Market Overview

Dawson Geophysical Reports Second Quarter 2019 Results


MIDLAND, Texas, Aug. 1, 2019 /PRNewswire/ -- Dawson Geophysical Company (NASDAQ:DWSN) (the "Company") today reported unaudited financial results for its second quarter ended June 30, 2019.

For the quarter ended June 30, 2019, the Company reported revenues of $24,076,000, a decrease of approximately thirty three percent compared to $36,158,000 for the quarter ended June 30, 2018. For the second quarter of 2019, the Company reported a net loss of $11,246,000 or $0.49 loss per common share compared to a net loss of $5,711,000 or $0.25 loss per common share for the second quarter of 2018. The Company reported negative EBITDA of $6,071,000 for the quarter ended June 30, 2019 compared to positive EBITDA of $1,564,000 for the quarter ended June 30, 2018.

For the six months ended June 30, 2019, the Company reported revenues of $75,240,000, a decrease of approximately thirteen percent compared to $86,038,000 for the six months ended June 30, 2018. For the six months ended June 30, 2019, the Company reported a net loss of $11,383,000 or $0.49 loss per common share compared to a net loss of $7,420,000 or $0.32 loss per common share for the six months ended June 30, 2018. The Company reported negative EBITDA of $111,000 for the six months ended June 30, 2019 compared to positive EBITDA of $8,553,000 for the six months ended June 30, 2018.

During the second quarter of 2019, the Company operated a peak of five crews in the United States ("U.S."), including microseismic operations, and a single small channel count crew in Canada for a short period of time compared to four large channel count crews in the U.S. and four large channel count crews in Canada in the first quarter. Based on currently available information, the Company anticipates operating four to six crews in the U.S. during the third quarter and into early fourth quarter of 2019 and two to four crews in the U.S. later in the fourth quarter of 2019, with limited activity in Canada in the fourth quarter. The Company is currently operating three crews in the U.S. with two additional crews to be deployed in the next few weeks. As in recent quarters, the majority of the Company's projects are on behalf of multi-client companies in the U.S. with some activity directly for exploration and production companies. The Company continues to implement cost reduction measures and maintain a strong balance sheet.

Capital expenditures for the second quarter were $1,152,000 and total $2,198,000 for the first six months of 2019, primarily for maintenance capital items. The Company's balance sheet remains strong with $44,861,000 of cash and short term investments and $44,906,000 of working capital as of June 30, 2019. The Company has notes payable and finance leases totaling $9,436,000 as of June 30, 2019.

Stephen C. Jumper, President and Chief Executive Officer, said, "As anticipated in our first quarter press release and conference call, overall crew utilization was lower during the second quarter. We began the quarter with three crews operating and two microseismic projects and ended the quarter with two crews active and three microseismic projects. Channel utilization was markedly lower in the second quarter compared to the first quarter of 2019, as several large channel count projects transitioned into smaller channel count projects during much of the second quarter. Utilization during the second quarter was further impacted by the timing of crew moves and severe wet conditions, primarily in Oklahoma, which limited activity on a large channel count crew for the back half of the quarter. Weather conditions became more favorable in the beginning of the third quarter. Reflected in the second quarter is an accrual of $1,450,000 for severance and retirement package costs related to recent headcount reductions and executive retirements."

Jumper continued, "We anticipate that both crew and channel count utilization will be improved in the third quarter and into the fourth quarter of 2019 in the U.S. as compared to second quarter levels, with four to six crews operating. In June, we began a large multicomponent project in West Texas utilizing 44,000 three-component units, or 132,000 total channels. Our current inventory of multicomponent channels is sufficient to meet these needs. This project is anticipated to be completed mid-fourth quarter, at which time the multicomponent equipment will redeploy to Canada for the winter season.

Primary areas of operations are in the Permian and Delaware Basins, SCOOP/STACK region of Oklahoma and Austin Chalk area of Southeast Texas. In addition, we have two larger channel count projects in Louisiana and Wyoming, each of which is projected to begin in the late third or early fourth quarter of this year. Bid activity remains intermittent and visibility remains challenging as exploration and production companies continue to evaluate capital spending."

Jumper concluded, "On June 30, 2019, Wayne Whitener, Executive Vice Chairman of the Company, and Robert Wood, President of our Canadian subsidiary, Eagle Canada, both entered into retirement. Wayne and Rob joined Dawson in February of 2015 when the legacy Dawson Geophysical merged with TGC Industries, where Wayne was Chief Executive Officer and Rob was President of TGC's Canadian operation, Eagle Canada. Terry Jackson, with forty years of experience in the Canadian seismic industry and ten years with Eagle Canada, will assume the role as president of our operations in Canada. In addition, Wayne has retired from his position as a member of the Board of Directors and the Company has reduced the number of active directors to seven. Wayne and Rob had very distinguished careers and were recognized as highly regarded leaders in the seismic industry. Their tremendous contributions to TGC Industries, Eagle Canada and Dawson Geophysical will be sorely missed. On behalf of the board, shareholders and employees, we wish them well in the next chapter of their lives."

Conference Call Information

Dawson Geophysical Company will host a conference call to review its second quarter 2019 financial results on August 1, 2019 at 9 a.m. CT. Participants can access the call at 1-866-548-4713 (U.S.) and 1-323-794-2093 (Toll/International). To access the live audio webcast or the subsequent archived recording, visit the Dawson website at Callers can access the telephone replay through September 1, 2019 by dialing 1-844-512-2921 (Toll-Free) and 1-412-317-6671 (Toll/International). The passcode is 4489359. The webcast will be recorded and available for replay on Dawson's website until September 1, 2019.

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 multicomponent 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; the volatility of oil and natural gas prices; changes in economic conditions; 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 disruptions; 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 on March 6, 2019. The Company disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise.



(unaudited and amounts in thousands, except share and per share data)

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