MIDLAND, Texas, July 26, 2011 /PRNewswire/ -- Dawson Geophysical
Company (NASDAQ: DWSN) today reported revenues of $98,033,000 for the quarter ending June 30, 2011, the Company's third quarter of
fiscal 2011, compared to $61,178,000
for the same quarter in fiscal 2010, an increase of 60 percent. Net
income for the third quarter of fiscal 2011 was $334,000 compared to net loss of $1,019,000 in the same quarter of fiscal 2010.
Earnings per share for the third quarter of fiscal 2011 were
$0.04 compared to a loss per share of
$0.13 for the third quarter of fiscal
2010. EBITDA for the third quarter of fiscal 2011 was $8,821,000 compared to $5,591,000 in the same quarter of fiscal 2010, an
increase of 58 percent.
For the nine months ended June 30,
2011, the Company reported revenues of $249,023,000 compared to $146,093,000 for the nine months ended
June 30, 2010, an increase of 70
percent. Net loss for the period decreased to $6,190,000 in 2011 from $7,941,000 in 2010. Loss per share for the first
nine months of fiscal 2011 was $0.79
compared to a loss per share of $1.02
for the first nine months of fiscal 2010. EBITDA for the first nine
months of fiscal 2011 increased to $14,939,000 compared to $7,868,000 in the same period of fiscal 2010, an
increase of 90 percent.
Revenues in the third quarter and first nine months of fiscal
2011 increased significantly over the same periods of fiscal 2010
due to an increase in active crew count to fourteen working crews,
including the two formerly provisional crews added during the
second fiscal quarter, and significantly higher third-party
charges, which constituted one-half of the growth in revenues
during these periods. The third-party charges are related to the
Company's use of helicopter support services, specialized survey
technologies and dynamite energy sources in areas with limited
access such as the Appalachian Basin, Oklahoma, East
Texas and Arkansas. The
Company is reimbursed for these expenses by its clients. The
Company's fiscal third quarter and nine month results also included
approximately $1,465,000 and
$2,421,000, or $0.19 per share and $0.31 per share, respectively, of expenses
related to its previously announced merger with TGC Industries and
respective increases of $884,000 and
$2,579,000 of depreciation charges
related to the Company's continued investment in new recording
equipment and energy source units.
Stephen Jumper, President and CEO
of Dawson Geophysical Company, said, “We are pleased with our third
quarter results, particularly after our difficult second quarter.
Our EBITDA increased to $8,821,000
for the third quarter of fiscal 2011 from $1,219,000 in the second quarter of 2011.
Our third quarter net income of $334,000 represents a dramatic improvement from
the loss of $4,857,000 reported in
the second quarter. Our June 30, 2011
results show significant improvement on a year-over-year quarterly
comparison, year-over-year nine month comparison and on a
quarter-to-quarter basis.”
As previously reported, the Company purchased the 14,850
single-channel OYO GSR units it had initially leased in the second
fiscal quarter by exercising the purchase option under the lease.
The conversion of the equipment lease to a purchase resulted in an
increase of approximately $0.02 per
share per month of depreciation charges and a decrease of
approximately $0.06 per share per
month of lease expense as compared to March
2011, the month in which the equipment was initially leased.
The purchase of the equipment was financed through a new term loan
facility in the amount of $16,427,000. The Company still retains its
$20,000,000 revolving facility and no
amounts are currently drawn under that facility. The Company now
owns in excess of 161,000 channels, which can be configured
variably throughout the Company on a project-by-project basis to
best meet the operational and geophysical needs of its clients.
On March 20, 2011, the Company
entered into a definitive merger agreement with TGC Industries, in
which, subject to the terms and conditions set forth in the merger
agreement, the Company agreed to acquire TGC in a tax-free,
stock-for-stock transaction. Additional details of the proposed
transaction are outlined in a press release issued on March 21, 2011. A copy of such press release is
available on the Company's website and the SEC website.
The Company's order book has grown to its highest level since
late fiscal 2008 with added projects in the Eagle Ford, Bakken,
Niobrara and Avalon liquids and oil-rich shales. Activity remains
relatively high in the Marcellus, Barnett and Haynesville natural
gas shales while demand is increasing in many conventional oil
basins. Pricing and contract terms are showing continued
improvements as activity levels in the lower 48 states continue to
increase. The Company continues to operate on several projects
contracted in early 2010 with less favorable contract terms and
believes it will complete work on these projects during calendar
2011. Demand for the Company's services remains strong. Although
our clients may cancel their service contracts on short notice, our
order book reflects commitments sufficient to maintain full
operation of fourteen crews through the end of calendar 2011.
During the third fiscal quarter, the Company's Board of
Directors approved a $5,000,000
increase to the Company's capital budget and approved the purchase
of the previously leased OYO GSR equipment, bringing the total
amount of the fiscal 2011 capital budget to $61,918,000. To date, $56,264,000 of the capital budget has been spent
primarily to purchase a 2,000-station OYO GSR four-channel
recording system along with three-component geophones, 24,850
single-channel OYO GSR recording boxes, additional conventional
geophones, cables for existing systems, vehicles to improve our
fleet and ten INOVA vibrator energy source units. The remaining
balance of the capital budget will be used for maintenance capital
purposes.
Jumper continued, “Continued increases in exploration activity
by our clients throughout the lower 48 United States have fueled
our growth and improved results. We added two seismic data
acquisition crews during 2011, we increased short-term utilization
rates through improved efficiencies, and we expanded the average
channel count per crew. We have made great progress as an industry,
and in particular as a company, in terms of improved outlook,
performance and demand for land seismic data acquisition services
in the lower 48 United States. While we are pleased with our
results, we believe there is tremendous upside as we have not yet
met our expected potential in crew efficiencies and revenue
generation. We are excited about our pending merger with TGC which
provides the right combination of resources and equipment to best
serve our oil and natural gas clients, our employees and to enhance
the shareholder value of both Dawson and TGC.”
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 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.
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 (loss) 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 (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 income (loss) 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,
disruptions in the global economy, dependence upon energy industry
spending, cancellations of service contracts, high fixed costs of
operations, weather interruptions, inability to obtain land access
rights of way, industry competition, limited number of customers,
credit risk related to our customers, asset impairments, 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, 2010.
The Company is also subject to risks related to the proposed
transaction with TGC, including risks related to the possibility
that the transaction does not close. A discussion of risks and
uncertainties related to the proposed transaction will be set forth
in a registration statement, including the proxy statement
prospectus contained therein, that relates to the proposed
transaction and which will be filed by the Company with the
Securities and Exchange Commission. 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.
Important Information For Investors and Shareholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. The transactions contemplated by the merger
agreement between the Company and TGC, including the proposed
merger and the proposed issuance of Company common stock in the
merger, will, as applicable, be submitted to the shareholders of
the Company and TGC for their consideration. The Company filed with
the Securities and Exchange Commission ("SEC") a registration
statement on Form S-4 that included a joint proxy statement of the
Company and TGC that also constitutes a prospectus of the Company.
The Company and TGC will mail the joint proxy statement/prospectus
to their respective shareholders. The Company and TGC also plan to
file other documents with the SEC regarding the proposed
transaction. INVESTORS AND SECURITY HOLDERS OF THE COMPANY AND TGC
ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
shareholders may currently obtain free copies of the joint proxy
statement/prospectus filed on June 10,
2011 and amended on July 20,
2011, and will be able to obtain free copies of any further
amendments to the proxy statement/prospectus as well as other
documents containing important information about the Company and
TGC filed with the SEC, through the website maintained by the SEC
at www.sec.gov. The Company and TGC make available free of charge
at www.dawson3d.com and www.tgcseismic.com, respectively (in the
"Investor Relations" section), copies of materials they file with,
or furnish to, the SEC, or investors and shareholders may contact
the Company at (432) 684-3000 or TGC at (972) 881-1099 or c/o
Dennard Rupp Gray & Lascar, LLC,
at (713) 529-6600 to receive copies of documents that each company
files with or furnishes to the SEC.
Participants in the Proxy Solicitation
The Company, TGC, and certain of their respective directors and
officers may be deemed to be participants in the solicitation of
proxies from the shareholders of the Company and TGC in connection
with the proposed transactions. Information about the directors and
officers of the Company is set forth in its proxy statement for its
2011 annual meeting of shareholders, which was filed with the SEC
on December 7, 2010. Information
about the directors and officers of TGC is set forth in its
Amendment No. 1 to Annual Report on Form 10-K/A, which was filed
with the SEC on April 15, 2011. These
documents can be obtained free of charge from the sources indicated
above. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
Company contact:
Stephen C. Jumper, CEO and
President
Christina W. Hagan, Chief Financial
Officer
(800) 332-9766
www.dawson3d.com
DAWSON
GEOPHYSICAL COMPANY
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STATEMENTS
OF OPERATIONS
|
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Three Months
Ended June 30,
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Nine Months
Ended June 30,
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2011
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2010
|
|
2011
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|
2010
|
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(Unaudited)
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|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
98,033,000
|
|
$
61,178,000
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|
$
249,023,000
|
|
$
146,093,000
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|
Operating costs:
|
|
|
|
|
|
|
|
|
Operating
expenses
|
85,431,000
|
|
54,098,000
|
|
225,324,000
|
|
133,245,000
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|
General and
administrative
|
3,804,000
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|
1,635,000
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|
9,396,000
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|
5,281,000
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|
Depreciation
|
7,900,000
|
|
7,016,000
|
|
22,767,000
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|
20,188,000
|
|
|
97,135,000
|
|
62,749,000
|
|
257,487,000
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|
158,714,000
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|
|
|
|
|
|
|
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|
Income (loss) from
operations
|
898,000
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|
(1,571,000)
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|
(8,464,000)
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|
(12,621,000)
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Other income:
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|
Interest
income
|
2,000
|
|
20,000
|
|
33,000
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|
78,000
|
|
Other income
|
21,000
|
|
126,000
|
|
603,000
|
|
223,000
|
|
Income (loss) before income
tax
|
921,000
|
|
(1,425,000)
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|
(7,828,000)
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|
(12,320,000)
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Income tax (expense)
benefit
|
(587,000)
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|
406,000
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|
1,638,000
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4,379,000
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Net income (loss)
|
$
334,000
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|
$
(1,019,000)
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|
$
(6,190,000)
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|
$
(7,941,000)
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Basic income (loss) per common
share
|
$
0.04
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|
$
(0.13)
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$
(0.79)
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$
(1.02)
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Diluted income (loss) per common
share
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$
0.04
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$
(0.13)
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$
(0.79)
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$
(1.02)
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Weighted average equivalent
common shares outstanding
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7,812,519
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7,779,256
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7,801,396
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7,776,740
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Weighted average equivalent
common
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shares
outstanding-assuming dilution
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7,925,181
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7,779,256
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7,801,396
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7,776,740
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|
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DAWSON
GEOPHYSICAL COMPANY
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BALANCE
SHEETS
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June
30,
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September
30,
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2011
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2010
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash
equivalents
|
$
12,004,000
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$
29,675,000
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Short-term
investments
|
-
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20,012,000
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Accounts receivable, net
of allowance for
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doubtful
accounts of $155,000 and $639,000 at
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June 30,
2011 and September 30, 2010, respectively
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84,451,000
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57,726,000
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Prepaid expenses and
other assets
|
11,936,000
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7,856,000
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Current deferred tax
asset
|
1,545,000
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1,764,000
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Total current assets
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109,936,000
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117,033,000
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Property, plant and
equipment
|
300,649,000
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248,943,000
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Less accumulated
depreciation
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(149,274,000)
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(130,900,000)
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Net
property, plant and equipment
|
151,375,000
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118,043,000
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Total assets
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$ 261,311,000
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$ 235,076,000
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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Current
liabilities:
|
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Accounts
payable
|
$
23,078,000
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$
14,274,000
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Accrued
liabilities:
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Payroll
costs and other taxes
|
2,940,000
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3,625,000
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Other
|
8,400,000
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7,963,000
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Deferred
revenue
|
5,031,000
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204,000
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Current maturities
of notes payable
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5,264,000
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-
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Total current liabilities
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44,713,000
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26,066,000
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Long-term
liabilities:
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Notes payable less
current maturities
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11,163,000
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-
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Deferred tax
liability
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20,444,000
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18,785,000
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Total long-term liabilities
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31,607,000
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18,785,000
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Stockholders'
equity:
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Preferred stock-par value
$1.00 per share;
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5,000,000
shares authorized, none outstanding
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-
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-
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Common stock-par value
$.33 1/3 per share;
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50,000,000
shares authorized, 7,910,885
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and
7,902,106 shares issued and outstanding at
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June 30,
2011 and September 30, 2010, respectively
|
2,637,000
|
|
2,634,000
|
|
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Additional paid-in
capital
|
91,363,000
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|
90,406,000
|
|
|
Other comprehensive
income, net of tax
|
-
|
|
4,000
|
|
|
Retained
earnings
|
90,991,000
|
|
97,181,000
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
184,991,000
|
|
190,225,000
|
|
|
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|
|
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Total liabilities and stockholders' equity
|
$ 261,311,000
|
|
$ 235,076,000
|
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|
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDA to Net
Income (Loss)
|
|
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|
|
|
|
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|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
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June
30,
|
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June
30,
|
|
|
2011
|
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2010
|
|
2011
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2010
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(in
thousands)
|
|
(in
thousands)
|
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Net income (loss)
|
$
334
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|
$
(1,019)
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|
$
(6,190)
|
|
$
(7,941)
|
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Depreciation
|
7,900
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|
7,016
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|
22,767
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|
20,188
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|
Income tax expense
(benefit)
|
587
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|
(406)
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(1,638)
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|
(4,379)
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EBITDA
|
$
8,821
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|
$
5,591
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$
14,939
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$
7,868
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|
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|
|
|
|
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|
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|
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Reconciliation of EBITDA to Net
Cash Provided by Operating Activities
|
|
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|
|
|
|
|
|
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Nine Months
Ended
|
|
|
|
|
June
30,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
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(in
thousands)
|
|
Net cash (used) provided by
operating activities
|
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|
$
(469)
|
|
$
1,472
|
|
Changes in working capital items
and other
|
|
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|
|
17,043
|
|
7,748
|
|
Noncash adjustments to
income
|
|
|
|
|
(1,635)
|
|
(1,352)
|
|
EBITDA
|
|
|
|
|
$
14,939
|
|
$
7,868
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SOURCE Dawson Geophysical Company