UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of report (date of earliest event reported): August 7, 2015

 

DAWSON GEOPHYSICAL COMPANY

(Exact name of Registrant as specified in its charter)

 

TEXAS

 

001-32472

 

74-2095844

(State of incorporation
or organization)

 

(Commission file number)

 

(I.R.S. employer identification number)

 

508 West Wall, Suite 800

Midland, Texas 79701

(Address of principal executive offices)

 

(432) 684-3000

(Registrant’s telephone number, including area code)

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act       (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act         (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02.                                        Results of Operations and Financial Condition.

 

On August 7, 2015, Dawson Geophysical Company (the “Company”) issued a press release reporting its operating results for the Company’s second quarter ended June 30, 2015.

 

The Company hereby incorporates by reference into this Item 2.02 the information set forth in such press release, a copy of which is furnished as Exhibit 99.1 to this Current Report. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and herein are deemed to be furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

Item 9.01.                                        Financial Statements and Exhibits.

 

(d)                                 Exhibits.

 

In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

 

EXHIBIT
NUMBER

 

 

DESCRIPTION

 

99.1

 

Press release dated August 7, 2015.

 

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

DAWSON GEOPHYSICAL COMPANY

 

 

 

 

Date: August 7, 2015

By:

/s/ Christina W. Hagan

 

 

Christina W. Hagan

 

 

Executive Vice President, Secretary and

 

 

Chief Accounting Officer

 

3



 

INDEX TO EXHIBITS

 

EXHIBIT
NUMBER

 

 

DESCRIPTION

 

99.1

 

Press release dated August 7, 2015.

 

 

4


Exhibit 99.1

 

Company contact:

Stephen C. Jumper, CEO and President

James K. Brata, Chief Financial Officer

(800) 332-9766

www.dawson3d.com

 

DAWSON GEOPHYSICAL REPORTS

SECOND QUARTER 2015 RESULTS

 

Severe weather conditions impact quarterly results

 

MIDLAND, Texas, August 7, 2015/PR Newswire/Dawson Geophysical Company (NASDAQ: DWSN) today reported results for its second quarter ended June 30, 2015.

 

On February 11, 2015, legacy Dawson Geophysical Company and legacy TGC Industries, Inc. consummated their previously announced strategic business combination. The merger transaction was accounted for as a reverse acquisition with legacy Dawson Geophysical being deemed the accounting acquirer. The combined companies adopted a calendar fiscal year ending December 31. Second quarter fiscal 2015 results reflect the first full quarter of operations for the combined companies. Second quarter fiscal 2015 results are compared to the quarterly results for legacy Dawson Geophysical for the period April 1 through June 30, 2014, which at the time was legacy Dawson Geophysical’s third fiscal quarter of its fiscal year ended September 30, 2014 and did not include the results of legacy TGC Industries, Inc. Due to the foregoing, the historical financial results for the quarter ended June 30, 2014 discussed below are not directly comparable to the combined Company’s financial results for the quarter ended June 30, 2015.  Selected pro forma financial information giving effect to the business combination as if it had occurred on January 1, 2014 (together with the assumptions related thereto) is presented at the end of this press release, and additional information regarding the business combination and its impact on the Company’s financial position is set forth in the Company’s Form 10-Q for the quarterly period ended June 30, 2015.

 

For the quarter ended June 30, 2015, the Company reported revenues of $43,335,000 as compared to $54,166,000 (or $72,403,000 on a pro forma basis) for the quarter ended June 30, 2014.  For the 2015 quarter, the Company reported a net loss of $11,877,000, or $0.55 loss per share attributable to common stock, as compared to a net loss of $7,493,000 (or $8,654,000 on a pro forma basis), or $0.54 (or $0.41 on a pro forma basis) loss per share attributable to common stock for the quarter ended June 30, 2014.  The Company also reported negative EBITDA of $5,704,000 for the quarter ended June 30, 2015. Revenues for the second quarter 2015 were negatively impacted by reduced client demand due to decreasing and uncertain commodity prices, client-directed project delays and severe weather conditions in many areas of operation that adversely impacted data acquisition crews in the lower 48 United States. The Company operated the equivalent of seven crews during the second quarter 2015. Severe weather conditions and flooding in Texas and the mid-continent region significantly reduced utilization rates for the seven crews and delayed deployment of three additional crews onto ready projects.

 

The dramatic reduction of the Company’s overall utilization rates had a significant negative impact on revenue for the second quarter 2015, partially offset by weather stand-by charges on several of the Company’s crews but at significantly reduced rates. Operating expenses for the June quarter were at reduced levels although not in direct proportion to the negative impact on revenue. Reflected in the current quarter is $690,000 of severance costs related to an approximately 30 percent reduction in work force since the closing of our merger.

 

Demand for Dawson’s services is at reduced levels from recent years and is anticipated to remain at such levels through 2015 in response to decreasing and uncertain commodity prices and reduced client expenditures. The Company anticipates operating eight to ten crews in the United States with limited activity in Canada during the third quarter ending September 30, 2015. Based on currently available information, the Company anticipates operating eight to ten crews in the United States through the balance of 2015.

 

The Company’s capital budget for 2015 continues at previously announced maintenance levels below the $10 million capital budget approved by the Board of Directors. Strategic investments in state-of-the-art seismic equipment during recent years are partially responsible for the lower 2015 capital budget. The Company’s balance sheet remains strong at June 30, 2015 with approximately $56,775,000 of cash and cash equivalents and short-term investments, $66,247,000 of working capital and $14,931,000 of debt and capital lease obligations.

 

Stephen C. Jumper said, “Despite today’s challenging environment, Dawson Geophysical is strategically positioned to withstand the commodities cycle downturn. Our strong balance sheet, diverse client base and a management team with more than one-hundred years

 



 

of combined industry experience provide us with the tools and resources required to successfully navigate today’s market. Equipment purchases made during recent years further enable us to successfully serve our valued clients while simultaneously operating below previously established capex levels.”

 

Jumper continued, “Severe weather conditions that began in mid-April and that were subsequently followed by Tropical Storm Bill later in the quarter negatively affected Texas and the mid-continent region where many of our crews were deployed. These multiple weather delays impacted utilization on seven of the active crews and delayed deployment of three additional crews on new projects. In addition to the negative weather in the quarter, the continuing actions to right size our organization to meet industry demands further impacted our quarterly results. We are currently operating ten crews in the United Sates. Weather conditions improved for July allowing us to operate at a higher utilization rate for the month as compared to the second quarter of 2015.”

 

Conference Call Information

 

Dawson Geophysical Company will host a conference call to review its second quarter 2015 financial results on August 7, 2015 at 9 a.m. CDT. Participants can access the call at 1-888-348-3664 (US), 1-855-669-9657 (Canada) and 1-412-902-4233 (Toll/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 August 10, 2015 by dialing 1-877-870-5176 (Toll-Free) and 1-858-384-5517 (Toll/International). The passcode is 10070060. The webcast will be recorded and available for replay on Dawson’s website until September 4, 2015.

 

About Dawson

 

Dawson Geophysical Company is a leading provider of North America onshore seismic data acquisition services with operations throughout the continental United States and Canada. 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 income (loss) is presented in the table following the text of this press release.

 

Forward-Looking Statements

 

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, dependence upon energy industry spending, the volatility of oil and natural gas prices, high fixed costs of operations, operational disruptions, changes in economic conditions, industry competition, the potential for contract delay or cancellations of

 



 

service contracts, the availability of capital resources, weather interruptions, limited number of customers, and credit risk related to our customers. A discussion of these and other factors, including risks and uncertainties, is set forth in Exhibit 99.5 to the Company’s Form 8-K/A that was filed with the Securities and Exchange Commission on April 30, 2015. 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.

 



 

DAWSON GEOPHYSICAL COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

43,335,000

 

$

54,166,000

 

$

117,057,000

 

$

130,932,000

 

Operating costs:

 

 

 

 

 

 

 

 

 

Operating expenses

 

43,399,000

 

49,608,000

 

108,190,000

 

109,699,000

 

General and administrative

 

5,621,000

 

3,533,000

 

13,143,000

 

7,209,000

 

Depreciation and amortization

 

12,380,000

 

10,253,000

 

23,603,000

 

20,430,000

 

 

 

61,400,000

 

63,394,000

 

144,936,000

 

137,338,000

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(18,065,000

)

(9,228,000

)

(27,879,000

)

(6,406,000

)

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

25,000

 

16,000

 

49,000

 

37,000

 

Interest expense

 

(190,000

)

(133,000

)

(337,000

)

(294,000

)

Other (expense) income

 

(19,000

)

441,000

 

13,000

 

98,000

 

Loss before income tax

 

(18,249,000

)

(8,904,000

)

(28,154,000

)

(6,565,000

)

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

6,372,000

 

1,411,000

 

9,685,000

 

724,000

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(11,877,000

)

$

(7,493,000

)

$

(18,469,000

)

$

(5,841,000

)

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Net unrealized income (loss) on foreign exchange rate translation, net of tax

 

$

344,000

 

$

42,000

 

$

(74,000

)

$

(65,000

)

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$

(11,533,000

)

$

(7,451,000

)

$

(18,543,000

)

$

(5,906,000

)

 

 

 

 

 

 

 

 

 

 

Basic loss per share attributable to common stock

 

$

(0.55

)

$

(0.54

)

$

(0.93

)

$

(0.42

)

 

 

 

 

 

 

 

 

 

 

Diluted loss per share attributable to common stock

 

$

(0.55

)

$

(0.54

)

$

(0.93

)

$

(0.42

)

 

 

 

 

 

 

 

 

 

 

Cash dividend declared per share of common stock

 

$

0.00

 

$

0.08

 

$

0.00

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

Weighted average equivalent common shares outstanding

 

21,525,952

 

14,010,497

 

19,783,724

 

14,009,930

 

 

 

 

 

 

 

 

 

 

 

Weighted average equivalent common shares outstanding-assuming dilution

 

21,525,952

 

14,010,497

 

19,783,724

 

14,009,930

 

 



 

DAWSON GEOPHYSICAL COMPANY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

June 30,

 

December 31,

 

 

 

2015

 

2014

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

37,275,000

 

$

14,644,000

 

Short-term investments

 

19,500,000

 

28,750,000

 

Accounts receivable, net of allowance for doubtful accounts of $775,000 at June 30, 2015 and $250,000 at December 31, 2014

 

31,297,000

 

37,133,000

 

Prepaid expenses and other assets

 

6,413,000

 

5,703,000

 

Current deferred tax asset

 

1,445,000

 

2,818,000

 

 

 

 

 

 

 

Total current assets

 

95,930,000

 

89,048,000

 

 

 

 

 

 

 

Property, plant and equipment

 

367,825,000

 

339,245,000

 

Less accumulated depreciation

 

(200,945,000

)

(181,453,000

)

 

 

 

 

 

 

Net property, plant and equipment

 

166,880,000

 

157,792,000

 

 

 

 

 

 

 

Intangibles, net

 

2,747,000

 

 

 

 

 

 

 

 

Total assets

 

$

265,557,000

 

$

246,840,000

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

7,216,000

 

$

5,849,000

 

Accrued liabilities:

 

 

 

 

 

Payroll costs and other taxes

 

3,322,000

 

3,015,000

 

Other

 

4,988,000

 

3,158,000

 

Deferred revenue

 

5,265,000

 

1,752,000

 

Current maturities of notes payable and obligations under capital leases

 

8,892,000

 

6,018,000

 

 

 

 

 

 

 

Total current liabilities

 

29,683,000

 

19,792,000

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

Notes payable and obligations under capital leases less current maturities

 

6,039,000

 

4,209,000

 

Deferred tax liability

 

11,339,000

 

28,621,000

 

 

 

 

 

 

 

Total long-term liabilities

 

17,378,000

 

32,830,000

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding

 

 

 

Common stock-par value $.01 per share; 35,000,000 shares authorized, 21,571,513 and 14,216,540 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

 

216,000

 

142,000

 

Additional paid-in capital

 

141,831,000

 

99,084,000

 

Retained earnings

 

76,867,000

 

95,336,000

 

Treasury stock, at cost; 48,445 shares at June 30, 2015 and none at December 31, 2014

 

 

 

Accumulated other comprehensive loss, net of tax

 

(418,000

)

(344,000

)

 

 

 

 

 

 

Total stockholders’ equity

 

218,496,000

 

194,218,000

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

265,557,000

 

$

246,840,000

 

 



 

Reconciliation of EBITDA to Net loss

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(in thousands)

 

(in thousands)

 

Net loss

 

$

(11,877

)

$

(7,493

)

$

(18,469

)

$

(5,841

)

Depreciation and amortization

 

12,380

 

10,253

 

23,603

 

20,430

 

Interest expense (income), net

 

165

 

117

 

288

 

257

 

Income tax benefit

 

(6,372

)

(1,411

)

(9,685

)

(724

)

EBITDA

 

$

(5,704

)

$

1,466

 

$

(4,263

)

$

14,122

 

 

Reconciliation of EBITDA to Net Cash provided by Operating Activities

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(in thousands)

 

(in thousands)

 

Net cash provided by operating activities

 

$

15,970

 

$

9,252

 

$

12,708

 

$

32,602

 

Changes in working capital and other items

 

(21,572

)

(7,563

)

(16,237

)

(17,790

)

Noncash adjustments to income

 

(102

)

(223

)

(734

)

(690

)

EBITDA

 

$

(5,704

)

$

1,466

 

$

(4,263

)

$

14,122

 

 

Pro Forma Information

 

The following unaudited pro forma condensed financial information for the three and six months ended June 30, 2015 and 2014 gives effect to the Merger as if it had occurred on January l, 2014. The unaudited pro forma condensed financial information has been included for comparative purposes only and is not necessarily indicative of the results that might have occurred had the transactions taken place on the dates indicated and is not intended to be a projection of future results. The unaudited pro forma financial information reflects certain adjustments related to the acquisition, such as (1) to record certain incremental expenses resulting from purchase accounting adjustments, such as reduced depreciation and amortization expense in connection with the fair value adjustments to property, plant and equipment, and intangible assets; and (2) to record the related tax effects. Shares used in the calculations of earnings per share in the table below were 21,525,952 and 21,329,220 for the three months ended June 30, 2015 and 2014, respectively, and 21,509,886 and 21,329,371 for the six months ended June 30, 2015 and 2014, respectively.

 

 

 

Pro Forma

 

Pro Forma

 

 

 

Three Months Ended June 30

 

Six Months Ended June 30

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

43,335,000

 

$

72,403,000

 

$

130,667,000

 

$

197,970,000

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(11,877,000

)

$

(8,654,000

)

$

(22,446,000

)

$

(977,000

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.55

)

$

(0.41

)

$

(1.04

)

$

(0.05

)

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

(0.55

)

$

(0.41

)

$

(1.04

)

$

(0.05

)