MIDLAND, Texas, Feb. 28, 2019 /PRNewswire/ -- Dawson
Geophysical Company (NASDAQ: DWSN) (the "Company") today reported
unaudited financial results for its fourth quarter and full year
ended December 31, 2018.
For the fourth quarter ended December 31, 2018, the Company
reported revenues of $27,670,000, a
decrease of approximately 26% compared to $37,418,000 for the quarter ended
December 31, 2017. For the fourth quarter of 2018, the Company
reported a net loss of $11,816,000 or
$0.51 loss per common share compared
to a net loss of $4,788,000 or
$0.21 loss per common share for the
quarter ended December 31, 2017. The Company reported negative
EBITDA of $5,442,000 for the quarter
ended December 31, 2018 compared to positive EBITDA of
$4,039,000 for the quarter ended
December 31, 2017.
For the year ended December 31, 2018, the Company reported
revenues of $154,156,000, a decrease
of approximately two percent compared to $156,532,000 for the year ended December 31,
2017. For the full year 2018, the Company reported a net loss of
$24,407,000 or $1.07 loss per common share compared to a net
loss of $31,790,000 or $1.40 loss per common share for the year ended
December 31, 2017. The Company reported EBITDA of $4,762,000 for the year ended December 31,
2018 compared to $1,983,000 for the
year ended December 31, 2017. Effective January 1, 2018,
the Company adopted the requirements of Accounting Standards Update
No. 2014-09, Revenue from Contracts with Customers "Topic
606", and all amounts set forth in this earnings release for
periods prior to January 1, 2018 have been adjusted to comply
with the new standard. All comparative financial statement
presentation has been retroactively adjusted for the five percent
stock dividend declared and paid in the second quarter of 2018.
During the fourth quarter of 2018, the Company operated a peak
of four crews in the United States
("U.S.") and a peak of three crews in Canada with varying utilization of the active
crews during the quarter in both areas of operation. The fourth
quarter in the U.S. historically has been challenging due to
shorter work days and the holiday season. Based on currently
available information, the Company anticipates operating up to a
peak of five crews in the U.S. and up to a peak of four crews in
Canada in the first quarter of
2019, with varying utilization of the active crews during the
quarter in both areas of operation. The winter season in
Canada concludes at the end of the
first quarter of 2019 with no further seismic activities
anticipated thereafter and until the next winter season. In
addition, the Company anticipates that it will conduct one
microseismic project in the U.S. during the first quarter of 2019.
Based on currently available information, the Company anticipates
operating up to a peak of four crews in the U.S. with varying
utilization during the second quarter of 2019.
Stephen C. Jumper, President and
Chief Executive Officer, said, "The fourth quarter of 2018 was a
difficult quarter for Dawson Geophysical and the entire oil and gas
services sector. Crude oil (WTI) began the fourth quarter at
$74.68, only to close down
approximately 39% to $45.72 on
December 31, 2018. The PHLX Oil
Service Index (OSX) experienced an even more challenging fourth
quarter as it began trading October 1,
2018 at $151.40, only to drop
approximately 47% to $80.60 on
December 31, 2018 after reaching a
yearly low of $75.70 on December 24, 2018. At February 27, 2019, the OSX continues to trade at
reduced levels from the $150 range
and closed at $94.84 and WTI crude
oil closed at $56.98."
Jumper continued, "Despite the challenging fourth quarter market
conditions, for the twelve month period ending December 31, 2018, while revenues remained
consistent with 2017 levels, Dawson Geophysical delivered a 140%
increase in EBITDA and a significant reduction in net loss compared
to the twelve month period ended December
31, 2017. Our ongoing emphasis on cost reduction and
enhanced efficiencies contributed to these improvements. While our
twelve month results improved compared to the twelve month period
ended December 31, 2017, market
conditions continue to remain challenging in both the U.S. and
Canada. The increase in demand we
anticipated for the second half of 2018 did not materialize as oil
prices softened, and the Canadian market was unfavorably impacted
by the large differential between Canadian oil prices and WTI
prices. In the Permian and Delaware Basins, takeaway capacity
constraints resulted in a pricing differential to WTI throughout
the year, further reducing effective oil prices. Many industry
professionals believe the Permian and Delaware pricing differential will further
ease as additional takeaway capacity is added in 2019 and 2020.
That said, we are encouraged by an emerging trend related to areas
of activity by exploration and production companies and
multi-client data companies. For much of 2018, seismic projects in
the U.S. have been concentrated in the Permian and Delaware basins with little activity occurring
outside of those basins. In recent months, we have seen a slight
increase in interest in projects located outside of the Permian and
Delaware basins. We have recently
bid projects in the Niobrara and Powder River, SCOOP/STACK, Eagle
Ford, and Austin Chalk basins."
As we reported during our last earnings call, during the third
quarter of 2018, the Company's Board of Directors approved an
increase in our 2018 capital budget from $10
million to $17 million in
response to a strategic opportunity to acquire certain seismic
recording equipment. Capital expenditures for the fourth quarter
were $2,311,000 and totaled
$16,098,000 for the twelve months
ended December 31, 2018, primarily
for seismic data acquisition equipment and replacement vehicles.
The Company's balance sheet remains strong with $39,312,000 of cash and short term investments
and $49,737,000 of working capital as
of December 31, 2018. The Company has notes payable and
capital lease obligations totaling $12,780,000 as of December 31, 2018. The
Company's Board of Directors has approved an initial capital budget
of $10 million for 2019.
Jumper concluded, "While 2018 proved difficult for Dawson
Geophysical as well as many companies in the oilfield services
sector, we continue to believe that seismic remains a valuable
technology for identification and development of both conventional
and unconventional hydrocarbon reservoirs by our clients and the
industry. Reduced finding and development costs and improved
production economics are just some of the benefits that seismic
data affords our clients. For the year so far, WTI is up 23%, and
several analysts expect oil prices to rise in the first half of
2019. We anticipate reduced bid activity during the first quarter
of 2019, but remain cautiously optimistic as our clients evaluate
their 2019 capital budget expenditures and with the increasing
interest in several key basins outside of the Permian and
Delaware. We continue our
commitment to maintaining our strong balance sheet, taking
advantage of opportunistic equipment purchases, and positioning
ourselves to meet the needs of our valued shareholders and clients
as we deliver the best in class high resolution subsurface
images."
Conference Call Information
Dawson Geophysical Company will host a conference call to review
its year-end and fourth quarter 2018 financial results on
February 28, 2019 at
9:00 a.m. Central / 10:00 a.m. Eastern. Participants
can access the call at 1-877-407-9208 (US/Canada) and 1-201-493-6784
(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
March 28, 2019 by dialing
1-844-512-2921 (Toll-Free) and 1-412-317-6671 (Toll/International).
The passcode is 13687410. The webcast will be recorded and
available for replay on Dawson's website at http://www.dawson3d.com
until March 28, 2019.
About Dawson
Dawson Geophysical Company is a leading provider of North
American 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 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 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 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 Securities and Exchange
Commission on March 9, 2018. 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
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(amounts in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(unaudited)
|
|
(unaudited
and as adjusted)
|
|
(unaudited)
|
|
(unaudited
and as adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
|
27,670
|
|
$
|
37,418
|
|
$
|
154,156
|
|
$
|
156,532
|
Operating
costs:
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
28,544
|
|
|
30,062
|
|
|
132,937
|
|
|
139,072
|
General
and administrative
|
|
4,226
|
|
|
3,893
|
|
|
16,287
|
|
|
16,189
|
Depreciation and amortization
|
|
6,762
|
|
|
9,485
|
|
|
29,959
|
|
|
39,235
|
|
|
39,532
|
|
|
43,440
|
|
|
179,183
|
|
|
194,496
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(11,862)
|
|
|
(6,022)
|
|
|
(25,027)
|
|
|
(37,964)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
143
|
|
|
76
|
|
|
400
|
|
|
306
|
Interest
expense
|
|
(164)
|
|
|
(97)
|
|
|
(408)
|
|
|
(158)
|
Other
(expense) income
|
|
(342)
|
|
|
576
|
|
|
(170)
|
|
|
712
|
Loss before income
tax
|
|
(12,225)
|
|
|
(5,467)
|
|
|
(25,205)
|
|
|
(37,104)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
409
|
|
|
679
|
|
|
798
|
|
|
5,314
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
(11,816)
|
|
|
(4,788)
|
|
|
(24,407)
|
|
|
(31,790)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized (loss) income on foreign exchange rate translation,
net
|
|
(808)
|
|
|
66
|
|
|
(1,141)
|
|
|
816
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
$
|
(12,624)
|
|
$
|
(4,722)
|
|
$
|
(25,548)
|
|
$
|
(30,974)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share of common stock
|
$
|
(0.51)
|
|
$
|
(0.21)
|
|
$
|
(1.07)
|
|
$
|
(1.40)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share of common stock
|
$
|
(0.51)
|
|
$
|
(0.21)
|
|
$
|
(1.07)
|
|
$
|
(1.40)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
equivalent common shares outstanding
|
|
22,943,853
|
|
|
22,820,409
|
|
|
22,912,217
|
|
|
22,779,377
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
equivalent common shares outstanding - assuming
dilution
|
|
22,943,853
|
|
|
22,820,409
|
|
|
22,912,217
|
|
|
22,779,377
|
|
|
|
|
|
|
|
|
|
|
|
|
DAWSON GEOPHYSICAL
COMPANY
|
CONSOLIDATED
BALANCE SHEETS
|
(amounts in
thousands, except share data)
|
|
|
|
|
|
|
|
December
31,
|
|
2018
|
|
2017
|
Assets
|
(unaudited)
|
|
(as
adjusted)
|
Current
assets:
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
28,729
|
|
$
|
22,013
|
Short-term investments
|
|
10,583
|
|
|
16,583
|
Accounts
receivable, net of allowance for doubtful accounts of $250
at December 31, 2018 and 2017
|
|
25,338
|
|
|
33,156
|
Current
maturities of notes receivable
|
|
64
|
|
|
695
|
Prepaid
expenses and other current assets
|
|
12,311
|
|
|
7,340
|
Total current
assets
|
|
77,025
|
|
|
79,787
|
|
|
|
|
|
|
Property and
equipment
|
|
293,948
|
|
|
307,844
|
Less
accumulated depreciation
|
|
(222,407)
|
|
|
(221,271)
|
Property and
equipment, net
|
|
71,541
|
|
|
86,573
|
|
|
|
|
|
|
Notes receivable,
net of current maturities
|
|
1,447
|
|
|
841
|
Intangibles,
net
|
|
379
|
|
|
494
|
Long-term deferred
tax assets, net
|
|
293
|
|
|
224
|
|
|
|
|
|
|
Total
assets
|
$
|
150,685
|
|
$
|
167,919
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
5,427
|
|
$
|
5,933
|
Accrued
liabilities:
|
|
|
|
|
|
Payroll costs and
other taxes
|
|
1,034
|
|
|
1,151
|
Other
|
|
3,643
|
|
|
4,314
|
Deferred
revenue
|
|
10,501
|
|
|
6,314
|
Current
maturities of notes payable and obligations under capital
leases
|
|
6,683
|
|
|
2,712
|
Total current
liabilities
|
|
27,288
|
|
|
20,424
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
Notes
payable and obligations under capital leases, net of current
maturities
|
|
6,097
|
|
|
5,153
|
Deferred
tax liabilities, net
|
|
134
|
|
|
874
|
Other
accrued liabilities
|
|
150
|
|
|
150
|
Total long-term
liabilities
|
|
6,381
|
|
|
6,177
|
|
|
|
|
|
|
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, 23,018,441 and
22,926,805 shares issued, and 22,969,996 and 22,878,360
shares outstanding at December 31, 2018
and 2017, respectively
|
|
|
|
|
|
|
230
|
|
|
229
|
Additional paid-in capital
|
|
153,268
|
|
|
152,022
|
Retained
deficit
|
|
(34,518)
|
|
|
(10,153)
|
Treasury
stock, at cost; 48,445 shares
|
|
—
|
|
|
—
|
Accumulated other comprehensive loss, net
|
|
(1,964)
|
|
|
(780)
|
Total stockholders'
equity
|
|
117,016
|
|
|
141,318
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
150,685
|
|
$
|
167,919
|
|
|
|
|
|
|
Reconciliation of
EBITDA to Net Loss
|
|
|
|
|
|
|
|
(amounts in
thousands)
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
(as
adjusted)
|
|
|
|
|
(as
adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(11,816)
|
|
$
|
(4,788)
|
|
$
|
(24,407)
|
|
$
|
(31,790)
|
Depreciation and
amortization
|
|
6,762
|
|
|
9,485
|
|
|
29,959
|
|
|
39,235
|
Interest expense
(income), net
|
|
21
|
|
|
21
|
|
|
8
|
|
|
(148)
|
Income tax
benefit
|
|
(409)
|
|
|
(679)
|
|
|
(798)
|
|
|
(5,314)
|
EBITDA
|
$
|
(5,442)
|
|
$
|
4,039
|
|
$
|
4,762
|
|
$
|
1,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
EBITDA to Net Cash Provided by (Used in) Operating
Activities
|
(amounts in
thousands)
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
(as
adjusted)
|
|
|
|
|
(as
adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$
|
561
|
|
$
|
(3,394)
|
|
$
|
13,333
|
|
$
|
(6,703)
|
Changes in working
capital and other items
|
|
(6,262)
|
|
|
7,703
|
|
|
(7,665)
|
|
|
9,662
|
Noncash adjustments
to net loss
|
|
259
|
|
|
(270)
|
|
|
(906)
|
|
|
(976)
|
EBITDA
|
$
|
(5,442)
|
|
$
|
4,039
|
|
$
|
4,762
|
|
$
|
1,983
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Dawson Geophysical Company