UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): May 5, 2010
DAWSON GEOPHYSICAL COMPANY
(Exact name of Registrant as specified in its charter)
| TEXAS (State of incorporation or organization) |
001-34404 (Commission file number) |
75-0970548 (I.R.S. employer identification number) |
| 508 W. WALL, SUITE 800 MIDLAND, TEXAS (Address of principal executive offices) |
79701 (Zip code) |
Registrant’s telephone number, including area code: (432) 684-3000
(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 May 5, 2010, Dawson Geophysical Company (the “Company”) issued a press release reporting
its operating results for the quarter ended March 31, 2010, the second quarter of the Company’s
2010 fiscal year.
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 the Exchange Act.
| Exhibit | ||||
| Number | Description | |||
| 99.1 | Press release dated May 5, 2010. |
|||
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: May 5, 2010 | By: | /s/ Christina W. Hagan | ||
| Christina W. Hagan | ||||
| Executive Vice President, Secretary and Chief Financial Officer |
||||
INDEX TO EXHIBITS
| Exhibit | ||||
| Number | Description | |||
| 99.1 | Press release dated May 5, 2010. |
|||
Exhibit 99.1
NEWS RELEASE
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
Company contact:
L. Decker Dawson, Chairman
Stephen C. Jumper, CEO and President
Christina W. Hagan, Chief Financial Officer
(800) 332-9766
www.dawson3d.com
L. Decker Dawson, Chairman
Stephen C. Jumper, CEO and President
Christina W. Hagan, Chief Financial Officer
(800) 332-9766
www.dawson3d.com
DAWSON GEOPHYSICAL REPORTS
SECOND QUARTER FINANCIAL RESULTS
SECOND QUARTER FINANCIAL RESULTS
Company Redeploys Two
Data Acquisition Crews
Data Acquisition Crews
MIDLAND, Texas, May 5, 2010/PR Newswire/ — Dawson Geophysical Company (NASDAQ DWSN) today
reported revenues of $48,585,000 for the quarter ending March 31, 2010, the Company’s second
quarter of fiscal 2010, compared to $64,625,000 for the same quarter in fiscal 2009, a decrease of
25 percent. Net loss for the second quarter of fiscal 2010 was $2,706,000 compared to net income of
$6,170,000 in the same quarter of fiscal 2009. Loss per share for the second quarter of fiscal 2010
was $0.35 compared to income per share of $0.79 for the second quarter of fiscal 2009. EBITDA for
the second quarter of fiscal 2010 was $2,488,000 compared to $16,814,000 in the same quarter of
fiscal 2009.
The revenue decrease in the quarter compared to the same quarter of fiscal 2009 was primarily the
result of previously announced reductions in active crew count from sixteen to nine crews beginning
in the second quarter of fiscal 2009 (four crews), third quarter of fiscal 2009 (two crews), and
first quarter of fiscal 2010 (one crew), a more competitive pricing environment, substantially
lower utilization rates of the remaining crews and increased downtime for weather. Revenues in the
quarter continued to include relatively high third-party charges related to the use of helicopter
support services, specialized survey technologies and dynamite energy sources. The higher level of
these charges during the second quarter was driven by the Company’s increased demand levels in
areas with limited access. The Company is reimbursed for these expenses by its clients.
Stephen Jumper, President and CEO of Dawson Geophysical Company, said, “Increased demand for our
services and higher crew utilization rates during our second quarter resulted in improved financial
performance compared to our first fiscal quarter despite extremely difficult weather conditions,
particularly heavy snowfalls in the Northern and Northeastern regions of the country along with wet
and icy conditions in the mid and southern regions. As previously announced, we redeployed two
seismic data acquisition crews during the quarter bringing the number of currently active crews to
eleven.”
NEWS RELEASE
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
Jumper continued, “We continue to experience steady demand for our services, especially in targeted
oil and natural gas producing basins, including the Marcellus Shale, Barnett Shale, Fayetteville
Shale, Eagle Ford Shale, Haynesville Shale, Bakken Shale, mid-continent region and the Permian
Basin. While we remain in a competitive pricing environment, we believe we are in a position to
continue to mitigate short-term utilization rate issues and take advantage of increased crew
efficiencies and productivity. Although our clients may cancel their service contracts on short
notice, we believe our current order book reflects commitment levels sufficient to maintain
operations for eleven crews well into calendar 2010.”
The Company’s Board of Directors has approved an additional $10,000,000 capital budget for fiscal
2010, bringing the total fiscal 2010 budget to $20,000,000. At the end of the second quarter, the
Company spent $8,007,000 after trade in allowance on the purchase of additional ARAM and RSR
channels as the desire for increased channel count for higher resolution images and improved
operational efficiencies continues to grow. Our current channel count is in excess of 120,000.
Total capital expenditures for the fiscal year to date are $15,658,000 including the purchase of
the 2,000 stations of OYO GSR four channel three-component recording equipment reported in the
first quarter. The balance of the capital budget will be used for maintenance capital requirements
and the purchase of additional geophones.
Jumper concluded, “While market conditions are still challenging, we believe we are positioned to
capture the upside of the seismic market. We now have eleven crews fully deployed throughout every
major oil and natural gas basin in the continental United States. Utilization rates continue to
improve, demand for our services remains steady, and we maintain a very solid balance sheet with
approximately $80,000,000 of working capital, no debt and a $20,000,000 undrawn revolver available.
In addition, we continue to cultivate and nurture valuable client relationships. We have retained
all of our key technical and operational people which should allow us to capitalize on the
opportunities beginning to emerge in 2010 and beyond.”
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NEWS RELEASE
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
Dawson Geophysical Company is the leading provider of U.S. onshore seismic data acquisition
services as measured by the number of active data acquisition crews. Founded in 1952, Dawson
acquires and processes 2D, 3D, 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.
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, 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.
3
NEWS RELEASE
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
Dawson Geophysical Company
508 W. Wall, Suite 800
Midland, TX 79701
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, cancellations of service contracts, high fixed costs of
operations, weather interruptions, inability to obtain land access rights of way, industry
competition, limited number of customers, credit risk related to our customers, asset impairments,
the availability of capital resources and operational disruptions. 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, 2009. 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.
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DAWSON GEOPHYSICAL COMPANY
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS
| Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Operating revenues |
$ | 48,585,000 | $ | 64,625,000 | $ | 84,915,000 | $ | 144,841,000 | ||||||||
Operating costs: |
||||||||||||||||
Operating expenses |
44,428,000 | 45,737,000 | 79,147,000 | 104,752,000 | ||||||||||||
General and administrative |
1,792,000 | 2,408,000 | 3,646,000 | 4,563,000 | ||||||||||||
Depreciation |
6,695,000 | 6,529,000 | 13,172,000 | 13,130,000 | ||||||||||||
| 52,915,000 | 54,674,000 | 95,965,000 | 122,445,000 | |||||||||||||
Income (loss) from operations |
(4,330,000 | ) | 9,951,000 | (11,050,000 | ) | 22,396,000 | ||||||||||
Other income: |
||||||||||||||||
Interest income |
28,000 | 62,000 | 58,000 | 140,000 | ||||||||||||
Other income |
95,000 | 272,000 | 97,000 | 310,000 | ||||||||||||
Income (loss) before income tax |
(4,207,000 | ) | 10,285,000 | (10,895,000 | ) | 22,846,000 | ||||||||||
Income tax benefit (expense) |
1,501,000 | (4,115,000 | ) | 3,973,000 | (8,942,000 | ) | ||||||||||
Net income (loss) |
$ | (2,706,000 | ) | $ | 6,170,000 | $ | (6,922,000 | ) | $ | 13,904,000 | ||||||
Net income (loss) per common share |
$ | (0.35 | ) | $ | 0.79 | $ | (0.89 | ) | $ | 1.78 | ||||||
Net income (loss) per common
share-assuming dilution |
$ | (0.35 | ) | $ | 0.79 | $ | (0.89 | ) | $ | 1.78 | ||||||
Weighted average equivalent common
shares outstanding |
7,779,256 | 7,799,744 | 7,775,483 | 7,797,986 | ||||||||||||
Weighted average equivalent common
shares outstanding-assuming dilution |
7,779,256 | 7,850,508 | 7,775,483 | 7,824,202 | ||||||||||||
DAWSON GEOPHYSICAL COMPANY
BALANCE SHEETS
BALANCE SHEETS
| March 31, | September 30, | |||||||
| 2010 | 2009 | |||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 19,117,000 | $ | 36,792,000 | ||||
Short-term investments |
30,123,000 | 25,267,000 | ||||||
Accounts receivable, net of allowance for
doubtful accounts of $639,000 in March 2010
and $533,000 in September 2009 |
54,009,000 | 40,106,000 | ||||||
Prepaid expenses and other assets |
7,143,000 | 7,819,000 | ||||||
Current deferred tax asset |
921,000 | 1,694,000 | ||||||
Total current assets |
111,313,000 | 111,678,000 | ||||||
Property, plant and equipment |
246,333,000 | 240,820,000 | ||||||
Less accumulated depreciation |
(118,322,000 | ) | (115,341,000 | ) | ||||
Net property, plant and equipment |
128,011,000 | 125,479,000 | ||||||
Total assets |
$ | 239,324,000 | $ | 237,157,000 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 16,894,000 | $ | 6,966,000 | ||||
Accrued liabilities: |
||||||||
Payroll costs and other taxes |
3,160,000 | 2,720,000 | ||||||
Other |
9,822,000 | 10,600,000 | ||||||
Deferred revenue |
1,512,000 | 2,230,000 | ||||||
Total current liabilities |
31,388,000 | 22,516,000 | ||||||
Deferred tax liability |
15,987,000 | 16,262,000 | ||||||
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, 7,817,756
and 7,822,994 shares issued and outstanding
in each period |
2,606,000 | 2,608,000 | ||||||
Additional paid-in capital |
89,690,000 | 89,220,000 | ||||||
Other comprehensive income, net of tax |
42,000 | 18,000 | ||||||
Retained earnings |
99,611,000 | 106,533,000 | ||||||
Total stockholders’ equity |
191,949,000 | 198,379,000 | ||||||
Total liabilities and stockholders’ equity |
$ | 239,324,000 | $ | 237,157,000 | ||||
5
Reconciliation of EBITDA to Net Income (Loss)
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
Net income (loss) |
$ | (2,706 | ) | $ | 6,170 | $ | (6,922 | ) | $ | 13,904 | ||||||
Depreciation |
6,695 | 6,529 | 13,172 | 13,130 | ||||||||||||
Income tax (benefit) expense |
(1,501 | ) | 4,115 | (3,973 | ) | 8,942 | ||||||||||
EBITDA |
$ | 2,488 | $ | 16,814 | $ | 2,277 | $ | 35,976 | ||||||||
Reconciliation of EBITDA to Net Cash Provided by Operating
Activities
| Six Months Ended | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
| (in thousands) | ||||||||
Net cash provided by operating activities |
$ | 2,510 | $ | 38,291 | ||||
Changes in working capital items and other |
763 | (328 | ) | |||||
Non-cash adjustments to income |
(996 | ) | (1,987 | ) | ||||
EBITDA |
$ | 2,277 | $ | 35,976 | ||||
6