Superior Drilling Products Reports First Quarter 2024 Results
First Quarter 2024 Revenue Review (See at “Definitions” the composition of product/service revenue categories.) |
||||||||||||||
($ in thousands) |
2024 |
2023 |
2023 |
Change Sequential |
Change Year/Year |
|||||||||
|
$ |
4,249 |
$ |
3,639 |
$ |
5,475 |
16.8 |
% |
(22.4 |
)% |
||||
International |
|
697 |
|
633 |
|
806 |
10.1 |
% |
(13.5 |
)% |
||||
Total Revenue |
$ |
4,946 |
$ |
4,273 |
$ |
6,281 |
15.8 |
% |
(21.3 |
)% |
||||
Tool (DNR) Revenue |
$ |
2,981 |
$ |
2,512 |
$ |
4,254 |
18.7 |
% |
(29.9 |
)% |
||||
Contract Services |
|
1,965 |
|
1,761 |
|
2,027 |
11.6 |
% |
(3.1 |
)% |
||||
Total Revenue |
$ |
4,946 |
$ |
4,273 |
$ |
6,281 |
15.8 |
% |
(21.3 |
)% |
The year-over-year change in revenue was impacted by lower tool sales, which largely reflected the decline in
The Company’s
International revenue growth was 10% sequentially, demonstrating the successful advancements of the Company’s operations in the
For the first quarter of 2024,
First Quarter 2024 Operating Results |
|||||||||||||||||
($ in thousands, except per share amounts) |
2024 |
2023 |
2023 |
Change Sequential |
Change Year/Year |
||||||||||||
Cost of revenue |
$ |
2,305 |
|
$ |
1,939 |
|
$ |
2,239 |
|
18.9 |
% |
3.0 |
% |
||||
As a percent of sales |
|
46.6 |
% |
|
45.4 |
% |
|
35.6 |
% |
||||||||
Selling, general & administrative |
$ |
2,130 |
|
$ |
2,263 |
|
$ |
2,339 |
|
(5.8 |
)% |
(8.9 |
)% |
||||
As a percent of sales |
|
43.1 |
% |
|
53.0 |
% |
|
37.2 |
% |
||||||||
Depreciation & amortization |
$ |
351 |
|
$ |
344 |
|
$ |
326 |
|
2.0 |
% |
7.7 |
% |
||||
Total operating expenses |
$ |
4,787 |
|
$ |
4,546 |
|
$ |
4,903 |
|
5.3 |
% |
(2.4 |
)% |
||||
Operating income (loss) |
$ |
159 |
|
$ |
(273 |
) |
$ |
1,378 |
|
NM |
|
(88.4 |
)% |
||||
As a % of sales |
|
3.2 |
% |
|
-6.4 |
% |
|
21.9 |
% |
||||||||
Other (expense) including income tax |
$ |
(1,982 |
) |
$ |
5,859 |
|
$ |
(135 |
) |
NM |
|
NM |
|
||||
Net (loss) Income |
$ |
(1,822 |
) |
$ |
5,586 |
|
$ |
1,513 |
|
NM |
|
NM |
|
||||
Diluted earnings per share |
$ |
(0.06 |
) |
$ |
0.18 |
|
$ |
0.05 |
|
||||||||
Adjusted EBITDA¹ |
$ |
839 |
|
$ |
439 |
|
$ |
2,019 |
|
91.0 |
% |
(58.4 |
)% |
||||
As a % of sales |
|
17.0 |
% |
|
10.3 |
% |
|
32.1 |
% |
||||||||
1Adjusted 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 income to Adjusted EBITDA. |
The cost of revenue increase reflected the underutilization of manufacturing resources given the reduced demand, as well as increased headcount, operating supplies and travel in the ME. Selling, general and administrative (SG&A) expenses decreased 9% year-over-year, and 6% sequentially, largely due to lower patent infringement related legal fees.
Included in other expenses and reflected in the net loss for the first quarter of 2024 was
Balance Sheet and Liquidity
For the three months ended
Capital expenditures of
Total debt at quarter-end was
Definitions and Composition of Product/Service Revenue:
Tool (DNR) Revenue is the sum of tool sales/rental revenue and other related tool revenue, which is comprised of royalties and fleet maintenance fees.
Contract Services revenue is comprised of repair and manufacturing services for drill bits and other tools or products for customers.
About
Additional information about the Company can be found at: www.sdpi.com.
Additional Information for
This press release relates to a proposed acquisition of
Participants in the Solicitation
DTI and SDP and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the SDP shareholders in connection with the proposed transaction. Information about the directors and executive officers of DTI is set forth in its Annual Report on Form 10-K for the year ended
These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and Schedule 13e-3 and other relevant materials in connection with the transaction to be filed with the
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 limitation, statements regarding the proposed transaction, 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," "plan or "will," 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 effectiveness of success at expansion in the
FINANCIAL TABLES FOLLOW
|
|||||||
Consolidated Condensed Statements of Operations |
|||||||
(unaudited) |
|||||||
Three Months Ended |
|||||||
|
2024 |
|
|
2023 |
|
||
Revenue | |||||||
|
$ |
4,249,150 |
|
$ |
5,475,061 |
|
|
International |
|
697,066 |
|
|
806,153 |
|
|
Total Revenue |
$ |
4,946,216 |
|
$ |
6,281,214 |
|
|
Operating cost and expenses |
|||||||
Cost of revenue |
$ |
2,305,068 |
|
$ |
2,238,597 |
|
|
Selling, general, and administrative expenses |
|
2,130,488 |
|
|
2,338,841 |
|
|
Depreciation and amortization expense |
|
351,213 |
|
|
326,014 |
|
|
Total operating cost and expenses |
$ |
4,786,769 |
|
$ |
4,903,452 |
|
|
Operating income |
$ |
159,447 |
|
$ |
1,377,762 |
|
|
Other income (expense) | |||||||
Interest income |
|
20,691 |
|
|
16,898 |
|
|
Interest expense |
|
(194,008 |
) |
|
(154,091 |
) |
|
Acquisition expense |
|
(1,748,277 |
) |
|
- |
|
|
Recovery of related party note receivable |
|
- |
|
|
350,262 |
|
|
Loss on disposition of assets |
|
(5,819 |
) |
|
- |
|
|
Total other (expense) income |
|
(1,927,413 |
) |
|
213,069 |
|
|
(Loss) Income before income taxes |
|
(1,767,966 |
) |
|
1,590,831 |
|
|
Income tax expense |
|
(54,422 |
) |
|
(77,612 |
) |
|
Net (loss) income |
$ |
(1,822,388 |
) |
$ |
1,513,219 |
|
|
(Loss) Earnings per common share - basic |
$ |
(0.06 |
) |
$ |
0.05 |
|
|
Weighted average common shares outstanding - basic |
|
30,391,244 |
|
|
29,245,080 |
|
|
(Loss) Earnings per common share - diluted |
$ |
(0.06 |
) |
$ |
0.05 |
|
|
Weighted average common shares outstanding - diluted |
|
30,391,244 |
|
|
29,276,716 |
|
|
||||||||
Consolidated Condensed Balance Sheets |
||||||||
|
|
|||||||
|
2024 |
|
|
2023 |
|
|||
ASSETS | ||||||||
Current Assets | ||||||||
Cash |
$ |
2,080,224 |
|
$ |
2,670,626 |
|
||
Accounts receivable |
|
2,355,947 |
|
|
2,670,361 |
|
||
Prepaid expenses |
|
323,214 |
|
|
335,152 |
|
||
Inventories |
|
2,695,666 |
|
|
2,706,491 |
|
||
Other current assets |
|
433,090 |
|
|
373,587 |
|
||
Total current assets |
|
7,888,141 |
|
|
8,756,217 |
|
||
Property, plant and equipment, net |
|
11,037,332 |
|
|
11,242,251 |
|
||
Right of use assets (net of amortization) |
|
395,453 |
|
|
451,094 |
|
||
Deferred tax asset |
|
6,407,195 |
|
|
6,387,240 |
|
||
Other noncurrent assets |
|
199,816 |
|
|
199,816 |
|
||
Total assets |
$ |
25,927,937 |
|
$ |
27,036,618 |
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable |
$ |
1,775,936 |
|
$ |
1,547,619 |
|
||
Accrued expenses |
|
1,300,744 |
|
|
870,060 |
|
||
Accrued income tax |
|
651,081 |
|
|
626,455 |
|
||
Current portion of operating lease liability |
|
55,019 |
|
|
54,034 |
|
||
Current portion of long-term financial obligation |
|
86,685 |
|
|
83,648 |
|
||
Current portion of long-term debt, net of discounts |
|
543,771 |
|
|
635,273 |
|
||
Total current liabilities |
|
4,413,236 |
|
|
3,817,089 |
|
||
Operating lease liability, less current portion |
|
278,751 |
|
|
325,480 |
|
||
Long-term financial obligation, less current portion |
|
3,930,595 |
|
|
3,954,373 |
|
||
Long-term debt, less current portion, net of discounts |
|
1,557,351 |
|
|
1,609,868 |
|
||
Deferred income |
|
675,000 |
|
|
675,000 |
|
||
Total liabilities |
|
10,854,933 |
|
|
10,381,810 |
|
||
Shareholders’ equity | ||||||||
Common stock (30,391,240 and 28,235,001) |
|
30,391 |
|
|
30,391 |
|
||
Additional paid-in-capital |
|
45,315,307 |
|
|
45,074,723 |
|
||
Accumulated deficit |
|
(30,272,694 |
) |
|
(28,450,306 |
) |
||
Total shareholders’ equity |
|
15,073,004 |
|
|
16,654,808 |
|
||
Total liabilities and shareholders’ equity |
$ |
25,927,937 |
|
$ |
27,036,618 |
|
|
|||||||||
Consolidated Statements of Cash Flows |
|||||||||
(unaudited) |
|||||||||
Three Months Ended |
|||||||||
|
2024 |
|
|
2023 |
|
||||
Cash Flows from Operating Activities | |||||||||
Net (loss) income |
$ |
(1,822,388 |
) |
|
1,513,219 |
|
|||
Adjustments to reconcile net income to net cash provided by | |||||||||
operating activities: | |||||||||
Depreciation and amortization expense |
|
351,215 |
|
|
326,014 |
|
|||
Amortization of right-of-use assets |
|
55,641 |
|
|
51,257 |
|
|||
Share-based compensation expense |
|
240,584 |
|
|
227,148 |
|
|||
Deferred tax asset |
|
(19,955 |
) |
|
- |
|
|||
Loss on disposition of rental fleet |
|
2,806 |
|
|
- |
|
|||
Loss on sale or dispositon of assets |
|
3,013 |
|
|
- |
|
|||
Amortization of deferred loan cost |
|
4,519 |
|
|
3,087 |
|
|||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable |
|
314,414 |
|
|
(718,533 |
) |
|||
Inventories |
|
10,825 |
|
|
(167,601 |
) |
|||
Prepaid expenses and other current assets |
|
(47,565 |
) |
|
(1,954 |
) |
|||
Accounts payable, accrued expenses, and other liabilities |
|
578,315 |
|
|
(262,804 |
) |
|||
Income Tax expense |
|
24,626 |
|
|
75,547 |
|
|||
Net cash (used in) provided by operating activities |
$ |
(303,950 |
) |
$ |
1,045,380 |
|
|||
Cash Flows From Investing Activities | |||||||||
Purchases of property, plant and equipment |
|
(122,483 |
) |
|
(1,567,524 |
) |
|||
Proceeds on sale of assets |
|
5,310 |
|
|
- |
|
|||
Proceeds from recovery of related party note receivable |
|
- |
|
|
350,262 |
|
|||
Net cash used in investing activities |
$ |
(117,173 |
) |
$ |
(1,217,262 |
) |
|||
Cash Flows from Financing Activities | |||||||||
Principal payments on debt |
|
(241,985 |
) |
|
(213,905 |
) |
|||
Proceeds received from debt borrowings |
|
72,706 |
|
|
- |
|
|||
Payments on revolving loan |
|
- |
|
|
(472,089 |
) |
|||
Proceeds received from revolving loan |
|
- |
|
|
655,754 |
|
|||
Net cash used in financing activities |
$ |
(169,279 |
) |
$ |
(30,240 |
) |
|||
Net decrease in cash |
|
(590,403 |
) |
|
(202,122 |
) |
|||
Cash at beginning of period |
|
2,670,626 |
|
|
2,158,025 |
|
|||
Cash at end of period |
$ |
2,080,223 |
|
$ |
1,955,903 |
|
|
|||||||||||
Adjusted EBITDA Reconciliation |
|||||||||||
Three Months Ended | |||||||||||
|
|
|
|||||||||
GAAP net income |
$ |
(1,822,388 |
) |
$ |
5,585,820 |
|
$ |
1,513,219 |
|
||
Add back: | |||||||||||
Depreciation and amortization |
|
351,215 |
|
|
344,322 |
|
|
326,014 |
|
||
Interest expense, net |
|
173,317 |
|
|
183,984 |
|
|
137,193 |
|
||
Share-based compensation |
|
240,584 |
|
|
237,373 |
|
|
227,148 |
|
||
Net non-cash compensation |
|
88,200 |
|
|
88,200 |
|
|
88,200 |
|
||
Income tax expense (benefit) |
|
54,422 |
|
|
(6,312,108 |
) |
|
77,612 |
|
||
Recovery of Related Party Note Receivable |
|
- |
|
|
198,894 |
|
|
(350,262 |
) |
||
Employee Severance Cost |
|
- |
|
|
42,294 |
|
|
- |
|
||
Acquistion expense |
|
1,748,277 |
|
|
- |
|
|
- |
|
||
Loss on disposition of assets |
|
5,819 |
|
|
70,663 |
|
|
- |
|
||
Non-GAAP adjusted EBITDA¹ |
$ |
839,446 |
|
$ |
439,442 |
|
$ |
2,019,124 |
|
||
GAAP Revenue |
$ |
4,946,216 |
|
$ |
4,272,784 |
|
$ |
6,281,214 |
|
||
Non-GAAP Adjusted EBITDA Margin |
|
17.0 |
% |
|
10.3 |
% |
|
32.1 |
% |
||
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/20240514270979/en/
For more information, contact investor relations:
716-843-3908 / 716-843-3832
dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com
Source: