Dawson Geophysical Reports Fourth Quarter And Full Year 2020 Results

About this update from Dawson Geophysical Company

MIDLAND, Texas , March 11, 2021 /PRNewswire/ -- Dawson Geophysical Company (NASDAQ: DWSN) (the "Company") today reported unaudited financial results for its fourth quarter and full year ended December 31, 2020 . For the fourth quarter ended December 31, 2020 , the Company reported revenues of $8,884,000 , a decrease of approximately 74% compared to $33,557,000 for the quarter ended December 31, 2019 . For the fourth quarter of 2020, the Company reported a net loss of $7,849,000 , or $0.33 loss per share of common stock, compared to a net loss of $5,828,000 , or $0.25 loss per share of common stock, for the quarter ended December 31, 2019 . The Company reported negative EBITDA of $4,151,000 for the quarter ended December 31, 2020 compared to negative EBITDA of $788,000 for the quarter ended December 31, 2019 . For the year ended December 31, 2020 , the Company reported revenues of $86,100,000 , a decrease of approximately 41% compared to $145,773,000 for the year ended December 31, 2019 . For the full year 2020, the Company narrowed its net loss to $13,196,000 , or $0.56 loss per share of common stock, from a net loss of $15,213,000 , or $0.66 loss per share of common stock, for the year ended December 31, 2019 . The Company reported EBITDA of $3,683,000 for the year ended December 31, 2020 , a decrease of approximately 41% compared to $6,261,000 for the year ended December 31, 2019 . During the fourth quarter of 2020, the Company operated one data acquisition crew with periods of low utilization in the United States (" U.S. "). The one crew was inactive for the latter part of the third quarter and well into the fourth quarter. Based on currently available information, the Company anticipates operating one crew in the U.S. through the first quarter with likely sustained periods of downtime and one crew in Canada for the winter season ending at the end of the first quarter of 2021. While visibility remains limited beyond the first quarter, the Company maintains the ability to deploy additional crews on short notice when market conditions improve. Reflected in both the fourth quarter and year end results is a non-cash impairment of approximately $1.6 million related to a note receivable and bad debt expense. Stephen C. Jumper , President and Chief Executive Officer, said, "Fiscal 2020 was a year of unprecedented adversity. The company started out the first half of the year with its best financial and operational results in many years. We operated three large channel count crews in the U.S. and up to three crews in the Canada during the first quarter of 2020. The company continued profitability in the second quarter with the operation of two large channel count crews. As reported in our second quarter earnings release, the company began to experience the dramatic impact of the COVID-19 related economic lockdowns in late spring and early summer. As oil prices began to trade at significantly low levels, Exploration and Production ("E&P") companies reduced their capital budgets and spending, which in turn, negatively impacted demand for our services. As a result, crew deployment lessened and utilization of our existing channels dropped. Utilization levels went from strong and promising in the first half of the year to weak for periods of time in the second half of the year. Even though we have seen some gradual uptick in oil prices, current requests for proposals for our services in both the U.S. and Canada remain challenged. We are beginning to see signs of modest recovery in the oilfield service space as the oil and gas industry has experienced slight economic improvements in the number of active drilling rigs and hydraulic fracturing crews deployed in the U.S. On a different note, the decrease in overall activity and financial difficulties led to an increase in M&A activity as some E&P companies have chosen to consolidate with others. At this time, we are unable to forecast the impact that this activity will have on the demand for our services as E&P companies re-evaluate their capital spending projects. However, this recent M&A activity indicates E&P companies will continue their focus on shareholder returns and disciplined capital spending as they seek to develop and produce oil and natural gas with increased efficiency by prioritizing their most economic drilling locations. This need for increased efficiencies promotes demand for seismic data acquisition and the services we provide. As in the most recent down cycles, we anticipate recovery in seismic data acquisition to somewhat lag behind increases in drilling and completion activities. The overall effect on the Company of the current administration's order to pause oil and gas leasing and issuance of new drilling permits on federal lands is yet to be determined, however, we anticipate activity among E&P companies to be cautious in many of the Western States such as New Mexico , Utah and Wyoming ." Jumper continued, "In response to these difficult conditions, we are maintaining our focus on cost saving measures while balancing the ability to respond rapidly when market conditions improve. As reported in our previous press releases this past year, we have taken steps to outsource several ancillary services. These steps, including permitting and surveying, have resulted in reduced salary costs and lower general and administrative expenses. Moreover, as previously reported in our second quarter 2020 earnings press release, the Company anticipates approximately $4.3 million in annual cost savings as a result of previously enacted cost saving measures." Capital expenditures for the fourth quarter were $25,000 and totaled $2,786,000 for the twelve months ended December 31, 2020 , primarily for maintenance capital items. The Company's Board of Directors has approved an initial capital budget of $1,000,000 for 2021. The Company's balance sheet remains strong with $46,538,000 of cash, restricted cash and short term investments and $51,149,000 of working capital as of December 31, 2020 . The Company is nearly debt free, with notes payable and finance leases of $138,000 as of December 31, 2020 . Jumper concluded, "Despite the setbacks thrust upon us by the worldwide COVID-19 pandemic, we are determined to press forward and deliver the highest quality services for our clients. Our state-of-the-art equipment inventory, our strong and unleveraged balance sheet and our dedicated work force positions us for a healthy recovery when market conditions improve. As mentioned above, conditions are difficult and will remain so for the near-term pending continued improvement and stabilization in oil prices, but I am confident in the future and that we are properly focused on upcoming opportunities. I thank all of our hard-working employees, valued clients and our trusted shareholders as we work toward better times ahead." Conference Call Information Dawson Geophysical Company will host a conference call to review its year-end and fourth quarter 2020 financial results on March 11, 2021 at 9:00 a.m. Central / 10:00 a.m. Eastern. Participants can access the call at 1-800-289-0438 (US/ Canada ) and 1-323-794-2423 (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 April 11, 2021 by dialing 1-844-512-2921 (Toll-Free) and 1-412-317-6671 (Toll/International). The passcode is 7372829. The webcast will be recorded and available for replay on Dawson's website at http://www.dawson3d.com until April 11, 2021 . 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; 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 negative impact on demand for oil and gas; the current significant surplus in the supply of oil and the ability of 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; 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 U.S. Securities and Exchange Commission (the " SEC ") on March 6, 2020 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 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 , 2020 2019 2020 2019 (unaudited) (unaudited) Operating revenues $ 8,884 $ 33,557 $ 86,100 $ 145,773 Operating costs: Operating expenses 10,809 30,814 68,998 123,024 General and administrative 2,715 3,779 13,920 17,169 Depreciation and amortization 3,762 5,182 17,174 21,826 17,286 39,775 100,092 162,019 Loss from operations (8,402) (6,218) (13,992) (16,246) Other income (expense): Interest income 76 103 402 548 Interest expense (3) (54) (83) (435) Other income (expense), net 489 248 501 681 Loss before income tax (7,840) (5,921) (13,172) (15,452) Income tax (expense) benefit (9) 93 (24) 239 Net loss (7,849) (5,828) (13,196) (15,213) Other comprehensive income: Net unrealized income on foreign exchange rate translation, net 593 112 372 392 Comprehensive loss $ (7,256) $ (5,716) $ (12,824) $ (14,821) Basic loss per share of common stock $ (0.33) $ (0.25) $ (0.56) $ (0.66) Diluted loss per share of common stock $ (0.33) $ (0.25) $ (0.56) $ (0.66) Weighted average equivalent common shares outstanding 23,478,072 23,257,830 23,382,433 23,179,257 Weighted average equivalent common shares outstanding - assuming dilution 23,478,072 23,257,830 23,382,433 23,179,257 DAWSON GEOPHYSICAL COMPANY CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data) December 31, 2020 2019 Assets (unaudited) Current assets: Cash and cash equivalents $ 40,955 $ 26,271 Restricted cash 5,000 5,000 Short-term investments 583 2,350 Accounts receivable, net of allowance for doubtful accounts of $250 at December 31, 2020 and 2019 7,343 24,356 Current maturities of notes receivable — 66 Prepaid expenses and other current assets 4,709 7,575 Total current assets 58,590 65,618 Property and equipment 271,480 284,647 Less accumulated depreciation (232,580) (231,098) Property and equipment, net 38,900 53,549 Right-of-use assets 5,494 6,605 Notes receivable, net of current maturities — 1,394 Intangibles, net 393 385 Long-term deferred tax assets, net — 57 Total assets $ 103,377 $ 127,608 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,603 $ 3,952 Accrued liabilities: Payroll costs and other taxes 1,045 1,963 Other 1,811 3,599 Deferred revenue 1,779 3,481 Current maturities of notes payable and finance leases 94 4,062 Current maturities of opearating lease liabilities 1,109 1,200 Total current liabilities 7,441 18,257 Long-term liabilities: Notes payable and finance leases, net of current maturities 44 96 Operating lease liabilities, net of current maturities 4,899 5,940 Deferred tax liabilities, net 19 — Other accrued liabilities — 150 Total long-term liabilities 4,962 6,186 Operating 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, 23,526,517 and 23,335,855 shares issued, and 23,478,072 and 23,287,410 shares outstanding at December 31, 2020 and 2019, respectively 235 233 Additional paid-in capital 154,866 154,235 Retained deficit (62,927) (49,731) Treasury stock, at cost; 48,445 shares — — Accumulated other comprehensive loss, net (1,200) (1,572) Total stockholders' equity 90,974 103,165 Total liabilities and stockholders' equity $ 103,377 $ 127,608 Reconciliation of EBITDA to Net Loss (amounts in thousands) Three Months Ended December 31 , Twelve Months Ended December 31 , 2020 2019 2020 2019 Net loss $ (7,849) $ (5,828) $ (13,196) $ (15,213) Depreciation and amortization 3,762 5,182 17,174 21,826 Interest (income) expense, net (73) (49) (319) (113) Income tax expense (benefit) 9 (93) 24 (239) EBITDA $ (4,151) $ (788) $ 3,683 $ 6,261 Reconciliation of EBITDA to Net Cash (Used in) Provided by Operating Activities (amounts in thousands) Three Months Ended December 31 , Twelve Months Ended December 31 , 2020 2019 2020 2019 Net cash (used in) provided by operating activities $ (4,807) $ 8,283 $ 19,641 $ 9,480 Changes in working capital and other items 2,654 (8,518) (12,444) (812) Non-cash adjustments to net loss (1,998) (553) (3,514) (2,407) EBITDA $ (4,151) $ (788) $ 3,683 $ 6,261 View original content: http://www.prnewswire.com/news-releases/dawson-geophysical-reports-fourth-quarter-and-full-year-2020-results-301245271.html SOURCE Dawson Geophysical Company

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