Q4 2020 Dawson Geophysical Co Earnings Call
Please standby.
Okay.
Statements made by management during this call with respect to forecasts estimates or other expectations regarding future events or which provide any information other than historical facts may constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Five.
These forward looking statements are based on management's current expectations and include known and unknown risks uncertainties and other factors many of which the company is unable to predict or control that may cause the company's actual future results or performance to materially.
Really materially differ from any future results or performance expressed or implied by those statements.
Yeah.
These risks and uncertainties include the risk factors disclosed by the company from time to time in its filing with the S. E C, including in the company's annual report on form 10-K filed with the SEC on March six 2020, and any subsequent quarterly reports.
And on form 10-Q filed with the SEC. Furthermore, as we start this call. Please also refer to the statement regarding forward looking statements incorporated in the company's press release issued this morning and please note that the contents of the company's conference call. This morning is covered by those statements.
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During this conference call management will make references to EBITDA.
Which is a non-GAAP financial measure a reconciliation of the non-GAAP measure to the applicable GAAP measure can be found in the company's current earnings release, a copy of which is located on the company's website www Dot Sun's treaty Dot com.
The call is scheduled for 30 minutes and the company will not provide any guidance.
Today's call is being recorded and I would now like to turn the call over to Stephen jumper, Chairman President and CEO of Dawson Geophysical Company. Please go ahead Sir.
Well. Thank you April good.
And welcome to Dawson Geophysical company's fourth quarter, 2020 earnings and operations Conference call.
April said my name is Steve jumper, Chairman, President and CEO of the company joining me on the call is Jim Braun Executive Vice President and Chief Financial Officer.
Before I start the call just a few things to go over if you'd like to listen to a replay of today's call. It will be available via webcast by going to the Investor Relations section of the company's website at Www Dot Dawson three big Dot com.
Information reported on this call speaks only of today Thursday March 11th 2021, and therefore, you're advised that time sensitive information may no longer be accurate as at the time of any replay listening.
Turning to our preliminary fourth quarter and 12 months ended December 31, 2020 financial results.
For the fourth quarter ended December 31, 2020, the company reported revenues of $8 9 million a decrease of approximately 74 per cent compared to $33 6 million for the quarter ended December 31, 2019 for the fourth quarter of 2020, the company reported a net loss from seven eight.
Megan or 33 cents loss per share of common stock compared to a net loss of $5 8 million or 25 net loss per share of common stock for the quarter ended December 31, 2019, the cash.
Company reported negative EBITDA day, EBITDA of $4 2 million per the quarter ended December 31, 2020 compared to negative EBITDA of 788000 for the quarter ended December 31 2019.
On a year ended December 31, 2020, the company reported revenues of $86 1 million.
A decrease of approximately 41 per cent compared to a 145 8 million for the year ended December 31, 2019 for the full year of 19, the company narrowed its loss to $13 2 million or 56.
Since loss per share of common stock compared to a net loss of $15 2 million or 60 cents.
Loss per share of common stock for the year ended December at night.
Super 31, 2019 that should've been full year 2020, the company reported EBITDA of $3 7 million for the year ended December 31, 2020, a decrease of approximately 41 per cent for the year ended December 31, 2020, compared to $6 3 billion per the year ended December 31, two.
And in 19.
During the fourth quarter of 2020, the company operated one data acquisition crews with periods of low utilization in the United States.
On one crew was inactive for the latter part of the third quarter and well into the fourth pool.
Based on currently available information the company anticipates operating operating one crew in the U S through the first quarter of 'twenty, one we'd 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.
Flex it in both the fourth quarter and year end results is a noncash impairment of approximately $1.6 million related to a note receivable and bad debt expense.
I will now turn control on the call over to Jim brought up who who will review the financial results.
Well retired looking five on box and our outlook into the first quarter of 2020 Jan.
Thank you Stephen Good morning revenues from fourth quarter of 2020 were $8 9 million a decrease of approximately 74 per cent compared to 33 6 million from quarter end on December 31st 2019.
In our earnings release issued this morning during the fourth quarter of 2020 the.
The company operated one data acquisition crews in periods of low utilization in the U S.
The one crew as an actor from Atlanta 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.
One crew in Canada from the winter season, ending at the end of the first quarter of 2021.
Cost of services on the fourth quarter.
From.
'twenty 'twenty were 10 8 million decrease from 65%.
Compared to 38 million on the same quarter from 2019.
General and administrative expenses were $2 $7 million on the fourth quarter of 2020, a decrease of 28% compared to $3 8 million in the fourth quarter of 2019.
Depreciation and amortization expenses in the fourth quarter of 2020 was $3 8 million a decrease from 27% compared with $5 2 million from same quarter of 2019.
Net loss from the fourth quarter of 2020, with some one 8 million or 33 share of loss per common share compared to a net loss of $5 8 million or 25 loss per common share in the fourth quarter a few may 19.
We recorded income tax expense from 9000 from fourth quarter of 2020.
Compared to an income tax benefit of 93000 in the second quarter of 2019.
EBITDA on the fourth quarter of 2020 was negative $4 2 million compared to negative EBITDA from 180000 strength.
For 2019.
An EBITDA reconciliation was provided in our earnings release issued this morning.
Now I'll highlight some.
Results for the year ended December 31 2020.
Revenues for the year ended December 31 2020.
We're at 86 point 80.
$86 1 million a decrease from 41%.
$245 8 million in the year ended December 31 2019.
So services for the year from 2020 were $69 million, a decrease of 44% compared to 123 million from the year ended December 31.
19.
General and administrative expenses.
From $13 9 million for the year ended December 31, 2020, a day.
Increase of 19% compared to $17 2 million from the year ended December 31 2019.
Depreciation and amortization expense for the year ended December 31st mortgage on it.
$17 2 million a decrease from 21% on.
Baird to $21 8 million for the year ended December 31 2019.
We narrowed our net loss for the year ended December 31, 2020 to 13.
$13 2 million or <unk> 56 loss per common share compared to on a net loss of $15 2 million or 66 cents loss per common share for the year ended December 31 2019.
EBITDA for the year of 2020 was $3 7 million compared to EBITDA of $6 3 million for the year of 2019.
Okay.
EBITDA reconciliation is provided on our earnings release issued this morning.
Now I'll highlight some balance sheet items.
Our balance sheet continues to remain strong as of December 31, 2020, we had <unk>.
Including obligations under financing leases of approximately 138000.
We had cash and short term investments of 46 point.
5 million, our current ratio was seven nine to one.
Working capital was approximately $51 1 million.
And with that I'll turn the call back to Steve for some comments on our operations well. Thank you Jim.
David on the earnings release issued this morning fiscal 2020 was a year of unprecedented adversity.
The company started at 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 Canadian market during the first quarter of 2020 debt.
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.
As oil prices began to trade at significantly low level exploration and production companies reduced their capital budgets and spending which in turn negatively impacted demand for our services. As a result crew deployment less ended on utilization of our existing channels dropped.
<unk> levels went from strong and promising in the first half of the year two week for periods of time on the second half of the year, even though we have seen some gradual uptick in oil prices.
Requests for proposals for our services in both the U S and Canada remained challenged.
We are beginning to see signs of modest recovery in the oil service day.
As the oil and gas industry has experienced slight economic improvement in the number of active drilling rigs in hydraulic fracturing crews deployed in the U S. On a different note. The decrease in overall activity in financial difficulty led to an increase in M&A activity on some E&P companies have chosen to consolidate.
With others.
At this time, we are unable to forecast the impact of this activity.
I have on the demand for our services as E&P companies, where you evaluate their capital spending projects. However, this recent M&A activity indicates E&P cafes 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 the most economic drilling locations. This need for increased efficiencies promotes demand per se it isn't exactly data.
Data.
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As in the most recent down cycle, we anticipate recovery in seismic data acquisition to somewhat lag behind increase in drilling and completion activities.
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 on our previous press releases. This year, we have taken steps to outsource several ancillary services.
These steps, including permitting a survey have resulted in reduced salary costs and lower general and administrative expenses Morrow. Moreover, as previously reported in our second quarter 2020 earnings per.
Yes, really the company anticipates approximately $4 $3 million in annual cost savings as a result.
These previously enacted enacted cost saving measures.
Capital expenditures for the fourth quarter were $25000 and totaled $2 8 million for the 12 months ended December 31, 2020, primarily for maintenance capital items. The company's board of Directors has approved an initial capital budget of $1 billion for 2021.
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 already equipment inventory are strong on an unlevered balance sheet and our dedicated workforce positioned.
For help in recovery when market conditions improve.
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 think all of our hard working employees, our value clients and our trusted shareholders as we work toward better times.
And with that April I believe we are ready to take questions.
Thank you if you'd like to ask a question simply press the star key followed by the digit one on your telephone keypad.
I'll stop here, you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again press star one at this time well pause.
For a moment.
And we'll first hear from John Potratz of research investments.
Good morning, Stephen did very well for the quarter given how everything is going just wondering on business prospects.
On the Wall Street Journal, they talked about Exxon going into using C. O two stores in the ground.
Does this way the prospects from the seismic.
Activity given that it.
Putting <unk> on the ground.
And and.
Drilling for oil and gas.
Yeah.
This is a different seismic data in there from what.
For you.
I appreciate your interest and your questions as always.
We have been involved over the years and several isolated.
What you would consider or call C O two sequestration projects.
The ones that we have been involved with today.
As I understand it has involved a commercial aspect.
And academic aspect or component as well as.
Some government funding to two.
Look at the D C O two projects and so we've done we actually did one probably I don't know if it was late third early fourth quarter of 'twenty, where we bid a.
Fairly small three D survey.
That was academic driven the intent is to get an image of the sub surface and.
See if you can identify.
Secure.
Location to inject cotwo in the ground on hold it's a different process than what we it its the same size, but it's a different application what we typically do day to day as bill geologic images and.
Look for places that our Earth models that are.
Conducive to the accumulation of hydrocarbons and so there's this takes our imagery and look to see if they can find a secure closed reservoir to inject cotwo.
We have had some projects recently most of them are small in nature that have come across that are that are a combination there are primarily commercial related.
There are some companies out there over the years that specialize in this and we've been exposed to some of the <unk> type work in the past and so the answer to the question is yes, I think it is an opportunity.
That will present itself going forward, but the projects from the C. O two standpoint tend to be smaller in nature and are.
A little more isolated than what you would get from a typical E&P exploration and production project.
But still it's a new business of course effectively four from someone like Exxon. They give you more business with you have the crews available to do the work.
Correct correct.
Yeah.
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Yes, correct.
And right now with the crude being down not working which is good good work GAAP.
It is in.
You know the.
We're certainly.
Looking at several of those projects.
Currently and they they typically have a little bit of lead time, because theres quite a bit of a geologic work that has to go in behind them.
And in front of them.
Okay.
Sure.
Hum.
On a question that would combine the council.
Leases on federal land with a lot of your customers.
Locked in drilling on the ability to two.
Few more seismic work that day locking in before buying clothes. The counsel that they have the ability to hire you later that they have.
I didn't get the.
Geophysical areas.
Yeah that debt.
That's something that the day that we're a little uncertain on at this time as to how that process works.
I'm confident that when we're dealing with federal lands, which typically occur or are located in the western U S and Mexico, Utah, Wyoming, Colorado places like that I am confident that that many of our customers.
Have their leases in position and I'm confident many of them are sitting on drilling permits.
For years to come.
And so the delay is going to affect some new entry of new permits, but it's not going on in my opinion stop that activity.
Lately however.
When you go in to do a seismic project in advance of drilling.
Ah you're you still have to go through a permit process with.
Several federal authorities, the bureau of land management fish and wildlife and agencies like that and so we don't currently have anything in the pipeline.
That is that is on federal lands.
We don't anticipate it to be a huge issue other than what it has typically been in the past where it's just.
Taking time, and making sure youre doing the right things and getting the necessary approvals in <unk>.
And studies and those types of things done in advance, but how.
How it's going to affect actual seismic permits at this point.
We're unclear.
But at least they have the land that they could essentially do drilling.
Who's got the permits with day.
Do have the basic permits in place.
To be able to do that.
Yes, and Ed.
As I understand that.
The executive order book.
No that is an expert on it as I understand it it just put on more moratorium of 60 days.
On new leases and new drilling permits and so as I understand it most of the E&P companies that are have access or have all operations on federal lands will have.
Yeah.
Permits well in advance of drilling so I think from a drilling permit and leasing standpoint, I think there'll be continued activity as I said, how it effects and upfront I don't think it will stop it but you know how it affects an upfront.
Seismic project has yet to be determined.
We've worked on federal lands for Forever, we have a good relationship with the federal land folks we know what needs to be done the right way, we know what what from what surveys needed to be done and we take great care on federal lands as we do on private lands to make sure. We're doing all the right things so I'm com.
But we're we're just unclear as to what effect that's gonna have on the near term.
Okay.
It looks like it's not a big constraint.
For seismic work.
In the west because people are anticipating and relationships are still there.
Correct.
It sounds great there've been several weeks 13D filing that's amazing.
What what what I'd like to tell my people from attractive to you.
Right.
Well I think most of the 13D filing that youre seeing out there are many of our long term shareholders that have Uh huh.
Sales greater than five per cent about our company for quite some time on I think what youre seeing for the most part day or just updated routine filings.
Oh, okay.
Yeah.
Very good.
Thank you very much next question from someone else. Thank you.
As a reminder, star one to ask a question I'll make a comment we'll pause for a moment.
Okay.
Yeah.
Yeah.
And it appears there are no further questions at this time.
Okay.
Well. Thank you I wanted to take this opportunity to.
I, thank everybody for listening in as I said earlier I wanted to take this opportunity to thank our.
Employees, who are working very hard and diligently on behalf of our clients and our shareholders will certainly want to thank our clients for their on the opportunities they provide and really wanted to take this opportunity to.
Thank our shareholders for their trust and support and through.
Through these difficult times, we are as we've said in our press release and on this call. It is it continues to be a very challenging time, probably the most challenging I have been through.
We are encouraged we're encouraged with the recent uptick in oil prices $65.
We will see how the day improvement in oil prices flow through the capital budget plans and spending plans of our E&P customers. We are seeing some uptick in drilling and the completions, which are certainly are encouraging we really had about a year alone.
On the same still more or less on drilling and completions. So there's some catch up work to be done in 'twenty, one on behalf of our E&P customers.
We're optimistic about the future.
Of our company and our and our industry.
Uh huh.
Our balance sheet remains strong we have had significant cutback in cost saving measures, but we maintain the ability to respond very quickly in our equipment is in good shape and ready to respond when.
Things turned around and with that I'll close the call. Thank you again for your time and your interest and we'll talk to you in about 60 days. Thank you.
That does conclude today's conference. Thank you all for your participation you may now disconnect.
Okay.
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