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 8, 2008
DAWSON GEOPHYSICAL COMPANY
(Exact name of Registrant as specified in its charter)
| TEXAS | 0-10144 | 75-0970548 | ||
| (State of incorporation or organization) |
(Commission file number) | (I.R.S. employer identification number) |
| 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 8, 2008, Dawson Geophysical Company (the “Company”) issued a press release reporting
its operating results for the quarter ended March 31, 2008, the second quarter of its 2008 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 8, 2008. |
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 8, 2008 | 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 8, 2008. |
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 AND SIX MONTHS RESULTS
SECOND QUARTER AND SIX MONTHS RESULTS
Company Places Order for 20 Vibrator Energy Source Units and Will
Add 16th Data Acquisition Crew in May
Add 16th Data Acquisition Crew in May
MIDLAND, Texas, May 8, 2008/PR Newswire/ — Dawson Geophysical Company (NASDAQ DWSN) today reported
revenues of $78,363,000 for the quarter ending March 31, 2008, the Company’s second fiscal quarter
of 2008, compared to $59,935,000 for the same quarter in fiscal 2007, an increase of 31 percent.
Revenue growth in the quarter was primarily the result of the addition of two seismic data
acquisition crews in April and September of 2007, increased channel count and productivity on
existing crews.
Net income for the second quarter of fiscal 2008 was $8,292,000, compared to $5,368,000 in the same
quarter of fiscal 2007, an increase of 54 percent. Earnings per share for the second quarter of
fiscal 2008 were $1.08 per share, compared to $0.71 per share in the same quarter of fiscal 2007.
EBITDA for the second quarter of fiscal 2008 was $19,228,000 compared to $12,961,000 in the same
quarter of fiscal 2007, an increase of 48 percent. Included in the second quarter results is a 41
percent increase in depreciation charges from the prior year period reflecting the Company’s
continued capital investment and growth.
The Company’s second quarter results reflect continued brisk domestic exploration activities by the
Company’s clients, particularly those clients seeking natural gas. Revenues in the second quarter
of fiscal 2008 continued to include high third-party charges related to the use of helicopter
support services, specialized survey technologies, and dynamite energy sources. The sustained level
of these charges is driven by the Company’s continued operations in areas with limited access in
the Appalachian Basin, Arkansas, Val Verde Basin of Texas, and in Eastern Oklahoma. The Company is
reimbursed for these expenses by its clients.
Stephen Jumper, President and CEO of Dawson Geophysical Company said, “Our clients’ desire for
higher resolution subsurface images with improved efficiency and channel count growth continued to
drive our earnings and revenues in the second fiscal quarter and six month period. In response to
continued strong demand, Dawson Geophysical will field an additional crew, our 16th, in May 2008 by
redeploying an existing I/O MRX recording system. This crew will be a smaller channel count crew
initially committed to large scale 2D and smaller 3D seismic projects.”
The Company’s Board of Directors recently increased the Company’s fiscal 2008 capital budget from
$30,000,000 to $55,000,000. The additional budget of $25,000,000 will be used to add to the
vibrator energy source fleet, increase channel count on existing crews, expand data processing
capabilities, and to make technical improvements in all phases of the Company’s operations. During
the second quarter, the Company replaced an I/O System II MRX recording system on an existing crew
with an 8,000-channel ARAM ARIES recording system and placed an order for twenty additional I/O
vibrator energy source units, of which thirteen have been delivered. The Company now operates in
excess of 115,000 channels and 176 vibrator energy source units.
Demand for the Company’s services continues at a high level. Although the Company’s clients may
cancel their service contracts on short notice, the Company’s order book remains strong, reflecting
commitments to operate at full capacity on all crews through the end of calendar 2008 and on a
number of crews well into calendar 2009. 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, New Mexico, Oklahoma, Louisiana, 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, 2008, revenues were $155,962,000, compared to $113,589,000 for
the same period in 2007, an increase of 37 percent. Net income for the first six months of fiscal
2008 increased 48 percent to $15,996,000, compared to $10,803,000 for the first six months of
fiscal 2007. Earnings per share for the first six months of fiscal 2008 were $2.09 as compared to
$1.43 for the first six months of fiscal 2007, an increase of 46 percent. EBITDA was $37,198,000 in
the first six months of fiscal 2008 versus $25,629,000 during the same period of fiscal 2007, an
increase of 45 percent.
Jumper concluded, “In today’s high cost oil and natural gas environment, exploration and production
companies are striving to lower their finding and development costs and to maximize their return on
investment. Dawson Geophysical Company’s ability to apply its more than 55 years of experience and
success in helping companies achieve these objectives and to improve subsurface images with state
of the art technology positions us for continued growth opportunities.”
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About Dawson Geophysical Company
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.
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:
| • | 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.
3
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,
high fixed cost of operations, weather interruptions, the ability to obtain land access rights of
way, industry competition, the ability to manage growth, 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, 2007. 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, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Operating revenues |
$ | 78,363,000 | $ | 59,935,000 | $ | 155,962,000 | $ | 113,589,000 | ||||||||
Operating costs: |
||||||||||||||||
Operating expenses |
57,529,000 | 45,608,000 | 115,654,000 | 85,332,000 | ||||||||||||
General and administrative |
1,837,000 | 1,605,000 | 3,543,000 | 3,053,000 | ||||||||||||
Depreciation |
5,854,000 | 4,154,000 | 11,405,000 | 8,168,000 | ||||||||||||
| 65,220,000 | 51,367,000 | 130,602,000 | 96,553,000 | |||||||||||||
Income from operations |
13,143,000 | 8,568,000 | 25,360,000 | 17,036,000 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
116,000 | 272,000 | 334,000 | 426,000 | ||||||||||||
Interest expense |
(95,000 | ) | — | (200,000 | ) | — | ||||||||||
Other |
115,000 | (33,000 | ) | 99,000 | (1,000 | ) | ||||||||||
Income before income tax |
13,279,000 | 8,807,000 | 25,593,000 | 17,461,000 | ||||||||||||
Income tax expense: |
||||||||||||||||
Current |
(4,110,000 | ) | (3,138,000 | ) | (8,650,000 | ) | (5,065,000 | ) | ||||||||
Deferred |
(877,000 | ) | (301,000 | ) | (947,000 | ) | (1,593,000 | ) | ||||||||
Net income |
$ | 8,292,000 | $ | 5,368,000 | $ | 15,996,000 | $ | 10,803,000 | ||||||||
Net income per common share |
$ | 1.08 | $ | 0.71 | $ | 2.09 | $ | 1.43 | ||||||||
Net income per common share-assuming dilution |
$ | 1.07 | $ | 0.70 | $ | 2.07 | $ | 1.41 | ||||||||
Weighted average equivalent common shares outstanding |
7,667,071 | 7,590,911 | 7,663,566 | 7,572,156 | ||||||||||||
Weighted average equivalent common
shares outstanding-assuming dilution |
7,728,437 | 7,650,405 | 7,724,269 | 7,642,709 | ||||||||||||
DAWSON GEOPHYSICAL COMPANY
BALANCE SHEETS
BALANCE SHEETS
| March 31, | September 30, | |||||||
| 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 9,144,000 | $ | 14,875,000 | ||||
Accounts receivable, net of allowance for
doubtful accounts of $242,000 and $176,000
in 2008 and 2007 respectively |
70,174,000 | 56,707,000 | ||||||
Prepaid expenses and other assets |
1,394,000 | 815,000 | ||||||
Current deferred tax asset |
936,000 | 693,000 | ||||||
Total current assets |
81,648,000 | 73,090,000 | ||||||
Property, plant and equipment |
229,435,000 | 207,427,000 | ||||||
Less accumulated depreciation |
(91,060,000 | ) | (84,655,000 | ) | ||||
Net property, plant and equipment |
138,375,000 | 122,772,000 | ||||||
| $ | 220,023,000 | $ | 195,862,000 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 18,434,000 | $ | 12,816,000 | ||||
Accrued liabilities: |
||||||||
Payroll costs and other taxes |
2,807,000 | 2,325,000 | ||||||
Other |
11,939,000 | 14,263,000 | ||||||
Deferred revenue |
587,000 | 2,922,000 | ||||||
Line of credit |
10,000,000 | 5,000,000 | ||||||
Total current liabilities |
43,767,000 | 37,326,000 | ||||||
Deferred tax liability |
10,572,000 | 9,381,000 | ||||||
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, 7,729,494 and 7,658,494 shares issued and outstanding in each period |
2,577,000 | 2,553,000 | ||||||
Additional paid-in capital |
85,807,000 | 85,090,000 | ||||||
Retained earnings |
77,300,000 | 61,512,000 | ||||||
Total stockholders’ equity |
165,684,000 | 149,155,000 | ||||||
| $ | 220,023,000 | $ | 195,862,000 | |||||
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Reconciliation of EBITDA to Net Income
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Net Income |
$ | 8,292,000 | $ | 5,368,000 | $ | 15,996,000 | $ | 10,803,000 | ||||||||
Depreciation |
5,854,000 | 4,154,000 | 11,405,000 | 8,168,000 | ||||||||||||
Interest expense |
95,000 | — | 200,000 | — | ||||||||||||
Income tax expense |
4,987,000 | 3,439,000 | 9,597,000 | 6,658,000 | ||||||||||||
EBITDA |
$ | 19,228,000 | $ | 12,961,000 | $ | 37,198,000 | $ | 25,629,000 | ||||||||
Reconciliation of EBITDA to Net Cash Provided by Operating
Activities
| Six Months Ended | ||||||||
| March 31, | ||||||||
| 2008 | 2007 | |||||||
Net cash provided by operating activities |
$ | 16,501,000 | $ | 21,028,000 | ||||
Changes in working capital items and other |
21,217,000 | 4,773,000 | ||||||
Non-cash adjustments to income |
(520,000 | ) | (172,000 | ) | ||||
EBITDA |
$ | 37,198,000 | $ | 25,629,000 | ||||
6