MIDLAND, Texas, Nov. 12,
2014 /PRNewswire/ -- Dawson Geophysical Company (NASDAQ: DWSN)
today reported fourth quarter and year-end results for fiscal
2014.
Fourth Quarter
The Company reported revenues of $62,570,000 for the quarter-ended September 30, 2014, the Company's fourth quarter
of fiscal 2014, compared to $69,673,000 for the same quarter of fiscal 2013.
The Company reported a net loss for the fourth quarter of fiscal
2014 of $3,882,000, or $0.49 per share attributable to common stock,
compared to a net loss of $2,790,000,
or $0.35 per share attributable to
common stock, in the same quarter of fiscal 2013. EBITDA for the
fourth quarter of fiscal 2014 was $3,748,000 compared to $6,635,000 in the same quarter of fiscal 2013.
Fourth quarter fiscal 2014 EBITDA increased from $1,466,000 in the third quarter of fiscal 2014.
Included in the fourth quarter fiscal 2014 results is approximately
$950,000 of transaction costs related
to the recently announced proposed business combination with TGC
Industries, Inc. ("TGC").
During most of the fourth quarter of fiscal 2014, the Company
operated ten seismic data acquisition crews. Operations on several
of the crews during the fourth quarter of fiscal 2014 were
negatively impacted late in the quarter by weather issues in
certain regions of the country, short delays on several projects
and long crew moves on two projects. The Company had limited
microseismic activity and no Canadian operations in the fourth
quarter of fiscal 2014. Revenues for the fourth quarter of fiscal
2014 were reduced from the fourth quarter of fiscal 2013 primarily
as the result of decreased utilization of the Company's data
acquisition crews, unusually high early completion revenue
incentives recognized in the fourth fiscal quarter of 2013 and a
continued reduction in third-party reimbursable expenses.
Year-end
For the fiscal year ended September 30,
2014, the Company reported revenues of $261,683,000 compared to $305,299,000 for the prior fiscal year. Net loss
for fiscal 2014 was $12,620,000, or
$1.59 per share attributable to
common stock, compared to net income of $10,480,000, or $1.31 per share attributable to common stock, for
fiscal 2013. EBITDA for fiscal 2014 was $22,730,000 compared to $57,262,000 in fiscal 2013.
Revenues for fiscal 2014 were lower than fiscal 2013 primarily
due to reduced utilization of the Company's crews and softer demand
for services across North America.
In addition, net income and EBITDA were negatively impacted by the
difficult Canadian season in the first half of fiscal
2014.
Capital expenditures for fiscal 2014 were $34,073,000 compared to $50,069,000 in fiscal 2013. The expenditures for
fiscal 2014 included 9,000 three-component Geospace GSX3 units and
maintenance capital items. Capital expenditures for fiscal 2015 are
anticipated to be only at maintenance levels. The Company's balance
sheet remains strong with $49,753,000
of cash and short-term investments, $73,777,000 of working capital and $11,685,000 of debt at September 30, 2014.
Stephen Jumper, President, Chief
Executive and Chairman of the Company said, "Fiscal 2014 was a
difficult year for the worldwide geophysical industry and our
company. Demand for services softened from 2012/2013 levels. The
reduced demand levels from the 2012/2013 period, combined with
project delays, negatively impacted utilization rates in fiscal
2014."
Jumper continued, "Despite these challenges, current demand for
services at Dawson Geophysical remains relatively steady, albeit
below 2012/2013 levels, as our order book is sufficient to sustain
nine to ten crews throughout the remainder of calendar 2014 and
into the first quarter of calendar 2015 contingent upon project
readiness. We have seen a slight improvement in utilization rates
in the fourth quarter of calendar 2014 compared to the third
quarter of calendar 2014 and anticipate current demand levels in
the market going into early calendar 2015."
Consistent with the Company's previously announced quarterly
dividend policy, on November 10, 2014
the Company's Board of Directors approved the payment on
December 8, 2014 of an $0.08 per share quarterly cash dividend to
Company shareholders of record at the close of business on
November 24, 2014 (the "record
date"). The quarterly dividend represents an aggregate distribution
of approximately $645,000 based on
the outstanding number of shares of Common Stock as of the
declaration date, or approximately $2,580,000 on an annualized basis.
As previously announced, on October 9,
2014 the Company entered into an agreement relating to a
strategic business combination with TGC Industries, Inc. (NASDAQ:
TGE). The transaction is anticipated to close in the first calendar
quarter of 2015, subject to approval by holders of two-thirds of
the outstanding shares of both TGC and Dawson, as well as certain other closing
conditions and regulatory approvals. Upon consummation of the
transaction, current Dawson and
TGC shareholders will own approximately 66% and 34% of the combined
company, respectively. Details of the transaction are described in
the Company's October 9, 2014 press
release and conference call which can be found on the Company's
website, www.dawson3d.com.
"This is an exciting time for our company as we join forces with
TGC to combine our complimentary resources," Jumper continued. "We
believe the combination of Dawson
and TGC will result in shared platforms of people, services and
equipment that will better serve our valued clients, shareholders
and employees. The combination should allow us
to improve our ability to meet the demand for higher
resolution images cost effectively in a shorter cycle time.
Collectively, we anticipate that our resources will further
position us to increase utilization rates, reduce costs and provide
avenues of growth for the combined company."
Jumper concluded, "Many of the client-driven delays experienced
during the previous four quarters have been resolved leading to
improved utilization rates. Increased visibility from our clients
is further helping us to right-size our crew count and improve
efficiencies. We believe seismic technology, combined with our
internal processes, helps our clients' high-grade drilling
locations, often resulting in reduced development costs.
Dawson and the anticipated
Dawson/TGC combined company are
well positioned with a strong balance sheet, personnel, and
equipment to react to market conditions quickly. Recent inquiries
give us reason to anticipate current activity levels into early
calendar 2015."
Conference Call Information
Dawson will host a conference
call to review its fiscal year-end and fourth quarter 2014
financial results on November 12, 2014, at 9 a.m. CST. Participants can access the call at
(877) 300-8521 (US), (855) 669-9657 (Canada), or (412) 317-6026
(International). To access the live audio webcast or the subsequent
archived recording, visit the Dawson website at www.dawson3d.com. Callers
can access the telephone replay through November 15, 2014 by dialing (877) 870-5176
(US) and (858) 384-5517 (International). The passcode is
10055897. The Webcast will be recorded and available for replay on
Dawson's website until
December 12, 2014.
About Dawson
Dawson Geophysical Company is a leading provider of U.S. onshore
seismic data acquisition services in the lower 48 states of
the United States. Founded in
1952, Dawson acquires and
processes 2-D, 3-D and multi-component 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
This press release contains 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. 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 generally accepted accounting
principles, and EBITDA is not a measure of operating income,
operating performance or liquidity presented in accordance with
generally accepted accounting principles. 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 generally accepted
accounting principles. 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, depreciation and amortization. A
reconciliation of the Company's EBITDA to its net (loss) income and
its net cash (used) provided by operating activities is presented
in the table following the text of this press release.
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 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. These risks include but are
not limited to, the volatility of oil and natural gas prices,
disruptions in the global economy, dependence upon energy industry
spending, limited number of customers, credit risk related to our
customers, cancellations of service contracts, high fixed costs of
operations, weather interruptions, inability to obtain land access
rights of way, industry competition, managing growth, the
availability of capital resources, operational disruptions, the
possibility that the business combination with TGC Industries, Inc.
does not close when expected or at all because required regulatory,
shareholder or other approvals and other conditions to closing are
not received or satisfied on a timely basis or at all, the risk
that the benefits from the business combination may not be fully
realized or may take longer to realize than expected, the ability
to promptly and effectively integrate the businesses of the Company
and TGC, the reaction of the companies' customers, employees and
counterparties to the transaction and the diversion of management
time on transaction-related issues. 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, 2013 and the Company's subsequent quarterly and
periodic filings with the Securities and Exchange Commission
("SEC"). 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.
Important Information for Investors and Shareholders
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. The transactions contemplated by the pending
business combination transaction, including, with respect to the
Company, the proposed merger between the Company and Riptide
Acquisition Corp. and, with respect to TGC, the proposed issuance
of TGC common stock in the transaction, will, as applicable, be
submitted to the shareholders of the Company and TGC for their
consideration. TGC will file with the Securities and Exchange
Commission a registration statement on Form S-4 that will include a
joint proxy statement of the Company and TGC that also constitutes
a prospectus of TGC. The Company and TGC will mail the joint proxy
statement/prospectus to their respective shareholders. The Company
and TGC also plan to file other documents with the SEC regarding
the proposed transaction. INVESTORS AND SECURITY HOLDERS OF THE
COMPANY AND TGC ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. Investors and shareholders will be able to
obtain free copies of the joint proxy statement/prospectus and
other documents containing important information about the Company
and TGC, once such documents are filed with the SEC, through the
website maintained by the SEC at www.sec.gov. The Company will make
available free of charge at www.dawson3d.com (in the
"Investor Relations" section) copies of materials it files with, or
furnishes to, the SEC, or investors and shareholders may contact
the Company at (432) 684-3000 to receive copies of documents that
the Company files with or furnishes to the SEC.
Participants in the Merger Solicitation
The Company and certain of its directors and officers may be
deemed to be participants in the solicitation of proxies from the
shareholders of the Company and TGC in connection with the proposed
transaction. Information about the directors and officers of the
Company is set forth in its proxy statement for its 2014 annual
meeting of shareholders, which was filed with the SEC on
December 18, 2013, as well as
subsequent periodic reports filed with the SEC. These documents can
be obtained free of charge from the sources indicated above. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed
with the SEC when they become available.
DAWSON GEOPHYSICAL
COMPANY
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
INCOME
|
|
|
Three Months
Ended September 30,
|
|
Twelve Months Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$ 62,570,000
|
|
$ 69,673,000
|
|
$ 261,683,000
|
|
$ 305,299,000
|
Operating
costs:
|
|
|
|
|
|
|
|
Operating expenses
|
54,529,000
|
|
59,740,000
|
|
223,336,000
|
|
234,660,000
|
General
and administrative
|
4,710,000
|
|
3,214,000
|
|
16,083,000
|
|
13,364,000
|
Depreciation
|
9,862,000
|
|
9,182,000
|
|
40,168,000
|
|
37,095,000
|
|
69,101,000
|
|
72,136,000
|
|
279,587,000
|
|
285,119,000
|
|
|
|
|
|
|
|
|
(Loss) income from
operations
|
(6,531,000)
|
|
(2,463,000)
|
|
(17,904,000)
|
|
20,180,000
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
income
|
19,000
|
|
14,000
|
|
73,000
|
|
63,000
|
Interest
expense
|
(106,000)
|
|
(136,000)
|
|
(535,000)
|
|
(660,000)
|
Other
income (expense)
|
417,000
|
|
(84,000)
|
|
466,000
|
|
(13,000)
|
(Loss) income
before income tax
|
(6,201,000)
|
|
(2,669,000)
|
|
(17,900,000)
|
|
19,570,000
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense):
|
|
|
|
|
|
|
|
Current
|
(195,000)
|
|
117,000
|
|
(787,000)
|
|
(817,000)
|
Deferred
|
2,514,000
|
|
(238,000)
|
|
6,067,000
|
|
(8,273,000)
|
|
2,319,000
|
|
(121,000)
|
|
5,280,000
|
|
(9,090,000)
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$ (3,882,000)
|
|
$ (2,790,000)
|
|
$
(12,620,000)
|
|
$ 10,480,000
|
|
|
|
|
|
|
|
|
Other comprehensive
(loss) income:
|
|
|
|
|
|
|
|
Net
unrealized loss on foreign exchange rate
|
|
|
|
|
|
|
|
translation, net of tax
|
$
(152,000)
|
|
$
-
|
|
$
(217,000)
|
|
$
-
|
|
|
|
|
|
|
|
|
Comprehensive
(loss) income
|
$ (4,034,000)
|
|
$ (2,790,000)
|
|
$
(12,837,000)
|
|
$ 10,480,000
|
|
|
|
|
|
|
|
|
Basic (loss)
income per share attributable to common stock
|
$
(0.49)
|
|
$
(0.35)
|
|
$
(1.59)
|
|
$
1.31
|
|
|
|
|
|
|
|
|
Diluted (loss)
income per share attributable to common stock
|
$
(0.49)
|
|
$
(0.35)
|
|
$
(1.59)
|
|
$
1.31
|
|
|
|
|
|
|
|
|
Cash dividend
declared per share of common stock
|
$
0.08
|
|
$
-
|
|
$
0.24
|
|
$
-
|
|
|
|
|
|
|
|
|
Weighted average
equivalent common shares outstanding
|
7,961,244
|
|
7,933,903
|
|
7,959,452
|
|
7,879,614
|
|
|
|
|
|
|
|
|
Weighted average
equivalent common shares outstanding
|
|
|
|
|
|
|
|
-assuming dilution
|
7,961,244
|
|
7,933,903
|
|
7,959,452
|
|
7,920,365
|
DAWSON GEOPHYSICAL
COMPANY
CONSOLIDATED BALANCE
SHEETS
|
|
|
September
30,
|
|
September
30,
|
|
2014
|
|
2013
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
cash equivalents
|
$ 22,753,000
|
|
$ 52,405,000
|
Short-term investments
|
27,000,000
|
|
23,500,000
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
|
|
of
$250,000 at September 30, 2014 and September 30, 2013
|
39,995,000
|
|
37,488,000
|
Prepaid
expenses and other assets
|
2,420,000
|
|
737,000
|
Current
deferred tax asset
|
5,977,000
|
|
1,664,000
|
|
|
|
|
Total current assets
|
98,145,000
|
|
115,794,000
|
|
|
|
|
Property, plant
and equipment
|
337,922,000
|
|
325,464,000
|
Less
accumulated depreciation
|
(173,428,000)
|
|
(152,231,000)
|
|
|
|
|
Net property, plant and equipment
|
164,494,000
|
|
173,233,000
|
|
|
|
|
Total assets
|
$ 262,639,000
|
|
$ 289,027,000
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$ 10,720,000
|
|
$ 15,880,000
|
Accrued
liabilities:
|
|
|
|
Payroll costs and
other taxes
|
1,998,000
|
|
1,850,000
|
Other
|
4,097,000
|
|
6,154,000
|
Deferred
revenue
|
801,000
|
|
3,438,000
|
Current
maturities of notes payable and obligations
|
|
|
|
under capital leases
|
6,752,000
|
|
9,258,000
|
|
|
|
|
Total current liabilities
|
24,368,000
|
|
36,580,000
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
Notes payable and obligations under capital leases
|
|
|
|
less
current maturities
|
4,933,000
|
|
3,697,000
|
Deferred tax liability
|
33,808,000
|
|
35,690,000
|
|
|
|
|
Total long-term liabilities
|
38,741,000
|
|
39,387,000
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock-par value $1.00 per share;
|
|
|
|
5,000,000 shares authorized, none outstanding
|
-
|
|
-
|
Common
stock-par value $.33 1/3 per share;
|
|
|
|
50,000,000 shares authorized, 8,065,233
|
|
|
|
and
8,056,943 shares issued and outstanding at
|
|
|
|
September 30, 2014 and September 30, 2013, respectively
|
2,688,000
|
|
2,686,000
|
Additional paid-in capital
|
96,086,000
|
|
94,846,000
|
Retained
earnings
|
100,973,000
|
|
115,528,000
|
Other
comprehensive loss, net of tax
|
(217,000)
|
|
-
|
|
|
|
|
Total stockholders' equity
|
199,530,000
|
|
213,060,000
|
|
|
|
|
Total liabilities and stockholders' equity
|
$ 262,639,000
|
|
$ 289,027,000
|
Reconciliation of
EBITDA to Net (Loss) Income
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
(in
thousands)
|
|
(in
thousands)
|
Net (loss)
income
|
$
(3,882)
|
|
$
(2,790)
|
|
$
(12,620)
|
|
$
10,480
|
Depreciation
|
9,862
|
|
9,182
|
|
40,168
|
|
37,095
|
Interest expense
(income), net
|
87
|
|
122
|
|
462
|
|
597
|
Income tax (benefit)
expense
|
(2,319)
|
|
121
|
|
(5,280)
|
|
9,090
|
EBITDA
|
$
3,748
|
|
$
6,635
|
|
$
22,730
|
|
$
57,262
|
|
|
|
|
|
|
|
|
Reconciliation of
EBITDA to Net Cash (Used) Provided by Operating
|
|
|
|
|
|
|
|
Activities
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
(in
thousands)
|
|
(in
thousands)
|
Net cash (used)
provided by operating activities
|
$
(447)
|
|
$
20,986
|
|
$
10,446
|
|
$
70,579
|
Changes in working
capital and other items
|
4,324
|
|
(13,972)
|
|
13,507
|
|
(11,457)
|
Noncash adjustments
to income
|
(129)
|
|
(379)
|
|
(1,223)
|
|
(1,860)
|
EBITDA
|
$
3,748
|
|
$
6,635
|
|
$
22,730
|
|
$
57,262
|
SOURCE Dawson Geophysical Company