Enservco Corporation (NYSE American: ENSV), a diversified national
provider of specialized well-site services to the domestic onshore
conventional and unconventional oil and gas industries, today
reported financial results for its first quarter ended March 31,
2021.
“The increase in commodity prices during the first quarter did
not translate into increased completions activity as quickly as we
might have expected. That, combined with continued impact of the
pandemic and periods of unseasonably warm weather, resulted in
lower than anticipated revenue in the first quarter,” said Rich
Murphy, Executive Chairman. “On a brighter note, we anticipate
improved results during our upcoming heating season based on
current higher commodity prices compared to last year, increased
requests for proposals and recent new customer wins, and successful
implementation of 10-15% price increases in certain markets. In
addition, we continued to grow our partnerships with two large
oilfield services companies in the first quarter and we expect
these relationships to further expand next season.”
“We are focusing more resources on our year-round hot oiling
service business, where we see good potential for expansion and
have commenced a $400,000 capex project for our hot oiling fleet
that will conclude in September,” Murphy added. “Our Jourdanton
yard in south Texas remains busy and has our largest concentration
of hot oilers with 19 units. We are now working to establish a
presence in east Texas to serve customers in the Haynesville Shale
and other fields in the Ark-La-Tex region. We have two hot oilers
scheduled to commence full-time operations this month with the
potential to add up to a dozen units by year-end. In the meantime,
we are augmenting our traditional services with non-oilfield
services such as equipment and dirt hauling, which contributed
profitable revenue in the first quarter that’s expected to continue
in the second and third quarters.”
“We are moving forward with a much-improved balance sheet since
September 2020 following the addition of $12.5 million in new
equity, the elimination of approximately $22 million in debt and a
right-sizing program that took approximately $4.2 million in annual
expense our of our business. We believe we are well positioned to
proceed with our growth initiatives and weather the ongoing
pandemic impact,” said Marjorie Hargrave, President and CFO.
First Quarter Results
Total revenue in the first quarter ended March 31, 2021,
declined to $5.1 million from $9.4 million in the same quarter last
year.
Production services revenue was $1.8 million in
the first quarter from $3.2 million in the same quarter last year.
Production services included hot oiling, which declined to $1.8
million from $2.9 million, and acidizing, which declined to $45,000
from $270,000.
Production services generated a segment loss of
$123,000 in the first quarter as compared to a segment loss of
$292,000 in the same quarter last year.
Completion services revenue, primarily
consisting of frac water heating revenue, in the first quarter was
$3.3 million compared to $6.2 million in the same quarter last
year.
Completion services generated a segment profit
of $157,000, down from a segment profit of $1.2 million in the same
quarter last year.
Total operating expenses in the first quarter declined 36% year
over year to $7.5 million from $11.6 million due primarily to lower
costs of providing completion services. Sales, general and
administrative expense decreased 43% in the first quarter to $1.0
million from $1.8 million, reflecting the impact of cost-cutting
measures implemented in 2020.
The Company reported an operating loss of $2.4 million in the
first quarter compared to an operating loss of $2.3 million in the
same quarter last year. Net loss in the first quarter was $2.2
million, or $0.24 per diluted share, a 23% reduction from the net
loss of $2.8 million, or $0.77 per diluted share, in the same
quarter last year. The improved bottom line was primarily
attributable to lower interest expense in the first quarter of 2021
due to a significant reduction in the Company’s total debt and
cessation of the recording of interest expense on the Company’s
credit facility after the debt restructuring in the third quarter
of 2020.
Adjusted EBITDA in the first quarter was a negative $940,000
compared to a negative $503,000 in the same quarter last year.
Enservco used $2.6 million in cash from operations in the first
quarter, up from $1.0 million in cash used in operations in the
same quarter last year. Cash provided by financing activities
increased to $4.9 million from $0.5 million in the same quarter
last year due primarily to the public offering in February 2021,
partially offset by the $3.0 million paydown of the Company’s
credit facility.
Conference Call Information
Management will hold a conference call today to discuss these
results. The call will begin at 8:30 a.m. Mountain Time (10:30 a.m.
Eastern) and will be accessible by dialing 888-506-0062
(973-528-0011 for international callers). No passcode is necessary.
A telephonic replay will be available through May 20, 2021, by
calling 877-481-4010 (919-882-2331 for international callers) and
entering the Conference ID #41082. To listen to the webcast,
participants should go to the ENSERVCO website at www.enservco.com
and link to the “Investors” page at least 15 minutes early to
register and download any necessary audio software. A replay of the
webcast will be available until June 12, 2021. The webcast also is
available at the following link:
https://www.webcaster4.com/Webcast/Page/2228/41082.
About EnservcoThrough its various operating
subsidiaries, Enservco provides a range of oilfield services,
including hot oiling, acidizing, frac water heating, and related
services. The Company has a broad geographic footprint covering
seven major domestic oil and gas basins and serves customers in
Colorado, Montana, New Mexico, North Dakota, Oklahoma,
Pennsylvania, Ohio, Texas, Wyoming and West
Virginia. Additional information is available at
www.enservco.com.
*Note on non-GAAP Financial Measures This press
release and the accompanying tables include a discussion of EBITDA
and Adjusted EBITDA, which are non-GAAP financial measures provided
as a complement to the results provided in accordance with
generally accepted accounting principles ("GAAP"). The term
"EBITDA" refers to a financial measure that we define as earnings
(net income or loss) plus or minus net interest plus taxes,
depreciation and amortization. Adjusted EBITDA excludes from EBITDA
stock-based compensation and, when appropriate, other items that
management does not utilize in assessing Enservco’s operating
performance (as further described in the attached financial
schedules). None of these non-GAAP financial measures are
recognized terms under GAAP and do not purport to be an alternative
to net income as an indicator of operating performance or any other
GAAP measure. We have reconciled Adjusted EBITDA to GAAP net income
in the Consolidated Statements of Operations table at the end of
this release. We intend to continue to provide these non-GAAP
financial measures as part of our future earnings discussions and,
therefore, the inclusion of these non-GAAP financial measures will
provide consistency in our financial reporting.
Cautionary Note Regarding Forward-Looking
StatementsThis news release contains information that is
"forward-looking" in that it describes events and conditions
Enservco reasonably expects to occur in the future. Expectations
for the future performance of Enservco are dependent upon a number
of factors, and there can be no assurance that Enservco will
achieve the results as contemplated herein. Certain statements
contained in this release using the terms "may," "expects to," and
other terms denoting future possibilities, are forward-looking
statements. The accuracy of these statements cannot be guaranteed
as they are subject to a variety of risks, which are beyond
Enservco's ability to predict, or control and which may cause
actual results to differ materially from the projections or
estimates contained herein. Among these risks are those set forth
in Enservco’s annual report on Form 10-K for the year ended
December 31, 2020, and subsequently filed documents with the SEC.
Forward looking statements in this news release that are subject to
risk include expectations for improved financial results, expansion
of partnerships and hot oiling operations, success of the east
Texas expansion, and continuation of non-oilfield services work. It
is important that each person reviewing this release understand the
significant risks attendant to the operations of Enservco. Enservco
disclaims any obligation to update any forward-looking statement
made herein.
Contact:
Jay PfeifferPfeiffer High Investor Relations,
Inc.Phone: 303-880-9000jay@pfeifferhigh.com
Marjorie HargravePresident and CFOEnservco
Corporationmhargrave@enservco.com
|
ENSERVCO CORPORATION |
Condensed Consolidated Balance Sheets |
(In thousands) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
ASSETS |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
3,700 |
|
|
$ |
1,467 |
|
Accounts receivable, net |
|
|
3,172 |
|
|
|
1,733 |
|
Prepaid expenses and other current assets |
|
|
971 |
|
|
|
858 |
|
Inventories |
|
|
334 |
|
|
|
295 |
|
Assets for held for sale |
|
|
527 |
|
|
|
527 |
|
Total current assets |
|
$ |
8,704 |
|
|
$ |
4,880 |
|
|
|
|
|
|
Property and equipment, net |
|
|
19,035 |
|
|
|
20,317 |
|
Goodwill |
|
|
546 |
|
|
|
546 |
|
Intangible assets, net |
|
|
563 |
|
|
|
617 |
|
Right-of-use asset - finance, net |
|
|
110 |
|
|
|
129 |
|
Right-of-use asset - operating, net |
|
|
2,708 |
|
|
|
2,918 |
|
Other assets |
|
|
421 |
|
|
|
423 |
|
Non-current assets of discontinued operations |
|
|
347 |
|
|
|
353 |
|
TOTAL ASSETS |
|
$ |
32,434 |
|
|
$ |
30,183 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
1,315 |
|
|
$ |
1,931 |
|
Senior revolving credit facility, related party (including future
interest payable of $735 and $892, respectively - see Note 6) |
|
|
1,318 |
|
|
|
1,593 |
|
Lease liability - finance, current |
|
|
66 |
|
|
|
65 |
|
Lease liability - operating, current |
|
|
847 |
|
|
|
854 |
|
Current portion of long-term debt |
|
|
89 |
|
|
|
100 |
|
Current liabilities of discontinued operations |
|
|
33 |
|
|
|
31 |
|
Total current liabilities |
|
$ |
3,668 |
|
|
$ |
4,574 |
|
|
|
|
|
|
Long-Term Liabilities |
|
|
|
|
Senior revolving credit facility, related party (including future
interest payable of $433 and $485, respectively - see Note 6) |
|
$ |
13,850 |
|
|
$ |
17,485 |
|
Subordinated debt, related party (Note 2) |
|
|
- |
|
|
|
1,180 |
|
Long-term debt, less current portion |
|
|
2,038 |
|
|
|
2,052 |
|
Lease liability - finance, less current portion |
|
|
38 |
|
|
|
55 |
|
Lease liability - operating, less current portion |
|
|
1,986 |
|
|
|
2,185 |
|
Other liabilies |
|
|
43 |
|
|
|
88 |
|
Long-term liabilities of discontinued operations |
|
|
- |
|
|
|
9 |
|
Total long-term liabilities |
|
$ |
17,955 |
|
|
$ |
23,054 |
|
Total liabilities |
|
$ |
21,623 |
|
|
$ |
27,628 |
|
|
|
|
|
|
Commitments and Contingencies (Note 8) |
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit) |
|
|
|
|
Preferred stock, $.005 par value, 10,000,000 shares authorized, no
shares issued or outstanding |
|
|
- |
|
|
|
- |
|
Common stock. $.005 par value, 100,000,000 shares authorized;
11,439,630 and 6,307,868 shares issued as of March 31, 2021 and
December 31, 2020, respectively; 6,907 shares of treasury stock as
of March 31, 2021 and December 31, 2020, respectively; and
11,432,723 and 6,300,961 shares outstanding as of March 31, 2021
and December 31, 2020, respectively |
|
|
57 |
|
|
|
32 |
|
Additional paid-in capital |
|
|
40,456 |
|
|
|
30,052 |
|
Accumulated deficit |
|
|
(29,702 |
) |
|
|
(27,529 |
) |
Total stockholders' equity (deficit) |
|
$ |
10,811 |
|
|
$ |
2,555 |
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
$ |
32,434 |
|
|
$ |
30,183 |
|
ENSERVCO CORPORATION |
CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS |
(in thousands) |
|
|
For the Three Months Ended |
|
|
March 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
Revenues |
|
|
|
|
Production services |
|
$ |
1,844 |
|
|
$ |
3,202 |
|
Completion and other services |
|
|
3,299 |
|
|
|
6,184 |
|
|
|
|
5,143 |
|
|
|
9,386 |
|
|
|
|
|
|
Expenses |
|
|
|
|
Production services |
|
|
1,967 |
|
|
|
3,494 |
|
Completion and other services |
|
|
3,142 |
|
|
|
4,971 |
|
Sales, general and administrative expenses |
|
|
1,005 |
|
|
|
1,762 |
|
Loss on disposal of equipment |
|
|
51 |
|
|
|
15 |
|
Depreciation and amortization |
|
|
1,336 |
|
|
|
1,396 |
|
Total operating expenses |
|
|
7,501 |
|
|
|
11,638 |
|
|
|
|
|
|
Loss from operations |
|
|
(2,358 |
) |
|
|
(2,252 |
) |
|
|
|
|
|
Other (expense) income |
|
|
|
|
Interest expense |
|
|
(33 |
) |
|
|
(641 |
) |
Other income |
|
|
226 |
|
|
|
20 |
|
Total other income (expense) |
|
|
193 |
|
|
|
(621 |
) |
|
|
|
|
|
Loss from continuing operations before income tax benefit
(expense) |
|
|
(2,165 |
) |
|
|
(2,873 |
) |
Income tax expense |
|
|
- |
|
|
|
- |
|
Loss from continuing operations |
|
$ |
(2,165 |
) |
|
$ |
(2,873 |
) |
Loss from discontinued operations (Note 5) |
|
|
(8 |
) |
|
|
36 |
|
Net loss |
|
$ |
(2,173 |
) |
|
$ |
(2,837 |
) |
|
|
|
|
|
Loss from continuing operations per common share - basic and
diluted |
|
$ |
(0.24 |
) |
|
$ |
(0.78 |
) |
(Loss) income from discontinued operations per common share - basic
and diluted |
|
|
- |
|
|
$ |
0.01 |
|
Net loss per share - basic and diluted |
|
$ |
(0.24 |
) |
|
$ |
(0.77 |
) |
|
|
|
|
|
Weighted average number of common shares outstanding – basic
and diluted |
|
|
9,187 |
|
|
|
3,701 |
|
ENSERVCO CORPORATION |
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED) |
|
|
|
|
|
|
For the Three Months Ended |
|
|
March 31, |
|
|
|
2021 |
|
|
|
2020 |
|
OPERATING ACTIVITIES |
|
|
|
|
Net (loss) income |
|
$ |
(2,173 |
) |
|
$ |
(2,837 |
) |
Net (loss) income from discontinued operations |
|
|
(8 |
) |
|
|
36 |
|
Net (loss) income from continuing operations |
|
|
(2,165 |
) |
|
|
(2,873 |
) |
Adjustments to reconcile net (loss) income to net cash |
|
|
|
|
used in operating activities |
|
|
|
|
Depreciation and amortization |
|
|
1,336 |
|
|
|
1,396 |
|
Loss on disposal of property and equipment |
|
|
51 |
|
|
|
15 |
|
Board compensation issued in equity |
|
|
311 |
|
|
|
- |
|
Stock-based compensation |
|
|
24 |
|
|
|
39 |
|
Amortization of debt issuance costs and discount |
|
|
8 |
|
|
|
47 |
|
Provision for bad debt expense |
|
|
38 |
|
|
|
300 |
|
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
(1,476 |
) |
|
|
429 |
|
Inventories |
|
|
(39 |
) |
|
|
39 |
|
Prepaid expense and other current assets |
|
|
(113 |
) |
|
|
333 |
|
Amortization of operating lease assets |
|
|
210 |
|
|
|
230 |
|
Other assets |
|
|
2 |
|
|
|
15 |
|
Accounts payable and accrued liabilities |
|
|
(556 |
) |
|
|
(869 |
) |
Operating lease liabilities |
|
|
(206 |
) |
|
|
(204 |
) |
Other liabilities |
|
|
(45 |
) |
|
|
- |
|
Net cash used in operating activities - continuing operations |
|
|
(2,620 |
) |
|
|
(1,103 |
) |
Net cash (used in) provided by operating activities - discontinued
operations |
|
|
(2 |
) |
|
|
134 |
|
Net cash used in operating activities |
|
|
(2,622 |
) |
|
|
(969 |
) |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
Purchases of property and equipment |
|
|
(45 |
) |
|
|
(164 |
) |
Proceeds from disposal of property and equipment |
|
|
13 |
|
|
|
- |
|
Net cash used in investing activities - continuing operations |
|
|
(32 |
) |
|
|
(164 |
) |
Net cash provided by investing activities - discontinued
operations |
|
|
- |
|
|
|
178 |
|
Net cash (used in) provided by investing activities |
|
|
(32 |
) |
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Gross proceeds from stock issuance |
|
|
9,660 |
|
|
|
- |
|
Stock issuance costs and registration fees |
|
|
(815 |
) |
|
|
- |
|
Term loan repayment |
|
|
(3,000 |
) |
|
|
- |
|
Net line of credit (repayments) borrowings |
|
|
(701 |
) |
|
|
595 |
|
TDR accrued future interest payments |
|
|
(209 |
) |
|
|
- |
|
Repayment of long-term debt |
|
|
(25 |
) |
|
|
(23 |
) |
Payments of finance leases |
|
|
(22 |
) |
|
|
(30 |
) |
Net cash provided by financing activities - continuing
operations |
|
|
4,888 |
|
|
|
542 |
|
Net cash used in financing activities - discontinued
operations |
|
|
(1 |
) |
|
|
(33 |
) |
Net cash provided by financing activities |
|
|
4,887 |
|
|
|
509 |
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash
Equivalents |
|
|
2,233 |
|
|
|
(446 |
) |
Cash and Cash Equivalents, beginning of
period |
|
|
1,467 |
|
|
|
663 |
|
Cash and Cash Equivalents, end of period |
|
$ |
3,700 |
|
|
$ |
217 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
Cash paid for interest |
|
$ |
220 |
|
|
$ |
537 |
|
Supplemental Disclosure of Non-cash Investing and Financing
Activities: |
|
|
|
|
Non-cash conversion of subordinated debt and accrued interest to
common stock |
|
$ |
1,312 |
|
|
$ |
- |
|
Non-cash common stock issuances for board fees |
|
|
311 |
|
|
|
- |
|
ENSERVCO CORPORATION AND SUBSIDIARIES |
Calculation of Adjusted EBITDA * |
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
March 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
Net loss |
|
$ |
(2,173 |
) |
|
$ |
(2,837 |
) |
Add back |
|
|
|
|
Interest expense (including discontinued operations) |
|
|
33 |
|
|
|
642 |
|
Depreciation and amortization (including discontinued
operations) |
|
|
1,343 |
|
|
|
1,403 |
|
EBITDA |
|
|
(797 |
) |
|
|
(792 |
) |
Add back (deduct) |
|
|
|
|
Stock-based compensation |
|
|
24 |
|
|
|
39 |
|
Severance and transition costs |
|
|
7 |
|
|
|
- |
|
Loss (gain) on disposal of equipment (including discontinued
operations) |
|
|
51 |
|
|
|
(39 |
) |
Other expense |
|
|
(226 |
) |
|
|
279 |
|
EBITDA related to discontinued operations |
|
|
1 |
|
|
|
10 |
|
Adjusted EBITDA |
|
$ |
(940 |
) |
|
$ |
(503 |
) |
|
|
|
|
|
Use of Non-GAAP Financial Measures: Non-GAAP results are presented
only as a supplement to the financial statements and for use within
management’s discussion and analysis based on U.S. generally
accepted accounting principles (GAAP). The non-GAAP financial
information is provided to enhance the reader's understanding of
the Company’s financial performance, but no non-GAAP measure should
be considered in isolation or as a substitute for financial
measures calculated in accordance with GAAP. Reconciliations of the
most directly comparable GAAP measures to non-GAAP measures are
provided herein. |
|
|
|
|
|
EBITDA is defined as net (loss) income (earnings), before interest
expense, income taxes, and depreciation and amortization. Adjusted
EBITDA excludes stock-based compensation from EBITDA and, when
appropriate, other items that management does not utilize in
assessing the Company’s ongoing operating performance as set forth
in the next paragraph. None of these non-GAAP financial measures
are recognized terms under GAAP and do not purport to be an
alternative to net income as an indicator of operating performance
or any other GAAP measure. |
|
|
|
|
|
All of the items included in the reconciliation from net income to
EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash
items (e.g., depreciation, amortization of purchased intangibles,
stock-based compensation, impairment losses, etc.) or (ii) items
that management does not consider to be useful in assessing the
Company’s ongoing operating performance (e.g., income taxes, gain
or losses on sale of equipment, severance and transition
costs, gain on settlement, expenses to consolidate former Adler
facilities, patent litigation and defense costs, other expense
(income), EBITDA related to discontinued operations, etc.). In the
case of the non-cash items, management believes that investors can
better assess the company’s operating performance if the measures
are presented without such items because, unlike cash expenses,
these adjustments do not affect the Company’s ability to generate
free cash flow or invest in its business. |
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We use, and we believe investors benefit from the presentation of,
EBITDA and Adjusted EBITDA in evaluating our operating performance
because it provides us and our investors with an additional tool to
compare our operating performance on a consistent basis by removing
the impact of certain items that management believes do not
directly reflect our core operations. We believe that EBITDA is
useful to investors and other external users of our financial
statements in evaluating our operating performance because EBITDA
is widely used by investors to measure a company’s operating
performance without regard to items such as interest expense,
taxes, and depreciation and amortization, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, capital structure and the method
by which assets were acquired. Additionally, our fixed charge
coverage ratio covenant associated with our Loan and Security
Agreement with East West Bank require the use of Adjusted
EBITDA in specific calculations. |
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Because not all companies use identical calculations, the Company’s
presentation of non-GAAP financial measures may not be comparable
to other similarly titled measures of other companies. However,
these measures can still be useful in evaluating the Company’s
performance against its peer companies because management believes
the measures provide users with valuable insight into key
components of GAAP financial disclosures. |
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