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8-K - FORM 8-K - DAWSON OPERATING COd772307d8k.htm

Exhibit 99.1

NEWS RELEASE

Dawson Geophysical Company

508 W. Wall, Suite 800

Midland, TX 79701

 

 

LOGO

Company contact:

Stephen C. Jumper, CEO and President

Christina W. Hagan, Chief Financial Officer

(800) 332-9766

www.dawson3d.com

DAWSON GEOPHYSICAL REPORTS

FISCAL THIRD QUARTER 2014 RESULTS

MIDLAND, Texas, August 6, 2014/PR Newswire/Dawson Geophysical Company (NASDAQ: DWSN) today reported revenues of $54,166,000 for the quarter ended June 30, 2014, the Company’s third quarter of fiscal 2014, as compared to $75,647,000 for the same quarter of fiscal 2013. The Company reported net loss of $7,493,000 for the third quarter of fiscal 2014, or a loss of $0.94 per share attributable to common stock, as compared to a net income of $4,063,000, or $0.50 per share attributable to common stock, in the same quarter of fiscal 2013. EBITDA for the third quarter of fiscal 2014 was $1,466,000 compared to $15,975,000 for the same quarter of fiscal 2013.

The revenue decrease for the third quarter of fiscal 2014 compared to the third quarter of fiscal 2013 primarily resulted from the previously disclosed reduction in utilization of the Company’s data acquisition crews as the result of client driven delays, project readiness issues and to a lesser extent weather related issues late in the quarter. During the third quarter of fiscal 2014, the Company operated an average of eight to nine crews as compared to an average of thirteen crews during the third quarter of fiscal 2013. During the second quarter of fiscal 2014, the Company operated an average of twelve crews.

Fiscal 2013 third quarter results included additional revenues from two micro-seismic recording projects and early completion incentives that did not recur during the fiscal 2014 third quarter. Fiscal 2014 third quarter operating expenses were lower than fiscal 2013 third quarter operating expenses, but not in proportion to the reduction in revenue. This resulted from certain crew and project roll-off costs early in the 2014 quarter and the retention of twelve operational crews in anticipation of higher client utilization rates during the balance of calendar 2014.

Stephen Jumper, President, Chief Executive and Chairman, said, “We were disappointed with our quarterly results. Although client demand for our services remains relatively steady, we continued to experience client-driven delays on already awarded projects from April to mid-June which significantly impacted our utilization rates. These project related issues began to resolve themselves later in the quarter than originally anticipated resulting in our ability to operate ten to twelve crews in late June. Based on presently available information from our clients, we anticipate operating ten crews through the end of calendar 2014.”

Consistent with the Company’s previously announced quarterly dividend policy, on August 4, 2014 the Company’s Board of Directors approved the payment on August 29, 2014 of an $0.08 per share quarterly cash dividend to Company shareholders of record at the close of business on August 15, 2014 (the “record date”). The quarterly dividend represents an aggregate distribution of approximately $645,000 based on the outstanding number of shares of Common Stock as of the declaration date, or approximately $2,580,000 on an annualized basis.

Jumper concluded, “We have experienced a difficult environment during the previous four quarters driven primarily by unanticipated client delays, weather issues and project readiness issues related to land access permits or agricultural activity. We are working diligently to mitigate these challenges through on-going communications with our valued clients, who are providing greater insight and visibility into their future needs and timing for our seismic services, thus allowing us to more properly address their needs and right-size our crew count. Our order book remains steady as do indications of interest for possible future projects. We are committed to retaining sufficient levels of qualified Dawson personnel and our robust inventory of equipment to enable us to deploy crews and channel count to service anticipated client needs during the balance of calendar 2014 and beyond. Our balance sheet remains strong with approximately $68 million of working capital and $14 million of debt as of June 30, 2014, and we are pleased to continue our quarterly dividend program.”


Conference Call Information

Dawson will host a conference call to review its third fiscal quarter 2014 financial results on August 6, 2014, at 9 a.m. CDT. Participants can access the call at (877) 300-8521 (US), (855) 669-9657 (Canada), or (412) 317-6026 (International). To access the live audio webcast or the subsequent archived recording, visit the Dawson website at www.dawson3d.com. Callers can access the telephone replay through August 9, 2014 by dialing (877) 870-5176 (US) and (858) 384-5517 (International). The passcode is 10050018. The Webcast will be recorded and available for replay on Dawson’s website until September 5, 2014.

About Dawson

Dawson Geophysical Company is a leading provider of onshore seismic data acquisition services in the lower 48 states of the United States and Canada. Founded in 1952, Dawson acquires and processes 2-D, 3-D and multi-component seismic data solely for its clients, ranging from major oil and gas companies to independent oil and gas operators as well as providers of multi-client data libraries.

Non-GAAP Financial Measures

This press release contains information about the Company’s EBITDA, a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission. The Company defines EBITDA as net income plus interest expense, interest income, income taxes, depreciation and amortization expense. The Company uses EBITDA as a supplemental financial measure to assess:

 

    the financial performance of its assets without regard to financing methods, capital structures, taxes or historical cost basis;

 

    its liquidity and operating performance over time in relation to other companies that own similar assets and that the Company believes calculate EBITDA in a similar manner; and

 

    the ability of the Company’s assets to generate cash sufficient for the Company to pay potential interest costs.

The Company also understands that such data is used by investors to assess the Company’s performance. However, the term EBITDA is not defined under generally accepted accounting principles, and EBITDA is not a measure of operating income, operating performance or liquidity presented in accordance with generally accepted accounting principles. When assessing the Company’s operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net (loss) income, cash flow from operating activities or other cash flow data calculated in accordance with generally accepted accounting principles. In addition, the Company’s EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as the Company. Further, the results presented by EBITDA cannot be achieved without incurring the costs that the measure excludes: interest, taxes, depreciation and amortization. A reconciliation of the Company’s EBITDA to its net income is presented in the table following the text of this press release.

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Dawson Geophysical Company cautions that statements in this press release which are forward-looking and which provide other than historical information involve risks and uncertainties that may materially affect the Company’s actual results of operations. These risks include but are not limited to the volatility of oil and natural gas prices, dependence upon energy industry spending, disruptions in the global economy, industry competition, delays, reductions or cancellations of service contracts, high fixed costs of operations, external factors affecting our crews such as weather interruptions and inability to obtain land access rights of way, whether we enter into turnkey or term contracts, crew productivity, limited number of customers, credit risk related to our customers, the availability of capital resources and operational disruptions. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Form 10-K for the fiscal year ended September 30, 2013. Dawson Geophysical Company disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise.


DAWSON GEOPHYSICAL COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

 

     Three Months Ended June 30,     Nine Months Ended June 30,  
     2014     2013     2014     2013  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Operating revenues

   $ 54,166,000      $ 75,647,000      $ 199,113,000      $ 235,626,000   

Operating costs:

        

Operating expenses

     49,608,000        56,519,000        168,807,000        174,920,000   

General and administrative

     3,533,000        3,046,000        11,373,000        10,150,000   

Depreciation

     10,253,000        9,231,000        30,306,000        27,913,000   
  

 

 

   

 

 

   

 

 

   

 

 

 
     63,394,000        68,796,000        210,486,000        212,983,000   

(Loss) income from operations

     (9,228,000     6,851,000        (11,373,000     22,643,000   

Other income (expense):

        

Interest income

     16,000        14,000        54,000        49,000   

Interest expense

     (133,000     (159,000     (429,000     (524,000

Other income (expense)

     441,000        (107,000     49,000        71,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income tax

     (8,904,000     6,599,000        (11,699,000     22,239,000   

Income tax benefit (expense)

     1,411,000        (2,536,000     2,961,000        (8,969,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (7,493,000   $ 4,063,000      $ (8,738,000   $ 13,270,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive (loss) income:

        

Net unrealized income (loss) on foreign exchange rate translation, net of tax

   $ 42,000      $ —        $ (65,000   $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive (loss) income

   $ (7,451,000   $ 4,063,000      $ (8,803,000   $ 13,270,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic (loss) income per share attributable to common stock

   $ (0.94   $ 0.50      $ (1.10   $ 1.65   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) income per share attributable to common stock

   $ (0.94   $ 0.50      $ (1.10   $ 1.64   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividend declared per share of common stock

   $ 0.08      $ —        $ 0.16      $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average equivalent common shares outstanding

     7,960,510        7,873,698        7,958,687        7,861,425   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average equivalent common shares outstanding -assuming dilution

     7,960,510        7,922,556        7,958,687        7,900,126   
  

 

 

   

 

 

   

 

 

   

 

 

 


DAWSON GEOPHYSICAL COMPANY

CONSOLIDATED BALANCE SHEETS

 

     June 30,     September 30,  
     2014     2013  
     (Unaudited)        
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 25,177,000      $ 52,405,000   

Short-term investments

     26,750,000        23,500,000   

Accounts receivable, net of allowance for doubtful accounts of $250,000 at June 30, 2014 and September 30, 2013

     36,843,000        37,488,000   

Prepaid expenses and other assets

     3,153,000        737,000   

Current deferred tax asset

     2,273,000        1,664,000   
  

 

 

   

 

 

 

Total current assets

     94,196,000        115,794,000   

Property, plant and equipment

     350,517,000        325,464,000   

Less accumulated depreciation

     (175,609,000     (152,231,000
  

 

 

   

 

 

 

Net property, plant and equipment

     174,908,000        173,233,000   
  

 

 

   

 

 

 

Total assets

   $ 269,104,000      $ 289,027,000   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 9,386,000      $ 15,880,000   

Accrued liabilities:

    

Payroll costs and other taxes

     2,853,000        1,850,000   

Other

     3,311,000        6,154,000   

Deferred revenue

     3,213,000        3,438,000   

Current maturities of notes payable and obligations under capital leases

     7,656,000        9,258,000   
  

 

 

   

 

 

 

Total current liabilities

     26,419,000        36,580,000   

Long-term liabilities:

    

Notes payable and obligations under capital leases less current maturities

     6,007,000        3,697,000   

Deferred tax liability

     32,707,000        35,690,000   
  

 

 

   

 

 

 

Total long-term liabilities

     38,714,000        39,387,000   

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock-par value $1.00 per share; 5,000,000 shares authorized, none outstanding

     —          —     

Common stock-par value $.33 1/3 per share; 50,000,000 shares authorized, 8,064,233 and 8,056,943 shares issued and outstanding at June 30, 2014 and September 30, 2013, respectively

     2,688,000        2,686,000   

Additional paid-in capital

     95,848,000        94,846,000   

Retained earnings

     105,500,000        115,528,000   

Other comprehensive loss, net of tax

     (65,000     —     
  

 

 

   

 

 

 

Total stockholders’ equity

     203,971,000        213,060,000   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 269,104,000      $ 289,027,000   
  

 

 

   

 

 

 


Reconciliation of EBITDA to Net (Loss) Income                         
     Three Months Ended     Nine Months Ended  
     June 30,     June 30,  
     2014     2013     2014     2013  
     (in thousands)     (in thousands)  

Net (loss) income

   $ (7,493   $ 4,063      $ (8,738   $ 13,270   

Depreciation

     10,253        9,231        30,306        27,913   

Interest expense (income), net

     117        145        375        475   

Income tax (benefit) expense

     (1,411     2,536        (2,961     8,969   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 1,466      $ 15,975      $ 18,982      $ 50,627   
  

 

 

   

 

 

   

 

 

   

 

 

 
Reconciliation of EBITDA to Net Cash Provided by Operating Activities                         
     Three Months Ended     Nine Months Ended  
     June 30,     June 30,  
     2014     2013     2014     2013  
     (in thousands)     (in thousands)  

Net cash provided by operating activities

   $ 9,252      $ 37,180      $ 10,893      $ 49,593   

Changes in working capital and other items

     (7,563     (20,781     9,183        2,515   

Noncash adjustments to income

     (223     (424     (1,094     (1,481
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 1,466      $ 15,975      $ 18,982      $ 50,627