Press release from PR Newswire
Superior Energy Services, Inc. Reports Second Quarter 2011 Results
Wednesday, July 27, 2011
Superior Energy Services, Inc. Reports Second Quarter 2011 Results16:15 EDT Wednesday, July 27, 2011Record Quarterly Revenue Drives GAAP Earnings of $0.59 Per Diluted Share and Adjusted Earnings of $0.53 Per Diluted ShareNEW ORLEANS, July 27, 2011 /PRNewswire/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $48.1 million, or $0.59 per diluted share on record quarterly revenue of $510.8 million for the second quarter of 2011, and adjusted net income of $42.7 million, or $0.53 per diluted share, after excluding a pre-tax gain of $5.9 million from the sale of liftboats and $2.5 million in non-cash, unrealized pre-tax gains from hedging contracts at the Company's equity-method investments.These results are compared with second quarter of 2010 net income of $24.1 million, or $0.30 per diluted share on quarterly revenue of $424.9 million, and adjusted net income of $34.6 million, or $0.43 per diluted share, after excluding pre-tax management transition expenses of $16.4 million.For the six months ended June 30, 2011, the Company's net income was $63.6 million, or $0.79 per diluted share on revenue of $924.8 million, and adjusted net income was $57.9 million, or $0.71 per diluted share, after excluding a pre-tax gain of $8.6 million for the sale of liftboats and $0.4 million in non-cash, unrealized pre-tax gains from hedging contracts at the Company's equity-method investments.For the six months ended June 30, 2010, the Company's net income was $45.6 million, or $0.57 per diluted share on revenue of $789.4 million, and adjusted net income was $56.1 million, or $0.71 per diluted share, after excluding pre-tax management transition expenses of $16.4 million.David Dunlap, CEO of the Company, commented, "We delivered stronger-than-anticipated earnings and achieved record quarterly revenue due to several factors. The most notable were our continued growth in the highly active U.S. land market for intervention services and rental tools, and increased demand for our subsea inspection, repair and maintenance services in Southeast Asia. In addition, we benefitted from drilling activity in the deepwater Gulf of Mexico ? the first notable activity in this market since the second quarter of last year."Our operating income as a percentage of revenue (operating margin) nearly doubled as compared with the first quarter of 2011 primarily due to profitability increases in the Subsea and Well Enhancement Segment driven by the growth in demand for well completion tools and services in the Gulf of Mexico and subsea inspection, repair and maintenance services in international markets. In addition, we experienced seasonal increases in demand for shallow water intervention and end-of-life services."Our U.S. land revenue increased 11% sequentially as compared with a 6% increase in the average number of drilling rigs working in the U.S. We experienced high utilization levels for our intervention services and high volumes for our drilling products and services. Internationally, our revenue increased 33% and we continued to lay the foundation for future growth by successfully expanding our product and service offering into new geographic markets."2011 Earnings Guidance UpdateThe Company expects 2011 adjusted earnings per share ? which is exclusive of gains and losses ? to be in the range of $1.96 and $2.16. Prior earnings guidance was in the range of $1.62 and $2.02 per diluted share. Mr. Dunlap commented, "The second quarter was important because we believe it is the launching point for our earnings growth during the remainder of 2011 and into 2012. We expect to be able to grow our earnings base as we put more assets into multiple markets, continue the execution of our international expansion strategy and provide products and services to the gradually improving deepwater Gulf of Mexico drilling market."Geographic BreakdownFor the second quarter of 2011, Gulf of Mexico revenue was approximately $175 million, U.S. land revenue was approximately $198 million, and international revenue was approximately $138 million.Subsea and Well Enhancement SegmentSecond quarter revenue for the Subsea and Well Enhancement Segment was $336.0 million, as compared with $284.4 million in the second quarter of 2010 and $262.0 million in the first quarter of 2011, which represents an 18% year-over-year increase and a 28% sequential increase.Gulf of Mexico revenue in this segment increased 32% sequentially to $111 million due to a strong surge in demand for completion tools and stimulation services, primarily related to the resumption of deepwater drilling and seasonal activity increases in the shallow water of the Gulf of Mexico. In addition, the segment benefitted from a seasonal uptick in demand for intervention services such as coiled tubing, wire line and snubbing services and end-of-life services such as plug and abandonment. U.S. land revenue in this segment increased 13% sequentially to $131 million due to increased demand for coiled tubing, pressure control products and remedial pumping services. International revenue increased 52% to $94 million due to increased activity for subsea inspection, repair and maintenance services, snubbing services and the successful completion of a two-well subsea plug and abandonment project in Indonesia.Drilling Products and Services SegmentSecond quarter revenue for the Drilling Products and Services Segment was $149.2 million, as compared with $121.3 million in the second quarter of 2010 ? a 23% year-over-year improvement ? and $128.3 million in the first quarter of 2011, or 16% higher sequentially.The primary factor driving the higher sequential revenue was a 53% increase in Gulf of Mexico revenue to $39 million as a result of increased demand for premium drill pipe and stabilization equipment. This was due in part to the resumption of drilling rig activity in the deepwater market. U.S. land revenue increased 7% sequentially to $68 million as a result of increased rentals of accommodations, stabilization equipment, and accessories. International revenue increased 7% sequentially to $42 million due to increased rentals of premium drill pipe in Colombia and stabilization equipment in Brazil.Marine SegmentMarine Segment revenue in the second quarter was $25.6 million, a 34% increase over the second quarter of 2010 and an 8% increase from first quarter of 2011. Average fleet utilization in the second quarter of 2011 was 70% as compared with 62% in the second quarter of 2010 and 57% in the first quarter of 2011. The Company sold four liftboats during the second quarter, including two from its 145-155 ft. class fleet, and one each from its 160-175 ft. class fleet and 200 ft. class feet. The Company now has 18 liftboats in its rental fleet.Liftboat Average Day rates and Utilization by Class SizeThree Months Ended June 30, 2011($ actual)ClassLiftboats(1)AverageDayrateUtilization155'-175'88,34572.3%200'511,39566.4%230'-245'318,52968.5%250'-265'438,48670.3%(1) Reflects average number of liftboats working during the periodConference Call InformationThe Company will host a conference call at 10 a.m. Central Time on Thursday, July 28, 2011. The call can be accessed from Superior's website at www.superiorenergy.com, or by telephone at 480-629-9835. For those who cannot listen to the live call, a telephonic replay will be available through Thursday, August 4, 2011 and may be accessed by calling 303-590-3030 and using the pass code 4451411. An archive of the webcast will be available after the call for a period of 60 days at www.superiorenergy.com.Superior Energy Services, Inc. serves the drilling 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 Six Months Ended June 30, 2011 and 2010(in thousands, except earnings per share amounts)(unaudited)Three Months EndedSix Months EndedJune 30,June 30,2011201020112010Revenues$ 510,806$ 424,856$ 924,787$ 789,367Cost of services (exclusive of items shown separately below)271,370229,916505,215428,968Depreciation, depletion, amortization and accretion63,31454,299122,677105,347General and administrative expenses95,88192,529182,760163,253Gain on sale of businesses5,884-8,558-Income from operations86,12548,112122,69391,799Other income (expense): Interest expense, net(16,453)(12,680)(28,825)(26,718) Earnings from equity-method investments, net5,4992,1705,5266,155Income before income taxes75,17137,60299,39471,236Income taxes27,06213,53735,78225,645Net income$ 48,109$ 24,065$ 63,612$ 45,591Basic earnings per share$ 0.60$ 0.31$ 0.80$ 0.58Diluted earnings per share$ 0.59$ 0.30$ 0.79$ 0.57Weighted average common shares used in computing earnings per share: Basic79,74478,71679,38578,625 Diluted81,25479,60181,02479,499SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSJUNE 30, 2011 AND DECEMBER 31, 2010(in thousands)6/30/201112/31/2010(Unaudited)(Audited)ASSETSCurrent assets: Cash and cash equivalents$ 244,114$ 50,727 Short-term investments164,161- Accounts receivable, net437,954452,450 Prepaid expenses38,86225,828 Inventory and other current assets220,410235,047 Total current assets1,105,501764,052Property, plant and equipment, net 1,394,9181,313,150Goodwill589,761588,000Notes receivable71,26169,026Equity-method investments63,30859,322Intangible and other long-term assets, net136,888113,983 Total assets$ 3,361,637$ 2,907,533LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable$ 109,167$ 110,276 Accrued expenses170,383162,044 Income taxes payable 8,9552,475 Deferred income taxes24,02729,353 Current portion of decommissioning liabilities17,17216,929 Current maturities of long-term debt391,262184,810 Total current liabilities720,966505,887Deferred income taxes 228,191223,936Decommissioning liabilities103,880100,787Long-term debt, net810,184681,635Other long-term liabilities121,800114,737Total stockholders' equity1,376,6161,280,551 Total liabilities and stockholders' equity$ 3,361,637$ 2,907,533Superior Energy Services, Inc. and SubsidiariesSegment HighlightsThree months ended June 30, 2011, March 31, 2011 and June 30, 2010(Unaudited)(in thousands)Three months endedRevenueJune 30, 2011March 31, 2011June 30, 2010Subsea and Well Enhancement$ 336,037$ 262,045$ 284,352Drilling Products and Services149,167128,270121,337Marine25,60223,66619,167Total Revenues$ 510,806$ 413,981$ 424,856Gross Profit (1)June 30, 2011March 31, 2011June 30, 2010Subsea and Well Enhancement$ 141,730$ 91,377$ 116,477Drilling Products and Services92,54081,57377,578Marine5,1667,186885Total Gross Profit$ 239,436$ 180,136$ 194,940Income (Loss) from OperationsJune 30, 2011 (2)March 31, 2011 (3)June 30, 2010 (4)Subsea and Well Enhancement$ 50,864$ 10,979$ 32,882Drilling Products and Services29,66221,70420,334Marine5,5993,885(5,104)Total Income from Operations$ 86,125$ 36,568$ 48,112(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) Includes a gain on sale of liftboats of $5.9 million in the Marine Segment.(3) Includes a gain on sale of liftboats of $2.7 million recorded in the Marine Segment.(4) Includes management transition expenses of $16.4 million recorded in general and administrative expenses.SOURCE Superior Energy Services, Inc.