*Adjusted EBITDA is a non-GAAP measure. Please refer to the comments on the use of non-GAAP measures and the reconciliation of GAAP and non-GAAP measures in this press release form
Wernal, Utah--(BUSINESS WIRE)--Superior Drilling Products, Inc. (NYSE: SDPI), designer and manufacturer of drilling tool technology ("SDP" or "Company") today announced its third financial results for the 2021 quarter ending September 30, 2021.
Chairman and CEO Troy Meier commented: “The demand for our tools and services is strong, and we are working hard to meet customer requirements. We are committed to our flagship Drill-N-Ream® wellbore dressing tool for the oil and gas production industry The value brought is full of confidence. Importantly, we need engineering expertise and manufacturing skills. We are looking for new opportunities to manufacture drilling tools to meet the growing demand and challenging technical requirements for polycrystalline diamond tools. We I believe that in this challenging era of severe supply chain constraints and labor shortages, the technical knowledge of drilling technology, operational advantages, and ability to meet demand provide us with a competitive advantage."
Review for the third quarter of 2021 (in thousands of U.S. dollars, excluding per share amounts) (see "defining" the composition of product/service revenue categories.)
Revenue increased by US$163,000, or 5%, from the previous quarter, and increased by US$2 million, or 130%, year-on-year. As the oil and gas production market continues to improve and the company gains greater market share, the improvements in these two periods reflect higher demand.
In the third quarter of 2021, about 85% of revenue will come from North America, and about 15% will come from the international market in the Middle East. Revenue in North America increased year-on-year due to the increase in tool sales and rents, as well as the increase in royalties and maintenance fees. International revenue growth reflects increasing market penetration, including increased demand from new international customers acquired in the second quarter. The month-on-month and year-on-year growth in contract service revenue reflects the increased demand for new drilling tools and refurbished products.
(1) Adjusted EBITDA is a non-GAAP measurement standard, defined as earnings before interest, taxes, depreciation and amortization, non-cash stock compensation expenses, and abnormal items. For important disclosures regarding the use of adjusted EBITDA by SDP and the reconciliation of net losses with adjusted EBITDA, please refer to the attached table.
The higher costs associated with international sales affect the cost of revenue. Nevertheless, higher sales volume and continuous effective cost management have brought strong operating leverage, which significantly increased operating income to US$163,000, accounting for 4.6% of sales.
The improvement in operating income and the reduction in tax expenses resulted in a breakeven result with a net loss of US$6,000. The decrease in income tax expenses compared to the previous year was due to the decrease in income from foreign jurisdictions. Due to increased sales volume and increased operating leverage, adjusted EBITDA(1) increased to US$853,000 year-on-year, and adjusted EBITDA margin expanded to 23.9%.
The company believes that when combined with measures prepared in accordance with US Generally Accepted Accounting Principles ("GAAP"), adjusted EBITDA (a non-GAAP measure) helps understand its operating performance.
Cash at the end of the quarter was US$2.5 million, an increase of US$508,000 from the end of 2020. Cash provided by operations for the nine months ended September 30, 2021 was US$878,000. Long-term debt, including the current portion, was $2.6 million at the end of the quarter, which reflects the $750,000 in principal paid on the Hard Rock notes during this period. The remaining $750,000 in principal on the note will be paid on October 5, 2022.
After the end of the quarter, in October 2021, the company completed the issuance of 1,739,131 common shares at a price of $1.15 per share. This resulted in approximately $1.7 million in net proceeds for general corporate purposes, which may include capital expenditures, debt repayment or refinancing, acquisitions and repurchases or redemptions of securities.
Definition and composition of product/service revenue:
Contract service income includes maintenance and manufacturing services for drill bits and other tools or products provided to customers.
Other related tool income includes royalties and fleet maintenance fees.
Tool sales/lease revenue includes revenue from selling or renting tools to customers.
Tool revenue is the sum of other related tool revenue and tool sales/lease revenue.
The company will host a conference call and webcast at 10:00 am (12:00 pm Eastern Time) this morning to review the quarter’s performance and discuss its corporate strategy and prospects. The discussion will be accompanied by a slide presentation, which will be available on the SDP website www.sdpi.com/events prior to the conference call. After the official speech, there will be a question and answer session.
The conference call can be accessed by dialing (201) 689-8470. Alternatively, you can monitor webcasts at www.sdpi.com/events. From 1:00 pm on the day of the conference call (3:00 pm EST) to Friday, November 19, 2021, a call replay will be available. To listen to the archived call, please call (412) 317-6671 and enter the conference ID number 13723735, or visit the webcast replay on www.sdpi.com, and the transcript will be posted here once it is available.
About Superior Drilling Products, Inc.
Superior Drilling Products, Inc. is an innovative cutting-edge drilling tool technology company that provides cost-saving solutions to improve production efficiency in the oil and gas drilling industry. The company designs, manufactures, repairs and sells drilling tools. SDP drilling solutions include the patented Drill-N-Ream® wellbore dressing tool and the patented Strider™ oscillation system technology. In addition, SDP is a leading oilfield service company's PDC (polycrystalline diamond composite) drill bit manufacturer and refurbishment company. SDP operates the most advanced drilling tool manufacturing facilities, manufacturing solutions and customized products for the drilling industry. The company's growth strategy is to use its expertise in drilling tool technology and innovative precision machining to expand its product supply and solutions in the oil and gas industry.
For more information about the company, please visit: www.sdpi.com.
A safe harbor for forward-looking statements
This press release contains forward-looking statements and information that are subject to many risks and uncertainties, many of which are beyond our control. All statements other than the statements of historical facts contained in this press release, including but not limited to the continuing impact of COVID-19 on the business, the company's strategy, future operations, the success of developing future tools, the company's effective strategy and plans for executing the business , Financial condition, estimated income and losses, estimated costs, prospects, management plans and goals, and ability to exceed performance are all forward-looking statements. Use "may", "believe", "anticipate", "intend", "estimate", "expect", "may", "continue", "forecast", "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 company's beliefs and expectations, and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include the duration of the COVID-19 pandemic and the related impact on the oil and gas industry, the effectiveness of the successful expansion in the Middle East, the available options for the North American market, the delay in the commercialization of Strider technology, and the company’s business strategy. Success and growth prospects; the market success of the company's professional tools, the effectiveness of sales work, cash flow and liquidity; financial forecasts and actual operating results; the amount, nature and timing of capital expenditures; availability and conditions of capital; competition and government regulations ; And general economic conditions. These and other factors may adversely affect the company's plans and the results and financial impact described in this article. The company assumes no obligation to modify or update any forward-looking statements to reflect events or circumstances after the date of this agreement.
Comprehensive and concise business report
Consolidated Cash Flow Statement
(1) Adjusted EBITDA refers to the adjusted net income based on income tax, interest, depreciation and amortization and other items indicated in the reconciliation table. The company believes that adjusted EBITDA is an important supplementary measure of operating performance, and uses it to evaluate performance and provide information for 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 performance indicators, including net cash provided by operations, operating income and net income. The company's method of calculating adjusted EBITDA may be quite different from that used by other companies. Investors should be careful not to rely on it too much.
Investor relations: Deborah K. Pawlowski, Kei Advisors LLC (716) 843-3908, dpawlowski@keiadvisors.com
Superior Drilling (NYSE: SDPI) reports that revenue in the third quarter of fiscal year 21 continued to grow to 3.6 million U.S. dollars, increasing profitability
Investor relations: Deborah K. Pawlowski, Kei Advisors LLC (716) 843-3908, dpawlowski@keiadvisors.com