Dawson Geophysical Company (DWSN)

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Dawson Geophysical Company (DWSN)

F4Q12 Earnings Call

November 14, 2012 10:00 AM ET


Steve Jumper - President & CEO

Christina Hagan - EVP & CFO


Collin Gerry - Raymond James

Rudy Hokanson - Barrington Research

George Venturatos - Johnson Rice



Good morning and welcome to the Dawson Geophysical fiscal year-end and fourth quarter 2012 conference Call. All participants will be in a listen-only mode. (Operator Instructions). After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please also note that today’s event is being recorded.

I would now like to turn the conference call over to Steve Jumper, President and CEO. Sir you may begin.

Steve Jumper

Thank you, Jamie. Well good morning and welcome to Dawson Geophysical Company’s fiscal fourth quarter and year end 2012 earnings and operations conference call. As Jamie said, my name is Steve Jumper, President and CEO of the company. Joining me on the call is Christina Hagan, Executive Vice President and Chief Financial Officer. Today’s call will be presented in three segments. Following these brief remarks, Chris will discuss our financial results. I will then return for an operations update and then open the call for questions.

The call is scheduled for 30 minutes, and as in the past, we will not provide any guidance. At this point, I will turn control of the call over to Chris Hagan, our CFO to discuss our financial results.

Christina Hagan

Thank you, Steve. First, I'll read our Safe Harbor provisions. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Dawson Geophysical Company cautions that statements made today in this conference call, 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, dependence upon energy industry spending, disruptions in the global economy, industry competition, delays, reductions or cancellations of service contracts, high fixed cost of operations, external factors affecting our crews such as weather interruptions and inability to obtain land access rights of way, whether we enter into turnkey or term contracts, crew productivity, limited number of customers, credit risk related to our customers, 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, 2011.

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. During this conference call, we will make references to EBITDA, which is a non-GAAP financial measure. A reconciliation of the non-GAAP measure to the applicable GAAP measure can be found in our current earnings release, a copy of which is located on our website at www.dawson3d.com.

And turning to our financial results, for the fourth quarter of fiscal 2012 ended September 2012, revenues were $72,998,000 compared to $84,256,000 for the same quarter in fiscal 2011. The company reported net income for the fourth quarter of fiscal 2012 of $1,152,000 compared to $2,944,000 in the same quarter of fiscal 2011. Basic earnings per share for the fourth quarter of fiscal 2012 were $0.15 compared to $0.38 per share in the same quarter of fiscal 2011. EBITDA for the fourth quarter of fiscal 2012 was $10,630,000 compared to $12,955,000 in the same quarter fiscal 2011.

For the fiscal year end September 30th 2012, the company reported revenues of $319,234,000 compared to $333,279,000 for the year end fiscal 2011. Net income for fiscal 2012 increased to $11,113,000 from a net loss of $3,246,000 in fiscal 2011. Earnings per share for fiscal 2012 were $1.42 compared to a loss per share of $0.42 for fiscal 2011.

EBITDA for fiscal 2012 increased to $49,615,000 compared to $27,861,000 in the same period of fiscal 2011, an increase of 78%. Capital expenditures for fiscal 2012 total $47,664,000 as compared to $59,380,000 in fiscal 2011 and $19,962,000 in fiscal 2010. The expenditures in fiscal 2012 included 10,500 GSR single-channel units, 3,000 GSR three-channel units, 19 INOVA vibrator energy source units, additional geophones, cables, and vehicles along with maintenance capital requirement.

The company anticipates the capital budget in fiscal 2013 of approximately $40 million to include additional cable-less recording equipment, additional energy source unit, Canada operation capital requirement and maintenance capital requirement.

Included in the fourth quarter in full year fiscal 2011 results, the transaction cost of $1,444,000 and $3,866,000 respectively related to a terminated merger agreement. Included in the company’s year-end fiscal 2012 results is an $0.18 per share of onetime tax benefit taken in the first fiscal quarter of 2012 related to the above mentioned terminated merger agreement. Reflected in the fourth quarter and year end fiscal 2012 results were increases in depreciation expense of $637,000 and $1,962,000 respectively from the prior period. The increase in depreciation expenses related to the company's investment, in addition recording equipment and energy sourcing over the past 24 months. Steve.

Steve Jumper

Well thank you Chris, let me start by recapping our fiscal fourth quarter and year end highlights. As Chris mentioned, the fourth quarter and year end 2012, demand for seismic services in lower 48 approached multiyear high. Order book levels are multiyear highs and capable of sustaining 14 data acquisition accrued as well in the calendar ‘13.

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