Superior Well Services has announced today its third quarter 2008 results. Highlights for the quarter include:
For the three months ended September 30, 2008, revenues increased 54.8% to $146.0 million compared to $94.3 million for the three months ended September 30, 2007. Operating income was $24.9 million for the three months ended September 30, 2008, a 32.1% increase compared to the three months ended September 30, 2007 and a sequential increase of 50.1% from the second quarter of 2008. Net income for the three months ended September 30, 2008 totaled $14.9 million, while fully diluted earnings per share increased to $0.64.
EBITDA, a non-GAAP financial measure, totaled $35.6 million, a 39.2% increase compared to the three months ended September 30, 2007. For our definition of EBITDA, please see footnote 1. For a reconciliation of EBITDA to net income, please see the information following the consolidated statement of income included in this press release.
David Wallace, Chief Executive Officer, said, "Our third quarter results reflect an improved market environment, as operators increased their drilling activity, which in turn increased demand for our high quality well completion services. Increased utilization, better ability to pass through material cost increases and successful installation of bulk handling infrastructure all combined to produce company records for revenues and EBITDA.
"Revenues grew 55% for the quarter when compared to the third quarter of last year and were 22% above revenues generated during the second quarter of 2008. Our service centers are strategically positioned in the country's most profitable and active resource plays including the Bakken, Haynesville and Marcellus shales. Activity in these plays is expected to remain strong despite uncertainty related to commodity price forecasts and the credit markets."
Stimulation, nitrogen, cementing and down-hole surveying revenues presented 64.7%, 7.6%, 17.6% and 10.1% of our total revenues of $146.0 million in the third quarter of 2008, respectively. Each of our operating regions had revenue increases compared to the third quarter of 2007. Increased activity levels at new and existing service centers led to the increases in 2008. New centers include organic start-up locations and acquisitions that have less than twelve months operating history with Superior.
Cost of revenues was $109.7 million, or 75.1% of revenues, during the third quarter of 2008, compared to $66.1 million or 70.1% percent of revenues during the third quarter of 2007. As a percentage of revenues, cost of revenues increased principally due to higher material costs for the third quarter of 2008 compared to the third quarter of 2007.
As a percentage of revenue, material costs increased 5.5% for the third quarter of 2008 compared to the third quarter of 2007 due to higher sand, chemical and cement costs, as well as transportation expenses incurred to deliver materials. Fuel costs as a percentage of revenues increased 2.0% in the third quarter of 2008 as compared to the third quarter of 2007 due to higher diesel prices.
Selling, general and administrative, or SG&A, expenses were $11.4 million for the third quarter of 2008 compared to $9.3 million for to the third quarter of 2007, an increase of 22.1%. This increase was primarily due to higher labor expenses associated with increased activity levels. As a percentage of revenue, SG&A expenses declined from 9.9% in the third quarter of 2007 to 7.8% in the third quarter of 2008.
The percentage decline was due to the ability to leverage the fixed cost component of these costs over a higher base of revenue. Labor expenses increased $1.5 million in the third quarter of 2008 compared to the third quarter of 2007 due to the hiring of additional management, sales and administrative personnel to manage the growth in our operations. Approximately $0.6 million of the labor expense increase in the third quarter of 2008 compared to the third quarter 2007 is related to our new service centers. As a percentage of revenue, the portion of labor expenses included in SG&A expense decreased from 5.9% in the third quarter of 2007 to 4.8% in the third quarter of 2008.
Operating income was $24.9 million for the third quarter of 2008 compared to $18.9 million for the third quarter of 2007, an increase of 32.1%. The primary reason for the increase was higher revenues due to increased activity levels at new and existing service centers. This increase in revenue was partially offset by the increases in our cost of revenue and SG&A expenses as described above.
During the first nine months of 2008, our capital expenditures for new property, plant and equipment were $81.5 million, compared to $95.2 million for the same period last year. In July 2008, we purchased the assets of Nuex Wireline, Inc. for $6.0 million to expand our presence in the Rocky Mountain region and this amount is included in our total 2008 capital expenditures.
At September 30, 2008 our total debt was $51.6 million. Our borrowing capacity at the end of the third quarter on our syndicated credit facility was $195.4 million. In September 2008, we entered into a new credit agreement that provides for a $250.0 million secured revolving syndicated credit facility, which replaced both our $45.0 million revolving credit facility and our $30.0 million standby term loan facility.
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