DAWSON GEOPHYSICAL REPORTS THIRD QUARTER 2023 RESULTS
- Significant increase in revenues from Q3 2022 to Q3 2023
- Net loss decreased from Q3 2022 to Q3 2023
- Anticipated increase in Canadian activity in Q1 2024
- Substantial negative EBITDA for Q3 2023
- Decline in third party pass through revenue anticipated for Q4 2023
As previously announced, on March 24, 2023, the Company entered into an Asset Purchase Agreement (the "Purchase Agreement") with Wilks Brothers, LLC ("Wilks") and
For the quarter ended September 30, 2023, the Company reported revenues of
For the nine months ended September 30, 2023, the Company reported revenues of
The Company began the third quarter through the month of July with one mid-sized channel count crew operating in the lower 48. Deployment of a second, smaller channel count crew occurred in early August expanding to a larger channel count crew in mid-August and operated through the third quarter and into the fourth quarter. Based on currently available information, the Company anticipates operating two crews with improved channel count utilization through the fourth quarter and well into 2024 in the lower 48. Canadian activity began in October with the operation of one small 2-D crew. We expect to have up to three crews operating in
As similarly stated in our second quarter 2023 earnings release, although the active rig count in the lower 48 is currently at 634 according to TD Cowen, capital spending levels by Exploration and Production companies continues to improve but remains well below pre-pandemic levels as E&P companies continue to exercise financial discipline. Despite the decline in drilling activity, operating conditions in the seismic sector have improved from one year ago levels, with primary interest coming from multi-client data library companies backed by publicly traded independent E&P companies, as well as major E&P companies and, to a lesser extent, carbon capture related entities. The Company's recent and near term activities are primarily in the Permian basin region of
As noted above and in our Form 8-K filed March 24, 2023, Dawson Geophysical purchased the seismic data acquisition assets of
The Company's balance sheet includes cash, restricted cash and short-term investments at September 30, 2023 of
Capital expenditures were
Stephen C. Jumper, President and CEO of Dawson Geophysical, said, "In part, low utilization rates associated with the second quarter led to a difficult start in July, negatively impacting third quarter results. Such results, while improved from year-ago levels, did not meet expectations. Despite these challenges, monthly operations improved meaningfully through the end of the third quarter and into the beginning of the fourth quarter. Management anticipates high channel count utilization spread over two crews into the second quarter of 2024 in the lower 48 as well as high utilization during the Canadian winter season which began in October and will ramp up going into the fourth quarter. As noted above, the Canadian winter season is off to a good start as we anticipate up to three crews to be operating by the first quarter of 2024.
Jumper concluded, "To date, we are much better positioned early in the fourth quarter than we have been at any time during the second or third quarters of 2023. Utilization is expected to be at high levels for the remainder of the current year and into the first half of 2024. At the same time, we anticipate a notable increase in carbon capture projects in 2024. We continue to add to our order book with activity primarily in the Permian and Delaware Basins and believe that the Company's experienced workforce, robust equipment inventory and commitment to a strong balance sheet, positions us well as we move into 2024."
About
Dawson Geophysical Company is a leading provider of North American onshore seismic data acquisition services with operations throughout the continental
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
- 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
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 September 30, | Nine Months Ended September 30, | ||||||||||
2023 | 2022 (as adjusted) | 2023 | 2022 (as adjusted) | ||||||||
Operating revenues | $ | 22,961 | $ | 7,429 | $ | 72,588 | $ | 34,128 | |||
Operating costs: | |||||||||||
Operating expenses | 24,144 | 8,650 | 67,832 | 29,838 | |||||||
General and administrative | 2,495 | 2,975 | 8,971 | 11,671 | |||||||
Depreciation and amortization | 2,014 | 2,861 | 6,827 | 8,972 | |||||||
28,653 | 14,486 | 83,630 | 50,481 | ||||||||
Income (loss) from operations | (5,692) | (7,057) | (11,042) | (16,353) | |||||||
Other income (expense): | |||||||||||
Interest income | 192 | 91 | 436 | 147 | |||||||
Interest expense | (22) | (4) | (53) | (24) | |||||||
Other income (expense), net | 327 | 42 | 522 | 354 | |||||||
Income (loss) before income tax | (5,195) | (6,928) | (10,137) | (15,876) | |||||||
Income tax benefit (expense): | (3) | 16 | 96 | — | |||||||
Net income (loss) | (5,198) | (6,912) | (10,041) | (15,876) | |||||||
Other comprehensive income (loss): | |||||||||||
Net unrealized income (loss) on foreign exchange rate translation | (218) | (566) | 25 | (1,238) | |||||||
Comprehensive income (loss) | $ | (5,416) | $ | (7,478) | $ | (10,016) | $ | (17,114) | |||
Basic income (loss) per share of common stock | $ | (0.20) | $ | (0.28) | $ | (0.40) | $ | (0.64) | |||
Diluted income (loss) per share of common stock | $ | (0.20) | $ | (0.28) | $ | (0.40) | $ | (0.64) | |||
Weighted average equivalent common shares outstanding | 26,137,648 | 25,000,564 | 25,383,757 | 24,904,495 | |||||||
Weighted average equivalent common shares outstanding - assuming dilution | 26,137,648 | 25,000,564 | 25,383,757 | 24,904,495 | |||||||
DAWSON GEOPHYSICAL COMPANY | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(amounts in thousands, except share data) | |||||
September 30, | December 31, | ||||
2023 | 2022 (as adjusted) | ||||
(unaudited) | (unaudited) | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 13,891 | $ | 18,603 | |
Restricted cash | 5,000 | 5,000 | |||
Short-term investments | 265 | 265 | |||
Accounts receivable, net | 5,953 | 7,972 | |||
Employee retention credit receivable | — | 3,035 | |||
Prepaid expenses and other current assets | 7,507 | 8,951 | |||
Total current assets | 32,616 | 43,826 | |||
Property and equipment, net | 16,451 | 20,468 | |||
Right-of-use assets | 3,466 | 4,010 | |||
Intangibles, net | 368 | 369 | |||
Total assets | $ | 52,901 | $ | 68,673 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 5,458 | $ | 4,140 | |
Accrued liabilities: | |||||
Payroll costs and other taxes | 718 | 2,001 | |||
Other | 1,064 | 1,280 | |||
Deferred revenue | 6,748 | 7,380 | |||
Current maturities of notes payable and finance leases | 511 | 275 | |||
Current maturities of operating lease liabilities | 1,190 | 1,118 | |||
Total current liabilities | 15,689 | 16,194 | |||
Long-term liabilities: | |||||
Notes payable and finance leases, net of current maturities | 1,139 | 207 | |||
Operating lease liabilities, net of current maturities | 2,654 | 3,331 | |||
Deferred tax liabilities, net | 15 | 137 | |||
Total long-term liabilities | 3,808 | 3,675 | |||
Commitments and contingencies | — | — | |||
Stockholders' equity: | |||||
Preferred stock-par value | — | — | |||
Common stock-par value | |||||
23,812,329 shares issued, and 30,812,329 and 23,812,329 shares outstanding at | |||||
September 30, 2023 and December 31, 2022, respectively | 308 | 238 | |||
Additional paid-in capital | 156,678 | 155,413 | |||
Accumulated earnings (deficit) | (121,534) | (112,469) | |||
Equity of | — | 7,695 | |||
Accumulated other comprehensive income (loss), net | (2,048) | (2,073) | |||
Total stockholders' equity | 33,404 | 48,804 | |||
Total liabilities and stockholders' equity | $ | 52,901 | $ | 68,673 | |
Reconciliation of EBITDA to Net Income (Loss) | |||||||||||
(amounts in thousands) | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2023 | 2022 (as adjusted) | 2023 | 2022 (as adjusted) | ||||||||
Net income (loss) | $ | (5,198) | $ | (6,912) | $ | (10,041) | $ | (15,876) | |||
Depreciation and amortization | 2,014 | 2,861 | 6,827 | 8,972 | |||||||
Interest (income) expense, net | (170) | (87) | (383) | (123) | |||||||
Income tax (benefit) expense | 3 | (16) | (96) | - | |||||||
EBITDA | $ | (3,351) | $ | (4,154) | $ | (3,693) | $ | (7,027) | |||
Reconciliation of EBITDA to Net Cash Provided by (Used In) Operating Activities | |||||||||||
(amounts in thousands) | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2023 | 2022 (as adjusted) | 2023 | 2022 (as adjusted) | ||||||||
Net cash provided by (used in) operating activities | $ | (3,289) | $ | (3,332) | $ | 2,462 | $ | (1,598) | |||
Changes in working capital and other items | 312 | (528) | (5,260) | (4,268) | |||||||
Non-cash adjustments to net income (loss) | (374) | (294) | (895) | (1,161) | |||||||
EBITDA | $ | (3,351) | $ | (4,154) | $ | (3,693) | $ | (7,027) | |||
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SOURCE Dawson Geophysical Company
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