UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
Current
Report
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE
OF REPORT (DATE OF EARLIEST EVENT REPORTED):
May
14, 2024
SUPERIOR
DRILLING PRODUCTS, INC.
(Exact
name of registrant as specified in its charter)
Utah
|
|
46-4341605
|
(State
of Incorporation) |
|
(I.R.S.
Employer Identification No.) |
|
|
|
1583
South 1700 East |
|
|
Vernal,
Utah |
|
84078 |
(Address
of principal executive offices) |
|
(Zip
code) |
Commission
File Number: 001-36453
Registrant’s
telephone number, including area code: (435)
789-0594
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☒ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
Registered Pursuant to Section 12(b) of the Exchange Act:
Title
of each class: |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered: |
Common
Stock, $0.001 par value |
|
SDPI |
|
NYSE
American |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
2.02. Results of Operations and Financial Condition.
On
May 14, 2024, Superior Drilling Products, Inc. issued a press release announcing its financial results for the quarter ended March 31,
2024. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
In
accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 2.02 and in the attached Exhibit 99.1 shall
be deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended.
Item
9.01 Financial Statements and Exhibits.
*Furnished
herewith.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date:
May 14, 2024 |
SUPERIOR
DRILLING PRODUCTS, INC. |
|
|
|
/s/
Christopher D. Cashion |
|
Christopher
D. Cashion |
|
Chief
Financial Officer |
Exhibit
99.1
|
NEWS
RELEASE |
1583
S. 1700 E. ● Vernal, UT 84078 ● (435)789-0594
|
FOR
IMMEDIATE RELEASE
Superior
Drilling Products Reports First Quarter 2024 Results
VERNAL,
UT – May 14, 2024 — Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or the “Company”),
a designer and manufacturer of drilling tool technologies, today reported financial results for the first quarter ended March 31, 2024.
On March 7, 2024, Drilling Tools International Corp. (“DTI”) (Nasdaq: DTI) and SDP jointly announced they have entered into
a definitive agreement under which DTI agreed to acquire SDP for total consideration of approximately $32.2 million. The closing of the
transaction is expected to occur in the third quarter of 2024.
First
Quarter 2024 Revenue Review (See at “Definitions” the composition of product/service revenue categories.)
($ in thousands) | |
March 31, 2024 | | |
December 31, 2023 | | |
March 31, 2023 | | |
Change Sequential | | |
Change Year/Year | |
North America | |
$ | 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 U.S. rig count. The
average U.S. rig count of 623 in the first quarter of 2024 was down 138 rigs, or 18%, from the prior-year period.
The
Company’s North America revenue related to tool sales were up sequentially, largely given the timing of orders from DTI, the Company’s
North American distributor.
International
revenue growth was 10% sequentially, demonstrating the successful advancements of the Company’s operations in the Middle East (ME),
and the increasing rig counts in the ME region.
For
the first quarter of 2024, North America revenue comprised approximately 86% of total revenue, with remaining sales all within the ME.
Superior
Drilling Products Reports First Quarter 2024 Results May
14, 2024 Page
2 of 8 | |
First
Quarter 2024 Operating Results
($ in thousands, except per share amounts) | |
March 31, 2024 | | |
December 31, 2023 | | |
March 31, 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 $1.7 million of acquisition related expenses. These
pertained to legal and professional fees in support of the agreement and plan of merger with DTI. Net income for the 2023 fourth quarter
included the release of $6.4 million of deferred tax asset valuation allowance.
Balance
Sheet and Liquidity
For
the three months ended March 31, 2024, net cash used in operating activities was $304 thousand compared with $1.0 million of cash generated
from operations in the first quarter of 2023. Cash at quarter-end was $2.1 million.
Capital
expenditures of $122 thousand in the first quarter of 2024 were largely for equipment for the Company’s ME service and technology
center.
Total
debt at quarter-end was $2.1 million.
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
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 leading
oil field service companies. 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.
Superior
Drilling Products Reports First Quarter 2024 Results May
14, 2024 Page
3 of 8 | |
Additional
Information for Superior Drilling Products, Inc. Shareholders and Where to Find It
This
press release relates to a proposed acquisition of Superior Drilling Products, Inc. (“SDP”) by Drilling Tools International
Corporation (“DTI”). In connection with the transaction, DTI filed a registration statement on Form S-4 on May 10, 2024,
which includes a document that serves as a prospectus of DTI and a proxy statement of SDP (the “joint proxy statement/prospectus”),
and each party will file other relevant documents regarding the transaction with the Securities and Exchange Commission (the “SEC”).
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY, INCLUDING THE SCHEDULE 13E-3, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A definitive joint proxy statement/prospectus will be sent to shareholders of SDP. Investors and security holders will be able to obtain
free copies of the registration statement and the joint proxy statement/prospectus and other relevant documents filed with the SEC through
the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by DTI will be available free of
charge on the DTI website at www.drillingtools.com or by contacting DTI by email at InvestorRelations@drillingtools.com or by mail at
3710 Briarpark Drive, Suite 150, Houston, TX 77042. Copies of the documents filed with the SEC by SDP will be available free of charge
on the SDP website at https://sdpi.com or by contacting SDP by email at dpawlowski@keiadvisors.com or by mail at 1583 S. 1700 E., Vernal
UT 84078.
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 December 31, 2023, which was filed with
the SEC on March 28, 2024, and in other documents filed with the SEC by DTI and its executive officers and directors. Information about
the directors and executive officers of SDP is set forth in its Annual Report on Form 10-K for the year ended December 31, 2023, which
was filed with the SEC on March 15, 2024, and in other documents filed with the SEC by SDP and its executive officers and directors.
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 SEC
when they become available. Information concerning the interests of the participants in the solicitation, which may, in some cases, be
different than those of SDP’s shareholders generally, will be set forth in the joint prospectus/proxy statement relating to the
proposed transaction and the Schedule 13e-3 when they become available. Investors should read the proxy statement/prospectus and Schedule
13e-3 carefully before making any voting or investment decisions.
Superior
Drilling Products Reports First Quarter 2024 Results May
14, 2024 Page
4 of 8 | |
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 Middle East, 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; the duration of the COVID-19 pandemic and related impact on the oil and natural gas industry; general economic
conditions; the conditions to the completion of the proposed transaction, including obtaining Company shareholder approval and the regulatory
approvals required for the transaction on the anticipated schedule or at all, financing for the transaction may not be obtained by DTI
on favorable terms or at all, the closing of the proposed transaction may not occur or could be delayed, either as a result of litigation
related to the transaction or otherwise or result in significant costs of defense, indemnification, and liability, the risk that the
cost savings and any other synergies from the transaction may not be fully realized by DTI or may take longer or cost more to be realized
than expected, including that the transaction may not be accretive to DTI within the expected timeframe or the extent anticipated, completing
the transaction may distract DTI and Company management from other important matters, the possibility that any or all of the various
conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required
regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals),
the possibility that competing offers or acquisition proposals for the Company will be made, the occurrence of any event, change or other
circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including
in circumstances, which would require a party to pay a termination fee, the effect of the announcement or pendency of the proposed transaction
on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with
its customers, suppliers and other business counterparties, or its operating results and business generally, risks related to the proposed
transaction diverting management’s attention from the Company’s or DTI’s ongoing business operations, the amount of
costs, fees and expenses related to the proposed transaction, the risk that the Company’s or DTI’s stock price may decline
significantly if the proposed transaction is not consummated, the risk of shareholder litigation in connection with the proposed transaction,
including resulting expense or delay. These and other risks and uncertainties separately provided to you and indicated from time to time
described in filings and potential filings by the Company with the Securities and Exchange Commission 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.
For
more information, contact investor relations:
Deborah
K. Pawlowski / Craig P. Mychajluk
Kei Advisors LLC
716-843-3908 / 716-843-3832
dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com
Superior
Drilling Products Reports First Quarter 2024 Results May
14, 2024 Page
5 of 8 | |
FINANCIAL
TABLES FOLLOW
Superior
Drilling Products, Inc.
Consolidated
Condensed Statements of Operations
(unaudited)
| |
Three Months Ended March 31, | |
| |
2024 | | |
2023 | |
Revenue | |
| | | |
| | |
North America | |
$ | 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 | |
Superior
Drilling Products Reports First Quarter 2024 Results May
14, 2024 Page
6 of 8 | |
Superior
Drilling Products, Inc.
Consolidated
Condensed Balance Sheets
| |
March
31, 2024 | | |
December
31, 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 | |
Superior
Drilling Products Reports First Quarter 2024 Results May
14, 2024 Page
7 of 8 | |
Superior
Drilling Products, Inc.
Consolidated
Statements of Cash Flows
(unaudited)
| |
Three Months Ended March 31, | |
| |
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 | |
Superior
Drilling Products Reports First Quarter 2024 Results May
14, 2024 Page
8 of 8 | |
Superior
Drilling Products, Inc.
Adjusted
EBITDA Reconciliation
(unaudited)
| |
Three Months Ended | |
| |
March 31, 2024 | | |
December 31, 2023 | | |
March 31, 2023 | |
| |
| | |
| | |
| |
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.
###
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