DAWSON GEOPHYSICAL REPORTS SECOND QUARTER 2024 RESULTS

Rhea-AI Summary

Dawson Geophysical Company (NASDAQ: DWSN) reported its Q2 2024 financial results. The company experienced a 38% decrease in revenues to $12.5 million compared to $20.2 million in Q2 2023. Despite this, the net loss narrowed to $3.5 million ($0.12 per share) from $4.4 million ($0.18 per share) year-over-year. Year-to-date, DWSN achieved a net income of $2.3 million ($0.07 per share), a significant improvement from a $4.8 million loss in the same period of 2023.

The company reduced operations to one crew in late May but expects to ramp up to two crews later in Q3 2024. DWSN's cost reduction initiatives led to a 37% decrease in general and administrative expenses year-to-date. As of June 30, 2024, the company had $11.2 million in cash and $9 million in positive working capital.

Positive

• Net loss narrowed to $3.5 million in Q2 2024 from $4.4 million in Q2 2023
• Year-to-date net income of $2.3 million, compared to a $4.8 million loss in the same period of 2023
• 37% reduction in general and administrative expenses year-to-date
• Generated $7.8 million of cash from operations in the first half of 2024
• $11.2 million cash on hand and $9 million positive working capital as of June 30, 2024

Negative

• 38% decrease in revenues to $12.5 million in Q2 2024 compared to $20.2 million in Q2 2023
• Reduced operations from two crews to one crew in late May due to softness in the calendar
• Negative Adjusted EBITDA of $2.3 million in Q2 2024

Insights

Financial Analyst

Dawson Geophysical's Q2 2024 results paint a mixed picture. While revenues declined 38% year-over-year to $12.5 million, the company narrowed its net loss to $3.5 million from $4.4 million in Q2 2023. The reduction in operational scale from two crews to one in late May reflects ongoing industry challenges, but management's quick response demonstrates adaptability.

Notably, year-to-date net income of $2.3 million contrasts with last year's loss, indicating improved overall financial health. The 37% reduction in G&A expenses year-to-date is commendable. However, investors should monitor the company's ability to capitalize on expected increased activity in Q3 and maintain full equipment deployment through Q2 2025.

The $0.32 per share special dividend, totaling $9.9 million, is a positive signal for shareholders but may impact future liquidity. With $11.2 million in cash and positive working capital, Dawson appears positioned to navigate near-term challenges while pursuing growth opportunities.

Market Research Analyst

Dawson Geophysical's performance reflects broader trends in the geophysical services sector. The company's strategic adjustments in bidding and marketing processes aim to improve utilization, a critical factor in this cyclical industry. The expected ramp-up in Q3 and full equipment deployment forecast through Q2 2025 suggest cautious optimism about market conditions.

The reduction to one crew in May highlights the ongoing volatility in demand for seismic services. However, the anticipated resumption of Canadian operations in Q4 indicates seasonal patterns are normalizing. Investors should watch for signs of sustained recovery in exploration spending by oil and gas companies, which will directly impact Dawson's performance.

The company's focus on divesting under-utilized assets to improve return on capital aligns with industry-wide efforts to optimize operations. This strategy, combined with cost-cutting measures, positions Dawson to potentially outperform peers if market conditions improve as expected.

MIDLAND, Texas, Aug. 12, 2024 /PRNewswire/ -- Dawson Geophysical Company (NASDAQ: DWSN) (the "Company") today reported unaudited financial results for its second quarter ended June 30, 2024.

Management Comment

Tony Clark, Dawson's President and CEO, commented, "We began the quarter with two crews operating in the United States, and dropped to one crew in late May. We reacted quickly to the softness in our calendar and reduced headcount to one crew to conserve our cash flows during this time. We have strategically adjusted our bidding and marketing process to improve our utilization throughout the year going forward. We expect to ramp up our activity later in the third quarter of this year improving our utilization, revenues and operating cash flows. We are continually evaluating our performance as an organization and believe that we are positioned to capitalize on the opportunities in our industry."

Second Quarter and Year-to-Date Results

For the second quarter ended June 30, 2024, the Company reported revenues of $12.5 million, a decrease of 38% compared to $20.2 million for the comparable quarter ended June 30, 2023. Revenue included reimbursable revenue of $4.2 million and $9.3 million for the quarters ended June 30, 2024, and June 30, 2023, respectively.

For the second quarter ended June 30, 2024, we incurred a net loss of $3.5 million or $0.12 per common share compared to a net loss of $4.4 million or $0.18 per common share for the quarter ended June 30, 2023. During the quarter, we generated negative Adjusted EBITDA of $2.3 million in the quarter ended June 30, 2024, compared to negative Adjusted EBITDA of $2.5 million in the quarter ended June 30, 2023.

Year to date, we have generated net income of $2.3 million or $0.07 per common share compared to a net loss of $4.8 million or $0.19 per common share. Our cost reduction initiatives continue to improve our profitability with a 37% reduction in general and administrative expenses year-to-date compared to the comparable period of 2023.

Operations Update

The Company started the quarter with two crews in the United States, and dropped to one crew in late May. Our Canadian operations were seasonally halted in April, but we expect them to resume operating in the fourth quarter later this year. We have improved our backlog and expect to have two crews deployed later in the third quarter, and expect to have our current equipment fully deployed throughout the end of the second quarter of 2025.

We periodically evaluate all of our assets and are looking for opportunities to divest certain under-utilized assets to improve our return on capital.

Special Cash Dividend and Liquidity

As previously reported, the Company's Board of Directors declared a special cash dividend on the Company's common stock of $0.32 per share, which was paid on May 6, 2024, to stockholders of record as of the close of business on April 22, 2024. The aggregate payment was approximately $9.9 million.

For the six months ended June 30, 2024, we generated $7.8 million of cash from our operations, and as of June 30, 2024, the Company had cash of $11.2 million and positive working capital of $9 million.

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 for its clients, which range from major oil and gas companies to independent oil and gas operators, as well as providers of multi-client data libraries. Dawson also provides Carbon Capture Utilization and Storage ("CCUS") seismic monitoring, which continues to grow and be an integral part of its business. Dawson has acquired several CCUS base surveys and plan to acquire more in the future.

 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 Adjusted EBITDA, a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission. The Company defines Adjusted EBITDA net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation, depletion and amortization and (iv) other unusual or non-recurring charges, such as severance expenses. Our management uses Adjusted 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 Adjusted 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 is used by investors to assess its performance. However, the terms EBITDA and Adjusted EBITDA are not defined under GAAP, and neither EBITDA nor Adjusted EBITDA is a measure of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing our 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 and Adjusted EBITDA may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or Adjusted EBITDA in the same manner as us. Further, the results presented by EBITDA or Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes: interest, taxes, and depreciation and amortization, and other unusual or non-recurring charges, such as severance expenses. A reconciliation of the Company's Adjusted 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. Forward-looking statements generally relate to future events or the Company's future financial or operating performance and may be identified by words such as "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," or similar words. 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 factors include, but are not limited to, our status as a controlled public company, which exempts us from certain corporate governance requirements; the limited market for our common stock, which could result in the delisting of the common stock from Nasdaq; 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 April 1, 2024. 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 INCOME (LOSS) (unaudited and amounts in thousands, except share and per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Operating revenues:
Fee Revenue	$	8,326		$	10,881		$	35,064		$	33,154
Reimbursable Revenue		4,186			9,338			9,032			16,473
		12,512			20,219			44,096			49,627
Operating costs:
Operating expenses
Fee operating expenses		8,499			10,568			25,995			27,215
Reimbursable operating expenses		4,186			9,338			9,032			16,473
		12,685			19,906			35,027			43,688
General and administrative		2,171			2,977			4,082			6,476
Severance expense		86			—			86			—
Depreciation and amortization		1,406			2,113			2,995			4,813
		16,348			24,996			42,190			54,977
(Loss) income from operations		(3,836)			(4,777)			1,906			(5,350)
Other income (expense):
Interest income		105			136			218			244
Interest expense		(39)			(14)			(85)			(31)
Other income (expense), net		93			143			332			195
(Loss) income before income tax		(3,677)			(4,512)			2,371			(4,942)
Current		131			(14)			(71)			(22)
Deferred		—			96			—			121
Income tax benefit (expense)		131			82			(71)			99
Net (loss) income		(3,546)			(4,430)			2,300			(4,843)
Other comprehensive (loss) income:
Net unrealized (loss) income on foreign exchange rate translation		(110)			249			(270)			243
Comprehensive (loss) income	$	(3,656)		$	(4,181)		$	2,030		$	(4,600)
Basic (loss) income per share of common stock	$	(0.12)		$	(0.18)		$	0.07		$	(0.19)
Diluted (loss) income per share of common stock	$	(0.12)		$	(0.18)		$	0.07		$	(0.19)
Weighted average equivalent common shares outstanding		30,815,443			25,000,564			30,813,886			25,000,564
Weighted average equivalent common shares outstanding - assuming dilution		30,815,443			25,000,564			30,813,886			25,000,564

 

DAWSON GEOPHYSICAL COMPANY CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data)
		June 30,			December 31,
		2024			2023
Assets
Current assets:
Cash and cash equivalents		$	11,158		$	10,772
Restricted cash			—			5,000
Short-term investments			265			265
Accounts receivable, net			4,424			12,735
Prepaid expenses and other current assets			7,079			8,654
Total current assets			22,926			37,426
Property and equipment, net			15,082			16,508
Right-of-use assets			2,620			3,208
Intangibles, net			365			377
Total assets		$	40,993		$	57,519
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	3,400		$	3,883
Accrued liabilities:
Payroll costs and other taxes			2,249			3,415
Other			759			709
Deferred revenue			5,709			11,829
Current maturities of notes payable and finance leases			740			1,380
Current maturities of operating lease liabilities			1,064			1,202
Total current liabilities			13,921			22,418
Long-term liabilities:
Notes payable and finance leases, net of current maturities			1,408			1,289
Operating lease liabilities, net of current maturities			1,862			2,363
Deferred tax liabilities, net			15			15
Total long-term liabilities			3,285			3,667
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,
30,906,777 and 30,812,329 shares issued and outstanding at June 30, 2024
and December 31, 2023, respectively			309			308
Additional paid-in capital			156,860			156,678
Accumulated deficit			(131,200)			(123,640)
Accumulated other comprehensive loss, net			(2,182)			(1,912)
Total stockholders' equity			23,787			31,434
Total liabilities and stockholders' equity		$	40,993		$	57,519

 

Reconciliation of Adjusted EBITDA to Net (Loss) Income (amounts in thousands)
	Three Months Ended June 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net loss	$	(2,468)		$	(1,078)		$	(3,546)		$	(2,794)		$	(1,636)		$	(4,430)
Depreciation and amortization		1,162			244			1,406			1,528			585			2,113
Interest income, net		(60)			(6)			(66)			(81)			(41)			(122)
Income tax benefit		(131)			—			(131)			(82)			—			(82)
EBITDA		(1,497)			(840)			(2,337)			(1,429)			(1,092)			(2,521)
Severance expense		86			—			86			—			—			—
Adjusted EBITDA	$	(1,411)		$	(840)		$	(2,251)		$	(1,429)		$	(1,092)		$	(2,521)
	Six Months Ended June 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net (loss) income	$	(301)		$	2,601		$	2,300		$	(5,254)		$	411		$	(4,843)
Depreciation and amortization		2,467			528			2,995			3,646			1,167			4,813
Interest income, net		(123)			(10)			(133)			(156)			(57)			(213)
Income tax expense (benefit)		71			—			71			(99)			—			(99)
EBITDA		2,114			3,119			5,233			(1,863)			1,521			(342)
Severance expense		86			—			86			—			—			—
Adjusted EBITDA	$	2,200		$	3,119		$	5,319		$	(1,863)		$	1,521		$	(342)

 

Reconciliation of Adjusted EBITDA to Net Cash Provided By (Used in) Operating Activities (amounts in thousands)
	Three Months Ended June 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net cash provided by (used in) operating activities	$	1,302		$	4,618		$	5,920		$	(868)		$	8,439		$	7,571
Changes in working capital and other items		(2,285)			(5,408)			(7,693)			(340)			(9,485)			(9,825)
Non-cash adjustments to net loss		(514)			(50)			(564)			(221)			(46)			(267)
EBITDA		(1,497)			(840)			(2,337)			(1,429)			(1,092)			(2,521)
Severance expense		86			—			86			—			—			—
Adjusted EBITDA	$	(1,411)		$	(840)		$	(2,251)		$	(1,429)		$	(1,092)		$	(2,521)
	Six Months Ended June 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net cash provided by operating activities	$	3,298		$	4,492		$	7,790		$	1,710		$	4,041		$	5,751
Changes in working capital and other items		(450)			(1,272)			(1,722)			(3,134)			(2,438)			(5,572)
Non-cash adjustments to net (loss) income		(734)			(101)			(835)			(439)			(82)			(521)
EBITDA		2,114			3,119			5,233			(1,863)			1,521			(342)
Severance expense		86			—			86			—			—			—
Adjusted EBITDA	$	2,200		$	3,119		$	5,319		$	(1,863)		$	1,521		$	(342)

 

Statements of Operations by operating segment for the three and six months ended June 30, 2024, and 2023.
	Three Months Ended June 30, 2024									Six Months Ended June 30, 2024
	USA Operations			Canada Operations			Consolidated			USA Operations			Canada Operations			Consolidated
Operating revenues
Fee revenue	$	8,321		$	5		$	8,326		$	26,608		$	8,456		$	35,064
Reimbursable revenue		4,186			—			4,186			8,995			37			9,032
		12,507			5			12,512			35,603			8,493			44,096
Operating costs:
Fee operating expenses		7,846			653			8,499			21,025			4,970			25,995
Reimbursable operating expenses		4,186			—			4,186			8,995			37			9,032
Operating expenses		12,032			653			12,685			30,020			5,007			35,027
General and administrative		1,998			173			2,171			3,740			342			4,082
Severance expense		86			—			86			86			—			86
Depreciation and amortization		1,162			244			1,406			2,467			528			2,995
		15,278			1,070			16,348			36,313			5,877			42,190
(Loss) income from operations		(2,771)			(1,065)			(3,836)			(710)			2,616			1,906
Other income (expense):
Interest income		89			16			105			188			30			218
Interest expense		(29)			(10)			(39)			(65)			(20)			(85)
Other income (expense)		112			(19)			93			357			(25)			332
(Loss) income before income tax		(2,599)			(1,078)			(3,677)			(230)			2,601			2,371
Income tax benefit (expense)		131			—			131			(71)			—			(71)
Net (loss) income		(2,468)			(1,078)			(3,546)			(301)			2,601			2,300
Other comprehensive (loss) income:
Net unrealized loss on foreign exchange rate translation		—			(110)			(110)			—			(270)			(270)
Comprehensive (loss) income	$	(2,468)		$	(1,188)		$	(3,656)		$	(301)		$	2,331		$	2,030
	Three Months Ended June 30, 2023									Six Months Ended June 30, 2023
	USA Operations			Canada Operations			Consolidated			USA Operations			Canada Operations			Consolidated
Operating revenues
Fee revenue	$	10,780		$	101		$	10,881		$	23,043		$	10,111		$	33,154
Reimbursable revenue		9,336			2			9,338			15,869			604			16,473
		20,116			103			20,219			38,912			10,715			49,627
Operating costs:
Fee operating expenses		9,643			925			10,568			19,287			7,928			27,215
Reimbursable operating expenses		9,336			2			9,338			15,869			604			16,473
Operating expenses		18,979			927			19,906			35,156			8,532			43,688
General and administrative		2,667			310			2,977			5,769			707			6,476
Severance expense		—			—			—			—			—			—
Depreciation and amortization		1,528			585			2,113			3,646			1,167			4,813
		23,174			1,822			24,996			44,571			10,406			54,977
(Loss) income from operations		(3,058)			(1,719)			(4,777)			(5,659)			309			(5,350)
Other income (expense):
Interest income		91			45			136			178			66			244
Interest expense		(10)			(4)			(14)			(22)			(9)			(31)
Other income (expense)		101			42			143			150			45			195
(Loss) income before income tax		(2,876)			(1,636)			(4,512)			(5,353)			411			(4,942)
Income tax benefit		82			—			82			99			—			99
Net (loss) income		(2,794)			(1,636)			(4,430)			(5,254)			411			(4,843)
Other comprehensive (loss) income:
Net unrealized income on foreign exchange rate translation		—			249			249			—			243			243
Comprehensive (loss) income	$	(2,794)		$	(1,387)		$	(4,181)		$	(5,254)		$	654		$	(4,600)

 

 

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SOURCE Dawson Geophysical Company

FAQ

What were Dawson Geophysical's (DWSN) Q2 2024 financial results?

Dawson Geophysical reported revenues of $12.5 million, a net loss of $3.5 million ($0.12 per share), and negative Adjusted EBITDA of $2.3 million for Q2 2024.

How did DWSN's Q2 2024 results compare to Q2 2023?

Revenues decreased by 38% from $20.2 million in Q2 2023 to $12.5 million in Q2 2024. The net loss narrowed from $4.4 million in Q2 2023 to $3.5 million in Q2 2024.

What is Dawson Geophysical's (DWSN) operational outlook for the rest of 2024?

DWSN expects to ramp up to two crews later in Q3 2024 and anticipates having its current equipment fully deployed through Q2 2025. Canadian operations are expected to resume in Q4 2024.

How much cash did Dawson Geophysical (DWSN) have as of June 30, 2024?

As of June 30, 2024, Dawson Geophysical had $11.2 million in cash and $9 million in positive working capital.