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 2, 2007
DAWSON GEOPHYSICAL COMPANY
(Exact name of Registrant as specified in its charter)
| TEXAS | 2-71058 | 75-0970548 | ||
| (State of incorporation | (Commission file number) | (I.R.S. employer identification number) | ||
| or organization) |
| 508 W. WALL, SUITE 800 | ||
| MIDLAND, TEXAS | 79701 | |
| (Address of principal executive offices) | (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 2, 2007, Dawson Geophysical Company (the “Company”) issued a press release reporting
its operating results for the quarter ended March 31, 2007, the second quarter of its 2007 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 2, 2007. |
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 2, 2007 | 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 2, 2007. |
EXHIBIT 99.1
NEWS RELEASE 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 AND SIX MONTH RESULTS
SECOND QUARTER AND SIX MONTH RESULTS
Company Deploys 14th
Data Acquisition Crew
Data Acquisition Crew
MIDLAND, Texas, May 2, 2007/ PR Newswire/ — Dawson Geophysical Company (NASDAQ DWSN) today
reported revenues of $59,935,000 for the quarter ending March 31, 2007, the Company’s second fiscal
quarter of 2007, compared to $40,042,000 for the same quarter in fiscal 2006, an increase of 50
percent. Revenue growth in the quarter was primarily the result of the addition of two seismic
data acquisition crews during 2006, increased channel count and productivity on existing crews,
improved pricing, and more favorable contract terms. Included in the second quarter of fiscal 2007
revenues are substantial increases in third party charges related to the use of helicopter support
services, specialized survey technologies, and dynamite energy sources. The increase in these
charges is driven by the Company’s continued operations in areas with limited access
in the Appalachian Basin, Arkansas, the Rocky Mountains and eastern Oklahoma. The Company is reimbursed for these expenses by
its clients.
Net income for the second quarter of fiscal 2007 was $5,368,000, compared to $4,351,000 in the same
quarter of fiscal 2006, an increase of 23 percent. Earnings per share for the second quarter of
fiscal 2007 were $0.71 per share, compared to $0.58 per share in the same quarter of fiscal 2006.
EBITDA for the second quarter of fiscal 2007 was $12,961,000, compared to $9,899,000 in the same
quarter of fiscal 2006, an increase of 31 percent.
Although the Company’s second quarter reflects continued brisk domestic exploration activities by
the Company’s oil and gas clients, adverse weather conditions, particularly in January and March,
and the inability to secure land access permits in a timely manner on several projects in February
negatively affected the Company’s second quarter results. While inclement weather conditions
continued to have a negative effect on operations into April, the Company is currently operating at
full capacity and deployed its fourteenth crew in April as scheduled.
NEWS RELEASE Dawson Geophysical Company 508 W. Wall, Suite 800 Midland, TX 79701 |
|
During the second quarter and in April, the Company took delivery of ten new I/O vibrator energy
source units and has eight more on order. The Company is also on schedule to replace an I/O System
II MRX recording system used by an existing crew with a 9500 channel Aram recording system in June,
an increase of 1000 channels over the 8500 channels previously announced. In response to continued
demand for high resolution images and operating efficiencies, the Company has increased the channel
count on its fourteenth crew from 8500 channels to 10,000 channels and has purchased an additional
1500 channels of Aram equipment to further expand the recording capacity on existing crews. The
Company will own in excess of 95,000 channels upon fielding of the additional channels.
In March, Dawson Geophysical completed the data acquisition phase of a 3D seismic project at the
Dallas-Ft. Worth International Airport. The airport project represents one of the most complex
logistical and operational undertakings in the Company’s 55-year history.
Demand for
the Company’s services continues at an all-time high with an order book reflecting
commitments through the end of calendar 2007 for all fourteen crews and into calendar 2008 on
several crews. Operations are currently active on projects in West Texas, South Texas, East Texas,
the Barnett Shale of the Ft. Worth Basin, the Fayetteville Shale in Arkansas, the Rocky Mountains,
Oklahoma, and the Appalachian Basin. The Company’s data processing division continues to make
positive gains in market penetration, product improvement, and technical support.
Six Months Results
For the six months ended March 31, 2007, revenues were $113,589,000, compared to $75,535,000 for
the same period in 2006, an increase of 50 percent. Net income for the same six months increased
62 percent to $10,803,000 in 2007, compared to $6,651,000 in 2006. Earnings per share for the first
six months of fiscal 2007 were $1.43 as compared to $0.89 for the first six months of fiscal 2006,
an increase of 61 percent. EBITDA was $25,629,000 in the first six months of fiscal 2007 versus
$16,311,000 during the same period of fiscal 2006, an increase of 57 percent.
Stephen Jumper, President and CEO of Dawson Geophysical said, “We are very pleased by our
year-over-year results. Despite inclement weather conditions and land access issues during the
second quarter, we were able to post strong financial results. Going forward, we continue to
anticipate strong demand in the 3-D seismic data acquisition markets we serve. It is a very
exciting time at Dawson Geophysical and as we celebrate our
55th anniversary on May 15,
we will continue to serve our clients in their quest for oil and natural gas.”
NEWS RELEASE Dawson Geophysical Company 508 W. Wall, Suite 800 Midland, TX 79701 |
|
Management Appointments
The Board of Directors for Dawson Geophysical recently made several management appointments. The
Company named James W. (Tom) Thomas as Vice President, Chief Geophysicist and Stuart Wright as Vice
President of Applied Geophysics. Tom and Stuart have over 50 years of combined experience in the
seismic industry. Tom joined the Company in 2002 in the Midland office. Prior to joining the
Company, Tom was with Phillips Petroleum. Tom will soon relocate to the Oklahoma City office.
Stuart joined the Company in 2003 and is in the Denver office. Prior to joining the Company,
Stuart was most recently with WesternGeco in Denver.
About Dawson Geophysical
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 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.
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 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.
Forward Looking Statement
This press release contains information about the Company’s EBITDA, a non-GAAP financial measure. The Company defines EBITDA as net income plus interest expense, income taxes, depreciation and amortization expense. The Company uses EBITDA as a supplemental financial measure to assess:
This press release contains information about the Company’s EBITDA, a non-GAAP financial measure. The Company defines EBITDA as net income 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, 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 is presented in the table following the text of this press release.
NEWS RELEASE 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, dependence upon energy industry spending, the volatility of oil and gas prices,
weather interruptions, the ability to manage growth, the ability to obtain land access rights of
way and the availability of capital resources. 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, 2006. 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
STATEMENTS OF OPERATIONS
(UNAUDITED)
STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Operating revenues |
$ | 59,935,000 | $ | 40,042,000 | $ | 113,589,000 | $ | 75,535,000 | ||||||||
Operating costs: |
||||||||||||||||
Operating expenses |
45,608,000 | 29,109,000 | 85,332,000 | 57,247,000 | ||||||||||||
General and administrative |
1,605,000 | 1,314,000 | 3,053,000 | 2,441,000 | ||||||||||||
Depreciation |
4,154,000 | 3,188,000 | 8,168,000 | 6,164,000 | ||||||||||||
| 51,367,000 | 33,611,000 | 96,553,000 | 65,852,000 | |||||||||||||
Income from operations |
8,568,000 | 6,431,000 | 17,036,000 | 9,683,000 | ||||||||||||
Other income: |
||||||||||||||||
Interest income |
272,000 | 167,000 | 426,000 | 328,000 | ||||||||||||
Other income (expense) |
(33,000 | ) | 113,000 | (1,000 | ) | 136,000 | ||||||||||
Income before income tax |
8,807,000 | 6,711,000 | 17,461,000 | 10,147,000 | ||||||||||||
Income tax expense: |
||||||||||||||||
Current |
(3,138,000 | ) | (1,307,000 | ) | (5,065,000 | ) | (1,842,000 | ) | ||||||||
Deferred |
(301,000 | ) | (1,053,000 | ) | (1,593,000 | ) | (1,654,000 | ) | ||||||||
Net income |
$ | 5,368,000 | $ | 4,351,000 | $ | 10,803,000 | $ | 6,651,000 | ||||||||
Net income per common share |
$ | 0.71 | $ | 0.58 | $ | 1.43 | $ | 0.89 | ||||||||
Net income per common share-assuming dilution |
$ | 0.70 | $ | 0.57 | $ | 1.41 | $ | 0.88 | ||||||||
Weighted average equivalent common shares outstanding |
7,590,911 | 7,504,811 | 7,572,156 | 7,495,499 | ||||||||||||
Weighted average equivalent common
shares outstanding-assuming dilution |
7,650,405 | 7,593,193 | 7,642,709 | 7,583,611 | ||||||||||||
Dawson Geophysical Company
Balance Sheets
Balance Sheets
| March 31, | September 30, | |||||||
| 2007 | 2006 | |||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 16,337,000 | $ | 8,064,000 | ||||
Short-term investments |
6,484,000 | 6,437,000 | ||||||
Accounts receivable, net of allowance
for doubtful accounts of $280,000 in March 2007
and $148,000 in September 2006 |
45,187,000 | 46,074,000 | ||||||
Prepaid expenses and other assets |
1,771,000 | 690,000 | ||||||
Current deferred tax asset |
807,000 | 1,619,000 | ||||||
Total current assets |
70,586,000 | 62,884,000 | ||||||
Property, plant and equipment |
180,140,000 | 160,740,000 | ||||||
Less accumulated depreciation |
(82,228,000 | ) | (74,206,000 | ) | ||||
Net property, plant and equipment |
97,912,000 | 86,534,000 | ||||||
| $ | 168,498,000 | $ | 149,418,000 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 19,203,000 | $ | 16,280,000 | ||||
Accrued liabilities: |
||||||||
Payroll costs and other taxes |
2,275,000 | 1,958,000 | ||||||
Other |
5,902,000 | 4,195,000 | ||||||
Deferred revenue |
2,180,000 | 863,000 | ||||||
Total current liabilities |
29,560,000 | 23,296,000 | ||||||
Deferred tax liability |
7,709,000 | 6,914,000 | ||||||
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, 7,622,744
and 7,549,244 shares issued and outstanding
in each period |
2,541,000 | 2,517,000 | ||||||
Additional paid-in capital |
83,540,000 | 82,370,000 | ||||||
Other comprehensive expense, net of tax |
(9,000 | ) | (33,000 | ) | ||||
Retained earnings |
45,157,000 | 34,354,000 | ||||||
Total stockholders’ equity |
131,229,000 | 119,208,000 | ||||||
| $ | 168,498,000 | $ | 149,418,000 | |||||
Reconciliation of EBITDA to Net Income
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||
Net Income |
$ | 5,368 | $ | 4,351 | $ | 10,803 | $ | 6,651 | ||||||||
Depreciation |
4,154 | 3,188 | 8,168 | 6,164 | ||||||||||||
Interest expense |
— | — | — | — | ||||||||||||
Income tax expense |
3,439 | 2,360 | 6,658 | 3,496 | ||||||||||||
EBITDA |
$ | 12,961 | $ | 9,899 | $ | 25,629 | $ | 16,311 | ||||||||
Reconciliation of EBITDA to Net Cash Provided by Operating Activities
| Six Months Ended | ||||||||
| March 31, | ||||||||
| 2007 | 2006 | |||||||
| (in thousands) | ||||||||
Net cash provided by operating activities |
$ | 21,028 | $ | 10,309 | ||||
Changes in working capital items and other |
5,016 | 6,538 | ||||||
Non-cash adjustments to income |
(415 | ) | (536 | ) | ||||
EBITDA |
$ | 25,629 | $ | 16,311 | ||||