Enservco Reports 2020 First Quarter Financial Results
May 15 2020 - 4:00PM
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,
2020.
“The sharp reduction in customer drilling and completion and
activity in the fourth quarter carried into the first quarter and
was exacerbated by the Saudi-Russia price war and the worldwide
economic slowdown due to the Covid-19 pandemic,” said Ian
Dickinson, President and CEO. “We continue to take steps to
right size our cost structure. Since the first of the year we have
taken approximately $2.0 million in annualized costs out of the
business. This includes a significant headcount reduction,
compensation cuts across the organization, closure of our Oklahoma
facility and a temporary scaling back of operations at two other
facilities. In addition, we have reduced our 2020 maintenance Capex
budget by approximately $600,000 due to lower expected activity
levels. These moves were difficult but necessary as we manage
through the immediate challenges facing our industry.
“On a brighter note, we continue to build on the market share
gains we achieved in 2019. We have won and are pursuing
additional incremental business with new customers across our
footprint, with a particular focus in Texas, Colorado, Pennsylvania
and North Dakota,” Dickinson added. “We also continue to focus on
strengthening our balance sheet and are in ongoing discussions with
our lender and advisors regarding debt restructuring options.”
First Quarter ResultsTotal revenue in the first
quarter ended March 31, 2020, declined 62% to $9.4 million from
$24.8 million in the same quarter last year.
Production services revenue was down 22% year
over year to $3.2 million from $4.1 million. Production services
included hot oiling, which declined to $2.9 million from $3.6
million, and acidizing, which declined to $270,000 from
$469,000.
Production services generated a segment loss of
$292,000 in the first quarter as compared to a segment profit of
$770,000 in the same quarter last year.
Completion services revenue was down 70% in the
first quarter to $6.2 million from $20.7 million.
Completion services generated a segment profit
of $1.2 million, down from a segment profit of $8.7 million in the
same quarter last year.
Total operating expenses in the first quarter declined 37% year
over year to $11.6 million from $18.5 million due primarily to
lower costs of providing completion services. Sales, general
and administrative expense increased 10% in the first quarter to
$1.8 million from $1.6 million. The increase was attributable
to higher costs associated with bad debt reserve as well as
professional fees related to the Company’s efforts to restructure
its debt. Those increases were partially offset by elimination of
redundant costs related to the acquisition of Adler Hot Oil
Service.
The Company reported an operating loss of $2.3 million in the
first quarter compared to operating income of $6.3 million in the
same quarter last year. Net loss in the first quarter was
$2.8 million, or $0.05 per diluted share, versus net income of $4.3
million, or $0.08 per diluted share, in the same quarter last
year.
Adjusted EBITDA in the first quarter was a negative $503,000, down
from a positive $7.9 million in the same quarter last year.
Enservco used $1.0 million in cash from operations in the first
quarter, down from $2.6 million in cash used in operations in the
same quarter last year.
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 844-369-8770 (862-298-0840 for
international callers). No passcode is necessary. A
telephonic replay will be available through May 29, 2020, by
calling 877-481-4010 (919-882-2331 for international callers) and
entering the Conference ID #34739. To listen to the webcast,
participants should go to the ENSERVCO website at www.enservco.com
and link to the “Investors” page at least 15 minutes early to
register and download any necessary audio software. A replay of the
webcast will be available until June 15, 2020. The webcast
also is available at the following link:
https://www.webcaster4.com/Webcast/Page/2228/34739.
About EnservcoThrough its various operating
subsidiaries, Enservco provides a wide range of oilfield services,
including hot oiling, acidizing, frac water heating 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, 2019, and subsequently filed documents with the
SEC. Forward looking statements in this news release that are
subject to risk include the ability to continue growing market
share and taking costs out of the business and the ability to
restructure debt. 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 except per share amounts) |
(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
Revenues |
|
|
|
|
Production services |
$ |
3,202 |
|
|
$ |
4,116 |
|
|
Completion services |
|
6,184 |
|
|
|
20,696 |
|
|
|
|
|
9,386 |
|
|
|
24,812 |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
Production services |
|
3,494 |
|
|
|
3,346 |
|
|
Completion services |
|
4,971 |
|
|
|
12,020 |
|
|
Sales, general and administrative expenses |
|
1,762 |
|
|
|
1,602 |
|
|
Patent litigation and defense costs |
|
- |
|
|
|
9 |
|
|
Loss on disposals of equipment |
|
15 |
|
|
|
- |
|
|
Impairment loss |
|
- |
|
|
|
127 |
|
|
Depreciation and amortization |
|
1,396 |
|
|
|
1,400 |
|
|
|
Total operating expenses |
|
11,638 |
|
|
|
18,504 |
|
|
|
|
|
|
|
(Loss) Income from Operations |
|
(2,252 |
) |
|
|
6,308 |
|
|
|
|
|
|
|
Other (expense) income |
|
|
|
|
Interest expense |
|
(641 |
) |
|
|
(884 |
) |
|
Gain on settlement |
|
- |
|
|
|
|
Other income (expense) |
|
20 |
|
|
|
(65 |
) |
|
|
Total other income expense |
|
(621 |
) |
|
|
(949 |
) |
|
|
|
|
|
|
(Loss) income from continuing operations Before Tax Benefit |
|
(2,873 |
) |
|
|
5,359 |
|
Income tax expense |
|
- |
|
|
|
- |
|
(Loss) Income from continuing operations |
$ |
(2,873 |
) |
|
$ |
5,359 |
|
Discontinued operations |
|
|
|
|
Income (Loss) from operations of discontinued operations |
|
36 |
|
|
|
(1,056 |
) |
|
Income tax benefit |
|
- |
|
|
|
- |
|
|
Income (Loss) on discontinued operations |
|
36 |
|
|
|
(1,056 |
) |
Net (loss) income |
$ |
(2,837 |
) |
|
$ |
4,303 |
|
|
|
|
|
|
|
(Loss) earnings from continuing operations per Common Share -
Basic |
$ |
(0.05 |
) |
|
$ |
0.10 |
|
Loss from discontinued operations per Common Share - Basic |
|
- |
|
|
|
(0.02 |
) |
Net (loss) income per share - basic |
$ |
(0.05 |
) |
|
$ |
0.08 |
|
|
|
|
|
|
|
(Loss) earnings from continuing operations per Common Share -
Diluted |
$ |
(0.05 |
) |
|
$ |
0.09 |
|
Loss from discontinued operations per Common Share - Diluted |
|
- |
|
|
|
(0.01 |
) |
Net loss per share - diluted |
$ |
(0.05 |
) |
|
$ |
0.08 |
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding |
$ |
55,518 |
|
|
$ |
54,266 |
|
Add: Dilutive shares |
|
- |
|
|
|
951 |
|
Diluted weighted average number of common shares outstanding |
$ |
55,518 |
|
|
$ |
55,217 |
|
|
|
|
|
|
|
ENSERVCO CORPORATION AND SUBSIDIARIES |
Calculation of Adjusted EBITDA * |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
EBITDA* |
|
|
|
|
|
Net (loss) income |
$ |
(2,837 |
) |
|
$ |
4,303 |
|
|
Add Back (Deduct) |
|
|
|
|
|
Interest Expense |
|
642 |
|
|
|
884 |
|
|
Provision for income tax expense |
|
- |
|
|
|
- |
|
|
Depreciation and amortization (including discontinued
operations) |
|
1,403 |
|
|
|
1,683 |
|
|
EBITDA* |
|
(792 |
) |
|
|
6,870 |
|
|
Add Back (Deduct) |
|
|
|
|
|
|
Stock-based compensation |
|
39 |
|
|
|
92 |
|
|
|
Patent Litigation and defense costs |
|
- |
|
|
|
9 |
|
|
|
Gain on disposal of equipment |
|
(39 |
) |
|
|
- |
|
|
|
Impairment loss |
|
- |
|
|
|
127 |
|
|
|
Other (income) expense |
|
279 |
|
|
|
64 |
|
|
|
EBITDA related to discontinued operations |
|
10 |
|
|
|
774 |
|
|
Adjusted EBITDA* |
$ |
(503 |
) |
|
$ |
7,936 |
|
|
|
*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 (loss) 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, severance and transition
costs, gain on settlement, expenses to consolidate former Adler
facilities, patent litigation and defense costs, 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 |
2020 |
|
2019 |
|
|
|
(Unaudited) |
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
$ |
217 |
|
|
$ |
663 |
|
|
Accounts receivable, net |
|
5,695 |
|
|
|
6,424 |
|
|
Prepaid expenses and other current assets |
|
722 |
|
|
|
1,016 |
|
|
Inventories |
|
359 |
|
|
|
398 |
|
|
Income tax receivable, current |
|
57 |
|
|
|
43 |
|
|
Current assets of discontinued operations |
|
- |
|
|
|
187 |
|
|
|
Total current assets |
|
7,050 |
|
|
|
8,731 |
|
|
|
|
|
|
|
Property and equipment, net |
|
25,450 |
|
|
|
26,620 |
|
Goodwill |
|
546 |
|
|
|
546 |
|
Intangible assets, net |
|
777 |
|
|
|
828 |
|
Income taxes receivable, noncurrent |
|
- |
|
|
|
14 |
|
Right-of-use asset - financing, net |
|
499 |
|
|
|
569 |
|
Right-of-use asset - operating, net |
|
3,563 |
|
|
|
3,793 |
|
Other assets |
|
407 |
|
|
|
445 |
|
Non-current assets of discontinued operations |
|
1,301 |
|
|
|
1,430 |
|
TOTAL ASSETS |
$ |
39,593 |
|
|
$ |
42,976 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
3,600 |
|
|
$ |
4,470 |
|
|
Senior revolving credit facility |
|
34,589 |
|
|
|
33,994 |
|
|
Subordinated debt |
|
2,394 |
|
|
|
2,381 |
|
|
Lease liability - financing, current |
|
205 |
|
|
|
207 |
|
|
Lease liability - operating, current |
|
853 |
|
|
|
848 |
|
|
Current portion of long-term debt |
|
148 |
|
|
|
147 |
|
|
Current liabilities of discontinued operations |
|
31 |
|
|
|
72 |
|
|
|
Total current liabilities |
|
41,820 |
|
|
|
42,119 |
|
|
|
|
|
|
|
Long-Term Liabilities |
|
|
|
|
Long-term debt, less current portion |
|
175 |
|
|
|
198 |
|
|
Lease liability - Financing |
|
207 |
|
|
|
259 |
|
|
Lease liability - Operating |
|
2,805 |
|
|
|
3,009 |
|
|
Other liability |
|
33 |
|
|
|
33 |
|
|
Long-term liability of discontinued operations |
|
27 |
|
|
|
34 |
|
|
|
Total long-term liabilities |
|
3,247 |
|
|
|
3,533 |
|
|
|
Total liabilities |
|
45,067 |
|
|
|
45,652 |
|
|
|
|
|
|
|
Commitments and Contingencies (Note 8) |
|
|
|
|
|
|
|
|
|
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,
55,612,829 and 55,642,829 shares issued, respectively; 103,600
shares of treasury stock; and 55,509,229 and 55,539,229 shares
outstanding, respectively |
|
275 |
|
|
|
278 |
|
|
Additional paid-in capital |
|
22,108 |
|
|
|
22,066 |
|
|
Accumulated (deficit) earnings |
|
(27,857 |
) |
|
|
(25,020 |
) |
|
|
Total stockholders' equity |
|
(5,474 |
) |
|
|
(2,676 |
) |
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
39,593 |
|
|
$ |
42,976 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
ENSERVCO CORPORATION |
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED) |
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2020 |
|
2019 |
OPERATING ACTIVITIES |
|
|
|
|
Net (loss) income |
$ |
(2,837 |
) |
|
$ |
4,303 |
|
|
Net (income) loss from discontinued operations |
|
36 |
|
|
|
(1,056 |
) |
|
Net (loss) income from continuing operations |
|
(2,873 |
) |
|
|
5,359 |
|
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities |
|
|
|
|
|
Depreciation and amortization |
|
1,396 |
|
|
|
1,400 |
|
|
|
Loss on disposal of equipment |
|
15 |
|
|
|
- |
|
|
|
Impairment loss |
|
- |
|
|
|
127 |
|
|
|
Stock-based compensation |
|
39 |
|
|
|
92 |
|
|
|
Amortization of debt issuance costs and discounts |
|
47 |
|
|
|
179 |
|
|
|
Provision for bad debt expense |
|
300 |
|
|
|
- |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
Accounts receivable |
|
429 |
|
|
|
(11,199 |
) |
|
|
Inventories |
|
39 |
|
|
|
118 |
|
|
|
Prepaid expense and other current assets |
|
333 |
|
|
|
124 |
|
|
|
Amortization of operating lease assets |
|
230 |
|
|
|
- |
|
|
|
Other assets |
|
15 |
|
|
|
69 |
|
|
|
Accounts payable and accrued liabilities |
|
(869 |
) |
|
|
1,069 |
|
|
|
Operating lease liabilities |
|
(204 |
) |
|
|
- |
|
|
|
Other liabilities |
|
- |
|
|
|
84 |
|
|
|
Net cash used in operating activities - continuing operations |
|
(1,103 |
) |
|
|
(2,578 |
) |
|
|
Net cash provided by (used in) operating activities - discontinued
operations |
|
134 |
|
|
|
(68 |
) |
|
|
Net cash used in operating activities |
|
(969 |
) |
|
|
(2,646 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
Purchases of property and equipment |
|
(164 |
) |
|
|
(123 |
) |
|
Proceeds from disposals of property and equipment |
|
- |
|
|
|
155 |
|
|
|
Net cash (used in) provided by investing activities - continuing
operations |
|
(164 |
) |
|
|
32 |
|
|
|
Net cash provided by (used in) investing activities - discontinued
operations |
|
178 |
|
|
|
553 |
|
|
|
Net cash provided by investing activities |
|
14 |
|
|
|
585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Net line of credit borrowings |
|
595 |
|
|
|
2,016 |
|
|
Repayment of long-term debt |
|
(23 |
) |
|
|
(11 |
) |
|
Payments of finance leases |
|
(30 |
) |
|
|
- |
|
|
Repayment of note |
|
- |
|
|
|
(200 |
) |
|
Other financing activities |
|
- |
|
|
|
(1 |
) |
|
|
Net Cash provided by financing activities - continuing
operations |
|
542 |
|
|
|
1,804 |
|
|
|
Net Cash provided by (used in) - discontinued operations |
|
(33 |
) |
|
|
|
|
Net Cash provided by financing activities |
|
509 |
|
|
|
1,804 |
|
|
|
|
|
|
|
Increase (Decrease) in Cash Flows |
|
(446 |
) |
|
|
(257 |
) |
|
|
|
|
|
|
Cash and cash equivalents, beginning of
period |
|
663 |
|
|
|
257 |
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
$ |
217 |
|
|
$ |
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
Cash paid for interest |
|
537 |
|
|
|
595 |
|
Supplemental Disclosure of Non-cash Investing and Financing
Activities: |
|
|
|
Non-cash proceeds from revolving credit facility |
|
- |
|
|
|
39 |
|
|
|
|
|
|
|
ENSERVCO (AMEX:ENSV)
Historical Stock Chart
From Aug 2024 to Sep 2024
ENSERVCO (AMEX:ENSV)
Historical Stock Chart
From Sep 2023 to Sep 2024