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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Superior Drilling Products Inc | AMEX:SDPI | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.03 | -2.36% | 1.24 | 1.275 | 1.24 | 1.26 | 24,684 | 00:09:31 |
*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
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).
The updated release reads:
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.)
($ in thousands) December 31,2021 September 30,2021 December 31,2020 ChangeSequential ChangeYear/Year North America
3,546
3,041
1,203
16.6%
194.7%
International
405
521
338
(22.3)%
19.7%
Total Revenue$
3,950
$
3,562
$
1,541
10.9%
156.3%
Tool Sales/Rental$
1,545
$
836
342
84.8%
351.7%
Other Related Tool Revenue
1,422
1,510
561
(5.8)%
153.4%
Tool Revenue
2,967
2,346
903
26.5%
228.5%
Contract Services
983
1,216
638
(19.1)%
54.1%
Total Revenue$
3,950
$
3,562
$
1,541
10.9%
156.3%
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.
Fourth Quarter 2021 Operating Costs
($ in thousands, except per share amounts) December 31,2021 September 30,2021 December 31,2020 ChangeSequential ChangeYear/Year Cost of revenue$
1,777
$
1,442
$
821
23.2%
116.5%
As a percent of sales
45.0%
40.5%
53.3%
Selling, general & administrative$
1,660
$
1,551
$
1,483
7.0%
11.9%
As a percent of sales
42.0%
43.6%
96.2%
Depreciation & amortization$
423
$
405
$
682
4.3%
(38.0)%
Total operating expenses$
3,860
$
3,399
$
2,986
13.6%
29.3%
Operating Income (loss)$
90
$
163
$
(1,445)
(44.7)%
(106.2)%
As a % of sales
2%
4.6%
(94)%
Other (expense) income includingincome tax (expense)$
555
$
(169)
$
790
(427.2)%
(29.8)%
Net Income (loss)$
645
$
(6)
$
(655)
NM
NM
Diluted loss per share$
0.02
$
(0.00)
$
(0.03)
Adjusted EBITDA(1)$
827
$
853
$
(494)
(3.0)%
(267.4)%
As a % of sales
20.9%
23.9%
NM
(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 $827 thousand on higher net income.
The Company believes that when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), Adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its operating performance.
Full Year 2021 Review
($ in thousands, except per share amounts) December 31,2021 December 31,2020 $ Change % Change Tool sales/rental$
4,331
$
3,030
$
1,301
42.9%
Other Related Tool Revenue
4,917
4,021
$
896
22.3%
Tool Revenue$
9,248
$
7,051
$
2,198
31.2%
Contract Services
4,088
3,420
$
667
19.5%
Total Revenue$
13,336
$
10,471
$
2,865
27.4%
Operating expenses
13,923
14,293
$
(371)
(2.6)%
Operating (loss) income$
(587)
$
(3,823)
$
3,235
(84.6)%
Net loss$
(530)
$
(3,430)
$
2,900
(84.6)%
Diluted loss per share$
(0.02)
$
(0.13)
$
0.11
Adjusted EBITDA(1)$
2,626
$
(103)
$
2,729
NM
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.
Balance Sheet and Liquidity
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.
Webcast and Conference Call
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.
FINANCIAL TABLES FOLLOW.
Superior Drilling Products, Inc. Consolidated Condensed Statements Of Operations (unaudited)For the Three Months
For the Twelve Months
Ended December 31,
Ended December 31,
2021
2020
2021
2020
Revenue North America$
3,545,648
$
1,203,086
$
11,619,593
$
8,590,933
International
404,821
338,119
1,716,556
1,879,865
Total revenue$
3,950,469
$
1,541,205
$
13,336,149
$
10,470,798
Operating cost and expenses Cost of revenue
1,777,130
820,961
5,618,844
5,105,677
Selling, general, and administrative expenses
1,660,386
1,483,338
6,200,522
6,371,337
Depreciation and amortization expense
422,733
681,998
2,103,534
2,816,396
Total operating costs and expenses
3,860,249
2,986,297
13,922,900
14,293,410
Operating Income (loss)
90,220
(1,445,092)
(586,751)
(3,822,612)
Other Income (expense) Interest income
81
28
228
5,803
Interest expense
(125,593)
(125,096)
(539,390)
(575,306)
Recovery of related party note receivable
707,112
-
707,112
-
Loss on Fixed Asset Impairment
-
-
-
(30,000)
Net gain/(loss) on sale or disposition of assets
939
32,000
(249)
174,234
Loan Forgiveness
-
891,600
-
933,003
Total other expense
582,539
798,532
167,701
507,734
Income (loss) before income taxes$
672,759
$
(646,560)
$
(419,050)
$
(3,314,878)
Income tax expense
(27,875)
(8,582)
(110,751)
(114,996)
Net Income (loss)$
644,884
$
(655,142)
(529,801)
(3,429,874)
Basic income (loss) per common share$
0.02
$
(0.03)
$
(0.02)
$
(0.13)
Basic weighted average common shares outstanding
27,816,874
25,650,846
26,378,967
25,515,166
Diluted income (loss) per common Share$
0.02
$
(0.03)
$
(0.02)
$
(0.13)
Diluted weighted average common shares outstanding
27,816,874
25,650,846
26,378,967
25,515,166
Superior Drilling Products, Inc.
Consolidated Condensed Balance Sheets
December 31, 2021 December 31, 2020 (unaudited) Assets Current assets: Cash $2,822,100
$1,961,441
Accounts receivable, net2,871,932
1,345,622
Prepaid expenses435,595
90,269
Inventories1,174,635
1,020,008
Asset held for sale-
40,000
Other current assets55,159
40,620
Total current assets7,359,421
4,497,960
Property, plant and equipment, net6,930,329
7,535,098
Intangible assets, net236,111
819,444
Right of use Asset (net of amortization) $20,518
$99,831
Other noncurrent assets65,880
87,490
Total assets $14,612,259
$13,039,823
Liabilities and Owners' Equity Current liabilities: Accounts payable $1,139,091
$430,015
Accrued expenses467,462
1,091,518
Accrued Income tax206,490
106,446
Current portion of Operating Lease Liability13,716
79,313
Current portion of Long-term Financial Obligation65,678
61,691
Current portion of long-term debt, net of discounts2,195,759
1,397,337
-
-
Total current liabilities $4,088,196
$3,166,320
Operating long term liability6,802
20,518
Long-term Financial Obligation4,112,658
4,178,261
Long-term debt, less current portion, net of discounts256,675
1,451,049
Total liabilities $8,464,331
$8,816,148
Shareholders' equity Common stock (28,218,316 and 25,762,342)28,218
25,762
Additional paid-in-capital43,071,218
40,619,620
Accumulated deficit(36,951,508)
(36,421,707)
Total stockholders' equity $6,147,928
$4,223,675
Total liabilities and shareholders' equity $14,612,259
$13,039,823
Superior Drilling Products, Inc. Consolidated Statement of Cash Flows (Unaudited)December 31,2021
December 31,2020 Cash Flows From Operating Activities
Net Loss $
(529,801)
$
(3,429,874)
Adjustments to reconcile net income to net cash used in operating activities:Depreciation and amortization expense
2,103,534
2,816,396
Amortization debt discountShare - based compensation expense
756,743
550,573
Loss on disposition of rental fleet-
23,649
Loss (Gain) on sale or dispositon of assets249
(174,234)
Gain on Forgiveness of loan-
(933,003)
Impairment on asset held for sale-
30,000
Amortization of deferred loan cost18,522
18,525
Changes in operating assets and liabilities:Accounts receivable
(1,526,310)
2,504,887
Inventories(143,590)
(95,976)
Prepaid expenses and other noncurrent assets(338,255)
266,488
Accounts payable and accrued expenses85,020
(85,630)
Income Tax expense100,044
90,566
Other long term liabilities-
(61,421)
Net Cash Provided By Operating Activities526,156
1,520,946
Cash Flows From Investing Activities
Purchases of property, plant and equipment
(936,718)
(1,167,346)
Proceeds from sale of fixed assets50,000
149,833
Net Cash Provided By Investing Activities(886,718)
(1,017,513)
Cash Flows From Financing Activities
Principal payments on debt
(1,277,730)
(2,350,783)
Proceeds received from debt borrowings-
72,520
Proceeds received from SBA Paycheck Protection Program (PPP)-
891,600
Payments on Revolving loan(895,787)
(1,179,768)
Proceeds received from Revolving loan1,697,427
1,185,319
Proceeds from financing obligation-
1,622,106
Proceeds from Issuance of Common Stock1,697,311
-
Net Cash Provided By (Used In) Financing Activities1,221,221
240,994
Net change in Cash
860,659
744,427
Cash at Beginning of Period1,961,441
1,217,014
Cash at End of Period $2,822,100
$
1,961,441
Supplemental information:
Cash paid for interest $
530,898
$
576,854
Non-cash payment of other liabilities by offsetting recovery ofrelated-party note receivable $707,112
$
-
Long term debt paid with Sale of Plane $-
$
211,667
Superior Drilling Products, Inc.
Adjusted EBITDA(1) Reconciliation
(unaudited)
($, in thousands) Three Months Ended December 31,2021 December 31,2020 September 30,2021 GAAP net income (loss)$
644,884
$
(655,142)
$$
(6,210)
Add back: Depreciation and amortization
422,733
681,998
405,225
Interest expense, net
125,512
125,068
130,172
Share-based compensation
226,144
180,730
196,096
Net non-cash compensation
88,200
88,200
88,200
Income tax expense
27,875
8,582
39,327
Recovery of Related Party Note Receivable
(707,112)
-
-
Loan Forgiveness
-
(891,600)
-
(Gain) Loss on disposition of assets
(939)
(32,000)
-
Non-GAAP adjusted EBITDA(1)$
827,297
$
(494,164)
$
852,810
GAAP Revenue$
3,950,469
$
1,541,205
$
3,561,919
Non-GAAP Adjusted EBITDA Margin
20.9%
NM
23.9%
Year Ended December 31,2021 December 31,2020 GAAP net loss$
(529,801)
$
(3,429,874)
Add back: Depreciation and amortization
2,103,534
2,816,396
Interest expense, net
539,162
569,503
Share-based compensation
756,743
550,573
Net non-cash compensation
352,800
352,800
Income tax expense
110,751
114,996
Impairment on asset held for sale
-
30,000
Gain on disposition of assets
(249)
(174,234)
Loan forgiveness
-
(933,003)
Inventory impairment
-
-
Recovery of related party note receivable
(707,112)
-
Non-GAAP adjusted EBITDA(1)$
2,625,828
$
(102,843)
GAAP Revenue$
13,336,149
$
10,470,798
Non-GAAP Adjusted EBITDA Margin
19.7%
(1.0)%
(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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220311005130/en/
For more information, contact investor relations: Deborah K. Pawlowski Kei Advisors LLC (716) 843-3908 dpawlowski@keiadvisors.com
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