Attached files
| file | filename |
|---|---|
| EX-99.2 - Superior Drilling Products, Inc. | ex99-2.htm |
| 8-K - Superior Drilling Products, Inc. | form8-k.htm |
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NEWS RELEASE |
1583 S. 1700 E. ● Vernal, UT 84078 ● (435)789-0594
FOR IMMEDIATE RELEASE
Superior
Drilling Products, Inc. Reports 60% Growth in Revenue
for Fourth Quarter 2017
| ● | Fourth quarter revenue grew to $3.7 million while full-year 2017 revenue more than doubled over prior-year to $15.6 million | |
| ● | Tool Revenue was largest growth driver in the quarter and year, up 48% and 93%, respectively; Contract Services revenue nearly doubled in the quarter and tripled in the year | |
| ● | Generated $2.4 million in cash from 2017 operations |
VERNAL, UT, March 8, 2018 — Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or the “Company”), a designer and manufacturer of drilling tool technologies, today reported financial results for the fourth quarter and full year ended December 31, 2017.
Troy Meier, Chairman and CEO of Superior Drilling Products, noted, “We made excellent progress in 2017, growing significantly, generating cash and demonstrating the strength of our business model. We believe our flagship Drill-N-Ream® (DnR) wellbore conditioning tool is proving out its value proposition that it deserves to be on every well and we expect our StriderTM oscillation system technology will be another leading technology for the oil & gas drilling industry. We continue to focus on the development of new technologies, making improvements in our manufacturing processes and supply chain while building a strong, reliable team that can execute our strategy for growth.”
Fourth Quarter 2017 Financial Summary
| ($ in thousands,except per share amounts) | ||||||||||||||||||||||||||||
| Q4 2017 | Q4 2016 | $Y/Y Change | % Y/Y Change | Q3 2017 | $ Seq. Change | % Seq. Change | ||||||||||||||||||||||
| Tool sales/rental | $ | 1,434 | $ | 1,451 | $ | (17 | ) | (1.2 | )% | $ | 2,012 | $ | (578 | ) | (28.7 | )% | ||||||||||||
| Other related tool revenue | 1,224 | 342 | 882 | 257.9 | % | 1,171 | 53 | 4.5 | % | |||||||||||||||||||
| Tool Revenue | 2,658 | 1,794 | 864 | 48.2 | % | 3,183 | (525 | ) | (16.5 | )% | ||||||||||||||||||
| Contract Services | 1,072 | 539 | 533 | 98.9 | % | 1,264 | (192 | ) | (15.2 | )% | ||||||||||||||||||
| Total Revenue | $ | 3,730 | $ | 2,333 | $ | 1,397 | 59.9 | % | $ | 4,447 | $ | (717 | ) | (16.1 | )% | |||||||||||||
| Operating income (loss) | (670 | ) | (2,213 | ) | 1,543 | NM | 720 | (1,389 | ) | (193.1 | )% | |||||||||||||||||
| As a % of sales | NM | NM | 16.2 | % | ||||||||||||||||||||||||
| Net income (loss) | $ | (786 | ) | $ | (2,614 | ) | 1,829 | NM | $ | 586 | (1,372 | ) | (234.0 | )% | ||||||||||||||
| Diluted earnings (loss) per share | $ | (0.03 | ) | $ | (0.11 | ) | $ | 0.08 | NM | $ | 0.02 | $ | (0.05 | ) | (224.2 | )% | ||||||||||||
Revenue increased $1.4 million, or 60%, over the prior-year period to $3.7 million from growth in both Tool Revenue and Contract Services. Sequentially, revenue was down 16% which was in-line with expectations as exhausted customer annual budgets typically result in a slowing of activity into year-end.
Tool Revenue was $2.7 million in the quarter, an increase of $0.9 million, or 48% over the prior-year period. The growth was driven by a 258% increase to $1.2 million of Other related tool revenue, which is comprised of royalty, maintenance, and repair fees. The growth reflects the benefit of increased recurring revenue associated with the growing rental fleet deployed in the marketplace. Tool sales/rental were essentially unchanged in the fourth quarter of 2017, which was mostly the result of the initial rental fleet ramp-up process which was still underway by the channel partner in the fourth quarter of 2016.
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 2 of 10
Contract Services revenue was $1.1 million, which essentially doubled from the prior-year period and far outpaced the 57% year-over-year increase in average U.S. rig count in the quarter as the Company continues to support drill bit refurbishment beyond its contracted area and provide other contract manufacturing services.
Net loss was $786 thousand compared with net loss of $2.6 million in the fourth quarter of 2016. Included in net loss for the fourth quarter of 2017 was a $.6 million bonus expense in lieu of stock (see Operational Review). Included in the net loss for the fourth quarter of 2016 were pre-tax asset impairment charges of $1.1 million.
Adjusted EBITDA (see NOTE 1), or earnings before interest, taxes, depreciation and amortization, non-cash stock compensation expense and unusual items, grew to $791 thousand compared with $49 thousand in the prior-year period from the strength in revenue growth. Adjusted EBITDA declined from $1.8 million in the trailing third quarter on lower sequential volume from seasonality combined with year-end compensation items and spending associated with the Middle East expansion and increased engineering costs associated with the commercialization of Open Hole Strider.
NOTE 1: The Company believes that when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its operating performance. See the attached tables for important disclosures regarding SDP’s use of adjusted EBITDA, as well as a reconciliation of net income to adjusted EBITDA.
Fourth Quarter 2017 Operational Review
| ($ in thousands) | Q4 2017 | Q4 2016 | $ Y/Y Change | % Y/Y Change | Q3 2017 | $ Seq. Change | % Seq. Change | |||||||||||||||||||||
| Cost of revenue | $ | 1,571 | $ | 1,167 | $ | 405 | 34.7 | % | $ | 1,717 | (145 | ) | (8.5 | )% | ||||||||||||||
| As a percent of sales | 42.1 | % | 50.0 | % | 38.6 | % | ||||||||||||||||||||||
| Selling, general & administrative | $ | 1,897 | $ | 1,627 | $ | 270 | 16.6 | % | $ | 1,102 | 795 | 72.1 | % | |||||||||||||||
| As a percent of sales | 50.9 | % | 69.7 | % | 24.8 | % | ||||||||||||||||||||||
| Depreciation & amortization | $ | 931 | $ | 912 | $ | 19 | 2.1 | % | $ | 908 | 24 | 2.6 | % | |||||||||||||||
| Impairment of property, plant and equipment - held for sale | $ | - | $ | 840 | $ | (840 | ) | (100.0 | )% | $ | - | - | NM | |||||||||||||||
| Total operating expenses | $ | 4,400 | $ | 4,546 | $ | (146 | ) | (3.2 | )% | $ | 3,727 | $ | 673 | 18.1 | % | |||||||||||||
Cost of revenue as a percentage of sales decreased from 50.0% to 42.1%, primarily a result of higher volume, increased productivity, and improved mix as it relates to royalties and maintenance.
Selling, general and administrative expense (SG&A), which includes research and engineering, declined over the prior year period, but increased sequentially due to increases in engineering costs related to the StriderTM technology products, spending related to the Company’s expansion into the Middle East, and a $587,500 bonus expense in lieu of stock paid to the founders which would have otherwise vested over 3 years. The founders used the bonus to pay principle and interest on the Tronco note receivable which was reduced to $7.4 million at the end of 2017. The note receivable is currently over collateralized with 8,267,860 shares and 530,725 restricted stock units.
Operating loss was $669,800. On an adjusted basis (non-GAAP), the operating loss was $82,300 excluding consideration of the founders’ bonus expense.
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 3 of 10
Full Year 2017 Review
| ($ in thousands,except per share amounts) | 2017 | 2016 | $
Change | % Change | ||||||||||||
| Tool Revenue | $ | 10,597 | $ | 5,483 | 5,114 | 93.3 | % | |||||||||
| Contract Services | $ | 4,998 | $ | 1,670 | 3,328 | 199.3 | % | |||||||||
| Total Revenue | $ | 15,595 | $ | 7,153 | 8,442 | 118.0 | % | |||||||||
| Cost of revenue | 5,960 | 4,492 | 1,469 | 32.7 | % | |||||||||||
| As a % of sales | 38.2 | % | 62.8 | % | ||||||||||||
| Selling, general & administrative | 5,734 | 5,776 | (41 | ) | (0.7 | )% | ||||||||||
| As a % of sales | 36.8 | % | 80.7 | % | ||||||||||||
| Depreciation & amortization | 3,677 | 4,291 | (615 | ) | (14.3 | )% | ||||||||||
| Operating expenses | 15,371 | 14,559 | 812 | 5.6 | % | |||||||||||
| Impairment of property/goodwill | - | 840 | ||||||||||||||
| Total operating expenses | 15,371 | 15,399 | ||||||||||||||
| Operating income (loss) | 225 | (8,246 | ) | 8,471 | 102.7 | % | ||||||||||
| Net loss | $ | (279 | ) | (9,129 | ) | 8,850 | 96.9 | % | ||||||||
| Diluted loss per share | $ | (0.01 | ) | $ | (0.48 | ) | 0.47 | 97.9 | % | |||||||
Revenue for 2017 increased 118% over 2016 to $15.6 million, driven by market share growth and stronger market conditions with a 72% increase in the U.S. rig count. Tool revenue of $10.6 million increased 93%, or $5.1 million, from the prior-year period. Tool revenue was comprised of $6.7 million in tool sales/rental and $3.9 million in other related revenue. Contract Services revenue almost tripled to $5.0 million when compared with the prior-year period.
During the year, the Company continued to gain market share with its DnR tool, made significant strides in validating the performance of our StriderTM technology products, continued to strengthen relationships with important contract services customers, and entered a Middle East market development agreement with a well-established international partner.
Operating income for the year was $224,500. Excluding the founders’ bonus expense, operating income was $812,000, or 5.2% of sales. Net loss was $279,000, or $0.01 per diluted share in 2017.
Adjusted EBITDA (see NOTE 1) was $5.0 million, compared with an adjusted EBTIDA loss of $1.5 million in 2016, from higher revenue, improved mix, operational and efficiency improvements, and cost discipline. 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.
Balance Sheet and Liquidity
Cash generated by operations was $2.4 million in the year. At December 31, 2017, cash and equivalents was $2.4 million.
Total debt at the end of the year was $12.8 million, down $3.9 million, or 23%, compared with $16.7 million at December 31, 2016.
During the fourth quarter, the Company had capital expenditures of $90 thousand. For the year, capital expenditures were $936 thousand compared with $353 thousand in 2016.
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 4 of 10
Outlook and 2018 Guidance
Mr. Meier, added, “2018 is looking to be another exciting year for SDP as we expect another year of strong growth. We are in the process of evaluating the market share achievement of our DnR channel partner for the end of 2017, and are in conversations about our plans and expectations for 2018. We have a very strong partner and expect that they can meet or exceed the 17.5% market share requirement by the end of 2018. Although still in market development evaluation stages, we are really encouraged with the performance of the DnR in the Middle East and expect that to be another growth area in the latter half of 2018 and beyond. In addition, we have the StriderTM product line being requested and see this tool as another large future opportunity for SDP. Not losing sight of our legacy business, we are finalizing discussions with our drill bit refurbishment customer and anticipate that in the end we will be in a much better position while helping our customer succeed.”
Financial estimates for 2018 are expected to fall in the following ranges:
| Revenue: | $18 million to $22 million |
| Operating margin: | 5% to 10% |
| Interest Expense: | Approximately $750 thousand |
| Depreciation and Amortization: | Slightly under $4.0 million |
| Capital Expenditures: | Approximately $1 million |
Webcast and Conference Call
The Company will host a conference call and live webcast today at 9:00 am MT (11:00 am ET) to review the financial and operating results for the quarter and discuss its corporate strategy and outlook. The discussion will be accompanied by a slide presentation that will be made available immediately 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 on Superior Drilling Products’ website at www.sdpi.com/events.
A telephonic replay will be available from 12:00 p.m. MT (2:00 p.m. ET) the day of the teleconference until Thursday, March 15, 2018. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13676788, or access the webcast replay via the Company’s website 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 StriderTM 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.
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 5 of 10
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, regarding our strategy, future operations, financial position, estimated revenue and losses, projected costs, prospects, plans and objectives of management, 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. Certain statements in this release may constitute forward-looking statements, including statements regarding the Company’s financial position, market success with specialized tools, effectiveness of its sales efforts, success at developing future tools, and the Company’s effectiveness at executing its business strategy and plans. 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, our business strategy and prospects for growth; our cash flows and liquidity; our financial strategy, budget, projections and 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.
For more information, contact investor relations:
Deborah K. Pawlowski / Jeanne Ernst
Kei Advisors LLC
(716) 843-3908 / (716) 242-8635
dpawlowski@keiadvisors.com / jernst@keiadvisors.com
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 6 of 10
Superior Drilling Products, Inc.
Consolidated
Statements of Operations
(unaudited)
| For the Three Months Ended December 31, | For
the Year Ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 3,730,010 | $ | 2,332,658 | $ | 15,595,659 | $ | 7,153,063 | ||||||||
| Operating cost and expenses | ||||||||||||||||
| Cost of revenue | 1,571,367 | 1,166,699 | 5,960,223 | 4,491,670 | ||||||||||||
| Selling, general, and administrative expenses | 1,897,092 | 1,626,628 | 5,734,315 | 5,775,760 | ||||||||||||
| Depreciation and amortization expense | 931,368 | 912,035 | 3,676,598 | 4,291,249 | ||||||||||||
| Impairment of property, plant and equipment - held for sale | - | 840,380 | - | 840,380 | ||||||||||||
| Total operating costs and expenses | 4,399,827 | 4,545,742 | 15,371,136 | 15,399,059 | ||||||||||||
| Operating income (loss) | (669,817 | ) | (2,213,084 | ) | 224,523 | (8,245,996 | ) | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 91,601 | 78,579 | 346,926 | 313,547 | ||||||||||||
| Interest expense | (207,351 | ) | (511,804 | ) | (905,990 | ) | (1,613,214 | ) | ||||||||
| Other income | - | 49,976 | 43,669 | 237,203 | ||||||||||||
| Gain on sale of assets | - | (17,841 | ) | 12,167 | 177,611 | |||||||||||
| Total other expense | (115,750 | ) | (401,090 | ) | (503,228 | ) | (884,853 | ) | ||||||||
| Income (loss) before income taxes | $ | (785,567 | ) | $ | (2,614,174 | ) | $ | (278,705 | ) | $ | (9,130,849 | ) | ||||
| Income tax benefit | - | - | - | (2,000 | ) | |||||||||||
| Net income (loss) | $ | (785,567 | ) | $ | (2,614,174 | ) | $ | (278,705 | ) | $ | (9,128,849 | ) | ||||
| Basic income (loss) earnings per common share | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.48 | ) | ||||
| Basic weighted average common shares outstanding | 24,416,577 | 23,771,265 | 24,268,409 | 19,155,981 | ||||||||||||
| Diluted income (loss) per common Share | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.48 | ) | ||||
| Diluted weighted average common shares outstanding | 24,416,577 | 23,771,265 | 24,268,409 | 19,155,981 | ||||||||||||
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 7 of 10
Superior Drilling Products, Inc.
Consolidated
Balance Sheet
(unaudited)
| December 31, 2017 | December 31, 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 2,375,179 | $ | 2,241,902 | ||||
| Accounts receivable, net | 2,667,042 | 1,038,664 | ||||||
| Prepaid expenses | 111,530 | 76,175 | ||||||
| Inventories | 1,196,813 | 1,167,692 | ||||||
| Asset held for sale | - | 2,490,000 | ||||||
| Other current assets | - | 13,598 | ||||||
| Total current assets | 6,350,564 | 7,028,031 | ||||||
| Property, plant and equipment, net | 8,809,348 | 9,068,359 | ||||||
| Intangible assets, net | 6,132,778 | 8,579,444 | ||||||
| Related party note receivable | 7,367,212 | 8,296,717 | ||||||
| Other noncurrent assets | 15,954 | 15,954 | ||||||
| Total assets | $ | 28,675,856 | $ | 32,988,505 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,021,469 | $ | 1,066,514 | ||||
| Accrued expenses | 543,758 | 449,004 | ||||||
| Capital lease obligation | - | 217,302 | ||||||
| Related party debt obligation | - | 272,215 | ||||||
| Current portion of long-term debt, net of discounts | 6,101,678 | 2,905,682 | ||||||
| Total current liabilities | $ | 7,666,905 | $ | 4,910,717 | ||||
| Other long term liability | - | 820,657 | ||||||
| Long-term debt, less current portion, net of discounts | 6,706,375 | 13,288,701 | ||||||
| Total liabilities | $ | 14,373,280 | $ | 19,020,075 | ||||
| Stockholders’ equity | ||||||||
| Common stock (24,535,334 and 24,120,695) | 24,535 | 24,120 | ||||||
| Additional paid-in-capital | 38,907,864 | 38,295,428 | ||||||
| Accumulated deficit | (24,629,823 | ) | (24,351,118 | ) | ||||
| Total stockholders’ equity | $ | 14,302,576 | $ | 13,968,430 | ||||
| Total liabilities and shareholders’ equity | $ | 28,675,856 | $ | 32,988,505 | ||||
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 8 of 10
Superior Drilling Products, Inc.
Consolidated
Statements of Cash Flows
(unaudited)
| 2017 | 2016 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | (278,705 | ) | $ | (9,128,849 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization expense | 3,676,598 | 4,291,249 | ||||||
| Amortization of debt discount | 79,424 | 107,975 | ||||||
| Deferred tax benefit | - | (2,000 | ) | |||||
| Share - based compensation expense | 612,851 | 783,462 | ||||||
| Unrealized loss on warrant derivative | - | 112,024 | ||||||
| Impairment of property, plant and equipment | - | 1,054,482 | ||||||
| Impairment of inventories | - | 569,602 | ||||||
| Gain on sale of assets | (12,167 | ) | (177,611 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,628,378 | ) | 822,338 | |||||
| Inventories | (29,121 | ) | (115,444 | ) | ||||
| Prepaid expenses and other noncurrent assets | (21,757 | ) | 89,677 | |||||
| Other noncurrent assets | - | (60,866 | ) | |||||
| Accounts payable and accrued expenses | 13,990 | (218,375 | ) | |||||
| Other long-term liabilities | (53,355 | ) | (59,375 | ) | ||||
| Net Cash Provided By (Used In) Operating Activities | $ | 2,359,380 | $ | (1,931,711 | ) | |||
| Cash Flows From Investing Activities | ||||||||
| Purchases of property, plant and equipment | (936,118 | ) | (352,751 | ) | ||||
| Proceeds from sale of fixed assets | 2,483,921 | 517,385 | ||||||
| Net Cash Provided By Investing Activities | 1,547,803 | 164,634 | ||||||
| Cash Flows From Financing Activities | ||||||||
| Principal payments on debt | (3,482,311 | ) | (3,254,971 | ) | ||||
| Principal payments on capital lease obligations | (74,293 | ) | (360,971 | ) | ||||
| Principal payments on related party debt | (217,302 | ) | (268,835 | ) | ||||
| Proceeds received from borrowings on debt | - | 1,500,000 | ||||||
| Proceeds from line of credit | - | 226,885 | ||||||
| Proceeds from sale of subsidiary | - | 50,700 | ||||||
| Proceeds from payment on note receivable | - | 22,533 | ||||||
| Proceeds received from issuance of common stock, net | - | 5,027,082 | ||||||
| Debt issuance costs | - | (230,446 | ) | |||||
| Net Cash Provided By (Used In) Financing Activities | (3,773,906 | ) | 2,711,977 | |||||
| Net Increase (Decrease) in Cash | 133,277 | 944,900 | ||||||
| Cash at Beginning of Period | 2,241,902 | 1,297,002 | ||||||
| Cash at End of Period | $ | 2,375,179 | $ | 2,241,902 | ||||
| Supplemental information: | ||||||||
| Cash paid for interest | $ | 851,671 | $ | 1,563,280 | ||||
| Non-cash payment of other long-term liability by offsetting related party note receivable | $ | 1,267,711 | $ | 311,979 | ||||
| Acquisition of equipment by issuance of note payable | $ | 16,557 | $ | - | ||||
| Warrants issued for bridge financing debt | $ | - | $ | 112,024 | ||||
| Long-term debt paid with stock | $ | - | $ | 1,000,000 | ||||
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Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 9 of 10
Superior Drilling Products, Inc.
Adjusted
EBITDA(1) Reconciliation
(unaudited)
| Three Months Ended | ||||||||||||
| December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||
| GAAP net income (loss) | $ | (785,567 | ) | $ | 586,039 | $ | (2,614,174 | ) | ||||
| Add back: | ||||||||||||
| Depreciation and amortization | 931,368 | 907,837 | 912,035 | |||||||||
| Impairment of assets | - | - | 1,050,855 | |||||||||
| Interest expense, net | 115,750 | 133,551 | 433,225 | |||||||||
| Share-based compensation | 114,467 | 147,643 | 249,411 | |||||||||
| Non-Cash compensation | 414,497 | - | - | |||||||||
| (Gain) loss on sale of assets | - | - | 17,841 | |||||||||
| Income tax expense (benefit) | - | - | - | |||||||||
| Non-GAAP adjusted EBITDA(1) | $ | 790,515 | $ | 1,775,070 | $ | 49,193 | ||||||
| GAAP Revenue | $ | 3,730,010 | $ | 4,446,540 | $ | 2,332,658 | ||||||
| Non-GAAP EBITDA Margin | 21.2 | % | 39.9 | % | 2.1 | % | ||||||
| Year Ended | ||||||||
| 31-Dec-17 | 31-Dec-16 | |||||||
| GAAP net income (loss) | $ | (278,705 | ) | $ | (9,128,849 | ) | ||
| Add back: | ||||||||
| Depreciation and amortization | 3,676,598 | 4,291,249 | ||||||
| Share-based compensation | 612,851 | 783,462 | ||||||
| Non-cash compensation | 414,497 | - | ||||||
| Interest expense, net | 559,064 | 1,299,667 | ||||||
| Impairment of assets | - | 1,413,028 | ||||||
| (Gain) loss on sale of assets | (12,167 | ) | (177,611 | ) | ||||
| Unrealized gain on warrant derivative | - | (28,301 | ) | |||||
| Income tax expense (benefit) | - | (2,000 | ) | |||||
| Non-GAAP Adjusted EBITDA(1) | $ | 4,972,138 | $ | (1,549,355 | ) | |||
| GAAP Revenue | $ | 15,595,659 | $ | 7,153,063 | ||||
| Non-GAAP EBITDA Margin | 31.9 | % | NM | |||||
(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.
| -END - |
Superior
Drilling Products, Inc. Reports Fourth Quarter and Full-year 2017
March 8, 2018
Page 10 of 10
Superior Drilling Products, Inc.
Adjusted
Income from Operations(1) Reconciliation
(unaudited)
| Three Months Ended | ||||||||||||
| December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||
| Income (loss) from operations | $ | (669,817 | ) | $ | 719,590 | $ | (2,213,084 | ) | ||||
| Add back: | ||||||||||||
| Atypical bonus expense | 587,500 | - | - | |||||||||
| Impairment property, plant and equipment - held for sale | - | - | 840,380 | |||||||||
| Non-GAAP adjusted income from operations | $ | (82,317 | ) | $ | 719,590 | $ | (1,372,704 | ) | ||||
| GAAP Revenue | $ | 3,730,010 | $ | 4,446,540 | $ | 2,332,658 | ||||||
| Adjusted Operating Margin | -2.2 | % | 16.2 | % | -58.8 | % | ||||||
| Year Ended | ||||||||
| 31-Dec-17 | 31-Dec-16 | |||||||
| Income (loss) from operations | $ | 224,523 | $ | (8,245,996 | ) | |||
| Add back: | ||||||||
| Atypical bonus expense | 587,500 | - | ||||||
| Impairment property, plant and equipment - held for sale | - | 840,380 | ||||||
| Non-GAAP adjusted income from operations | $ | 812,023 | $ | (7,405,616 | ) | |||
| GAAP Revenue | $ | 15,595,659 | $ | 7,153,063 | ||||
| Adjusted Operating Margin | 5.2 | % | -103.5 | % | ||||
(1) Adjusted income from operations is defined as income from operations as reported, adjusted for certain items and to apply a normalized tax rate. Adjusted income from operations is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP and may not be comparable to the measures as used by other companies. Nevertheless, the Company believes that providing non-GAAP information, such as adjusted income from operations, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year’s income from operations to the historical periods’ income from operations, as well as facilitates a more meaningful comparison of the Company’s net income and diluted EPS to that of other companies.
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