*Adjusted EBITDA is a non-GAAP measure. See comments regarding the use of non-GAAP measures and the reconciliation of GAAP to non-GAAP measures in the tables of this release
VERNAL, Utah--(BUSINESS WIRE )--In the "Consolidated Condensed Statements Of Operations" financial table, the Diluted weighted average common shares outstanding for the Three Months Ended December 31, 2021 should read: 27,816,874 (instead of: 26,153,334).
SUPERIOR DRILLING PRODUCTS, INC. GREW REVENUE 156% AND ACHIEVED EARNINGS PER SHARE OF $0.02 IN FOURTH QUARTER 2021
*Adjusted EBITDA is a non-GAAP measure. See comments regarding the use of non-GAAP measures and the reconciliation of GAAP to non-GAAP measures in the tables of this release
Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or the “Company”), a designer and manufacturer of drilling tool technologies, today reported financial results for the fourth quarter of 2021 ended December 31, 2021.
Troy Meier, Chairman and CEO, commented, “We had exceptional growth in demand for our Drill-N-Ream® wellbore conditioning tool (“DNR”) as the number of operators and rigs using the tool continues to grow. It would appear as well that we are now reaching a point where tool fleet replacement is required as tool sales in the quarter picked up measurably.”
He added, “We have been building out our team and focused on training to be able to deliver to demand in 2022. We are working hard to address the challenges of talent management and retention, stay ahead of supply chain constraints and meet our customers’ requirements as demand continues to expand.”
Fourth Quarter 2021 Review ($ in thousands, except per share amounts) (See at “Definitions” the composition of product/service revenue categories.)
Significant growth in revenue year-over-year reflected a strong recovery in the oil & gas industry especially in North America, growing market penetration of the Company’s DNR in North America and the related expanded demand for new drilling tools.
For the fourth quarter 2021, approximately 90% of revenue was from North America and approximately 10% from international markets, all within the Middle East. Revenue in North America grew year-over-year from increased tool revenue and strong growth in Contract Services.
(1) Adjusted EBITDA is a non-GAAP measure defined as earnings before interest, taxes, depreciation and amortization, non-cash stock compensation expense and unusual items. See the attached tables for important disclosures regarding SDP’s use of Adjusted EBITDA, as well as a reconciliation of net loss to Adjusted EBITDA.
Gross margin was impacted by operating inefficiencies associated with labor shortages and supply chain constraints. Selling, general & administrative expenses were higher as a result of labor constraints and the inflationary impact of wages.
Net income of $645 thousand, or $0.02 per diluted share was primarily due to the recovery of principal and interest of a related party note receivable in the fourth quarter. Adjusted EBITDA(1) improved year-over-year to $827 thousand on higher net income.
The Company believes that when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), Adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its operating performance.
Revenue of $13.3 million grew 27% over the prior year as a result of an improved market combined with strong demand for the Company’s products and services. Revenue in North America was up 35% which more than offset a 8.7% decline in international markets as the Middle East continued to address the global pandemic with containment restrictions.
Tool revenue was $9.2 million, up 31%, or $2.2 million, from the prior-year period driven by demand for the DNR, both new tools as well as repair and royalty revenue from DNR activity on more rigs throughout the year. Contract Services revenue increased approximately $667 thousand, or 19%, to $4.1 million for the year as the Company refurbished more tools for its legacy customer.
Operating expenses in 2021 were down $371 thousand, or 3%, compared with 2020. This was primarily as a result of lower amortization expense and the reorganization of the Company’s international business to improve profitability.
Other income in 2021 included $707 thousand for recovery of a related party note receivable, whereas 2020 benefitted from the $933 thousand in forgiveness on SBA loans.
The net loss in 2021 was $530 thousand, or ($0.02) per diluted share, improved over a net loss of $3.4 million, ($0.13) per diluted share in 2020.
Adjusted EBTIDA was $2.6 million in 2021, or 19.7% of revenue. This was up from an Adjusted loss before tax, interest, depreciation and amortization of $103 thousand in 2020.
Cash at the end of the quarter was $2.8 million, up $861 thousand from the end of 2020 and up $353 thousand from the trailing third quarter. Cash generated by operations for the year was $526 thousand. Long-term debt, including the current portion, at quarter-end was $2.5 million. The final $750 thousand of principal due on the note is payable on October 5, 2022.
During the quarter, the Company completed an equity offering of 1,739,131 shares of common stock at a price of $1.15 per share, which resulted in net proceeds of approximately $1.7 million.
Definitions and Composition of Product/Service Revenue:
Contract Services Revenue is comprised of repair and manufacturing services for drill bits and other tools or products for customers.
Other Related Tool Revenue is comprised of royalties and fleet maintenance fees.
Tool Sales/Rental revenue is comprised of revenue from either the sale or rent of tools to customers.
Tool Revenue is the sum of Other Related Tool Revenue and Tool Sales/Rental revenue.
The Company will host a conference call and live webcast today at 10:00 am MT (12:00 pm ET) to review the results of the quarter and discuss its corporate strategy and outlook. The discussion will be accompanied by a slide presentation that will be made available prior to the conference call on SDP’s website at www.sdpi.com/events. A question-and-answer session will follow the formal presentation.
The conference call can be accessed by calling (201) 689-8470. Alternatively, the webcast can be monitored at www.sdpi.com/events. A telephonic replay will be available from 1:00 p.m. MT (3:00 p.m. ET) the day of the teleconference until Friday, March 18, 2022. To listen to the archived call, please call (412) 317-6671 and enter conference ID number 13727112 or access the webcast replay at www.sdpi.com, where a transcript will be posted once available.
About Superior Drilling Products, Inc.
Superior Drilling Products, Inc. is an innovative, cutting-edge drilling tool technology company providing cost saving solutions that drive production efficiencies for the oil and natural gas drilling industry. The Company designs, manufactures, repairs and sells drilling tools. SDP drilling solutions include the patented Drill-N-Ream® wellbore conditioning tool and the patented Strider™ oscillation system technology. In addition, SDP is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill bits for a leading oil field service company. SDP operates a state-of-the-art drill tool fabrication facility, where it manufactures its solutions for the drilling industry, as well as customers’ custom products. The Company’s strategy for growth is to leverage its expertise in drill tool technology and innovative, precision machining in order to broaden its product offerings and solutions for the oil and gas industry.
Additional information about the Company can be found at: www.sdpi.com.
Safe Harbor Regarding Forward Looking Statements
This news release contains forward-looking statements and information that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this release, including, without limitations, the continued impact of COVID-19 on the business, the Company’s strategy, future operations, success at developing future tools, the Company’s effectiveness at executing its business strategy and plans, financial position, estimated revenue and losses, projected costs, prospects, plans and objectives of management, and ability to outperform are forward-looking statements. The use of words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project”, “forecast,” “should” or “plan, and similar expressions are intended to identify forward-looking statements, although not all forward -looking statements contain such identifying words. These statements reflect the beliefs and expectations of the Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the duration of the COVID-19 pandemic and related impact on the oil and natural gas industry, the effectiveness of success at expansion in the Middle East, options available for market channels in North America, the deferral of the commercialization of the Strider technology, the success of the Company’s business strategy and prospects for growth; the market success of the Company’s specialized tools, effectiveness of its sales efforts, its cash flow and liquidity; financial projections and actual operating results; the amount, nature and timing of capital expenditures; the availability and terms of capital; competition and government regulations; and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the Company’s plans and described herein. The Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.
(1) Adjusted EBITDA represents net income adjusted for income taxes, interest, depreciation and amortization and other items as noted in the reconciliation table. The Company believes Adjusted EBITDA is an important supplemental measure of operating performance and uses it to assess performance and inform operating decisions. However, Adjusted EBITDA is not a GAAP financial measure. The Company’s calculation of Adjusted EBITDA should not be used as a substitute for GAAP measures of performance, including net cash provided by operations, operating income and net income. The Company’s method of calculating Adjusted EBITDA may vary substantially from the methods used by other companies and investors are cautioned not to rely unduly on it.
For more information, contact investor relations: Deborah K. Pawlowski Kei Advisors LLC (716) 843-3908 dpawlowski@keiadvisors.com
Superior Drilling Products, Inc. (NYSE American: SDPI) Grew Revenue 156% and Achieved Earnings per Share of $0.02 in Fourth Quarter 2021
For more information, contact investor relations: Deborah K. Pawlowski Kei Advisors LLC (716) 843-3908 dpawlowski@keiadvisors.com