Enservco Corporation (NYSE American: ENSV) (“Enservco”, or the
“Company”), a diversified national provider of specialized
well-site services to the domestic onshore conventional and
unconventional oil and gas industries, today announced operational
and financial results for the first quarter of 2024.
FINANCIAL SUMMARY(in 000’s,
except per share data)
|
Q1 2024 |
Q1 2023 |
% Change |
Revenues |
$ 9,792 |
$ 8,912 |
10% |
|
Production services |
$ 2,485 |
$ 2,863 |
(13%) |
|
Completion and other
services |
$7,307 |
$ 6,049 |
21% |
|
|
|
|
Segment
profit |
$ 3,261 |
$ 2,015 |
62% |
|
Production services |
$ 364 |
$ 546 |
(33%) |
|
Completion and other
services |
$ 2,897 |
$ 1,469 |
97% |
|
|
|
|
|
Income (loss)
from operations |
$ 1,262 |
($ 459) |
NM |
|
|
|
|
Net income
(loss) |
$ 740 |
($ 1,004) |
NM |
|
Per diluted share |
$ 0.03 |
($ 0.07) |
NM |
|
|
|
|
|
Adjusted
EBITDA(1) |
$ 2,222 |
$ 986 |
125% |
NM: Not
meaningful. (1) A non-GAAP financial measure; see the
“Non-GAAP Information” section in this release for more information
including reconciliations to the most comparable GAAP measures.
Q1 2024 HIGHLIGHTS
- Grew revenues
10% from Q1 2023 with the Company’s primarily seasonal-focused
completions services revenue increase partially offset by a
production services revenue decrease;
- Drove segment
profit increase of 62% year-over-year primarily due to overall
top-line growth complemented by execution of further operating
efficiency initiatives and related cost savings;
- Reduced general
and administrative expenses 18% from prior year;
- Improved profit
position to net income of $0.7 million, or $0.03 per diluted share
– an increase from a net loss of $1.0 million, or $0.07 per diluted
share, for Q1 2023;
- Increased
year-over-year Adjusted EBITDA by 125% to $2.2 million;
- Announced agreement to acquire
Buckshot Trucking LLC, an experienced and profitable energy
logistics business (the “Transaction”);
- Expected to generate increased
operational and financial flexibility with addition of year-round
business highlighted by significant growth opportunities and
non-dependence on weather related business; and
- Evaluating various financing
alternatives with closing of the Transaction targeted in early Q3
2024.
MANAGEMENT COMMENTARY
Rich Murphy, the Company’s CEO and Chairman
stated “We kicked off 2024 on a strong note with first quarter
results that materially exceeded the prior year across the board on
key financial metrics, including revenues, segment and operating
profit, and net earnings. Also included was 125% year-over-year
growth in Adjusted EBITDA. Significantly contributing to our first
quarter 2024 results was more than a 95% increase in profit from
our completions services segment that primarily reflects solid
performance from our seasonal-based frac water heating offerings.
As we have discussed in the past, this business is very winter
weather-dependent, and we were fortunate to have a colder first
quarter this year versus the same period in 2023. This was
partially offset by a decrease in profit in our production services
segment. I want to thank the entire workforce – and especially our
employee team – for their continued hard work and dedication as we
continue to execute on internal and external initiatives designed
to enhance our business mix and promote future success.”
Murphy continued, “While the first quarter
benefited from improved seasonal conditions for our frac water
heating services business, our performance during the period also
highlighted our efforts to drive further improvements throughout
the Company. These initiatives were muti-faceted and included
reducing our footprint to focus only on operations that provide the
best economic returns, lowering costs and streamlining processes
throughout the organization, and taking necessary steps to enhance
the Company’s financial outlook. Combined with our pending
acquisition of Buckshot, we believe Enservco will be in a
much-improved position in the marketplace and with the investment
community. We look forward to evaluating and executing additional
opportunities that further evolve our business away from seasonal
to more year-round activities designed to drive long-term cash flow
generation, profitability, and shareholder value.”
Q1 2024 FINANCIAL RESULTS
Total revenues were $9.8 million – 10% higher
than $8.9 million in the same quarter last year.
- Production
services revenue, which includes hot oiling and acidizing services,
decreased to $2.5 million from $2.9 million in the same quarter
last year, primarily due to decreased acidizing services in the
Company’s Texas region, combined with decreased hot oiling activity
levels in Enservco’s Pennsylvania and Texas regions. Production
services generated a segment profit of $0.4 million compared to a
segment profit of $0.5 million in Q1 2023.
- Completion
services revenue, which is primarily seasonal-focused frac water
heating services, grew to $7.3 million from $6.0 million in the
prior year quarter. Primarily driving the increase was colder
weather in 2024 relative to the prior year that led to increases in
frac water heating service activity levels. In addition, service
price increases in the Company’s Pennsylvania and Colorado regions
contributed to the growth in year-over-year revenue. Completion
services generated a segment profit of $2.9 million compared to a
profit of $1.5 million in the same quarter last year.
Operating profit improved to $1.3 million versus
an operating loss of $0.5 million in Q1 2023. In addition to a
significant improvement in the Company’s combined segment results,
year-over-year performance benefitted from an almost $0.3 million –
or 18% – decrease in general and administrative expenses primarily
due to reduced legal costs substantially associated with Enservco’s
successful shareholder litigation matter.
The Company reported net income of $0.7 million,
or $0.03 per diluted share, compared to a net loss of $1.0 million,
or $0.07 per diluted share, in the prior year.
Adjusted EBITDA was $2.2 million versus $1.0
million for Q1 2023 – a 125% year-over-year
increase.
BUCKSHOT TRANSACTION & OTHER
UPDATES
Enservco expects to close the Transaction in
early Q3 2024, with the Company currently evaluating financing
alternatives. Following closing, Enservco looks forward to quickly
integrating Buckshot’s assets and operations into the broader
organization. The Company remains excited about the opportunities
afforded by the addition of this year-round business that has
strong margins and cash flow visibility, coupled with growth
prospects.
Separately, Enservco continues to explore
strategic initiatives to reduce reliance on its seasonal frac water
heating services business and invest in opportunities that generate
solid cash flow and provide visible near and long-term growth.
CONFERENCE CALL & ADDITIONAL
INFORMATION
The Company has scheduled a conference call on
Thursday, May 16, 2024 at
9:30 a.m. ET to discuss its first quarter 2024
operational and financial results. To participate, interested
parties should dial 888-506-0062 at least five
minutes before the call is to begin. Please reference the “Enservco
First Quarter 2024 Earnings Conference Call” or use the participant
access code of 623631. International callers may
participate by dialing 973-528-0011. The call will
also be webcast and available on Enservco’s website at
www.enservco.com under “Investors” on the “Events” page.
In addition, interested parties can participate
through the webcast by accessing the following link:
https://www.webcaster4.com/Webcast/Page/2228/50645
Like callers, participants should access the
webcast at least five minutes prior to start time. In addition, a
replay of the webcast will be available following the call through
the above link.
ABOUT ENSERVCO
Enservco provides a range of oilfield services
through its various operating subsidiaries, including hot oiling,
acidizing, frac water heating, and related services. The Company
has a broad geographic footprint covering major domestic oil and
gas basins across the United States. Additional information is
available at www.enservco.com. On March 20, 2024, the Company
announced an agreement to purchase Buckshot Trucking LLC, an energy
logistics provider in multiple key oil and gas basins (the
“Buckshot Acquisition”). The Buckshot Acquisition is scheduled to
close in the third quarter of 2024. When closed, the Buckshot
Acquisition would provide Enservco with a growing business that is
not weather dependent, allow the Company to enter steady year-round
logistics, provide an expanded operating footprint, and improve
cash flow visibility.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This 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
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, 2023, and subsequently
filed documents with the Securities and Exchange Commission
(“SEC”). Forward looking statements in this news release that are
subject to risks related to, among other things, closing of the
Buckshot Acquisition on anticipated terms and timing, and the
ability of Enservco to successfully integrate Buckshot’s market
opportunities, personnel and operations and to achieve expected
benefits. Enservco disclaims any obligation to update any
forward-looking statement made herein.
CONTACT
Mark PattersonChief Financial OfficerEnservco
Corporationmpatterson@enservco.com
|
|
ENSERVCO CORPORATION AND
SUBSIDIARYCondensed Consolidated Statements of
Operations(In thousands, except per share
amounts)(Unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
Production services |
|
$ |
2,485 |
|
|
$ |
2,863 |
|
|
Completion and other services |
|
|
7,307 |
|
|
|
6,049 |
|
|
Total revenues |
|
|
9,792 |
|
|
|
8,912 |
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Production services |
|
|
2,121 |
|
|
|
2,317 |
|
|
Completion and other services |
|
|
4,410 |
|
|
|
4,580 |
|
|
Sales, general, and administrative |
|
|
1,232 |
|
|
|
1,503 |
|
|
Severance and transition |
|
|
- |
|
|
|
1 |
|
|
Gain on disposal of assets |
|
|
- |
|
|
|
(1 |
) |
|
Depreciation and amortization |
|
|
767 |
|
|
|
971 |
|
|
Total operating expenses |
|
|
8,530 |
|
|
|
9,371 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
1,262 |
|
|
|
(459 |
) |
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(578 |
) |
|
|
(590 |
) |
|
Other income |
|
|
56 |
|
|
|
29 |
|
|
Total other expense, net |
|
|
(522 |
) |
|
|
(561 |
) |
|
|
|
|
|
|
|
|
|
|
Income (loss) before
taxes |
|
|
740 |
|
|
|
(1,020 |
) |
|
Deferred income tax
benefit |
|
|
- |
|
|
|
16 |
|
|
Net income (loss) |
|
$ |
740 |
|
|
$ |
(1,004 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.03 |
|
|
$ |
(0.07 |
) |
|
Diluted |
|
$ |
0.03 |
|
|
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
26,934 |
|
|
|
14,808 |
|
|
Diluted |
|
|
30,284 |
|
|
|
14,808 |
|
|
|
ENSERVCO CORPORATION AND
SUBSIDIARYCondensed Consolidated Balance
Sheets(In thousands, except share and per share
amounts) |
|
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
474 |
|
|
$ |
201 |
|
Accounts receivable, net |
|
|
4,248 |
|
|
|
4,190 |
|
Prepaid expenses and other current assets |
|
|
870 |
|
|
|
1,047 |
|
Inventories |
|
|
219 |
|
|
|
209 |
|
Note receivable |
|
|
75 |
|
|
|
75 |
|
Total Current Assets |
|
|
5,886 |
|
|
|
5,722 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
6,235 |
|
|
|
6,923 |
|
Intangible assets, net |
|
|
67 |
|
|
|
- |
|
Right-of-use asset - finance,
net |
|
|
6 |
|
|
|
9 |
|
Right-of-use asset -
operating, net |
|
|
759 |
|
|
|
891 |
|
Note receivable, less current
portion |
|
|
125 |
|
|
|
144 |
|
Other assets |
|
|
182 |
|
|
|
183 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
13,260 |
|
|
$ |
13,872 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
3,104 |
|
|
$ |
4,285 |
|
Utica Facility |
|
|
1,684 |
|
|
|
1,595 |
|
LSQ Facility |
|
|
2,739 |
|
|
|
2,472 |
|
November 2022 Convertible Note, related party |
|
|
1,079 |
|
|
|
1,027 |
|
September and October 2023 Convertible Notes, related parties |
|
|
1,660 |
|
|
|
- |
|
Lease liability - finance |
|
|
6 |
|
|
|
10 |
|
Lease liability - operating |
|
|
395 |
|
|
|
441 |
|
Other current liabilities |
|
|
200 |
|
|
|
198 |
|
Total Current Liabilities |
|
|
10,867 |
|
|
|
10,028 |
|
|
|
|
|
|
|
|
|
|
Utica Facility, less current portion |
|
|
1,075 |
|
|
|
1,690 |
|
September and October 2023 Convertible Notes, related parties, less
current portion |
|
|
- |
|
|
|
1,656 |
|
Utica Residual Liability |
|
|
293 |
|
|
|
256 |
|
Lease liability - finance, less current portion |
|
|
10 |
|
|
|
6 |
|
Lease liability - operating, less current portion |
|
|
436 |
|
|
|
528 |
|
Deferred tax liabilities |
|
|
222 |
|
|
|
222 |
|
Other non-current liabilities |
|
|
7 |
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
12,910 |
|
|
|
14,444 |
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
(Deficit): |
|
|
|
|
|
|
|
|
Preferred stock, $0.005 par value, 10,000,000 shares authorized, no
shares issued or outstanding |
|
|
- |
|
|
|
- |
|
Common stock, $0.005 par value, 100,000,000 shares authorized;
27,362,742 and 26,592,637 shares issued as of March 31,
2024 and December 31, 2023, respectively; 6,907 shares of
treasury stock as of March 31, 2024 and December 31,
2023; and 27,355,835 and 26,585,730 shares outstanding as
of March 31, 2024 and December 31, 2023, respectively |
|
|
135 |
|
|
|
131 |
|
Additional paid-in capital |
|
|
49,148 |
|
|
|
48,970 |
|
Accumulated deficit |
|
|
(48,933 |
) |
|
|
(49,673 |
) |
Total Stockholders' Equity
(Deficit) |
|
|
350 |
|
|
|
(572 |
) |
|
|
|
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity (Deficit) |
|
$ |
13,260 |
|
|
$ |
13,872 |
|
|
ENSERVCO CORPORATION AND
SUBSIDIARYCondensed Consolidated Statements of
Cash Flows(In
thousands)(Unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2024 |
|
|
2023 |
|
Operating Activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
740 |
|
|
$ |
(1,004 |
) |
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
767 |
|
|
|
971 |
|
Gain on disposal of equipment |
|
|
- |
|
|
|
(1 |
) |
Stock-based compensation |
|
|
76 |
|
|
|
196 |
|
LSQ Facility interest paid-in-kind |
|
|
126 |
|
|
|
- |
|
Amortization of debt issuance costs and discount |
|
|
77 |
|
|
|
70 |
|
Deferred income tax benefit |
|
|
- |
|
|
|
(16 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(58 |
) |
|
|
243 |
|
Inventories |
|
|
(10 |
) |
|
|
(1 |
) |
Prepaid expense and other current assets |
|
|
178 |
|
|
|
481 |
|
Amortization of operating lease assets |
|
|
132 |
|
|
|
139 |
|
Other assets |
|
|
1 |
|
|
|
17 |
|
Accounts payable and accrued liabilities |
|
|
(924 |
) |
|
|
(1,189 |
) |
Operating lease liabilities |
|
|
(138 |
) |
|
|
(143 |
) |
Other liabilities |
|
|
92 |
|
|
|
(242 |
) |
Net cash provided by
(used in) operating activities |
|
|
1,059 |
|
|
|
(479 |
) |
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(77 |
) |
|
|
(49 |
) |
Proceeds from disposals of property and equipment |
|
|
- |
|
|
|
9 |
|
Purchase of intangible |
|
|
(67 |
) |
|
|
- |
|
Collections on note receivable |
|
|
19 |
|
|
|
25 |
|
Net cash used in investing
activities |
|
|
(125 |
) |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds from February 2023 Offering, net |
|
|
- |
|
|
|
2,952 |
|
Net LSQ Facility borrowings (repayments) |
|
|
140 |
|
|
|
(334 |
) |
Utica Facility repayments |
|
|
(545 |
) |
|
|
(294 |
) |
Repayments of long-term debt |
|
|
- |
|
|
|
(15 |
) |
Payments on financed insurance |
|
|
(256 |
) |
|
|
(79 |
) |
Net cash (used in) provided by
financing activities |
|
|
(661 |
) |
|
|
2,230 |
|
|
|
|
|
|
|
|
|
|
Net Increase in Cash and Cash
Equivalents |
|
|
273 |
|
|
|
1,736 |
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents,
beginning of period |
|
|
201 |
|
|
|
35 |
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, end
of period |
|
$ |
474 |
|
|
$ |
1,771 |
|
|
|
|
|
|
|
|
|
|
NON-GAAP INFORMATION
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 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 loss in the table below. 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.
|
|
|
For the Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Reconciliation from Net Income (Loss) to Adjusted
EBITDA |
|
|
|
|
Net income
(loss) |
|
$ |
740 |
|
|
$ |
(1,004 |
) |
Add back
(deduct): |
|
|
|
|
Interest expense |
|
|
578 |
|
|
|
590 |
|
Deferred income tax benefit |
|
|
- |
|
|
|
(16 |
) |
Depreciation and amortization |
|
|
767 |
|
|
|
971 |
|
EBITDA
(non-GAAP) |
|
|
2,085 |
|
|
|
541 |
|
Add back
(deduct): |
|
|
|
|
Stock-based compensation |
|
|
76 |
|
|
|
196 |
|
Severance and transition costs |
|
|
- |
|
|
|
1 |
|
Non-recurring legal and transaction costs |
|
|
117 |
|
|
|
278 |
|
Gain on disposal of assets |
|
|
- |
|
|
|
(1 |
) |
Other income |
|
|
(56 |
) |
|
|
(29 |
) |
Adjusted EBITDA (non-GAAP) |
|
$ |
2,222 |
|
|
$ |
986 |
|
|
|
|
|
|