Enservco Corporation (NYSE American: ENSV), a diversified national
provider of specialized well-site services to the domestic onshore
conventional and unconventional oil and gas industries, today
reported financial results for its first quarter ended March 31,
2019.
“Enservco delivered solid results in virtually all key financial
metrics in the first quarter. Revenue grew by 29% to $26.2
million, inclusive of the Adler acquisition,” said Ian Dickinson,
President and CEO. “Net income increased 111% to $4.3
million, with adjusted EBITDA up 49% to $7.2 million.
Adjusted EBITDA margins were 27.3%, up 360 basis points year over
year. Our revenue growth was particularly impressive since
the first half of January was slower than normal because customers
were re-ramping frac activity as crude oil prices recovered. Net
income was lower than expected due to approximately $1.0 million in
cost overruns in our water transfer segment due to frozen water
lines that required us to use third-party labor and equipment. From
an overall financial performance perspective, we are clearly on a
positive trajectory. Eight of our last nine quarters have shown
year-over-year increases in revenue and our annual profit metrics
have trended higher over the past two years. Assuming stable
commodity prices, we are optimistic about continuing our positive
momentum.
“Our strong first quarter performance was due to a number of
factors. Steady demand from our E&P customers played a
key role. We have a loyal customer base that includes
hundreds of E&Ps, ranging from small operators to the largest
major oil and gas producers in the U.S. We have also executed
on a number of process improvement initiatives and are generating
results. In 2019, consistent with our culture of continuous
improvement, we are focused on further streamlining field
operations with real-time, data driven systems and processes.
We are implementing a digital fleet management system that
integrates dispatching and geo-location, maintenance and inventory,
truck data and safety, reporting and compliance, electronic
invoicing, and finance and accounting. We expect these initiatives
to result in additional operating efficiencies and advance our
ultimate objectives of de-levering our balance sheet and better
positioning the Company for organic growth and accretive
M&A.”
First Quarter ResultsTotal revenue in the first
quarter ended March 31, 2019, increased 29% to $26.2 million from
$20.3 million in the same quarter last year.
Well enhancement services revenue increased 29%
year over year to $24.8 million from $19.3 million. The well
enhancement segment included frac water heating, up 42% to $20.7
million from $14.6 million; hot oiling, essentially flat at $3.6
million; and acidizing, down 54% to $0.5 million from $1.0 million.
The well enhancement segment generated income of $9.6 million in
the first quarter, a 55% increase over $6.2 million in segment
income in the prior year. Lower acidizing revenue in the first
quarter was due to a decline in services performed for two
customers in Texas and Wyoming that were more active in the same
quarter last year. In addition, the acidizing fleet had more
downtime than usual due to redeployment activities following the
closure of the Company’s underperforming Kansas location.
Management’s goal is to drive profitable growth in its acidizing
business as the year progresses.
Water transfer segment revenue increased 44% in
the first quarter to $1.4 million from $1.0 million in the same
quarter last year. The segment generated a loss of $757,000
in the first quarter compared to income of $38,000 in the same
quarter last year due to the aforementioned cost overruns related
to two line-freeze incidents. The Company has taken
corrective measures to reduce the potential for future such
incidents.
Total operating expenses in the first quarter increased 23% year
over year to $21.0 million from $17.1 million due primarily to
higher direct variable costs associated with increased activity
across the Company’s service lines and locations, the additional
water transfer costs, and an increase in overhead – primarily
depreciation expense – associated with the acquisition of Adler Hot
Oil Service. In addition, sales, general and administrative
expense increased 20% year over year to $1.6 million from $1.4
million due to higher administrative costs required to support the
growth of the business.
Despite higher costs in the first quarter, the Company achieved
a 65% increase in income from operations – to $5.3 million from
$3.2 million year over year. Net income in the first quarter
grew 111% to $4.3 million, or $0.08 per diluted share, from $2.0
million, or $0.04 per diluted share, in the same quarter last
year.
Adjusted EBITDA increased 49% in the first quarter to $7.2
million from $4.8 million in the same quarter last year.
Adjusted EBITDA margins (adjusted EBITDA as a percentage of
revenue) improved by 360 basis points in the first quarter to 27.3%
from 23.7% in the same quarter last year due to improved operating
efficiencies.
Conference Call InformationManagement will hold
a conference call today to discuss these results. The call
will begin at 2:30 p.m. Mountain Time (4:30 p.m. Eastern) and will
be accessible by dialing 877-407-8031 (201-689-8031 for
international callers). No passcode is necessary. A
telephonic replay will be available through June 4, 2019, by
calling 877-481-4010 (919-882-2331 for international callers) and
entering the Conference ID #48806. To listen to the webcast,
participants should go to the ENSERVCO website at
www.enservco.com and link to the “Investors” page at least 10
minutes early to register and download any necessary audio
software. A replay of the webcast will be available for 90
days. The webcast also is available at the following
link:https://www.investornetwork.com/event/presentation/48806
About ENSERVCOThrough its various operating
subsidiaries, ENSERVCO provides a wide range of oilfield services,
including hot oiling, acidizing, frac water heating, water transfer
and related services. The Company has a broad geographic
footprint covering seven major domestic oil and gas basins and
serves customers in Colorado, Montana, New Mexico, North Dakota,
Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West
Virginia. Additional information is available at
www.enservco.com
*Note on non-GAAP Financial Measures This press
release and the accompanying tables include a discussion of EBITDA
and Adjusted EBITDA, which are non-GAAP financial measures provided
as a complement to the results provided in accordance with
generally accepted accounting principles ("GAAP"). The term
"EBITDA" refers to a financial measure that we define as earnings
(net income or loss) plus or minus net interest plus taxes,
depreciation and amortization. Adjusted EBITDA excludes from EBITDA
stock-based compensation and, when appropriate, other items that
management does not utilize in assessing ENSERVCO’s operating
performance (as further described in the attached financial
schedules). None of these non-GAAP financial measures are
recognized terms under GAAP and do not purport to be an alternative
to net income as an indicator of operating performance or any other
GAAP measure. We have reconciled Adjusted EBITDA to GAAP net income
in the Consolidated Statements of Operations table at the end of
this release. We intend to continue to provide these non-GAAP
financial measures as part of our future earnings discussions and,
therefore, the inclusion of these non-GAAP financial measures will
provide consistency in our financial reporting.
Cautionary Note Regarding Forward-Looking
StatementsThis news release contains information that is
"forward-looking" in that it describes events and conditions
ENSERVCO reasonably expects to occur in the future. Expectations
for the future performance of ENSERVCO are dependent upon a number
of factors, and there can be no assurance that ENSERVCO will
achieve the results as contemplated herein. Certain statements
contained in this release using the terms "may," "expects to," and
other terms denoting future possibilities, are forward-looking
statements. The accuracy of these statements cannot be guaranteed
as they are subject to a variety of risks, which are beyond
ENSERVCO's ability to predict, or control and which may cause
actual results to differ materially from the projections or
estimates contained herein. Among these risks are those set forth
in ENSERVCO’s annual report on Form 10-K for the year ended
December 31, 2018, and subsequently filed documents with the
SEC. Forward looking statements in this news release that are
subject to risk include the ability to continue positive revenue
and profit trends and momentum; ability to prevent future line
freezes; ability to streamline field operations and successfully
implement process improvement initiatives and a digital fleet
management system; ability to de-lever the balance sheet and pursue
M&A initiatives. It is important that each person
reviewing this release understand the significant risks attendant
to the operations of ENSERVCO. ENSERVCO disclaims any
obligation to update any forward-looking statement made herein.
Contact:
Jay PfeifferPfeiffer High Investor Relations,
Inc.Phone: 303-880-9000Email: jay@pfeifferhigh.com
|
ENSERVCO CORPORATION |
CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS |
(in thousands) |
|
|
|
|
For the Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
Well enhancement
services |
|
$ |
24,812 |
|
|
$ |
19,285 |
|
|
Water transfer
services |
|
|
1,428 |
|
|
|
995 |
|
|
|
Total Revenues |
|
|
26,240 |
|
|
|
20,280 |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Well enhancement
services |
|
|
15,212 |
|
|
|
13,091 |
|
|
Water transfer
services |
|
|
2,185 |
|
|
|
957 |
|
|
Functional support
and other |
|
|
155 |
|
|
|
145 |
|
|
Selling, general,
and administrative expenses |
|
|
1,618 |
|
|
|
1,353 |
|
|
Patent litigation
and defense costs |
|
|
9 |
|
|
|
20 |
|
|
Severance and
transition costs |
|
|
- |
|
|
|
40 |
|
|
Impairment
loss |
|
|
127 |
|
|
|
- |
|
|
Depreciation and
amortization |
|
|
1,683 |
|
|
|
1,499 |
|
|
|
Total operating expenses |
|
|
20,989 |
|
|
|
17,105 |
|
|
|
|
|
|
|
|
Income from
Operations |
|
|
5,251 |
|
|
|
3,175 |
|
|
|
|
|
|
|
|
Other Expense |
|
|
|
|
|
Interest
expense |
|
|
(884 |
) |
|
|
(500 |
) |
|
Other expense |
|
|
(64 |
) |
|
|
(421 |
) |
|
|
Total other expense |
|
|
(948 |
) |
|
|
(921 |
) |
|
|
|
|
|
|
|
Income from
continuing operations before tax benefit |
|
|
4,303 |
|
|
|
2,254 |
|
Income tax
(expense) benefit |
|
|
- |
|
|
|
- |
|
Income from
continuing operations |
|
$ |
4,303 |
|
|
$ |
2,254 |
|
Discontinued
operations |
|
|
|
|
|
Loss from
operations of discontinued operations |
|
|
- |
|
|
|
(213 |
) |
|
Income tax
benefit |
|
|
- |
|
|
|
- |
|
|
Loss from
discontinued operations |
|
|
- |
|
|
|
(213 |
) |
Net income |
|
$ |
4,303 |
|
|
$ |
2,041 |
|
|
|
|
|
|
|
|
Earnings from
continuing operations per common share - basic |
|
$ |
0.08 |
|
|
$ |
0.04 |
|
Loss from
discontinued operations per common share - basic |
|
|
- |
|
|
|
- |
|
Net income per
share - basic |
|
$ |
0.08 |
|
|
$ |
0.04 |
|
|
|
|
|
|
|
|
Earnings from
continuing operations per common share - diluted |
|
$ |
0.08 |
|
|
$ |
0.04 |
|
Loss from
discontinued operations per common share - diluted |
|
|
- |
|
|
|
- |
|
Net income per
share - diluted |
|
$ |
0.08 |
|
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average number of common shares outstanding |
|
|
54,266 |
|
|
|
51,155 |
|
Add: Dilutive
shares assuming exercise of options and warrants |
|
|
951 |
|
|
|
1,793 |
|
Diluted weighted
average number of common shares outstanding |
|
|
55,217 |
|
|
|
52,948 |
|
|
|
|
|
|
|
|
ENSERVCO CORPORATION AND SUBSIDIARIES |
Calculation of Adjusted EBITDA * |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
Adjusted
EBITDA* |
|
|
|
|
|
Net income |
|
$ |
4,303 |
|
|
$ |
2,041 |
|
|
Add Back
(Deduct) |
|
|
|
|
|
Interest Expense |
|
|
884 |
|
|
|
500 |
|
|
Provision for income tax (benefit) expense |
|
|
- |
|
|
|
- |
|
|
Depreciation and amortization (including discontinued
operations) |
|
|
1,683 |
|
|
|
1,589 |
|
|
EBITDA* |
|
|
6,870 |
|
|
|
4,130 |
|
|
Add
Back |
|
|
|
|
|
|
Stock-based compensation |
|
|
92 |
|
|
|
73 |
|
|
|
Severance and Transition Costs |
|
|
- |
|
|
|
40 |
|
|
|
Patent Litigation and defense
costs |
|
|
9 |
|
|
|
20 |
|
|
|
Impairment loss |
|
|
127 |
|
|
|
- |
|
|
|
Other expense |
|
|
64 |
|
|
|
420 |
|
|
|
EBITDA related to discontinued
operations |
|
|
- |
|
|
|
124 |
|
|
Adjusted
EBITDA* |
|
$ |
7,162 |
|
|
$ |
4,807 |
|
|
Adjusted EBITDA*
Margin (Adjusted EBITDA* as a percentage of Revenue) |
|
|
27.3 |
% |
|
|
23.7 |
% |
|
|
*Note: See below for discussion of the use of non-GAAP financial
measurements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Measures: Non-GAAP results are presented
only as a supplement to the financial statements and for use within
management’s discussion and analysis based on U.S. generally
accepted accounting principles (GAAP). The non-GAAP financial
information is provided to enhance the reader's understanding of
the Company’s financial performance, but no non-GAAP measure should
be considered in isolation or as a substitute for financial
measures calculated in accordance with GAAP. Reconciliations of the
most directly comparable GAAP measures to non-GAAP measures are
provided herein. |
|
|
|
|
|
|
|
|
|
EBITDA is defined as net income (earnings), before interest
expense, income taxes, and depreciation and amortization. Adjusted
EBITDA excludes stock-based compensation from EBITDA and, when
appropriate, other items that management does not utilize in
assessing the Company’s ongoing operating performance as set forth
in the next paragraph. None of these non-GAAP financial measures
are recognized terms under GAAP and do not purport to be an
alternative to net income as an indicator of operating performance
or any other GAAP measure. |
|
|
|
|
|
|
|
|
All of the items included in the reconciliation from net income to
EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash
items (e.g., depreciation, amortization of purchased intangibles,
stock-based compensation, impairment losses, etc.) or (ii) items
that management does not consider to be useful in assessing the
Company’s ongoing operating performance (e.g., income taxes, gain
or losses on sale of equipment, acquisition-related expenses,
patent litigation and defense costs, severance and transition
costs, impairment losses, other expense (income), EBITDA
related to discontinued operations, etc.). In the case of the
non-cash items, management believes that investors can better
assess the company’s operating performance if the measures are
presented without such items because, unlike cash expenses, these
adjustments do not affect the Company’s ability to generate free
cash flow or invest in its business. |
|
|
|
|
|
|
|
We use, and we believe investors benefit from the presentation of,
EBITDA and Adjusted EBITDA in evaluating our operating performance
because it provides us and our investors with an additional tool to
compare our operating performance on a consistent basis by removing
the impact of certain items that management believes do not
directly reflect our core operations. We believe that EBITDA is
useful to investors and other external users of our financial
statements in evaluating our operating performance because EBITDA
is widely used by investors to measure a company’s operating
performance without regard to items such as interest expense,
taxes, and depreciation and amortization, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, capital structure and the method
by which assets were acquired. Additionally, our fixed charge
coverage ratio covenant associated with our Loan and Security
Agreement with East West Bank require the use of Adjusted
EBITDA in specific calculations. |
|
|
|
|
|
|
|
Because not all companies use identical calculations, the Company’s
presentation of non-GAAP financial measures may not be comparable
to other similarly titled measures of other companies. However,
these measures can still be useful in evaluating the Company’s
performance against its peer companies because management believes
the measures provide users with valuable insight into key
components of GAAP financial disclosures. |
ENSERVCO CORPORATION |
Condensed Consolidated Balance Sheets |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
ASSETS |
2019 |
|
2018 |
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
- |
|
|
$ |
257 |
|
|
Accounts
receivable, net |
|
|
21,390 |
|
|
|
10,729 |
|
|
Prepaid expenses
and other current assets |
|
|
894 |
|
|
|
1,081 |
|
|
Inventories |
|
|
396 |
|
|
|
514 |
|
|
Income tax
receivable, current |
|
|
85 |
|
|
|
85 |
|
|
Current assets of
discontinued operations |
|
|
74 |
|
|
|
864 |
|
|
|
Total current assets |
|
|
22,839 |
|
|
|
13,530 |
|
|
|
|
|
|
|
|
Property and
equipment, net |
|
|
31,709 |
|
|
|
33,057 |
|
Goodwill |
|
|
546 |
|
|
|
546 |
|
Intangible assets,
net |
|
|
982 |
|
|
|
1,033 |
|
Income taxes
receivable, noncurrent |
|
|
28 |
|
|
|
28 |
|
Right-of-use
asset |
|
|
1,888 |
|
|
|
- |
|
Other assets |
|
|
563 |
|
|
|
650 |
|
Non-current assets
of discontinued operations |
|
|
22 |
|
|
|
177 |
|
TOTAL ASSETS |
|
$ |
58,577 |
|
|
$ |
49,021 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current
Liabilities |
|
|
|
|
|
Accounts payable
and accrued liabilities |
|
$ |
4,624 |
|
|
$ |
3,391 |
|
|
Note Payable |
|
|
3,800 |
|
|
|
3,868 |
|
|
Lease liability,
current |
|
|
789 |
|
|
|
- |
|
|
Current portion of
long-term debt |
|
|
182 |
|
|
|
149 |
|
|
Current
liabilities of discontinued operations |
|
|
- |
|
|
|
44 |
|
|
|
Total current liabilities |
|
|
9,395 |
|
|
|
7,452 |
|
|
|
|
|
|
|
|
Long-Term
Liabilities |
|
|
|
|
|
Senior revolving
credit facility |
|
|
35,949 |
|
|
|
33,882 |
|
|
Subordinated
debt |
|
|
1,845 |
|
|
|
1,832 |
|
|
Long-term debt,
less current portion |
|
|
267 |
|
|
|
312 |
|
|
Lease
liability |
|
|
1,099 |
|
|
|
- |
|
|
Other
liability |
|
|
1,025 |
|
|
|
941 |
|
|
|
Total long-term
liabilities |
|
|
40,185 |
|
|
|
36,967 |
|
|
|
Total liabilities |
|
|
49,580 |
|
|
|
44,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
|
|
Preferred stock,
$.005 par value, 10,000,000 shares authorized, no shares issued or
outstanding |
|
|
- |
|
|
|
- |
|
|
Common stock.
$.005 par value, 100,000,000 shares authorized, 54,334,829
and 54,389,829 shares issued, respectively; 103,600 shares of
treasury stock; and 54,231,229 and 54,286,229 shares outstanding,
respectively |
|
|
271 |
|
|
|
271 |
|
|
Additional paid-in
capital |
|
|
21,889 |
|
|
|
21,797 |
|
|
Accumulated
deficit |
|
|
(13,163 |
) |
|
|
(17,466 |
) |
|
|
Total stockholders'
equity |
|
|
8,997 |
|
|
|
4,602 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
$ |
58,577 |
|
|
$ |
49,021 |
|
|
|
|
|
|
|
|
ENSERVCO CORPORATION |
CONSOLIDATED STATEMENT OF CASH
FLOWS |
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2019 |
|
2018 |
OPERATING
ACTIVITIES |
|
|
|
|
|
Net income |
|
$ |
4,303 |
|
|
$ |
2,041 |
|
|
Net loss from
discontinued operations |
|
|
- |
|
|
|
(213 |
) |
|
Net income from
continuing operations |
|
|
4,303 |
|
|
|
2,254 |
|
|
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,683 |
|
|
|
1,499 |
|
|
|
Impairment loss |
|
|
127 |
|
|
|
- |
|
|
|
Change in fair value of
warrants |
|
|
- |
|
|
|
434 |
|
|
|
Stock-based compensation |
|
|
92 |
|
|
|
73 |
|
|
|
Amortization of debt issuance
costs and discount |
|
|
179 |
|
|
|
38 |
|
|
|
Provision for bad debt
expense |
|
|
- |
|
|
|
33 |
|
|
Changes in
operating assets and liabilities |
|
|
|
|
|
|
Accounts receivable |
|
|
(10,661 |
) |
|
|
(844 |
) |
|
|
Inventories |
|
|
118 |
|
|
|
68 |
|
|
|
Prepaid expense and other
current assets |
|
|
122 |
|
|
|
(27 |
) |
|
|
Other assets |
|
|
69 |
|
|
|
(9 |
) |
|
|
Accounts payable and accrued
liabilities |
|
|
1,233 |
|
|
|
333 |
|
|
|
Other liabilities |
|
|
84 |
|
|
|
- |
|
|
|
Net cash (used in) provided by
operating activities - continuing operations |
|
|
(2,651 |
) |
|
|
3,852 |
|
|
|
Net cash provided by (used in)
operating activities - discontinued operations |
|
|
5 |
|
|
|
(359 |
) |
|
|
Net cash (used in) provided
by operating activities |
|
|
(2,646 |
) |
|
|
3,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
|
Purchases of
property and equipment |
|
|
(311 |
) |
|
|
(1,089 |
) |
|
Proceeds from
disposals of property and equipment |
|
|
155 |
|
|
|
- |
|
|
Proceeds from
insurance claims |
|
|
- |
|
|
|
52 |
|
|
|
Net cash used in investing
activities - continuing operations |
|
|
(156 |
) |
|
|
(1,037 |
) |
|
|
Net cash provided by investing
activities - discontinued operations |
|
|
741 |
|
|
|
(15 |
) |
|
|
Net cash provided by investing
activities |
|
|
585 |
|
|
|
(1,052 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
|
Net line of
credit borrowings |
|
|
2,016 |
|
|
|
(1,787 |
) |
|
Repayment of
long-term debt |
|
|
(11 |
) |
|
|
(17 |
) |
|
Repayment of
note |
|
|
(200 |
) |
|
|
- |
|
|
Other
financing |
|
|
(1 |
) |
|
|
(15 |
) |
|
|
Net Cash provided by (used in)
financing activities |
|
|
1,804 |
|
|
|
(1,819 |
) |
|
|
|
|
|
|
|
Net
(Decrease) Increase in Cash and Cash Equivalents |
|
|
(257 |
) |
|
|
622 |
|
|
|
|
|
|
|
|
Cash and
Cash Equivalents, beginning of period |
|
|
257 |
|
|
|
391 |
|
|
|
|
|
|
|
|
Cash and
Cash Equivalents, end of period |
|
$ |
- |
|
|
$ |
1,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
Cash paid for
interest |
|
$ |
595 |
|
|
$ |
437 |
|
Supplemental Disclosure of Non-cash Investing and Financing
Activities: |
|
|
|
|
|
Non-cash proceeds
from revolving credit facility |
|
$ |
39 |
|
|
$ |
40 |
|
|
|
|
|
|
|
|
ENSERVCO (AMEX:ENSV)
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From Mar 2024 to Apr 2024
ENSERVCO (AMEX:ENSV)
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From Apr 2023 to Apr 2024