,328  $67,549  
Depreciation, depletion, amortization and accretion  20,621   20,139   23,346   40,760   57,431  
Interest income, net  (6,513)  (5,439)  (1,459)  (11,952)  (2,638) 
Income tax expense  9,147   24,065   10,871   33,212   18,755  
Restructuring expenses  -   1,983   1,663   1,983   3,218  
Other (income) expense, net  1,836   2,152   13,471   3,988   (476) 
     Other adjustments (1)  -   -   (17,409)  -   (16,770) 
Adjusted EBITDA $92,495  $72,824  $74,045  $165,319  $127,069  
                 
 Adjusted EBITDA is a Non-GAAP measure.  See Non-GAAP Measures for our definition of Adjusted EBITDA.  
                 
(1) Adjustments for exit activities related to SES Energy Services India Pvt. Ltd. and the residual gain from revisions to our estimated decommissioning liability  


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES 
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT 
(in thousands, unaudited) 
                 
  Three Months Ended  Six Months Ended 
  June 30,  March 31,  June 30,  June 30,   June 30, 
  2023  2023  2022  2023   2022 
 Rentals                
 Income from operations $58,106  $53,014  $48,559  $111,120   $77,344 
 Depreciation, depletion, amortization and accretion  12,553   12,168   12,556   24,721    33,545 
 Adjusted EBITDA $70,659  $65,182  $61,115  $135,841   $110,889 
                 
 Wells Services                
 Income from operations $27,425  $12,854  $33,147  $40,279   $37,282 
 Depreciation, depletion, amortization and accretion  7,204   7,077   9,662   14,281    21,390 
     Other adjustments (1)  -   -   (17,409)  -    (16,770)
 Adjusted EBITDA $34,629  $19,931  $25,400  $54,560   $41,902 
                 
 Corporate                
 Loss from operations $(13,657) $(15,166)  (15,261) $(28,823)$- $(31,436)
 Depreciation, depletion, amortization and accretion  864   894   1,128   1,758  -  2,496 
 Restructuring expenses  -   1,983   1,663   1,983  -  3,218 
 Adjusted EBITDA $(12,793) $(12,289) $(12,470) $(25,082)  $(25,722)
                 
 Total                
 Income from operations $71,874  $50,702  $66,445  $122,576   $83,190 
 Depreciation, depletion, amortization and accretion  20,621   20,139   23,346   40,760    57,431 
 Restructuring expenses  -   1,983   1,663   1,983    3,218 
     Other adjustments (1)  -   -   (17,409)  -    (16,770)
 Adjusted EBITDA $92,495  $72,824  $74,045  $165,319   $127,069 
                 
 Adjusted EBITDA is a Non-GAAP measure.  See Non-GAAP Measures for our definition of Adjusted EBITDA. 
                 
(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
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