Superior Well Services Posts Slight Increase in Revenue from 2Q
Superior Well Services has announced a net loss for the three months ended September 30, 2009 of $11.8 million, or a $0.54 loss per diluted share, compared to net income of $14.9 million, or $0.64 per diluted share, in the same period in 2008.
The 2009 third quarter net loss of $11.8 million, or a $0.54 net loss per diluted share, compares to a net loss of $37.9 million, or a $1.66 net loss per diluted share, in the previous quarter ended June 30, 2009. Net loss for the third quarter and second quarter of 2009 includes the impact of a $0.2 million after-tax ($0.3 million pre-tax) and a $20.2 million after-tax ($33.2 million pre-tax) non-cash goodwill and intangible impairment charge, respectively.
Revenue in the third quarter of 2009 was $90.8 million, a 0.3% increase from the $90.5 million reported in the previous quarter and a 37.8% decrease from the $146.0 million reported in the third quarter of 2008. Operating loss, which includes a $0.3 million goodwill and intangible impairment charge, for the third quarter was $16.5 million compared to $59.2 million of operating loss, which includes a $33.2 million goodwill and intangible impairment charge, reported in the previous quarter, and $24.9 million of operating income reported in the third quarter of 2008.
Adjusted EBITDA, a non-GAAP financial measure, totaled $3.2 million, as compared to $(7.3) million reported in the previous quarter and $36.3 million reported in the third quarter of 2008.
David Wallace, Chief Executive Officer, said, "While U.S. drilling activity declined rapidly in the first six months of 2009, we have seen a slow and steady improvement in the U.S. land rig count from the June lows. There has been a consistent shift during the year in the percentage of horizontal rigs verses the percentage of vertical rigs, and the percentage of rigs drilling for oil verses the percentage of rigs drilling for natural gas. We believe that the increasing percentage of horizontal rigs plays into our strength with our presence in all of the active U.S. horizontal shale plays, and our geographic footprint in the U.S. allows us to benefit from the increased oil drilling activity.
"While price competition remains strong, we are pleased to have returned to positive Adjusted EBITDA for the third quarter. Adjusted EBITDA improved from the prior quarter by $10.4 million off of essentially flat revenues. This improvement was due to the effect of our previously announced cost control measures. 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 activity levels within our geographic footprint."
Stimulation, cementing, nitrogen, down-hole surveying, completion and fluid logistics revenue represented 64.3%, 14.2%, 7.3%, 6.5%, 4.0% and 3.7%, respectively, of our total revenue of $90.8 million in the third quarter of 2009. Our Appalachian, Southeast and Rocky Mountain operating regions had revenue increases compared to the previous quarter while our Southwest and Mid-Continent operating regions had revenue decreases. The operations we acquired in the Diamondback asset acquisition represented approximately $23.4 million of our revenue for the third quarter of 2009 and increased activity levels at new service centers that were established within the last twelve months represented approximately $4.8 million of our revenue during the same period. As a percentage of gross revenue, sales discounts increased 2.1% in the third quarter of 2009 compared to the previous quarter due to continued competition in our operating regions.
Cost of revenue decreased 7.0% or $7.2 million for the third quarter of 2009 compared to the previous quarter. As a percentage of net revenue, cost of revenue decreased by 8.2% to 105.2% for the third quarter of 2009 from 113.4% for the previous quarter due primarily to savings in labor, materials, repairs and other expenses as a percentage of net revenue partially offset by higher sales discounts. Labor expense as a percentage of net revenue decreased to 22.3% in the third quarter of 2009 compared to 27.6% in the previous quarter because of higher utilization, reduced levels of personnel, lower benefit costs and furloughs. Material costs as a percentage of net revenue decreased to 39.8% in the third quarter of 2009 from 40.9% in the previous quarter due to realized material cost savings.
SG&A expenses decreased 18.1% or $2.5 million for the third quarter of 2009 compared to the previous quarter. As a percentage of net revenue, SG&A expenses decreased by 2.8% to 12.6% for the third quarter of 2009 from 15.4% for the previous quarter primarily due to lower labor and other expenses. Labor decreased 23.7% or $2.0 million in the third quarter of 2009 compared to the previous quarter due to reduced levels of personnel, lower benefit costs and furloughs.
For the third quarter of 2009, we made capital expenditures of approximately $5.8 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 September 30, 2009, we had $85.8 million of working capital and total long-term debt of $227.3 million, with $146.4 million outstanding on our $175.0 million credit facility. Our credit facility matures in March 2013 and we are currently in compliance with our debt covenants.
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