Superior Well Services Cites Boost in 4Q09 Activity Levels
Superior Well Services announced a net loss for the three months ended December 31, 2009 of $15.2 million, or a $0.58 loss per diluted share, compared to net income of $11.9 million, or $0.48 per diluted share, in the same period in 2008.
The 2009 fourth quarter net loss of $15.2 million, or a $0.58 net loss per diluted share, compares to a net loss of $11.8 million, or a $0.54 net loss per diluted share, in the previous quarter ended September 30, 2009. Net loss for the third quarter of 2009 includes the impact of a $0.2 million after-tax ($0.3 million pre-tax) non-cash goodwill and intangible impairment charge.
Revenue in the fourth quarter of 2009 was $95.9 million, a 5.7% increase from the $90.8 million reported in the previous quarter and a 40.7% decrease from the $161.7 million reported in the fourth quarter of 2008. Operating loss for the fourth quarter was $19.6 million compared to $16.5 million of operating loss, which includes a $0.3 million goodwill and intangible impairment charge, reported for the previous quarter, and $22.5 million of operating income reported in the fourth quarter of 2008.
Adjusted EBITDA, a non-GAAP financial measure, totaled $0.8 million, as compared to $3.2 million reported for the previous quarter and $36.4 million reported in the fourth quarter of 2008. For our definition of Adjusted EBITDA, please see footnote 1. For a reconciliation of Adjusted EBITDA to net income (loss), please see the non-GAAP financial measure tables included in this press release.
David Wallace, Chief Executive Officer, said, "The fourth quarter showed a continued improvement in the U.S. land rig count. We experienced a 4% increase in activity levels as compared to the previous quarter. Activity levels in the fourth quarter ramped up as our customers gained visibility on the outlook for heating degree day withdrawals on natural gas storage. December was one of our busiest months of the year even with the impact of weather and the holidays.
In the fourth quarter, we sold 6,900,000 shares of common stock through a public offering and raised net proceeds of approximately $68.5 million which was used to pay down a portion of our credit facility. At year end, we had a debt to book capitalization ratio of 33.4%, and we anticipate using our income tax receivable of $36.0 million to further reduce the outstanding borrowings under our credit facility when it is received in 2010. We anticipate receiving proceeds from our income tax receivable in the second quarter of 2010.
In 2010, we began to see improved pricing in some areas and anticipate that pricing will continue to improve across our areas of operation, assuming that drilling activity continues at current levels. We continue to closely monitor our activity levels by service center, adjust our costs and reposition employees and equipment to take advantage of areas with higher margins within our geographic footprint."
Stimulation, cementing, nitrogen, down-hole surveying, completion and fluid logistics revenue represented 66.3%, 13.0%, 6.9%, 5.8%, 3.8% and 4.2%, respectively, of our total revenue of $95.9 million in the fourth quarter of 2009. Revenue increases in our Appalachian and Rocky Mountain operating regions more than offset slight revenue decreases in our Southeast, Southwest and Mid-Continent operating regions compared to the previous quarter. As a percentage of gross revenue, sales discounts decreased slightly by 0.4% in the fourth quarter of 2009 compared to the previous quarter.
Cost of revenue increased 9.2%, or $8.8 million, for the fourth quarter of 2009 compared to the previous quarter. As a percentage of net revenue, cost of revenue increased by 3.5% to 108.7% for the fourth quarter of 2009 from 105.2% for the previous quarter due primarily to increases in repairs and materials as a percentage of net revenue. Repair costs as a percentage of net revenue increased by 2.6% due to higher equipment repairs related to repairs on ancillary components used in our shale based activities. Material costs as a percentage of net revenue increased by 0.4% in the fourth quarter of 2009 from 39.8% in the previous quarter due to higher freight and demurrage charges associated in large part with the logistics of moving materials in our unconventional work. Outside contractor and labor expenses as a percentage of net revenue increased by 0.2% to 23.0% in the fourth quarter of 2009 as compared to 22.8% in the previous quarter due to using more contract employees in the fourth quarter of 2009 used to support the higher activity levels.
SG&A expenses decreased 1.7% or $0.2 million for the fourth quarter of 2009 compared to the previous quarter. As a percentage of net revenue, SG&A expenses decreased by 0.9% to 11.7% for the fourth quarter of 2009 from 12.6% for the previous quarter primarily due to lower labor expenses. Labor decreased 4.0% or $0.3 million in the fourth quarter of 2009 compared to the previous quarter.
For the fourth quarter of 2009, we made capital expenditures of approximately $4.5 million for maintenance on our existing equipment base and to purchase new and upgrade existing equipment. We plan to continue to focus on minimizing our discretionary spending and limiting our capital expenditures given the current operating environment.
At December 31, 2009, we had $98.9 million of working capital and total long-term debt of $163.6 million, with $82.7 million outstanding under our $100.0 million credit facility. Our credit facility matures in March 2013 and we are currently in compliance with all of the debt covenants under that facility as well as under the indenture governing our second lien notes.
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