Dawson Geophysical's CEO Discusses F2Q12 Results - Earnings Call Transcript

Dawson Geophysical Company (DWSN)

Q2 2012 Earnings Call

May 2, 2012 10:00 am ET

Executives

Steve Jumper – President, Chief Executive Officer

Christina Hagan – Executive Vice President, Chief Financial Officer

Analysts

Marshall Adkins – Raymond James

Georg Venturatos – Johnson Rice

Veny Aleksandrov – Pritchard Capital Partners

Presentation

Operator

Good morning and welcome to the Dawson Geophysical Company’s Second Quarter 2012 Earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one using a touchtone telephone. To withdraw your question, you may press star and then two. Please also note that today’s event is being recorded.

I would now like to turn the conference call over to Mr. Steve Jumper, President and CEO. Mr. Jumper, please go ahead.

Steve Jumper

Thank you, Jamie. Well good morning and welcome to Dawson Geophysical Company’s Fiscal Second Quarter 2012 Earnings and Operations Update conference call. As Jamie said, my name is Steve Jumper, President and CEO of the Company. Joining me on the call are Christina Hagan, Executive Vice President and Chief Financial Officer, and Ray Tobias, Executive Vice President and Chief Operating Officer.

Today’s call will be presented in three segments. Following opening remarks, Chris will discuss our financial results. I will then return for an operations update, then open the call for questions. The call is scheduled for 30 minutes, and as in the past, we will not provide any guidance.

At this point, I will turn control of the call over to Chris Hagan, our CFO, to discuss our financial results.

Christina Hagan

Thank you, Steve. First I’ll share our Safe Harbor provisions. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Dawson Geophysical Company cautions that statements made today in this conference call 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. These risks include but are not limited to the volatility of oil and natural gas prices, dependence upon energy industry spending, disruptions in the global economy, industry competition, delays, reductions or cancellations of service contract, high fixed costs of operations, external factors affecting our crews such as weather interruptions and inability to obtain land access rights of way, whether we enter into turnkey or term contracts, crew productivity, limited number of customers, credit risk related to our customers, availability of capital resources, and operational disruptions. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Form 10-K for the fiscal year ended September 30, 2011. Dawson Geophysical Company disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future events or otherwise.

During this conference call, we will make reference 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 our current earnings release, a copy of which is located on our website, www.dawson3d.com.

All right, let’s talk about our earnings. Dawson Geophysical today reported revenues of $85,546,000 for the quarter ended March 31, 2012 compared to $78,337,000 for the same quarter in fiscal 2011, an increase of 9%. Net income for the second quarter of fiscal 2012 was $5,589,000 compared to net loss of $4,857,000 in the same quarter ended March 31, 2011. Earnings per share for the second quarter of fiscal 2012 were $0.71 compared to a loss per share of $0.62 for the second quarter of fiscal 2011. EBITDA for the second quarter of fiscal 2012 was 17,520,000 compared to 1,219,000 for the quarter ending March 31, 2011.

Revenues for the six months ended March 31, 2012 were $177,928,000 compared to $150,990,000 for the same period ended March 31, 2011, an increase of 18%. Net income for the six months ended March 31, 2012 was $8,820,000 or $1.13 earnings per share as compared to a net loss of $6,524,000 or $0.84 loss per share for the same period of fiscal 2011. Included in the six months 2012 results is an $0.18 per share one-time tax benefit related to transaction costs.

Depreciation expenses for fiscal 2012 increased $897,000 compared to the same period of the prior year. Third party charges, which are included in revenues, declined as a percentage of revenues during the second fiscal quarter 2012 to a level more consistent with the Company’s historical average for such charges. These third party charges are related to the Company’s use of helicopter support services, specialized survey technologies, and dynamite energy sources in areas of limited access. The Company is reimbursed for these expenses by the client.

The Company’s Board of Directors has approved an increase of $30 million to the fiscal 2012 capital budget, bringing the fiscal 2012 budget total to $50 million.

Steve?

Steve Jumper

Well thank you, Chris. Let me start by recapping our fiscal second quarter and six month highlights. We increased second fiscal quarter 2012 revenues to 85.5 million from 78.3 million in the comparable fiscal 2011 quarter. We generated $17.5 million of EBITDA for the quarter ended March 31, 2012 compared to 1.2 million for the comparable quarter in fiscal 2011. Net income grew to $5.5 million or $0.71 earnings per share in the second fiscal quarter of 2012 compared to a net loss of 4.8 million or $0.62 loss per share in the second fiscal quarter of 2011.

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