- International preliminary revenue in the quarter grew nearly
50% over the prior-year period to approximately $0.4 million
reflecting success of strategy to diversify geographically
- Sequentially, International revenue estimated to increase
29% demonstrating further market penetration in depressed market
conditions
- Total revenue was approximately $1.5 million for the third
quarter and $8.9 million for the nine-month period
- International revenue more than doubled for the nine-month
period to $1.5 million as flagship well bore conditioning tool, the
Drill-N-Ream® gains market share during depressed industry
conditions
- Drill-N-Ream operated in 5 countries outside the U.S. and
Canada
- Instituted Phase III of cost savings to achieve cash break
even at year end
Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or
the “Company”), a designer and manufacturer of drilling tool
technologies, today reported preliminary revenue for the third
quarter and nine-month period ended September 30, 2020.
The Company expects revenue for the third quarter to be
approximately $1.5 million comprised of $1.1 million of revenue
from North America and $0.4 million from international markets.
Compared with the prior-year period, International revenue was up
50% and grew 29% compared with the trailing first quarter as demand
for the Company’s flagship well bore conditioning tool, the
Drill-N-Ream® (“DNR”), continued to grow even as markets contracted
due to the impact of the COVID-19 global pandemic on demand for oil
and on the ability for producers to maintain operations.
For the nine-month period, the Company expects revenue to be
approximately $8.9 million comprised of $7.4 million of revenue
from North America and $1.5 million from international markets.
International revenue more than doubled from the prior-year period
as the Company’s strategy to diversify geographically continued to
gain traction even in depressed market conditions resulting from
the global pandemic.
Troy Meier, Chairman and CEO, noted, “We believe that our
year-over-year and sequential growth in international revenue
clearly validates the traction our Drill-N-Ream® well bore
conditioning tool is gaining in the Middle East and beyond, even
given heavily restricted work conditions related to containing the
COVID-19 virus that reduced rig counts and measurably slowed
drilling activity. Throughout this slowdown, we continue to deploy
the DNR in more countries. The tool has now been deployed in
successful wells in the Ukraine and in Oman. As we have previously
noted, we expect the September quarter to be the trough and are
encouraged with the improvement in drill rig activity in North
America and around the world over the last few months.”
According to Baker Hughes, the drill rig count has increased to
287 rigs in the U.S. since the low point of 244 rigs operating on
August 14, 2020. Even as the international rig count declined from
747 at the end of August to 702 at the end of September,
International revenue improved further demonstrating market
penetration.
Phase III of Cost Saving Initiatives
The Company has reduced its monthly cash burn rate to
approximately $700 thousand through further payroll reductions
beginning October 23, 2020. This is an additional $200 thousand
monthly reduction in costs from its previously reported cash
requirements. The Company expects that at this rate and given
expected improvements in monthly revenue it will enter 2021 at a
cash breakeven operating level.
Chris Cashion, Chief Financial Officer, noted, “We are carefully
managing costs as we keep our eye on the future. The value the DNR
provides oil and natural gas producers is clearly validated with
the improvement we are seeing in international revenue. While we
expect the North American market to improve from its lows, we
believe that our growth in 2021 will come from the success we are
having developing long-term relationships with very large operators
and oil field service providers around the world.”
Webcast and Conference Call
The Company will host a conference call and live webcast on
Friday, November 6 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, November 13, 2020.
The archived call is available at (412) 317-6671 with conference ID
number 13710951, 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® 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 limitations, preliminary 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 International markets, 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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029006228/en/
For more information, contact investor relations: Deborah
K. Pawlowski, Kei Advisors LLC (716) 843-3908,
dpawlowski@keiadvisors.com
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