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Dawson Geophysical Reports Third Quarter 2020 Results

MIDLAND, Texas, Oct. 29, 2020 /PRNewswire/ -- Dawson Geophysical Company (NASDAQ: DWSN) (the "Company") today reported unaudited financial results for its third quarter ended September 30, 2020.

For the quarter ended September 30, 2020, the Company reported revenues of $8,738,000, a decrease of approximately 76 percent compared to $36,976,000 for the quarter ended September 30, 2019. For the third quarter of 2020, the Company reported a net loss of $7,840,000 or $0.33 loss per common share compared to net income of $1,998,000 or $0.09 income per common share for the third quarter of 2019. The Company reported negative EBITDA of $3,796,000 for the quarter ended September 30, 2020 compared to positive EBITDA of $7,160,000 for the quarter ended September 30, 2019.

For the nine months ended September 30, 2020, the Company reported revenues of $77,216,000, a decrease of approximately 31 percent compared to $112,216,000 for the nine months ended September 30, 2019. For the nine months ended September 30, 2020, the Company reported a net loss of $5,347,000 or $0.23 loss per common share compared to a net loss of $9,385,000 or $0.41 loss per common share for the nine months ended September 30, 2019. The Company reported EBITDA of $7,834,000 for the nine months ended September 30, 2020 compared to $7,049,000 for the nine months ended September 30, 2019.

During the third quarter of 2020, the Company operated one data acquisition crew with periods of low utilization. The one crew was inactive for the latter part of the third quarter and into the fourth quarter. Based on currently available information, the Company anticipates operating one crew with periods of low utilization for the foreseeable future in the United States ("U.S.") and up to two crews in Canada for the winter season in the late fourth quarter of 2020 and first quarter of 2021. 

Capital expenditures for the third quarter and first nine months of 2020 were $58,000 and $2,761,000, respectively, primarily for maintenance capital items. The Company's balance sheet remains strong with $45,422,000 of cash and cash equivalents and $54,797,000 of working capital as of September 30, 2020. The Company is nearly debt-free, having notes payable and finance leases totaling $266,000 as of September 30, 2020.

Stephen C. Jumper, President and Chief Executive Officer, said, "Reduced demand for oil and gas resulting primarily from the worldwide COVID–19 induced economic shutdown negatively impacted our third quarter operations. Project uncertainties remain high and have led to a substantial reduction in demand for our services going forward. Many of the companies we serve have significantly reduced their capital spending plans for the remainder of 2020 and into 2021. Requests for proposals for seismic services continue to come in slowly in both the U.S. and Canada, as well as worldwide. While oil prices remain in the $40 price per barrel range with a strong likelihood of remaining there through the remainder of 2020, several energy analysts are forecasting meaningful improvements in both oil and natural gas prices in 2021. Despite current challenges, the oil service industry is beginning to experience slight improvements in some areas that include an increase in the number of active rigs and hydraulic fracturing crews deployed in the U.S. In addition, there has been a recent surge in merger and acquisition activity within the oil and gas Exploration and Production sector, of which the impact upon oil service activity is yet to be determined. This recent activity indicates E&P companies will continue their focus on shareholder returns and disciplined capital spending as they seek to develop and produce with increased efficiency by drilling more robust locations. As in the most recent down cycles, we anticipate recovery in seismic data acquisition to somewhat lag behind increases in drilling and completion activities."

Jumper continued, "In response to these difficult conditions, we are maintaining our focus on cost saving measures while balancing the ability to respond rapidly when market conditions improve. As reported in our previous press releases this year, we have taken steps to outsource several ancillary services. These steps, including permitting and surveying, have resulted in reduced salary costs and lower general and administrative expenses. Moreover, and as also reported in our second quarter 2020 earnings press release, the Company anticipates approximately $4.3 million in annual costs savings as a result of previously enacted cost saving measures."

Jumper concluded, "The current downturn in the oil and gas industry is one of the most difficult periods I have experienced in my 35 years in the industry. Reduced commodity prices triggered by the COVID-19 pandemic and an oversupplied oil market continue to weigh on our operations and will likely remain so through the end of the year and into 2021. That said, we are well situated to withstand the current downturn as our cost cutting measures, strong balance sheet and investment in state-of-the art equipment in years past has positioned us for a strong recovery once the market turns. We continue to believe as E&P companies focus on returns as opposed to growth, the use of high resolution seismic data should play an important role in achieving that goal. As noted in our previous press releases, I want to thank all of our hard-working employees and our valued clients and shareholders during these challenging times."

Conference Call Information

Dawson Geophysical Company will host a conference call to review its third quarter 2020 financial results on October 29, 2020 at 9 a.m. CT. Participants can access the call at 1-800-239-9838 (US) and 1-323-794-2551 (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 November 29, 2020 by dialing 1-844-512-2921 (Toll-Free) and 1-412-317-6671 (Toll/International). The passcode is 7730230. The webcast will be recorded and available for replay on Dawson's website until November 29, 2020.

About Dawson

Dawson Geophysical Company is a leading provider of North American onshore seismic data acquisition services with operations throughout the continental U.S. 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 preliminary and unaudited results as determined by generally accepted accounting principles ("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, and 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 GAAP, and EBITDA is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. 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 GAAP. 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, and depreciation and amortization. A reconciliation of the Company's EBITDA to its net (loss) income 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; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of our customers, particularly during extended periods of low prices for crude oil and natural gas; the volatility of oil and natural gas prices; changes in economic conditions; the severity and duration of the COVID-19 pandemic, related economic repercussions and the resulting negative impact on demand for oil and gas; the current significant surplus in the supply of oil and the ability of OPEC+ to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; 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 challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees and remote work arrangements; 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 day rate 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 U.S. Securities and Exchange Commission (the "SEC") on March 6, 2020 and any subsequent Quarterly Reports on Form 10-Q filed with the SEC. 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) INCOME 

(unaudited and amounts in thousands, except share and per share data)














Three Months Ended September 30,


Nine Months Ended September 30,


2020


2019


2020


2019













Operating revenues

$

8,738


$

36,976


$

77,216


$

112,216

Operating costs:












   Operating expenses


9,441



26,030



58,189



92,210

   General and administrative


3,270



3,797



11,205



13,390

   Depreciation and amortization


4,125



5,238



13,412



16,644



16,836



35,065



82,806



122,244













(Loss) income from operations


(8,098)



1,911



(5,590)



(10,028)













Other income (expense):












   Interest income


106



152



326



445

   Interest expense


(10)



(101)



(80)



(381)

   Other income (expense), net


177



11



12



433

(Loss) income before income tax


(7,825)



1,973



(5,332)



(9,531)













Income tax (expense) benefit


(15)



25



(15)



146













Net (loss) income 


(7,840)



1,998



(5,347)



(9,385)













Other comprehensive income (loss):












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


374



(103)



(221)



280













Comprehensive (loss) income 

$

(7,466)


$

1,895


$

(5,568)


$

(9,105)













Basic (loss) income per share of common stock

$

(0.33)


$

0.09


$

(0.23)


$

(0.41)













Diluted (loss) income per share of common stock

$

(0.33)


$

0.09


$

(0.23)


$

(0.41)













Weighted average equivalent common shares outstanding


23,423,437



23,222,045



23,350,204



23,152,776













Weighted average equivalent common shares outstanding - assuming dilution


23,423,437



23,337,903



23,350,204



23,152,776

 

DAWSON GEOPHYSICAL COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)








 September 30, 


 December 31, 


2020


2019


(unaudited)




Assets






Current assets:






   Cash and cash equivalents

$

45,422


$

26,271

   Restricted cash


5,000



5,000

   Short-term investments


583



2,350

   Accounts receivable, net


4,987



24,356

   Current maturities of notes receivable


1,434



66

   Prepaid expenses and other current assets


3,499



7,575

      Total current assets


60,925



65,618







Property and equipment, net


42,449



53,549

Right-of-use assets


5,736



6,605

Notes receivable, net of current maturities




1,394

Intangibles, net


375



385

Long-term deferred tax assets, net




57







      Total assets

$

109,485


$

127,608







Liabilities and Stockholders' Equity






Current liabilities:






   Accounts payable

$

908


$

3,952

   Accrued liabilities:






      Payroll costs and other taxes


1,230



1,963

      Other


2,304



3,599

   Deferred revenue


374



3,481

   Current maturities of notes payable and finance leases


215



4,062

   Current maturities of operating lease liabilities


1,097



1,200

      Total current liabilities


6,128



18,257







Long-term liabilities:






   Notes payable and finance leases, net of current maturities


51



96

   Operating lease liabilities, net of current maturities


5,157



5,940

   Deferred tax liabilities, net


22



   Other accrued liabilities




150

      Total long-term liabilities


5,230



6,186







Operating commitments and contingencies










Stockholders' equity:






   Preferred stock-par value $1.00 per share; 4,000,000 shares authorized,






         none outstanding




   Common stock-par value $0.01 per share; 35,000,000 shares authorized, 23,526,517






         and 23,335,855 shares issued, and 23,478,072 and 23,287,410 shares outstanding 






         at September 30, 2020 and December 31, 2019, respectively


235



233

   Additional paid-in capital


154,763



154,235

   Retained deficit 


(55,078)



(49,731)

   Treasury stock, at cost; 48,445 shares




   Accumulated other comprehensive loss, net


(1,793)



(1,572)

      Total stockholders' equity


98,127



103,165







      Total liabilities and stockholders' equity

$

109,485


$

127,608







 

Reconciliation of EBITDA to Net (Loss) Income 












(amounts in thousands)













Three Months Ended September 30,


Nine Months Ended September 30,


2020


2019


2020


2019











Net (loss) income 

$

(7,840)


$

1,998


$

(5,347)


$

(9,385)

Depreciation and amortization


4,125



5,238



13,412



16,644

Interest (income) expense, net


(96)



(51)



(246)



(64)

Income tax expense (benefit)


15



(25)



15



(146)

EBITDA

$

(3,796)


$

7,160


$

7,834


$

7,049





































Reconciliation of EBITDA to Net Cash Provided by (Used in) Operating Activities












(amounts in thousands)













Three Months Ended September 30,


Nine Months Ended September 30,


2020


2019


2020


2019











Net cash provided by (used in) operating activities

$

15,472


$

(10,872)


$

24,448


$

1,197

Changes in working capital and other items


(18,831)



18,612



(15,098)



7,706

Noncash adjustments to net (loss) income


(437)



(580)



(1,516)



(1,854)

EBITDA

$

(3,796)


$

7,160


$

7,834


$

7,049













 

Cision View original content:http://www.prnewswire.com/news-releases/dawson-geophysical-reports-third-quarter-2020-results-301162447.html

SOURCE Dawson Geophysical Company

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