Dawson Geophysical's CEO Discusses F3Q 2012 Results - Earnings Call Transcript

Dawson Geophysical Company (DWSN)

F3Q 2012 Earnings Conference Call

August 1, 2012 10:00 ET

Executives

Steve Jumper – President and Chief Executive Officer

Christina Hagan – Executive Vice President and Chief Financial Officer

Analysts

Marshall Adkins – Raymond James

Georg Venturatos – Johnson Rice

A.J. Strasser – Cooper Creek Partners

Gary Lenhoff – Great Lakes Advisors

Presentation

Operator

Good morning and welcome to the Dawson Geophysical Third Quarter 2012 Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Steve Jumper. Please go ahead.

Steve Jumper – President and Chief Executive Officer

Well, thank you (Sue). Good morning and welcome to Dawson Geophysical Company’s third fiscal quarter 2012 earnings and operations call. As Sue said, my name is Steve Jumper, President and CEO of the Company. Joining me on the call is Christina Hagan, Executive Vice President and Chief Financial Officer. As in the past today’s call, we present in three segments. Following the openings remarks, Chris will discuss our financial results. I will then return for an operations update and open the call up for questions.

The call is scheduled for 30 minutes, and as in the past, we will not provide any guidance during the course of the call. At this point, I will turn to control the call over to Chris Hagan, CFO to discuss our financial results.

Christina Hagan – Executive Vice President and Chief Financial Officer

Thank you, Steve. First, I will 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 contracts, 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, the 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 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 our current earnings release, a copy of which is located on our website at www.dawson3d.com.

Let’s look at the numbers. Dawson Geophysical today reported revenues of $68,348,000 for the quarter ended June 30, 2012 compared to $98,033,000 for the same quarter in fiscal 2011. Net income for the third quarter of fiscal 2012 increased 241% to $1,141,000 compared to $334,000 in the same quarter ended June 30, 2011. Earnings per share for the third quarter of fiscal 2012 were $0.15 compared to $0.04 for the same – for the third quarter of fiscal 2011. EBITDA for the third quarter of fiscal 2012 increased 18% to $10,437,000 compared to $8,821,000 for the quarter ending June 30, 2011.

Revenues for the nine months ended June 30, 2012 were $246,276,000 compared to $249,023,000 for the same period ended June 30, 2011. Net income for the nine months ended June 30, 2012 was $9,960,000 or $1.27 earnings per share as compared to a net loss of $6,190,000 or $0.79 loss per share for the same period of fiscal 2011. Included in the third quarter of fiscal 2011 results were expenses of $1,465,000 related transaction costs. Reflected in the third fiscal quarter of 2012 results was an increase in depreciation expense of $428,000 from the same period of fiscal 2011. The increase in depreciation expenses related to the company’s investment and additional reporting equipment, including channels and additional energy source units during the past 18 months. Steve?

Steve Jumper – President and Chief Executive Officer

Well, thank you, Chris. Let me begin by recapping our fiscal third quarter and nine months highlights. As Chris mentioned in the third quarter and first nine months, we generated a 241% increase in net income to $1.1 million or $0.15 earnings per share for the three months period ended June 30, 2012 compared to net income of $334,000 or $0.04 earnings per share for the corresponding 2011 period. We generated an 18% increase in EBITDA for the three months period ended June 30, 2012 to $10 million – $10.4 million compared to $8.8 million for the third quarter of June 30 – quarter ended June 30, 2011.

We generated a 161% increase in EBITDA for the nine months period ending June 30, 2012 to $38.9 million compared to $14.9 million for the year ago nine-month period. We generated net income of $9.9 million or $1.27 earnings per share for the nine-month period ended June 30, 2012 compared to a net loss of $6.1 million or $0.79 loss per share for the comparable nine-month period of fiscal 2011. We’ve strengthened our order book, which is capable of sustaining 14 crews well in to fiscal 2013 with current projects in the Permian Basin, Eagle Ford, Mississippi Lime of Oklahoma and Kansas, Niobrara, and a project in the Marcellus Shale.

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