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 | Nine Months Ended | |||||||||||
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 | 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 | 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 | — | 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 | — | (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