Dawson Geophysical Company (DWSN)

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Dawson Geophysical Company (DWSN)

Q4 2010 Earnings Call

November 10, 2010 10:00 am ET


Decker Dawson – Founder, Chairman

Stephen Jumper – President, Chief Executive Officer

Christina Hagan – Executive Vice President, Chief Financial Officer


Christopher Boucek (phon) – Raymond James

Veny Aleksandrov – Pritchard Capital Partners



Good morning. My name is Cynthia and I’ll be your conference operator today. At this time I would like to welcome everyone to the Dawson Geophysical Fourth Quarter Earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you.

I would now like to turn today’s call over to Steve Jumper, President and CEO. Please go ahead, sir.

Stephen Jumper

Thank you, Cynthia. Good morning and welcome to Dawson Geophysical Company’s Fourth Quarter and Year-End 2010 Earnings and Operations conference call. As Cynthia said, my name is Steve Jumper, President and Chief Executive Officer of the Company. Joining me on the call are Christina Hagan, Executive Vice President and Chief Financial Officer; and Decker Dawson, Founder and Chairman of the Company.

As in quarters past, today’s call will be presented in three segments. Following the opening 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 we will not provide any guidance as we have done in the past.

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

Christina Hagan

Thank you, Steve. First I will share our Safe Harbor provisions. In accordance with the Safe Harbor provision 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, disruptions in the global economy, dependence upon energy industry spending, cancellation 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, 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 ending 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.

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

Turning to our financial results for the fourth quarter of fiscal 2010 ending September 30, 2010, our revenues were $59,179,000 compared to $46,835,000 for the same quarter in fiscal 2009, an increase of 26%. We reported a net loss for the fourth quarter of fiscal 2010 of 1,411,000 compared to a net loss of $2,056,000 in the same quarter of fiscal 2009. Basic loss per share for the fourth quarter of fiscal 2010 was $0.18 compared to $0.26 in the same quarter of fiscal 2009.

EBITDA for the fourth quarter of fiscal 2010 was $5,268,000 compared to $3,654,000 in the same quarter of fiscal 2009, an increase of 44%. Revenue increases for the fourth quarter compared to the same quarter of fiscal 2009 were primarily the result of redeployment of three data acquisition crews during the second and third quarters of fiscal 2010. This increase was partially offset by lower utilization rates and weather down times, particularly wet conditions in July; several long crew moves and startup delays on several projects due to equipment change-out; and timing of a few land access permits.

For the fiscal year ending September 30, 2010 our revenues were $205,272,000 compared to $243,995,000 for the same period in fiscal 2009, a decrease of 16%. We reported a net loss for fiscal 2010 of $9,352,000 compared to net income of $10,222,000 for fiscal 2009. Basic loss per share for fiscal 2010 was $1.22 as compared to earnings per share of $1.31 for fiscal 2009. EBITDA was $13,136,000 in fiscal 2010 compared to $43,875,000 during fiscal 2009, a decrease of 70%.

The revenue decrease in fiscal 2010 was primarily the result of previously announced reductions in active crew count during the second quarter of fiscal 2009 of four crews, third quarter of fiscal 2009 of two crews, and first quarter of fiscal 2010 of one crew; a more competitive pricing environment and substantially lower utilization rates of the remaining crews.

Revenues in fiscal 2010 continue to include high third party charges related to the use of helicopter support services, specialized survey technologies, and dynamite energy sources as the same level of these charges is driven by the Company’s continued operations in areas with limited access in the Appalachian Basin in east Texas and Arkansas. We are reimbursed for these expenses by our clients.

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