Superior Drilling Products, Inc. Addresses COVID-19 Impact on Business and Provides Preliminary First Quarter 2020 Revenue
April 09 2020 - 6:30AM
Business Wire
Preliminary first quarter 2020 revenue expected
to be approximately $5 million, similar to prior year first quarter
and driven by expansion in Middle East
Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or
the “Company”), an innovator and manufacturer of drilling tool
technologies, announced today actions the Company has taken to
address the recent changes in the oil & gas industry resulting
from a combination of the reduction in the price of oil and the
decline in demand for oil due to COVID-19. The Company also
provided preliminary revenue and cash for the first quarter 2020,
which ended March 31, 2020.
Troy Meier, Chairman and Chief Executive Officer, commented,
“First quarter preliminary revenue of approximately $5 million
clearly demonstrated that the Drill-N-Ream® (“DNR”), our flagship
wellbore conditioning tool, is making excellent progress in the
Middle East and continues to command recognition in the U.S.
However, the dramatic turn of events in March, that has created an
unprecedented situation globally for the oil and gas industry, has
driven us to take aggressive actions to reduce our cost structure
and preserve cash.”
Actions implemented to address COVID-19 and reduce
costs:
- Executive officers base salaries and directors’ fees reduced by
20%
- Other management team and salaried workforce salaries reduced
by 5% to 10%
- Workforce reduced by 20%
- Further investment in new technology, including the Strider™
oscillation system, deferred
Chris Cashion, Chief Financial Officer, commented, “Our first
quarter was strong and we ended it with approximately $2.6 million
in cash, up from $1.2 million at the end of 2019. However, we are
assuming that the U.S. rig count will continue to drop, oil
production in the Middle East will decline and the recent pricing
pressure on our products and services will be sustained. The cost
reduction actions we have taken has reduced our cash breakeven to
approximately $1.1 million in revenue per month. In addition, we
are addressing our balance sheet. We have applied for two loans
made available through federally funded programs. We have also
initiated conversation with the holder of the Hard Rock note
regarding delaying into the future the principal payments due in
July and October this year. We believe our efforts, plus a second
level of potential actions if needed, will ensure we have
sufficient liquidity.”
Mr. Meier concluded, “COVID-19 has measurably reduced demand for
oil globally and the severity of the situation is magnified by
higher levels of international production creating a growing
surplus of supply. Our team has reacted quickly to this rapidly
evolving environment and we believe we are positioned to weather
this storm as we have many others in the past.”
Webcast and Conference Call
The Company currently plans to report first quarter results
before the market opens on Thursday, May 7, 2020. SDP also plans to
host a conference call and live webcast that day at 10:00 am MT
(12:00 pm ET) to review the financial and operating results for the
quarter. A slide presentation will be made available prior to the
conference call on SDP’s website at www.sdpi.com/events. The
conference call can be accessed by calling (201) 689-8470.
Alternatively, the webcast can be monitored at
www.sdpi.com/events.
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® well bore 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 limitation, the continued impact
of COVID-19 on the Company’s business and results of operations,
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 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200409005215/en/
For more information, contact investor relations: Deborah
K. Pawlowski Kei Advisors LLC (716) 843-3908
dpawlowski@keiadvisors.com
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