DWSN Dawson Geophysical Company

MIDLAND, Texas, July 31 /PRNewswire-FirstCall/ -- Dawson Geophysical Company (NASDAQ:DWSN) today reported revenues of $84,568,000 for the quarter ending June 30, 2008, the Company's third fiscal quarter of 2008, compared to $68,637,000 for the same quarter in fiscal 2007, an increase of 23 percent. Revenue growth in the quarter was primarily the result of the addition of a new seismic data acquisition crew in September 2007, the replacement of an I/O MRX recording system with an ARAM ARIES recording system on an existing crew in April 2008, the redeployment of the I/O MRX recording system on a new crew in May 2008, increased channel count, and productivity on existing crews. Net income for the third quarter of fiscal 2008 was $9,707,000, compared to $7,561,000 in the same quarter of fiscal 2007, an increase of 28 percent. Earnings per share for the third quarter of fiscal 2008 were $1.27 per share, compared to $0.99 per share in the same quarter of fiscal 2007. EBITDA for the third quarter of fiscal 2008 was $22,397,000 compared to $17,700,000 in the same quarter of fiscal 2007, an increase of 26.5 percent. Included in the third quarter results is a 35 percent increase in depreciation charges from the prior year period reflecting the Company's continued capital investment and growth. The Company's third quarter results reflect continued brisk domestic exploration activities by the Company's clients, particularly those clients seeking natural gas reserves. Revenues in the third quarter of fiscal 2008 continued to include high third-party charges related to the use of helicopter support services, specialized survey technologies, and dynamite energy sources. The sustained level of these charges is driven by the Company's continued operations in areas with limited access in the Appalachian Basin, Arkansas, Val Verde Basin of Texas, and in Eastern Oklahoma. The Company is reimbursed for these expenses by its clients. Stephen Jumper, President and CEO of Dawson Geophysical Company said, "Increased demand for higher subsurface resolution and lower finding and development costs by our clients fueled record third quarter and nine months results. This success further led to the fielding of an additional crew, our sixteenth, in May 2008 by redeploying an existing I/O MRX recording system. This crew has a smaller channel count and is initially committed to large scale 2D and smaller 3D seismic projects in the Appalachian Basin." During the quarter, the Company took delivery of seven ION vibrator energy source units ordered in the second quarter. The Company now operates in excess of 115,000 channels and 143 vibrator energy source units. Nine Months Results For the nine months ended June 30, 2008, revenues were $240,530,000, compared to $182,226,000 for the same period in 2007, an increase of 32 percent. Net income for the first nine months of fiscal 2008 increased 40 percent to $25,703,000, compared to $18,364,000 for the first nine months of fiscal 2007. Earnings per share for the first nine months of fiscal 2008 were $3.35 as compared to $2.42 for the first nine months of fiscal 2007, an increase of 38 percent. EBITDA was $59,595,000 in the first nine months of fiscal 2008 versus $43,329,000 during the same period of fiscal 2007, an increase of 37.5 percent. Demand for the Company's services continues at a high level. Although the Company's clients may cancel their service contracts on short notice, the Company's order book remains strong, reflecting commitments to operate at full capacity on all crews through the end of calendar 2008 and on a number of crews well into calendar 2009. Operations are currently active on projects in West Texas, South Texas, East Texas, the Barnett Shale of the Ft. Worth Basin, the Fayetteville Shale in Arkansas, the Rocky Mountains, New Mexico, Oklahoma, Louisiana, California, and the Appalachian Basin. Mr. Jumper said, "Our strong performance and continued ability to deliver value for our clients is a reflection of the strength of our people, the depth of our geophysical resources, and our success in helping clients understand the geological complexities of their E&P assets. Our clients' desire for higher resolution subsurface images with improved efficiency and channel count growth will continue to drive our earnings and revenues as they did in the third fiscal quarter and nine month period." About Dawson Geophysical Company Dawson Geophysical Company is the leading provider of U.S. onshore seismic data acquisition services as measured by the number of active data acquisition crews. Founded in 1952, Dawson acquires and processes 2D, 3D, 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. Forward Looking Statement This press release contains information about the Company's EBITDA, a non-GAAP financial measure. The Company defines EBITDA as net income plus interest expense, 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, 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, dependence upon energy industry spending, the volatility of oil and gas prices, high fixed cost of operations, weather interruptions, the ability to obtain land access rights of way, industry competition, the ability to manage growth, and the availability of capital resources. 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, 2007. 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 STATEMENTS OF OPERATIONS Three Months Ended June 30, Nine Months Ended June 30, 2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating revenues $84,568,000 $68,637,000 $240,530,000 $182,226,000 Operating costs: Operating expenses 60,457,000 49,825,000 176,111,000 135,157,000 General and administrative 1,649,000 1,532,000 5,192,000 4,585,000 Depreciation 6,317,000 4,685,000 17,722,000 12,853,000 68,423,000 56,042,000 199,025,000 152,595,000 Income from operations 16,145,000 12,595,000 41,505,000 29,631,000 Other income (expense): Interest income 76,000 190,000 410,000 616,000 Interest expense (116,000) - (316,000) - Other (141,000) 230,000 (42,000) 229,000 Income before income tax 15,964,000 13,015,000 41,557,000 30,476,000 Income tax expense: Current (4,981,000) (4,502,000) (13,631,000) (9,567,000) Deferred (1,276,000) (952,000) (2,223,000) (2,545,000) (6,257,000) (5,454,000) (15,854,000) (12,112,000) Net income $9,707,000 $7,561,000 $25,703,000 $18,364,000 Net income per common share $1.27 $0.99 $3.35 $2.42 Net income per common share- assuming dilution $1.26 $0.98 $3.33 $2.40 Weighted average equivalent common shares outstanding 7,668,651 7,622,755 7,665,253 7,589,022 Weighted average equivalent common shares outstanding- assuming dilution 7,733,076 7,695,371 7,727,205 7,660,053 DAWSON GEOPHYSICAL COMPANY BALANCE SHEETS June 30, September 30, 2008 2007 (Unaudited) ASSETS Current assets: Cash and cash equivalents $12,834,000 $14,875,000 Accounts receivable, net of allowance for doubtful accounts of $216,000 and $176,000 in 2008 and 2007 respectively 74,784,000 56,707,000 Prepaid expenses and other assets 1,103,000 815,000 Current deferred tax asset 697,000 693,000 Total current assets 89,418,000 73,090,000 Property, plant and equipment 245,597,000 207,427,000 Less accumulated depreciation (96,806,000) (84,655,000) Net property, plant and equipment 148,791,000 122,772,000 $238,209,000 $195,862,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $14,807,000 $12,816,000 Accrued liabilities: Payroll costs and other taxes 1,612,000 2,325,000 Other 13,804,000 14,263,000 Deferred revenue 645,000 2,922,000 Line of credit 20,000,000 5,000,000 Total current liabilities 50,868,000 37,326,000 Deferred tax liability 11,609,000 9,381,000 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, 7,764,494 and 7,658,494 shares issued and outstanding in each period 2,588,000 2,553,000 Additional paid-in capital 86,137,000 85,090,000 Retained earnings 87,007,000 61,512,000 Total stockholders' equity 175,732,000 149,155,000 $238,209,000 $195,862,000 Reconciliation of EBITDA to Net Income Three Months Ended Nine Months Ended June 30, June 30, 2008 2007 2008 2007 Net Income $9,707,000 $7,561,000 $25,703,000 $18,364,000 Depreciation 6,317,000 4,685,000 17,722,000 12,853,000 Interest expense 116,000 - 316,000 - Income tax expense 6,257,000 5,454,000 15,854,000 12,112,000 EBITDA $22,397,000 $17,700,000 $59,595,000 $43,329,000 Reconciliation of EBITDA to Net Cash Provided by Operating Activities Nine Months Ended June 30, 2008 2007 Net cash provided by operating activities $30,605,000 $30,502,000 Changes in working capital items and other 29,818,000 12,718,000 Non-cash adjustments to income (828,000) 109,000 EBITDA $59,595,000 $43,329,000 DATASOURCE: Dawson Geophysical Company CONTACT: L. Decker Dawson, Chairman, Stephen C. Jumper, CEO and President, or Christina W. Hagan, Chief Financial Officer, all of Dawson Geophysical Company, 1-800-332-9766 Web site: http://www.dawson3d.com/

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