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Superior Energy Services Announces First Quarter 2022 Results and Conference Call

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Superior Energy Services, Inc.
Superior Energy Services, Inc.

HOUSTON, May 04, 2022 (GLOBE NEWSWIRE) -- Superior Energy Services, Inc. (the “Company”) filed its Form 10-Q for the period ending March 31, 2022 on May 4, 2022. In accordance with the Company’s Shareholders Agreement, it will host a conference call with shareholders on Wednesday, May 11, 2022.

The Company reported net income from continuing operations for the first quarter of 2022 of $24.0 million, or $1.20 per share, on revenue of $197.9 million. This compares to a net loss from continuing operations of $23.2 million, or $1.16 per share, for the fourth quarter of 2021, on revenues of $198.4 million. Net income from continuing operations includes $13.9 million of “Other income” primarily related to favorable foreign exchange rate changes during the quarter totaling $5.6 million and both realized and unrealized gains of $8.2 million on the value of our stock holdings in Select Energy Services.

The Company’s Adjusted EBITDA (a non-GAAP measure) was $53.0 million for the quarter, an increase of 32% compared to $40.1 million in fourth quarter 2021. Refer to page 10 for a Reconciliation of Adjusted EBITDA to GAAP results.

Brian Moore, Chief Executive Officer, commented, “Our positive first quarter results showcase the strength of our brands, their leaders, and teams as well as our continued execution of last year’s transformation initiatives. These efforts narrowed our operational focus to businesses with strong market positions, particularly in our Rentals segment, and enabled us to significantly reduce our cost structure, which has had a meaningful impact on margin expansion in these times of labor and supply chain costs inflation. We remain encouraged by our prospects for near-term and longer-term market opportunities and will continue to increase pricing as market capacity is absorbed, while remaining disciplined in our capital expenditure and market participation decisions.”

“The strategic transformation resulting from our Business Unit Review in 2021 weighted our product offerings toward businesses critical to our customer’s oil and gas operations. These businesses have limited competition with the three largest global oilfield service companies; require deep technical expertise, specifically in premium drill pipe and bottom hole assembly rentals; and have strong cash flow generating capacity as was delivered in our first quarter results.”

First Quarter 2022 Geographic Breakdown

U.S. land revenue was $38.5 million in the first quarter of 2022, an increase of 12% compared to revenue of $34.5 million in the fourth quarter of 2021 driven by both increased utilization and pricing in our Rentals Segment. Our premium drill pipe and downhole assemblies businesses benefited from increased customer demand and a tightening of the tool rental market where the most desirable assets within our substantial tool inventories were near full utilization.

U.S. offshore revenue was $61.1 million in the first quarter of 2022, up 17% compared to revenue of $52.0 million in the fourth quarter of 2021. U.S. offshore results were positively impacted by increased activity and pricing for both our premium drill pipe and hydraulic workover and snubbing businesses. We look forward to increased activity levels where we have the capacity for the highly specialized equipment required for deep water drilling and completion applications.

International revenue was $98.3 million in the first quarter of 2022, a decrease of 12% compared to revenue of $111.9 million in the fourth quarter of 2021. International results were negatively impacted by the completion of a project in Brazil and generally lower levels of activity in certain key geographies. We continue to assess our international footprint and will be focusing our efforts on servicing those markets where we can generate a competitive return and support longstanding customer relationships.

Segment Reporting

The Rentals segment revenue in the first quarter of 2022 was $88.8 million, a 7% increase compared to revenue of $82.8 million in the fourth quarter of 2021. Adjusted EBITDA of $49.7 million contributed 75% of the Company’s total Adjusted EBITDA before including Corporate costs. First quarter Adjusted EBITDA Margin (a non-GAAP measure further defined on page 9) within Rentals was 56% benefiting from increasing pricing and higher utilization.

The Well Services segment revenue in the first quarter of 2022 was $109.2 million, a 6% decrease compared to revenue of $115.6 million in the fourth quarter of 2021. Adjusted EBITDA for the first quarter was $16.5 million for an Adjusted EBITDA Margin of 15%. Although revenues were lower sequentially, our margins increased primarily due to the revenue mix in our hydraulic workover and snubbing business, with higher margin service revenue replacing mobilization revenue and pass-through work with lower margins. Also, the strategic shift of our more labor-intensive service businesses to U.S. offshore and International operations reduces our exposure to the most significant wage inflation pressures in this segment given our lower U.S. Land headcount.

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.

Liquidity

As of March 31, 2022, the Company had cash, cash equivalents, and restricted cash of approximately $439.1 million and the availability remaining under our ABL Credit Facility was approximately $84.4 million, assuming continued compliance with the covenants under our ABL Credit Facility. The Board of Directors continues to evaluate optimal uses of cash on hand, including potential returns of capital to shareholders.

Total cash proceeds received from the sale of non-core assets during the quarter were $13.4 million. Additionally, at March 31, 2022, the Company owned 3.1 million shares of Select Energy Services Class A common stock (NYSE: WTTR).

First quarter capital expenditures were $11.3 million. The Company expects total capital expenditures for 2022 to be approximately $75 million with substantially all of the remaining spend occurring in the second and third quarters. Approximately 65% of total 2022 capital expenditures are targeted for the replacement of existing assets. Of the total capital expenditures, over 60% will be invested in the Rentals segment.

Engagement of Strategic Advisor

The Company has engaged Evercore to review potential strategic alternatives focused on maximizing shareholder value.

The Board has not set a timetable for the conclusion of this review, nor has it made any decisions related to any further actions or potential strategic alternatives at this time. There can be no assurance that the review will result in any transaction or other strategic change or outcome. The Company does not intend to comment further unless and until it determines that further disclosure is appropriate or necessary.

Conference Call Information

The Company will host a conference call on Wednesday, May 11, 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 2779221. You may also listen to the call by dialing in at 1-877-800-3682 in the United States and Canada or 1-615-622-8047 for International calls and using access code 2779221. The call will be available for replay until June 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 Wendell York 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 May 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.

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,

March 31,

2022

2021

2021(1)

Revenues

$

197,930

$

198,436

$

151,771

Cost of revenues

112,380

125,099

97,810

Depreciation, depletion, amortization and accretion

34,085

61,603

48,388

General and administrative expenses

32,018

33,158

29,490

Restructuring expenses

1,555

2,419

9,653

Other (gains) and losses, net

1,147

17,459

(169

)

Income (loss) from operations

16,745

(41,302

)

(33,401

)

Other income (expense):

Interest income, net

1,179

937

414

Reorganization items, net

-

-

335,560

Other income (expense)

13,947

(629

)

(4,950

)

Income (loss) from continuing operations before income taxes

31,871

(40,994

)

297,623

Income tax benefit (expense)

(7,884

)

17,748

(55,718

)

Net income (loss) from continuing operations

23,987

(23,246

)

241,905

Income (loss) from discontinued operations, net of income tax

1,739

(6,102

)

(9,758

)

Net income (loss)

$

25,726

$

(29,348

)

$

232,147

Income (loss) per share -basic

Net income (loss) from continuing operations

$

1.20

$

(1.16

)

Income (loss) from discontinued operations, net of income tax

0.09

(0.31

)

Net income (loss)

$

1.29

$

(1.47

)

Income (loss) per share - diluted:

Net income (loss) from continuing operations

$

1.20

$

(1.16

)

Income (loss) from discontinued operations, net of income tax

0.08

(0.31

)

Net income (loss)

$

1.28

$

(1.47

)

Weighted-average shares outstanding - basic

19,999

19,999

Weighted-average shares outstanding - diluted

20,056

19,999

(1) Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence which is a non-GAAP financial measure. For further information regarding the breakdown of results, see our Annual Report on see our Quarterly Report on Form 10-Q for the three months ended March 31, 2022.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

3/31/2022

12/31/2021

ASSETS

Current assets:

Cash and cash equivalents

$

359,511

$

314,974

Accounts receivable, net

197,602

182,432

Income taxes receivable

5,578

5,099

Prepaid expenses

16,037

15,861

Inventory

59,830

60,603

Investment in equity securities

26,605

25,735

Other current assets

5,748

6,701

Assets held for sale

28,491

37,528

Total current assets

699,402

648,933

Property, plant and equipment, net

331,499

356,274

Notes receivable

61,566

60,588

Restricted cash

79,561

79,561

Other long-term assets, net

52,331

54,152

Total assets

$

1,224,359

$

1,199,508

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$

43,573

$

43,080

Accrued expenses

107,027

108,610

Income taxes payable

12,990

8,272

Liabilities held for sale

3,678

5,607

Total current liabilities

167,268

165,569

Decommissioning liabilities

193,041

190,380

Deferred income taxes

9,725

12,441

Other long-term liabilities

86,281

89,385

Total Liabilities

456,315

457,775

Total stockholders' equity (deficit)

768,044

741,733

Total liabilities and stockholders' equity

$

1,224,359

$

1,199,508


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended

March 31,

March 31,

2022

2021(1)

Cash flows from operating activities

Net income

$

25,726

$

232,147

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation, depletion, amortization and accretion

34,085

63,304

Reorganization items, net

-

(354,279

)

Other non-cash items

(17,251

)

43,840

Changes in operating assets and liabilities

(7,470

)

41,772

Net cash from operating activities

35,090

26,784

Cash flows from investing activities

Payments for capital expenditures

(11,297

)

(7,154

)

Proceeds from sales of assets

13,379

7,923

Proceeds from sales of equity securities

7,365

-

Net cash from investing activities

9,447

769

Cash flows from financing activities

Other

-

(1,934

)

Net cash from financing activities

-

(1,934

)

Effect of exchange rate changes on cash

-

311

Net change in cash, cash equivalents and restricted cash

44,537

25,930

Cash, cash equivalents and restricted cash at beginning of period

394,535

268,184

Cash, cash equivalents and restricted cash at end of period

$

439,072

$

294,114

(1) Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor 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 three months ended March 31, 2022.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

REVENUE BY GEOGRAPHIC REGION BY SEGMENT

(in thousands, except per share data)

(unaudited)

Three Months Ended

March 31,

December 31,

March 31,

2022

2021

2021

U.S. land

Rentals

$

33,962

$

29,907

$

16,026

Well Services

4,548

4,588

5,505

Total U.S. land

38,510

34,495

21,531

U.S. offshore

Rentals

32,753

27,356

28,599

Well Services

28,321

24,661

26,792

Total U.S. offshore

61,074

52,017

55,391

International

Rentals

22,041

25,530

16,162

Well Services

76,305

86,394

58,687

Total International

98,346

111,924

74,849

Total Revenues

$

197,930

$

198,436

$

151,771


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

(in thousands)

(unaudited)

Three Months Ended

March 31,

December 31,

March 31,

2022

2021

2021

Revenues

Rentals

$

88,756

$

82,793

$

60,787

Well Services

109,174

115,643

90,984

Corporate and other

-

-

-

Total Revenues

$

197,930

$

198,436

$

151,771

Income (Loss) from Operations

Rentals

$

28,785

$

2,311

$

(180

)

Well Services

4,135

(25,560

)

(10,898

)

Corporate and other

(16,175

)

(18,053

)

(22,323

)

Total Income (Loss) from Operations

$

16,745

$

(41,302

)

$

(33,401

)

Adjusted EBITDA

Rentals

$

49,774

$

44,179

$

32,149

Well Services

16,502

9,511

3,931

Corporate and other

(13,252

)

(13,581

)

(11,440

)

Total Adjusted EBITDA

$

53,024

$

40,109

$

24,640

Adjusted EBITDA Margin

Rentals

56

%

53

%

53

%

Well Services

15

%

8

%

4

%

Corporate and other

n/a

n/a

n/a

Total Adjusted EBITDA

27

%

20

%

16

%

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

March 31,

December 31,

March 31,

2022

2021

2021(1)

Net income (loss) from continuing operations

$

23,987

$

(23,246

)

$

241,905

Depreciation, depletion, amortization and accretion

34,085

61,603

48,388

Interest income, net

(1,179

)

(937

)

(414

)

Income taxes

7,884

(17,748

)

55,718

Reorganization items, net

-

-

(335,560

)

Restructuring expenses

1,555

2,419

9,653

Other (gains) and losses, net (2)

1,147

17,459

(169

)

Other (income) expense

(13,947

)

629

4,950

Other adjustments (3)

(508

)

(70

)

169

Adjusted EBITDA

$

53,024

$

40,109

$

24,640

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) Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence. For further information regarding the breakdown of results, see our Quarterly Report on Form 10-Q for the three months ended March 31, 2022.

(2) Other gains and losses for the fourth quarter comprised $15.2 million related to our Wells Services segment, which includes approximately $11.7 million from exit activities related to SES Energy Services India Pvt. Ltd, and $2.3 million related to our Rentals segment. Other gains and losses primarily relate to charges recorded as part of our strategic disposal of low margin assets in line with our Transformation Project strategy and includes gains/losses on asset sales, as well as impairments primarily related to long-lived assets.

(3) Other adjustments relate to costs associated with our Transformation Project which are included in cost of revenues in our condensed consolidated statements of operations. These costs primarily relate to shut down costs incurred at certain locations and include severance of personnel and the write-down of inventory.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT

(in thousands)

(unaudited)

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 gains and losses (1)

-

639

-

639

Adjusted EBITDA

$

49,774

$

16,502

$

(13,252

)

$

53,024

Three months ended December 31, 2021

Well

Corporate

Consolidated

Rentals

Services

and Other

Total

Income (loss) from operations

$

2,311

$

(25,560

)

$

(18,053

)

$

(41,302

)

Depreciation, depletion, amortization and accretion

40,467

19,083

2,053

61,603

Restructuring expenses

-

-

2,419

2,419

Other gains and losses and other adjustments (1)(2)

1,401

15,988

-

17,389

Adjusted EBITDA

$

44,179

$

9,511

$

(13,581

)

$

40,109

Three months ended March 31, 2021 (3)

Well

Corporate

Consolidated

Rentals

Services

and Other

Total

Income (loss) from operations

$

(180

)

$

(10,898

)

$

(22,323

)

$

(33,401

)

Depreciation, depletion, amortization and accretion

32,329

14,829

1,230

48,388

Restructuring expenses

9,653

9,653

Other gains and losses (1)

-

-

-

-

Adjusted EBITDA

$

32,149

$

3,931

$

(11,440

)

$

24,640

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) Other gains and losses for the fourth quarter comprised $15.2 million related to our Wells Services segment, which includes approximately $11.7 million from exit activities related to SES Energy Services India Pvt. Ltd, and $2.3 million related to our Rentals segment. Other gains and losses primarily relate to charges recorded as part of our strategic disposal of low margin assets in line with our Transformation Project strategy and includes gains/losses on asset sales, as well as impairments primarily related to long-lived assets.

(2) Other adjustments relate to costs associated with our Transformation Project which are included in cost of revenues in our condensed consolidated statements of operations. These costs primarily relate to shut down costs incurred at certain locations and include severance of personnel and the write-down of inventory.

(3) Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence. For further information regarding the breakdown of results, see our Quarterly Report on Form 10-Q for the three months ended March 31, 2022.

FOR FURTHER INFORMATION CONTACT:
Wendell York, VP – IR, Corporate Development & Treasury
1001 Louisiana St., Suite 2900
Houston, TX 77002
Investor Relations, ir@superiorenergy.com, (713) 654-2200