DWSN

Dawson Geophysical Company (DWSN)

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Dawson Geophysical Company (DWSN)

F1Q13 Earnings Call

February 8, 2013 10:00 am ET

Executives

Stephen C. Jumper – Chairman, President and Chief Executive Officer

Christina W. Hagan – Executive Vice President, Secretary, Treasurer and Chief Financial Officer

Analysts

Veny Aleksandrov – FIG Partners LLC

Collin Gerry – Raymond James & Associates, Inc.

Rudy A. Hokanson – Barrington Research Associates, Inc.

Georg P. Venturatos – Johnson Rice & Co. LLC

William D. Tichy – Beddow Capital Management, Inc.

Presentation

Operator

Good morning and welcome to the Dawson Geophysical First Quarter 2013 Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note that this event is being recorded.

I would now like to turn the conference over Steve Jumper. Please go ahead.

Stephen C. Jumper

Well, thank you Sue. Good morning and welcome to Dawson Geophysical Company’s fiscal 2013 first quarter earnings and operations call. As Sue said, my name is Steve Jumper, Chairman, 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 this opening remarks, Chris will discuss our financial results. I will then return for an operations update, then open the call for questions. This call is scheduled for 30 minutes and as in the past, we will not be providing any guidance.

At this point, I will turn control of the call over to Chris Hagan, our CFO to discuss our financial results.

Christina W. Hagan

Thank you, Steve. First, I’ll share our Safe Harbor provision. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Dawson Geophysical Company cautions its 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, dependent upon energy, industry spending, disruptions in the global economy, industry competition, delays, reductions or cancellations of service contracts, high fixed costs of operations, external factors affecting our crude 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, are set forth in the Company’s Form 10-K for the fiscal year ended September 30, 2012. Dawson Geophysical 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 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 www.dawson3d.com

For the first quarter of fiscal 2013, ended December 31, 2012, revenues were $76.629 million compared to $92.368 million for the same quarter in fiscal 2012. The company reported net income for the first quarter of fiscal 2013 at $2.928 million compared to $3.231 million the same quarter of fiscal 2012. Basic earnings per share for the first quarter fiscal 2013, were $0.36, compared to $0.23 per share in the same quarter of fiscal 2012, excluding the effect of a $0.18 per share one-time tax benefit, recognized in the first quarter of fiscal 2012, related to a merger agreement terminated in calendar 2011.

Our effective tax rate for the first quarter of fiscal 2013 is similar to the quarterly tax rates for fiscal 2012, except for the first quarter of fiscal 2012, which as I said contained a net tax benefit of approximately $1.4 million during the quarter, which was enough to completely offset our ordinary income and related tax expenses on the income statement for the three months ended December 31, 2011.

EBITDA for the first quarter of fiscal 2013 was $14.338 million compared to $11.028 million in the same quarter of fiscal 2012. Capital expenditures in the first quarter of fiscal 2013 included replacement of an I/O RSR recording system on an existing crew with the purchase of 12,000 Geospace GSX single-channel cable-less units; replacement of a set of vibrator energy source units on an existing crew with the purchase of ten INOVA vibrator energy source units; and the purchase of 2,500 stations of the Wireless Seismic RT System 2 recording system deployed on a small crew in the mid-continent region of the United States.

The company anticipates a capital budget in fiscal 2013 of approximately $50 million that include additional cable-less recording equipment, additional energy source units, Canada operation capital requirements and maintenance capital requirement. Reflected in the first fiscal quarter of fiscal 2013 results, where increases in depreciation expense of $1.318 million from capital expenditures in the prior fiscal year. The increase in depreciation expenses was related to the company's investment in additional recording equipment, and energy source units over the past 24 months. Steve?

Stephen C. Jumper

Thank you, Chris. Let me just start by recapping our fiscal first quarter highlights as mentioned. As Chris mentioned, the first quarter fiscal 2013 EBITDA increased to $14.338 million compared to $11.028 million for the same period of fiscal 2012, an increase of 30%. Income from operations increased 61% from $3.226 million in the first quarter of fiscal 2012 to $5.194 million in the first quarter of fiscal 2013.

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