Attached files
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| 8-K - CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES - DAWSON GEOPHYSICAL CO | a16-20928_18k.htm |
Exhibit 99.1
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NEWS RELEASE |
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Dawson Geophysical Company | |
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508 W. Wall, Suite 800 | |
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Midland, TX 79701 | |
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Company contact: | |
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Stephen C. Jumper, CEO and President | |
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James K. Brata, Chief Financial Officer | |
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(800) 332-9766 | |
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www.dawson3d.com |
DAWSON GEOPHYSICAL REPORTS
THIRD QUARTER 2016 RESULTS
MIDLAND, Texas, November 3, 2016/PR Newswire/Dawson Geophysical Company (NASDAQ: DWSN) (the “Company”) today reported unaudited financial results for its third quarter ended September 30, 2016.
For the quarter ended September 30, 2016, the Company reported revenues of $28,122,000 as compared to $62,498,000 for the quarter ended September 30, 2015. For the third quarter of 2016, the Company reported a net loss of $12,416,000 or $0.57 loss per share attributable to common stock, as compared to a net loss of $2,870,000 or $0.13 loss per share attributable to common stock for the third quarter of 2015. The Company reported negative EBITDA of $3,403,000 for the quarter ended September 30, 2016 compared to EBITDA of $7,806,000 for the quarter ended September 30, 2015.
During the third quarter of 2016, the Company operated four to five crews in the United States for most of the quarter. Utilization of several crews was unfavorably impacted by inclement weather conditions in several areas of operation late in the first quarter that continued into the early part of the second quarter, and again during the latter stages of the second quarter that continued into the beginning of the third quarter. In addition to inclement weather conditions, we experienced several client-directed delays over the last several months.
Stephen C. Jumper, President and Chief Executive Officer, said, “Demand for seismic data acquisition services in North America and worldwide continues to be soft in response to low and uncertain oil prices and reduced client expenditures. During the quarter ended September 30, 2016, oil prices averaged approximately $45 per barrel, starting the quarter at just over $49 per barrel, dropping to a quarterly low below $40 per barrel on August 2, and ending the quarter at just under $48 per barrel for West Texas Intermediate. While encouraging, it remains to be determined if the recent strengthening in oil prices can be sustained, and the price increases have yet to result in a meaningful increase in demand for our services. As we experienced uncertainty in oil and natural gas prices during our first two quarters of 2016, our client base continues to take a cautious approach to their capital spending. Based on currently available information, seismic service demand levels and the anticipated winter season in Canada, we believe we will operate five to seven crews through the first quarter of 2017. Visibility beyond the first quarter of 2017 remains unclear. In response to these factors, we will continue our on-going effort to control costs and maintain a strong balance sheet, our experienced personnel and our position as a leading onshore seismic data acquisition company in North America.”
Capital expenditures for the first nine months of 2016 were $6,198,000, primarily composed of replacement recording channels lost in the spring 2015 and 2016 floods in southeast Texas and Oklahoma. These expenditures were funded in part by insurance proceeds received related to those losses. The Company anticipates a capital budget for 2016 to be at maintenance levels below the $10 million approved by our board of directors. The Company’s balance sheet remains strong with $62,513,000 of cash and short term investments, $63,884,000 of working capital and $3,993,000 of debt and capital lease obligations as of September 30, 2016.
Jumper continued, “As mentioned during our second quarter call, 2016 will be a difficult year, and likely the most difficult in my thirty-plus years of experience with the Company and in the industry. That said, the price of oil is up over 70% from the decade low reached earlier this year on February 11. Although we have not seen a meaningful
increase in proposals as previously discussed, this positive development is very encouraging. The oil market appears to be slowly working through a rebalancing phase. We believe oil and gas companies will gradually start to put capital back to work, and seismic surveys should play an important role in helping these companies maximize their production economics. Our continuing commitment to maintain a strong balance sheet while operating the largest fleet of state-of-the-art land-based seismic equipment with the most experienced personnel in the industry uniquely positions Dawson Geophysical to successfully respond to the market as conditions improve.”
On February 11, 2015, legacy Dawson Geophysical Company and legacy TGC Industries, Inc. consummated their previously announced strategic business combination. The merger transaction was accounted for as a reverse acquisition with legacy Dawson Geophysical being deemed the accounting acquirer with the results of legacy TGC Industries, Inc. being reflected in the Company’s reported consolidated financial results only for periods from and after February 11, 2015. The merged companies adopted a calendar fiscal year ending December 31. Due to the foregoing, comparative financial results that include periods prior to February 11, 2015 are not comparable to financial results that include periods from and after February 11, 2015. Additional information regarding the business combination and its impact on the Company’s financial position are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the Securities and Exchange Commission on March 16, 2016 and includes the Company’s audited consolidated financial statements (i) as of and for the years ended December 31, 2015 and September 30, 2014, (ii) for the three months ended December 31, 2014 and (iii) for the year ended September 30, 2013.
Conference Call Information
Dawson Geophysical Company will host a conference call to review its third quarter 2016 financial results on November 3, 2016 at 9 a.m. CT. Participants can access the call at 1-888-397-5362 (US) and 1-719-325-2248 (Toll/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 December 4, 2016 by dialing 1-844-512-2921 (Toll-Free) and 1-412-317-6671 (Toll/International). The passcode is 7667218. The webcast will be recorded and available for replay on Dawson’s website until December 4, 2016.
About Dawson
Dawson Geophysical Company is a leading provider of North America onshore seismic data acquisition services with operations throughout the continental United States and Canada. 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
In an effort to provide investors with additional information regarding the Company’s unaudited results as determined by GAAP, the Company has included in this press release 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 (loss) 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 are 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 income (loss), 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 similar 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 loss is presented in the table following the text of this press release.
Forward-Looking Statements
In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, the 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. Such forward looking statements are based on the beliefs of management as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward looking statements as a result of certain factors. These risks include, but are not limited to, dependence upon energy industry spending; the volatility of oil and natural gas prices; changes in economic conditions; the potential for contract delays; reductions or cancellations of service contracts; limited number of customers; credit risk related to our customers; reduced utilization; high fixed costs of operations and high capital requirements; operational disruptions; industry competition; external factors affecting the Company’s crews such as weather interruptions and inability to obtain land access rights of way; whether the Company enters into turnkey or dayrate contracts; crew productivity; the availability of capital resources; and disruptions in the global economy. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on March 16, 2016. The 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
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Operating revenues |
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$ |
28,122,000 |
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$ |
62,498,000 |
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$ |
103,263,000 |
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$ |
179,555,000 |
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Operating costs: |
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Operating expenses |
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28,132,000 |
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50,195,000 |
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94,203,000 |
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158,385,000 |
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General and administrative |
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3,656,000 |
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4,999,000 |
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13,247,000 |
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18,142,000 |
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Depreciation and amortization |
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10,591,000 |
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11,966,000 |
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33,967,000 |
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35,569,000 |
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42,379,000 |
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67,160,000 |
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141,417,000 |
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212,096,000 |
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Loss from operations |
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(14,257,000 |
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(4,662,000 |
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(38,154,000 |
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(32,541,000 |
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Other income (expense): |
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Interest income |
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92,000 |
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35,000 |
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226,000 |
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84,000 |
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Interest expense |
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(71,000 |
) |
(155,000 |
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(239,000 |
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(492,000 |
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Other income |
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263,000 |
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502,000 |
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1,829,000 |
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515,000 |
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Loss before income tax |
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(13,973,000 |
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(4,280,000 |
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(36,338,000 |
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(32,434,000 |
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Income tax benefit |
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1,557,000 |
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1,410,000 |
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3,733,000 |
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11,095,000 |
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Net loss |
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$ |
(12,416,000 |
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$ |
(2,870,000 |
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$ |
(32,605,000 |
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$ |
(21,339,000 |
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Other comprehensive (loss) income: |
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Net unrealized (loss) income on foreign exchange rate translation, net |
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$ |
(48,000 |
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$ |
(890,000 |
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$ |
422,000 |
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$ |
(964,000 |
) |
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Comprehensive loss |
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$ |
(12,464,000 |
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$ |
(3,760,000 |
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$ |
(32,183,000 |
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$ |
(22,303,000 |
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Basic loss per share attributable to common stock |
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$ |
(0.57 |
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$ |
(0.13 |
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$ |
(1.51 |
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$ |
(1.05 |
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Diluted loss per share attributable to common stock |
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$ |
(0.57 |
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$ |
(0.13 |
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$ |
(1.51 |
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$ |
(1.05 |
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Weighted average equivalent common shares outstanding |
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21,622,349 |
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21,571,513 |
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21,603,065 |
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20,386,202 |
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Weighted average equivalent common shares outstanding -assuming dilution |
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21,622,349 |
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21,571,513 |
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21,603,065 |
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20,386,202 |
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DAWSON GEOPHYSICAL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
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September 30, |
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December 31, |
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2016 |
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2015 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
18,263,000 |
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$ |
37,009,000 |
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Short-term investments |
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44,250,000 |
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21,000,000 |
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Accounts receivable, net |
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12,772,000 |
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35,700,000 |
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Prepaid expenses and other assets |
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3,977,000 |
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6,150,000 |
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Total current assets |
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79,262,000 |
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99,859,000 |
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Property and equipment, net |
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117,821,000 |
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147,567,000 |
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Intangibles |
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499,000 |
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361,000 |
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Total assets |
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$ |
197,582,000 |
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$ |
247,787,000 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
3,981,000 |
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$ |
8,401,000 |
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Accrued liabilities: |
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Payroll costs and other taxes |
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1,928,000 |
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1,074,000 |
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Other |
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3,781,000 |
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4,604,000 |
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Deferred revenue |
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1,760,000 |
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6,146,000 |
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Current maturities of notes payable and obligations under capital leases |
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3,928,000 |
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8,585,000 |
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Total current liabilities |
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15,378,000 |
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28,810,000 |
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Long-term liabilities: |
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Notes payable and obligations under capital leases less current maturities |
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65,000 |
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2,106,000 |
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Deferred tax liabilities, net |
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1,971,000 |
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5,319,000 |
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Other accrued liabilities |
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1,992,000 |
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1,834,000 |
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Total long-term liabilities |
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4,028,000 |
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9,259,000 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding |
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— |
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— |
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Common stock-par value $0.01 per share; 35,000,000 shares authorized, 21,680,934 and 21,629,310 issued, and 21,632,489 and 21,580,865 shares outstanding at September 30, 2016 and December 31, 2015, respectively |
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217,000 |
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216,000 |
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Additional paid-in capital |
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142,909,000 |
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142,269,000 |
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Retained earnings |
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36,452,000 |
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69,057,000 |
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Treasury stock, at cost; 48,445 shares at September 30, 2016 and December 31, 2015 |
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— |
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— |
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Accumulated other comprehensive loss, net |
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(1,402,000 |
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(1,824,000 |
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Total stockholders’ equity |
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178,176,000 |
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209,718,000 |
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Total liabilities and stockholders’ equity |
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$ |
197,582,000 |
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$ |
247,787,000 |
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Reconciliation of EBITDA to Net loss
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
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(in thousands) |
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(in thousands) |
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Net loss |
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$ |
(12,416 |
) |
$ |
(2,870 |
) |
$ |
(32,605 |
) |
$ |
(21,339 |
) |
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Depreciation and amortization |
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10,591 |
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11,966 |
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33,967 |
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35,569 |
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Interest (income) expense, net |
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(21 |
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120 |
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13 |
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408 |
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Income tax benefit |
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(1,557 |
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(1,410 |
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(3,733 |
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(11,095 |
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EBITDA |
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$ |
(3,403 |
) |
$ |
7,806 |
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$ |
(2,358 |
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$ |
3,543 |
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Reconciliation of EBITDA to Net Cash (Used in) Provided by Operating Activities
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
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(in thousands) |
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(in thousands) |
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Net cash (used in) provided by operating activities |
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$ |
(1,798 |
) |
$ |
5,170 |
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$ |
14,426 |
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$ |
17,878 |
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Changes in working capital and other items |
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(1,367 |
) |
2,696 |
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(16,113 |
) |
(13,541 |
) | ||||
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Noncash adjustments to net loss |
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(238 |
) |
(60 |
) |
(671 |
) |
(794 |
) | ||||
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EBITDA |
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$ |
(3,403 |
) |
$ |
7,806 |
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$ |
(2,358 |
) |
$ |
3,543 |
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