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Press release from PR Newswire

Superior Energy Services, Inc. Reports Third Quarter 2010 Results

Wednesday, October 27, 2010

Superior Energy Services, Inc. Reports Third Quarter 2010 Results16:29 EDT Wednesday, October 27, 2010Earnings of $0.42 per Diluted Share on Record Revenue from U.S. Land and International Market AreasNEW ORLEANS, Oct. 27 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $33.2 million, or $0.42 per diluted share, on revenue of $435.4 million for the third quarter of 2010.These results compare with net income of $24.4 million, or $0.31 per diluted share, on revenue of $386.5 million for the third quarter of 2009, and net income of $24.1 million, or $0.30 per share, on revenue of $424.9 million in the second quarter of 2010. Results from the third quarter of 2009 include non-cash, pre-tax charges of $6.2 million related to the Company?s equity-method investments and results from the second quarter of 2010 include pre-tax management transition expenses of $16.4 million.For the nine months ended September 30, 2010, the Company?s net income was $78.8 million, or $0.99 per diluted share, on revenue of $1,224.7 million, and adjusted net income was $89.3 million, or $1.12 per diluted share, after excluding pre-tax management transition expenses of $16.4 million. For the nine months ended September 30, 2009, the Company?s net income was $12.3 million, or $0.16 per diluted share, on revenue of $1,184.7 million.David Dunlap, CEO of Superior, commented, ?Our product line and geographic diversification once again benefitted our results. Strong sequential growth in U.S. domestic land activity for coiled tubing and drilling products and improved performance in the Marine segment largely offset the decline in Gulf of Mexico activity associated with the deepwater drilling moratorium and related slowdown in shallow water permitting.?Non-Gulf of Mexico market areas generated a record $274 million in revenue, which represents a 17% sequential increase and a 67% increase year-over-year. Revenue from the domestic land market increased 31% sequentially and 121% year-over-year, as compared with increases in the average U.S. land drilling rig count of 10% sequentially and 76% year-over-year. International revenue increased 3% sequentially and 26% year-over-year, while Gulf of Mexico revenue decreased 16% sequentially and 27% year-over-year. ?We expect our 2010 earnings per share to be in a range of $1.52 to $1.56, which excludes the management transition expenses recorded in the second quarter.  This implies a fourth quarter of 2010 earnings per share range of $0.40 to $0.44. Our prior 2010 earnings per share guidance range was $1.35 to $1.55.?Geographic BreakdownFor the third quarter of 2010, Gulf of Mexico revenue was approximately $161.7 million, domestic land revenue was approximately $157.6 million, and international revenue was approximately $116.1 million.  The domestic land and international revenues were record highs for a quarter.Subsea and Well Enhancement SegmentThird quarter revenue for the Subsea and Well Enhancement Segment was $289.0 million, a 14% increase from the third quarter of 2009 and a 2% increase sequentially.  Income from operations was $40.0 million, or 14% of segment revenue as compared with $31.6 million, or 12% of segment revenue, in the third quarter of 2009, and $43.9 million (adjusted for management transition expenses), or 15% of segment revenue in the second quarter of 2010.Domestic land revenue in this segment increased 31% sequentially due to increased demand for coiled tubing, cased hole wireline, well control services and hydraulic workover and snubbing services. Gulf of Mexico revenue in this segment decreased 19% sequentially primarily due to a reduction in engineering and project management services and reduced revenue from the wreck removal project as work winds down. International revenue in this segment increased 4% sequentially due to increases in subsea and well control services.Drilling Products and Services SegmentThird quarter revenue for the Drilling Products and Services Segment was $118.7 million, 18% higher year-over-year and 2% lower sequentially. Income from operations was $15.4 million, or 13% of segment revenue, as compared with $17.9 million, or 18% of segment revenue, in the third quarter of 2009, and $25.0 million (adjusted for management transition expenses), or 21% of segment revenue, in the second quarter of 2010.  Domestic land revenue increased 31% sequentially primarily due to increased rentals of accommodations, specialty tubulars and stabilization equipment. International revenue was essentially unchanged from the prior quarter, while Gulf of Mexico revenue declined 29% sequentially due to the deepwater drilling moratorium which curtailed demand for drill pipe and specialty tubulars.Marine SegmentMarine Segment revenue was $27.6 million, 12% lower year-over-year and 44% higher sequentially. Income from operations was $5.9 million, or 21% of segment revenue, as compared with income from operations of $5.1 million, or 16% of segment revenue, in the third quarter of 2009, and a loss of $4.4 million (adjusted for management transition expenses) in the second quarter of 2010.Average fleet utilization was 88% as compared with 62% in both the third quarter of 2009 and in the second quarter of 2010. Utilization increased sequentially across almost all classes. The high utilization for the smaller liftboat classes is primarily due to Macondo oil spill response work. This segment also benefitted from a reduction in maintenance and repairs expenses as compared with the most recent quarter. Liftboat Average Dayrates and Utilization by Class SizeThree Months Ended September 30, 2010($ actual)ClassLiftboatsAverageDayrateUtilization145'-155'6$6,81096.9%160'-175'88,80789.3%200'510,71780.7%230'-245'324,25371.0%250'231,80097.8%265'(1)2----(1) Out of service for repairs during the quarter.Conference Call InformationThe Company will host a conference call at 10 a.m. Central Time on Thursday, October 28, 2010.  The call can be accessed from Superior?s website at www.superiorenergy.com, or by telephone at 480-629-9644.  For those who cannot listen to the live call, a telephonic replay will be available through Thursday, November 4, 2010 and may be accessed by calling 303-590-3030 and using the pass code 4369171. An archive of the webcast will be available after the call for a period of 60 days on http://www.superiorenergy.com.Superior Energy Services, Inc. serves the drilling and production-related needs of oil and gas companies worldwide through its brand name rental tools and its integrated well intervention services and tools, supported by an engineering staff who plan and design solutions for customers.  Offshore projects are delivered by the Company?s fleet of modern marine assets.This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involve known and unknown risks, uncertainties and other factors.  Among the factors that could cause actual results to differ materially are volatility of the oil and gas industry, including the level of exploration, production and development activity; risks associated with the uncertainty of macroeconomic and business conditions worldwide, as well as the global credit markets; risks associated with the Company?s rapid growth; changes in competitive factors and other material factors that are described from time to time in the Company?s filings with the Securities and Exchange Commission. Actual events, circumstances, effects and results may be materially different from the results, performance or achievements expressed or implied by the forward-looking statements.  Consequently, the forward-looking statements contained herein should not be regarded as representations by Superior or any other person that the projected outcomes can or will be achieved.FOR FURTHER INFORMATION CONTACT:David Dunlap, CEO; Robert Taylor, CFO; Greg Rosenstein, VP of Investor Relations, (504) 587-7374SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESConsolidated Statements of OperationsThree and Nine Months Ended September 30, 2010 and 2009(in thousands, except earnings per share amounts)(unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2010200920102009Revenues$    435,353$      386,455$    1,224,720$  1,184,725Cost of services (exclusive of items shown separately below)232,308215,674661,276635,407Depreciation, depletion, amortization and accretion56,80552,720162,152153,566General and administrative expenses84,91263,425248,165188,694Reduction in value of assets---92,683Income from operations61,32854,636153,127114,375Other income (expense):  Interest expense, net(12,456)(12,320)(39,174)(37,328)  Earnings (losses) from equity-method investments, net3,030(4,161)9,185(21,331)  Reduction in value of equity-method investment---(36,486)Income before income taxes51,90238,155123,13819,230Income taxes18,68513,73644,3306,923Net income$      33,217$        24,419$         78,808$       12,307Basic earnings per share$          0.42$            0.31$             1.00$           0.16Diluted earnings per share$          0.42$            0.31$             0.99$           0.16Weighted average common shares used  in computing earnings per share:    Basic78,79778,18878,68378,126    Diluted79,72278,81279,57378,684SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSSEPTEMBER 30, 2010 AND DECEMBER 31, 2009(in thousands)9/30/201012/31/2009(Unaudited)(Audited)ASSETSCurrent assets:  Cash and cash equivalents$        47,381$     206,505  Accounts receivable, net494,283337,151  Income taxes receivable-12,674  Prepaid expenses27,76520,209  Other current assets200,750287,024        Total current assets770,179863,563Property, plant and equipment, net 1,349,3961,058,976Goodwill576,774482,480Notes receivable84,965-Equity-method investments61,81260,677Intangible and other long-term assets, net99,30950,969        Total assets$   2,942,435$  2,516,665LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:  Accounts payable$        82,708$       63,466  Accrued expenses180,620133,602  Income taxes payable 24,386-  Current portion of decommissioning liabilities25,804-  Deferred income taxes29,70430,501  Current maturities of long-term debt810810        Total current liabilities344,032228,379Deferred income taxes 218,904209,053Decommissioning liabilities116,116-Long-term debt, net879,495848,665Other long-term liabilities116,41352,523Total stockholders' equity1,267,4751,178,045        Total liabilities and stockholders' equity$   2,942,435$  2,516,665Superior Energy Services, Inc. and SubsidiariesSegment HighlightsThree months ended September 30, 2010, June 30, 2010 and September 30, 2009(Unaudited)(in thousands)Three months ended,September 30, 2010June 30, 2010September 30, 2009RevenueSubsea and Well Enhancement$                 289,048$                 284,352$                 254,335Drilling Products and Services118,727121,337100,832Marine27,57819,16731,288Total Revenues$                 435,353$                 424,856$                 386,455Gross Profit (1)September 30, 2010June 30, 2010September 30, 2009Subsea and Well Enhancement$                 118,231$                 116,477$                   94,098Drilling Products and Services72,65977,57864,621Marine12,15588512,062Total Gross Profit$                 203,045$                 194,940$                 170,781Income from Operations (as adjusted)September 30, 2010June 30, 2010 (2)September 30, 2009Subsea and Well Enhancement$                   40,026$                   43,856$                   31,563Drilling Products and Services15,41925,01617,940Marine5,883(4,364)5,133--Total Income from Operations (as adjusted)$                   61,328$                   64,508$                   54,636(1) Gross profit is calculated by subtracting cost of services (exclusive of depreciation, depletion, amortization and accretion) from revenue for each of the Company?s segments.(2) Excludes management transition expenses of $16.4 million recorded in general and administrative expenses. Income from Operations is $48.1 million with the management transition expenses included.NON-GAAP FINANCIAL INFORMATIONWe report our financial results in conformity with U.S. generally accepted accounting principles (GAAP). However, the Company provides non-GAAP financial information because these adjustments are customarily excluded by analysts in published estimates and management believes, for purposes of comparability to financial performance in other periods and to evaluate the Company?s trends, that it is appropriate for these items to be excluded. Management uses this adjusted financial information to evaluate the Company?s operational trends and historical performance on a consistent basis. The adjusted financial information are not measures of financial performance under GAAP. A reconciliation of these adjustments is below. In making any comparisons to other companies, investors need to be aware that the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, or superior to, the Company?s reported results prepared in accordance with GAAP.Non-GAAP Reconciliation Excluding Management Transition ExpensesFor the three months ended June 30, 2010(in thousands)Subsea andWellEnhancementDrilling Products and ServicesMarineConsolidatedTotalIncome (loss) from operations$       32,882$       20,334$ (5,104)$      48,112Add:Management transition expenses10,9744,68274016,396Pre-tax income (loss) from operations as adjusted$       43,856$       25,016$ (4,364)$      64,508SOURCE Superior Energy Services, Inc.For further information: David Dunlap, CEO; Robert Taylor, CFO; or Greg Rosenstein, VP of Investor Relations, all of Superior Energy Services, Inc., +1-504-587-7374