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Superior Energy Services (SPN)
Q4 2011 Earnings Call
February 24, 2012 11:00 am ET
Previous Statements by SPN
» Superior Energy Services, Inc. Presents at Citi's 8th Annual Small/Mid Cap Conference, Nov-16-2011 08:45 AM
» Superior Energy Services' CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Superior Energy Services' CEO Discusses Q2 2011 Results - Earnings Call Transcript
David D. Dunlap - Chief Executive Officer, President and Director
Robert Taylor -
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Good day, ladies and gentlemen, thank you for standing by. Welcome to the Superior Energy Services Fourth Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Friday, February 24, 2012. I would now like to turn the conference over to Mr. Greg Rosenstein. Please go ahead, sir.
Greg A. Rosenstein
All right. Good morning, and thank you for joining today's conference call. Joining me today are Superior's President and CEO, David Dunlap; and Chief Financial Officer, Robert Taylor.
Let me remind everyone that during this conference call, management may make forward-looking statements regarding future expectations about the company's business management 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.
During this 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 these items on our website.
And with that, I'll now turn the call over to David Dunlap.
David D. Dunlap
Thanks, Greg, and good morning to everyone. Last night, we reported record quarterly revenue of $580 million, EBITDA of $166 million and adjusted net income of $54.6 million or $0.67 per diluted share. Our results were in line with our guidance as we benefited from continued strength in the U.S. land and international markets.
The Gulf of Mexico experienced a seasonal reduction in shallow water activity for intervention and end-of-life services. Demand in the U.S. remained strong for undersupplied product lines such as intervention services and drilling products and services.
Our U.S. land revenue increased 9%, which tripled the 3% increase in the U.S. land rig count. Coiled tubing had a record quarter, thanks to continued high utilization of existing units and new units that we deployed during the second half of the year. International growth continued at a strong pace, with 12% sequential growth to a record $160 million. We experienced increased demand for subsea inspection, repair and maintenance services as well as snubbing services.
Growth rates during the quarter were highest in Asia Pacific and in the Middle East. The fourth quarter put a cap on a great year of international growth for the company, with revenue expanding 17% to $545 million.
Despite the typical seasonal slowdown in the shallow water Gulf, the deepwater market remained stable. That was evident by the fact that the revenue from the Drilling Products and Services segment in the Gulf increased 8%, thanks to the group's exposure to deepwater drilling.
From a margin perspective, our overall margin was down slightly, excluding the transaction-related expenses due to the impact of reduced Gulf of Mexico activity in the Subsea and Well Enhancement and Marine segments. These were partially offset by strong margins from activity in other geographic markets.
Let me discuss the sale of our Marine segment before turning the call over to Robert. Liftboats were a part of our core business when we focused solely on shallow water services in the Gulf of Mexico. Our growth strategy has expanded beyond our historic Gulf of Mexico roots, and capital has been directed to other products and services that fulfill our evolving geographic expansion and investment return profile. I want to thank the management and employees of the Marine division for their dedication to customer service and safety through the years.
Now Robert will walk you through some of the financial details, and I'll come back to discuss our guidance and outlook. With that, I'll turn the call over to Robert Taylor.
Thank you, Dave. As we go through each segment, I'll make comparisons to the third quarter of 2011. In the Subsea and Well Enhancement segment, revenue was $393 million, a sequential increase of 4%, and income from operations excluding transaction expenses was $54 million, a decline of 3%. In U.S. land, revenue in this segment increased 11% to $170 million. In this market area, we experienced higher demand across most of our intervention services with the largest increases coming from coiled tubing and wireline services and remedial pressure pumping services.
Coiled tubing revenue increased 20% over the third quarter. As you will recall, coiled tubing revenue increased 17% in the third quarter, so we saw a tremendous growth in the back half of the year after deploying 8 new units. We also had a nice increase in wireline services and pressure control services. Incremental margins in U.S. land increased in excess of 50%, significantly influenced by growth in our coiled tubing business.
International revenue was $130 million, which represents an increase of 18%. Most of the growth came from Hallin Marine, which had high activity levels in Australia and Indonesia during the fourth quarter. This business has been getting very good vessel utilization, and day rates are starting to increase from the first half of the year.