DAWSON GEOPHYSICAL REPORTS THIRD QUARTER 2024 RESULTS

Rhea-AI Summary

Dawson Geophysical reported Q3 2024 financial results with revenues of $14.4 million, down 37% from $23 million in Q3 2023. The company posted a net loss of $5.6 million ($0.18 per share) compared to a $5.2 million loss in Q3 2023. For the nine months ended September 30, 2024, net loss was $3.3 million. The company operated with one crew in the US early in Q3, adding two small channel crews later. Operations in Canada resumed in October with expectations of increased revenues through Q1 2025. The Board approved a $6 million capital budget for new single node channels to improve efficiency. As of September 30, 2024, cash position stood at $7 million with positive working capital of $4.4 million.

Positive

• Generated $3.6 million cash from operations in first nine months of 2024
• Maintained strong liquidity with $7 million cash and $4.4 million positive working capital
• Board approved $6 million investment in new equipment to improve efficiency and margins

Negative

• Revenue decreased 37% year-over-year to $14.4 million in Q3 2024
• Net loss increased to $5.6 million in Q3 2024 from $5.2 million in Q3 2023
• Negative EBITDA of $4.3 million in Q3 2024, worsening from -$3.4 million in Q3 2023

Insights

Financial Analyst

The Q3 results reveal concerning trends with $14.4 million in revenue, marking a significant 37% decline year-over-year. The widening EBITDA loss from -$3.4 million to -$4.3 million indicates deteriorating operational efficiency. While the nine-month net loss improved to -$3.3 million from -$10 million, the current quarter's performance suggests renewed pressure on margins.

The $6 million capital investment in single node channels represents a significant commitment given the company's $7 million cash position. Though modernization could improve competitiveness and efficiency, the timing is risky considering the weak operational performance and small market cap of $48.4 million. The positive working capital of $4.4 million provides buffer for this investment cycle.

Industry Analyst

The seismic services market faces structural challenges, reflected in Dawson's reduced crew deployment and heavy reliance on reimbursable revenue (68% of total revenue). The planned deployment of a second large channel crew and resumption of Canadian operations suggest seasonal recovery, but underlying market weakness persists. The strategic pivot to single node technology is important but late, as competitors have already adopted similar efficiency-enhancing equipment.

The asset modernization strategy, while necessary, comes amid industry-wide overcapacity, making the timing of this investment cycle particularly challenging. The company's focus on divesting under-utilized assets indicates a defensive posture to maintain liquidity while funding modernization efforts.

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

Management Comment

Tony Clark, Dawson's President and CEO, commented, "We began the quarter with one crew operating in the United States, and had two small channel crews operating later in the quarter. We currently have one crew operating and a second large channel crew scheduled to deploy in mid-November, which will utilize the majority of our channels in the United States. Our seasonal operations in Canada resumed in October, and we expect increased revenues and profitability from Canada through the first quarter of 2025.

We are currently testing new single node channels in the field, and we expect to invest in increasing our channel count through the purchase of new equipment in the near future. We believe that investing in new single node channels will improve our revenue and margins due to improved crew efficiency with the lighter weight equipment.

We expect to finish the year strong and believe that we are positioned to capitalize on the opportunities in our industry."

Third Quarter and Year-to-Date Results

For the third quarter ended September 30, 2024, the Company reported revenues of $14.4 million, a decrease of 37% compared to $23 million for the comparable quarter ended September 30, 2023. Revenue included reimbursable revenue of $9.8 million and $13.2 million for the quarters ended September 30, 2024, and September 30, 2023, respectively.

For the third quarter ended September 30, 2024, we incurred a net loss of $5.6 million or $0.18 per common share compared to a net loss of $5.2 million or $0.20 per common share for the quarter ended September 30, 2023. During the quarter, we generated negative EBITDA of $4.3 million in the quarter ended September 30, 2024, compared to negative EBITDA of $3.4 million in the quarter ended September 30, 2023.

For the nine months ended September 30, 2024, we incurred a net loss of $3.3 million or $0.11 per common share compared to a net loss of $10 million or $0.40 per common share, for the nine months ended September 30, 2023.

Operations Update

Our Board of Directors approved an increase in our capital budget to $6 million for the potential purchase of new single node channels. The single node channels are expected to increase our revenues through more competitive bids for our customers, and increase our margins due to improved crew efficiencies. As we look to modernize our equipment for the current market, we are continuing to evaluate all of our assets and are looking for opportunities to divest under-utilized assets to improve our return on capital.

Liquidity

For the nine months ended September 30, 2024, we generated $3.6 million of cash from our operations, and as of September 30, 2024, the company had cash of $7 million and positive working capital of $4.4 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 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, depreciation and amortization expense and severance expenses. 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. 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, 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 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 September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating revenues:
Fee Revenue	$	4,663		$	9,735		$	39,727		$	42,889
Reimbursable Revenue		9,758			13,226			18,790			29,699
		14,421			22,961			58,517			72,588
Operating costs:
Operating expenses
Fee operating expenses		6,537			10,918			32,532			38,133
Reimbursable operating expenses		9,758			13,226			18,790			29,699
		16,295			24,144			51,322			67,832
General and administrative		2,529			2,495			6,611			8,971
Severance expense		—			—			86			—
Depreciation and amortization		1,388			2,014			4,383			6,827
		20,212			28,653			62,402			83,630
Loss from operations		(5,791)			(5,692)			(3,885)			(11,042)
Other income (expense):
Interest income		72			192			290			436
Interest expense		(35)			(22)			(120)			(53)
Other income (expense), net		102			327			434			522
Loss before income tax		(5,652)			(5,195)			(3,281)			(10,137)
Income tax benefit (expense)		35			(3)			(36)			96
Net loss		(5,617)			(5,198)			(3,317)			(10,041)
Other comprehensive income (loss):
Net unrealized income (loss) on foreign exchange rate translation		29			(218)			(241)			25
Comprehensive loss	$	(5,588)		$	(5,416)		$	(3,558)		$	(10,016)
Basic loss per share of common stock	$	(0.18)		$	(0.20)		$	(0.11)		$	(0.40)
Diluted loss per share of common stock	$	(0.18)		$	(0.20)		$	(0.11)		$	(0.40)
Weighted average equivalent common shares outstanding		30,906,777			26,137,648			30,845,076			25,383,757
Weighted average equivalent common shares outstanding - assuming dilution		30,906,777			26,137,648			30,845,076			25,383,757

 

DAWSON GEOPHYSICAL COMPANY
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
		September 30,			December 31,
		2024			2023
Assets
Current assets:
Cash and cash equivalents		$	6,980		$	10,772
Restricted cash			—			5,000
Short-term investments			—			265
Accounts receivable, net			2,788			12,735
Prepaid expenses and other current assets			3,411			8,654
Total current assets			13,179			37,426
Property and equipment, net			14,284			16,508
Right-of-use assets			2,348			3,208
Intangibles, net			370			377
Total assets		$	30,181		$	57,519
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	3,424		$	3,883
Accrued liabilities:
Payroll costs and other taxes			1,954			3,415
Other			992			709
Deferred revenue			691			11,829
Current maturities of notes payable and finance leases			704			1,380
Current maturities of operating lease liabilities			1,005			1,202
Total current liabilities			8,770			22,418
Long-term liabilities:
Notes payable and finance leases, net of current maturities			1,531			1,289
Operating lease liabilities, net of current maturities			1,621			2,363
Deferred tax liabilities, net			15			15
Total long-term liabilities			3,167			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 September 30, 2024
and December 31, 2023, respectively			309			308
Additional paid-in capital			156,905			156,678
Accumulated deficit			(136,817)			(123,640)
Accumulated other comprehensive loss, net			(2,153)			(1,912)
Total stockholders' equity			18,244			31,434
Total liabilities and stockholders' equity		$	30,181		$	57,519

 

Reconciliation of Adjusted EBITDA to Net (Loss) Income
(amounts in thousands)
	Three Months Ended September 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net loss	$	(4,442)		$	(1,175)		$	(5,617)		$	(3,813)		$	(1,385)		$	(5,198)
Depreciation and amortization		1,144			244			1,388			1,527			487			2,014
Interest income, net		(34)			(3)			(37)			(58)			(112)			(170)
Income tax (benefit) expense		(35)			—			(35)			3			—			3
EBITDA		(3,367)			(934)			(4,301)			(2,341)			(1,010)			(3,351)
Severance expense		—			—			—			—			—			—
Adjusted EBITDA	$	(3,367)		$	(934)		$	(4,301)		$	(2,341)		$	(1,010)		$	(3,351)
	Nine Months Ended September 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net (loss) income	$	(4,743)		$	1,426		$	(3,317)		$	(9,067)		$	(974)		$	(10,041)
Depreciation and amortization		3,611			772			4,383			5,173			1,654			6,827
Interest income, net		(157)			(13)			(170)			(214)			(169)			(383)
Income tax expense (benefit)		36			—			36			(96)			—			(96)
EBITDA		(1,253)			2,185			932			(4,204)			511			(3,693)
Severance expense		86			—			86			—			—			—
Adjusted EBITDA	$	(1,167)		$	2,185		$	1,018		$	(4,204)		$	511		$	(3,693)

 

Reconciliation of Adjusted EBITDA to Net Cash (Used in) Provided By Operating Activities
(amounts in thousands)
	Three Months Ended September 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net cash used in operating activities	$	(3,331)		$	(900)		$	(4,231)		$	(2,849)		$	(440)		$	(3,289)
Changes in working capital and other items		233			17			250			833			(521)			312
Non-cash adjustments to net loss		(269)			(51)			(320)			(325)			(49)			(374)
EBITDA		(3,367)			(934)			(4,301)			(2,341)			(1,010)			(3,351)
Severance expense		—			—			—			—			—			—
Adjusted EBITDA	$	(3,367)		$	(934)		$	(4,301)		$	(2,341)		$	(1,010)		$	(3,351)
	Nine Months Ended September 30,
	2024 US			2024 CA			2024 Consol.			2023 US			2023 CA			2023 Consol.
Net cash (used in) provided by operating activities	$	(33)		$	3,592		$	3,559		$	(1,139)		$	3,601		$	2,462
Changes in working capital and other items		(217)			(1,255)			(1,472)			(2,301)			(2,959)			(5,260)
Non-cash adjustments to net (loss) income		(1,003)			(152)			(1,155)			(764)			(131)			(895)
EBITDA		(1,253)			2,185			932			(4,204)			511			(3,693)
Severance expense		86			—			86			—			—			—
Adjusted EBITDA	$	(1,167)		$	2,185		$	1,018		$	(4,204)		$	511		$	(3,693)

 

Statements of Operations by operating segment for the three and nine months ended September 30, 2024, and 2023.
	Three Months Ended September 30, 2024									Nine Months Ended September 30, 2024
	USA Operations			Canada Operations			Consolidated			USA Operations			Canada Operations			Consolidated
Operating revenues
Fee revenue	$	4,652		$	11		$	4,663		$	31,260		$	8,467		$	39,727
Reimbursable revenue		9,758			—			9,758			18,753			37			18,790
		14,410			11			14,421			50,013			8,504			58,517
Operating costs:
Fee operating expenses		5,726			811			6,537			26,751			5,781			32,532
Reimbursable operating expenses		9,758			—			9,758			18,753			37			18,790
Operating expenses		15,484			811			16,295			45,504			5,818			51,322
General and administrative		2,393			136			2,529			6,133			478			6,611
Severance expense		—			—			—			86			—			86
Depreciation and amortization		1,144			244			1,388			3,611			772			4,383
		19,021			1,191			20,212			55,334			7,068			62,402
(Loss) income from operations		(4,611)			(1,180)			(5,791)			(5,321)			1,436			(3,885)
Other income (expense):
Interest income		58			14			72			246			44			290
Interest expense		(24)			(11)			(35)			(89)			(31)			(120)
Other income (expense), net		100			2			102			457			(23)			434
(Loss) income before income tax		(4,477)			(1,175)			(5,652)			(4,707)			1,426			(3,281)
Income tax benefit (expense)		35			—			35			(36)			—			(36)
Net (loss) income		(4,442)			(1,175)			(5,617)			(4,743)			1,426			(3,317)
Other comprehensive income (loss):
Net unrealized income (loss) on foreign exchange rate translation		—			29			29			—			(241)			(241)
Comprehensive (loss) income	$	(4,442)		$	(1,146)		$	(5,588)		$	(4,743)		$	1,185		$	(3,558)
	Three Months Ended September 30, 2023									Nine Months Ended September 30, 2023
	USA Operations			Canada Operations			Consolidated			USA Operations			Canada Operations			Consolidated
Operating revenues
Fee revenue	$	9,724		$	11		$	9,735		$	32,767		$	10,122		$	42,889
Reimbursable revenue		13,223			3			13,226			29,092			607			29,699
		22,947			14			22,961			61,859			10,729			72,588
Operating costs:
Fee operating expenses		10,066			852			10,918			29,353			8,780			38,133
Reimbursable operating expenses		13,223			3			13,226			29,092			607			29,699
Operating expenses		23,289			855			24,144			58,445			9,387			67,832
General and administrative		2,315			180			2,495			8,084			887			8,971
Severance expense		—			—			—			—			—			—
Depreciation and amortization		1,527			487			2,014			5,173			1,654			6,827
		27,131			1,522			28,653			71,702			11,928			83,630
Loss from operations		(4,184)			(1,508)			(5,692)			(9,843)			(1,199)			(11,042)
Other income (expense):
Interest income		72			120			192			250			186			436
Interest expense		(14)			(8)			(22)			(36)			(17)			(53)
Other income (expense), net		316			11			327			466			56			522
Loss before income tax		(3,810)			(1,385)			(5,195)			(9,163)			(974)			(10,137)
Income tax (expense) benefit		(3)			—			(3)			96			—			96
Net loss		(3,813)			(1,385)			(5,198)			(9,067)			(974)			(10,041)
Other comprehensive (loss) income:
Net unrealized (loss) income on foreign exchange rate translation		—			(218)			(218)			—			25			25
Comprehensive loss	$	(3,813)		$	(1,603)		$	(5,416)		$	(9,067)		$	(949)		$	(10,016)

 

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SOURCE Dawson Geophysical Company

FAQ

What was Dawson Geophysical's revenue in Q3 2024?

Dawson Geophysical (DWSN) reported revenues of $14.4 million in Q3 2024, which included $9.8 million in reimbursable revenue.

How much did Dawson Geophysical lose per share in Q3 2024?

Dawson Geophysical (DWSN) reported a net loss of $0.18 per common share in Q3 2024.

What is Dawson Geophysical's current cash position as of September 30, 2024?

Dawson Geophysical (DWSN) had $7 million in cash and $4.4 million in positive working capital as of September 30, 2024.

How much did Dawson Geophysical's Board approve for new equipment investment?

Dawson Geophysical's Board of Directors approved a $6 million capital budget for the potential purchase of new single node channels.