Superior Energy Services (SPN)
Q1 2011 Earnings Call
April 28, 2011 11:00 am ET
Greg Rosenstein - Vice President of Investor Relations, Secretary and Member of Administrative Committee
Rob Taylor - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Treasurer and Member of Administrative Committee
David Dunlap - Chief Executive Officer, President and Director
Chris Enright - Weeden & Co., LP
Daniel Burke - Johnson Rice & Company, L.L.C.
Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc.
William Sanchez - Howard Weil Incorporated
James Rollyson - Raymond James & Associates, Inc.
John Daniel - Simmons & Company International
William Conroy - Pritchard Capital Partners, LLC
James West - Barclays Capital
Previous Statements by SPN
» Superior Energy Services' CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Superior Energy Services CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Superior Energy Services, Inc. Q2 2010 Earnings Call Transcript
Alright, good morning, and thank you for joining today's conference call. Joining me today are Superior's CEO, David Dunlap; and CFO, Robert Taylor. Let me remind everyone that during this call, management will make forward-looking statements regarding future expectations about the company’s business, management’s plans for future operations or similar matters.
The company’s actual results could differ materially due to several important factors, including those described in the company’s filings with the Securities and Exchange Commission. Also during the call, management will refer to EBITDA which is a non-GAAP financial measure and in accordance with Regulation G, the company provides a reconciliation between net income and EBITDA on its website.
With that, I'll now turn the call over to David Dunlap.
Thank you, Greg, and good morning, to everyone. Thanks for joining us today. Last night, we reported revenue of $414 million, EBITDA of $93.3 million and a net income of $15.5 million or $0.19 per diluted share for our first quarter results. The quarter evolved as we expected and as we previously discussed on our last earnings call, there was slightly better performance in the U.S. land market than what we originally projected. As expected, the Gulf of Mexico activity had a significant decline from the fourth quarter, with revenue down 18%. We did see an increase in accommodation rental in the Gulf but drill pipe rentals were lower. We also experienced a decline in completion, production and end-of-life project work due to seasonality and a lack of permitting during the quarter, pretty much exactly as we expected.
International revenue declined 18% primarily due to lower utilization for vessels, performing at subsea inspection, repair and maintenance work. We did experience a slight uptick in international revenue for our Drilling Products and Services due to growth in Brazil, West Africa, Asia and the Middle East. Activity in the domestic land markets continues to grow. Although our revenue grew 5%, some of our larger core product lines like coiled tubing and downhole drilling tools witnessed a revenue increase of 12% as compared with the 2% increase in the drilling rig count.
We adjusted our guidance lower to reflect the $500 million senior note offering that Robert will discuss shortly. So the new earnings per share range is $1.62 to $2.02. From an operational standpoint, we are maintaining the same outlook and guidance that we provided in our last call as the same factors and drivers apply. We believe the fourth quarter of 2010, excluding the special charges, will be a good baseline for the second quarter of this year with the additional growth potential coming from new assets that are currently being deployed.
Our capital spending plans for 2011 are on track. We successfully placed 2 additional coiled tubing units in the field today and expect 5 additional coiled tubing units to be delivered before the end of the second quarter. We are encouraged by the pace of deepwater drilling permits. Our customers have contacted us for downhole drilling tools on most of the permitted projects, so we are hopeful that these permits will result in new drilling activity very soon.
Shallow water market is beginning to improve as it always does this time of year. This should mean increased demand for intervention and end-of-life services in liftboats. We are in the process of starting 2 international decommissioning projects, one involving P&A work in Indonesia that I spoke to you about last quarter and the other performing platform removal work in the Red Sea.
Finally, we expect higher utilization for our subsea operating vessels in Southeast Asia and other parts of the eastern hemisphere as the number of projects we're bidding on has increased since first quarter. Robert will walk you through some of the financials in more detail and then we'll take your questions.
With that, I'd like to turn the call over to Robert Taylor.
Thank you, Dave. As we go through each segment, I'll make comparisons to the fourth quarter of 2010. In the Subsea and Well Enhancement segment, revenue was $262 million and income was up from operations with $11 million, which represents sequential decrease of 15% and 54%, respectively. Gulf of Mexico revenue was down 22% to $84 million, with Marine Engineering and Product Management services incurring the largest reduction due to a slowdown in shallow water activity.
International revenue was $62 million, down 27% primarily due to reduced demand for vessels performing subsea inspection, and repair and maintenance work. We also experienced a decline in separate control work [ph]. Domestic land revenue increased 3% to $116 million, highlighted by a 10% increase in coiled tubing which was partially offset by a lower demand for pressure control services.