MIDLAND,
Texas, May 15, 2023 /PRNewswire/ -- Dawson
Geophysical Company (NASDAQ: DWSN) (the "Company") today reported
unaudited financial results for its first quarter ended
March 31, 2023. Financial and
operational results include the business and assets the Company
acquired from Breckenridge Geophysical, LLC ("Breckenridge") in the first quarter.
As previously announced, on March 24,
2023, the Company entered into an Asset Purchase Agreement
(the "Purchase Agreement") with Wilks Brothers, LLC ("Wilks") and
Breckenridge. Pursuant to the
Purchase Agreement and upon the terms and subject to the conditions
generally described in our Form 8-K filed with the SEC on
March 24, 2023, the Company completed
the purchase of substantially all of the Breckenridge assets related to seismic data
acquisition services other than its multi-client data library, in
exchange for a combination of equity consideration and a
convertible note described more fully below.
For the quarter ended March 31,
2023, which includes the results of Breckenridge for the entire quarter ended
March 31, 2023, the Company reported
revenues of $29,408,000, an increase
of approximately 34% compared to $21,934,000 for the quarter ended March 31, 2022 (combined revenues of the Company
and Breckenridge for such
quarter). Excluding Breckenridge,
the Company would have reported revenues of $28,626,000, an increase of approximately 56%
compared to $18,359,000 for the
quarter ended March 31, 2022. For the
first quarter of 2023, the Company reported a net loss of
$413,000 or $0.02 loss per common share compared to a net
loss of $1,385,000 or $0.06 loss per common share for the first quarter
of 2022 (combined results/net loss of the Company and Breckenridge for such quarter). Excluding
Breckenridge, the Company would
have reported net income of $562,000
for the quarter ended March 31, 2023
compared to a net loss of $2,391,000
for the quarter ended March 31, 2022.
The Company reported EBITDA of $2,179,000 for the quarter ended March 31, 2023 compared to EBITDA of $1,702,000 for the quarter ended March 31, 2022 (combined EBITDA of the Company
and Breckenridge for such
quarter). Excluding Breckenridge,
the Company would have reported EBITDA of $2,652,000 compared to EBITDA of $229,000 for the quarter ended March 31, 2022. First quarter combined results
were affected by the postponement of a project expected in the
quarter.
The Company began the year with one large channel count crew
operating in the lower 48 dropping to one mid-size channel count
crew in February through the end of the first quarter. A second
mid-size crew deployed in early March as reported in our
December 31, 2022 year-end press
release. During the Canadian winter season that ended in early
April, there were up to four smaller crews in operation. The
deployment of smaller crews during the winter season indicates
smaller projects with lower overall efficiencies than in the same
period of 2022. With the conclusion of the winter season, there is
currently no crew activity in Canada.
The operation of the two crews in the lower 48 continued into
the second quarter, with one larger channel count crew in the Eagle
Ford area and one mid-size crew in the Utica Basin. The Company
anticipates that the Utica Basin crew will have an extended period
of down time during the middle of the second quarter due to project
readiness delays. Efforts are ongoing to fill the near term period
of low utilization until the crew returns to the second Utica
project later in the second quarter.
Capital spending levels by Exploration and Production companies
is improving but remains low compared to pre-pandemic levels.
Consequently, demand for seismic services in North America also remains below pre-pandemic
levels and bid activity continues to be intermittent. The ability
to fill gaps in the schedule with smaller projects remains a focus
and visibility for 2023 has improved compared to the same time one
year ago. The Company expects to operate two crews through the
third quarter and may encounter periods of low utilization
affecting one crew near the end of the third quarter and into the
fourth quarter. As mentioned, the Company is directing efforts to
fill the schedule during both periods. Based on currently available
information, crew activity in the lower 48 during the fourth
quarter and into the first quarter of 2024 is expected to be at
high levels.
As noted above and in our Form 8-K filed March 24, 2023, we recently purchased the assets
of Breckenridge Geophysical, LLC, a seismic data acquisition
company previously owned by Wilks. The addition of the Breckenridge assets, contracts, client
contacts and experienced personnel provides us with the opportunity
to increase operational efficiency with the addition of like-kind
equipment, and improve utilization. During the integration process,
we believe we will realize further opportunities to streamline
costs and leverage increased operational and financial
efficiencies. While the transaction was structured as an asset
purchase, our financial presentations reflect combined results of
the two companies as if the combination occurred on January 14, 2022, the date Wilks became the
majority shareholder of the Company. This is due to the fact that
both Dawson and Breckenridge were under Wilks' control from
January 14, 2022 forward. The
presentation is required as a combination of entities under common
control. As part of the purchase agreement, in addition to the
1,188,235 shares of our common stock issued to Wilks at closing, we
entered into a convertible note to deliver approximately 5.8
million shares of common stock to Wilks after the Company receives
shareholder approval of the proposal to issue the shares upon
conversion of the convertible note in accordance with NASDAQ
Listing Rule 5635 and after completion of an audit of Breckenridge's 2022 fiscal year financial
statements. Until such approval, a convertible note payable
amounting to approximately $9.9
million is included in non-current liabilities on the
balance sheet.
The Company's balance sheet includes cash, restricted cash and
short-term investments at March 31, 2023 of $16,209,000 compared
to $23,121,000 at March 31, 2022. Excluding
Breckenridge, the Company would
have reported cash, restricted cash and short-term investments
at March 31, 2023 of $16,209,000 compared
to $19,660,000 at March 31, 2022. Working capital
was $23,877,000 at March
31, 2023 compared to $40,621,000 at March 31,
2022. Excluding Breckenridge, the
Company would have reported working capital
of $23,863,000 at March 31, 2023 compared
to $35,453,000 at March 31, 2022.
Capital expenditures were $1,117,000 for the three months
ended March 31, 2023, primarily for maintenance capital
requirements. The Company's Board of Directors approved an initial
capital budget of $5,000,000 for 2023, however, we
currently anticipate capital spending to focus on the replacement
of aging support vehicles.
Stephen C. Jumper, CEO and
President of Dawson Geophysical, said, "We are pleased with our
first quarter 2023 results. Our first quarter success is primarily
the result of improved market conditions, timing of projects
becoming crew ready and operational execution by the Dawson team. Since the onset of the COVID-19
pandemic, Exploration and Production companies have maintained a
commitment toward financial discipline. As a result, many seismic
projects that were scheduled for 2021 and 2022, in some cases, were
either shelved or delayed. Much of this, however, started to change
as seismic projects that had been placed on hold began to return to
market in late 2022. For the first quarter of 2023, we experienced
our first profitable quarter since 2020, absent the Breckenridge contribution. Moreover, net of
transaction costs, we generated net income of approximately
$1.3 million and EBITDA of
approximately $3.2 million excluding
the pro-forma contribution from Breckenridge."
Jumper concluded, "Project readiness issues, despite anticipated
short-term periods of low utilization on one crew, show continued
improvement. With the Breckenridge
transaction, the opportunity to fill those periods of low
utilization and to further add to our order book is now present.
Moreover, our order book reflects continued optimism as the size
and scope of projects strengthens and the geographic diversity tied
to those projects expands. While the North American seismic
data acquisition market remains challenged, we are encouraged with
the likelihood of an improved 2023, particularly during the latter
part of the year."
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 tables 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, the Company's status as a controlled public
company, which exempts the Company from certain corporate
governance requirements; the limited market for the Company's
shares, which could result in the delisting of the Company's shares
from Nasdaq and the Company no longer being required to make
filings with the U.S. Securities and Exchange Commission (the
"SEC"); the impact of general economic, industry, market or
political conditions; 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 impact on demand for oil and gas; surplus in the
supply of oil and the ability of the Organization of the Petroleum
Exporting Countries and its allies, collectively known as 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; disruptions in the global economy, including
export controls and financial and economic sanctions imposed on
certain industry sectors and parties as a result of the
developments in Ukraine and
related activities; and whether or not a future transaction or
other action occurs that causes the Company to be delisted from
Nasdaq and no longer be required to make filings with the SEC. 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 SEC on March 13, 2023
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
|
(unaudited and amounts in thousands, except share and
per share data)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2023
|
|
2022 (as adjusted)
|
|
|
|
|
|
|
Operating revenues
|
$
|
29,408
|
|
$
|
21,934
|
|
|
|
|
|
|
Operating costs:
|
|
|
|
|
|
Operating
expenses
|
|
23,782
|
|
|
14,403
|
General
and administrative
|
|
3,499
|
|
|
5,868
|
Depreciation and amortization
|
|
2,700
|
|
|
3,101
|
|
|
29,981
|
|
|
23,372
|
|
|
|
|
|
|
Loss from operations
|
|
(573)
|
|
|
(1,438)
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
Interest
income
|
|
108
|
|
|
26
|
Interest
expense
|
|
(17)
|
|
|
(11)
|
Other
income (expense), net
|
|
52
|
|
|
39
|
Loss before income tax
|
|
(430)
|
|
|
(1,384)
|
|
|
|
|
|
|
Income tax benefit (expense)
|
|
17
|
|
|
(1)
|
|
|
|
|
|
|
Net loss
|
|
(413)
|
|
|
(1,385)
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
Net
unrealized loss on foreign exchange rate translation
|
|
(6)
|
|
|
(233)
|
|
|
|
|
|
|
Comprehensive loss
|
$
|
(419)
|
|
$
|
(1,618)
|
|
|
|
|
|
|
Basic loss per share of common
stock
|
$
|
(0.02)
|
|
$
|
(0.06)
|
|
|
|
|
|
|
Diluted loss per share of common
stock
|
$
|
(0.02)
|
|
$
|
(0.06)
|
|
|
|
|
|
|
Weighted average equivalent common shares
outstanding
|
|
25,000,564
|
|
|
24,709,159
|
|
|
|
|
|
|
Weighted average equivalent common shares outstanding
- assuming dilution
|
|
25,000,564
|
|
|
24,709,159
|
|
|
|
|
|
|
|
|
|
|
|
|
DAWSON GEOPHYSICAL COMPANY
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(amounts in thousands, except share
data)
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
2023
|
|
2022 (adjusted)
|
|
(unaudited)
|
|
(unaudited)
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
10,944
|
|
$
|
18,603
|
Restricted
cash
|
|
5,000
|
|
|
5,000
|
Short-term
investments
|
|
265
|
|
|
265
|
Accounts
receivable, net
|
|
14,434
|
|
|
7,972
|
Employee
retention credit receivable
|
|
—
|
|
|
3,035
|
Prepaid
expenses and other current assets
|
|
12,223
|
|
|
8,951
|
Total current
assets
|
|
42,866
|
|
|
43,826
|
|
|
|
|
|
|
Property and equipment, net
|
|
18,377
|
|
|
20,468
|
Right-of-use assets
|
|
4,040
|
|
|
4,010
|
Intangibles, net
|
|
370
|
|
|
369
|
|
|
|
|
|
|
Total
assets
|
$
|
65,653
|
|
$
|
68,673
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
6,743
|
|
$
|
4,140
|
Accrued
liabilities:
|
|
|
|
|
|
Payroll costs and
other taxes
|
|
906
|
|
|
2,001
|
Other
|
|
1,275
|
|
|
1,280
|
Deferred
revenue
|
|
8,289
|
|
|
7,380
|
Current
maturities of notes payable and finance leases
|
|
591
|
|
|
275
|
Current
maturities of operating lease liabilities
|
|
1,185
|
|
|
1,118
|
Total current
liabilities
|
|
18,989
|
|
|
16,194
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
Notes
payable and finance leases, net of current maturities
|
|
277
|
|
|
207
|
Convertible note payable to controlling shareholder
|
|
9,880
|
|
|
—
|
Operating
lease liabilities, net of current maturities
|
|
3,274
|
|
|
3,331
|
Deferred
tax liabilities, net
|
|
112
|
|
|
137
|
Total long-term
liabilities
|
|
13,543
|
|
|
3,675
|
|
|
|
|
|
|
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,
25,000,564 and
|
|
|
|
|
|
23,812,329
shares issued, and 25,000,564 and 23,812,329 shares outstanding
at
|
|
|
|
|
|
March 31,
2023 and December 31, 2022, respectively
|
|
250
|
|
|
238
|
Additional
paid-in capital
|
|
146,856
|
|
|
155,413
|
Accumulated deficit
|
|
(111,906)
|
|
|
(112,469)
|
Equity
attributable to controlling shareholder
|
|
—
|
|
|
7,695
|
Accumulated other comprehensive loss, net
|
|
(2,079)
|
|
|
(2,073)
|
Total stockholders'
equity
|
|
33,121
|
|
|
48,804
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
65,653
|
|
$
|
68,673
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDA to Net
Loss
|
|
|
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2023
|
|
2022 (adjusted)
|
|
|
|
|
|
Net loss
|
$
|
(413)
|
|
$
|
(1,385)
|
Depreciation and
amortization
|
|
2,700
|
|
|
3,101
|
Interest (income)
expense, net
|
|
(91)
|
|
|
(15)
|
Income tax (benefit)
expense
|
|
(17)
|
|
|
1
|
EBITDA
|
$
|
2,179
|
|
$
|
1,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDA to Net Cash Used in
Operating Activities
|
|
|
|
|
|
(amounts in thousands)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2023
|
|
2022 (adjusted)
|
|
|
|
|
|
Net cash used in
operating activities
|
$
|
(1,820)
|
|
$
|
(9,149)
|
Changes in working
capital and other items
|
|
4,253
|
|
|
11,385
|
Non-cash adjustments to
net loss
|
|
(254)
|
|
|
(534)
|
EBITDA
|
$
|
2,179
|
|
$
|
1,702
|
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content:https://www.prnewswire.com/news-releases/dawson-geophysical-reports-first-quarter-2023-results-301825127.html
SOURCE Dawson Geophysical Company