DENVER, CO -- (Marketwire) -- 11/13/12 -- ENSERVCO Corporation (OTCQB: ENSV) (OTCBB: ENSV)
- Well-enhancement revenue up 43% versus 2011 third quarter
- Final proceeds from recent equity offering increased to $2.0 million from previously reported $1.3 million
- Recent debt refinancing and equity offering result in positive working capital -- a substantial improvement from $2.7 million working capital deficit at December 31, 2011
- Fourth-quarter start of fluid heating season brings surge in customer demand
- October revenue at Heat Waves division improves to $3.1 million from $900,000 in October 2011
ENSERVCO Corporation (OTCQB: ENSV) (OTCBB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today reported financial results for its third quarter and nine-month period ended September 30, 2012.
Third quarter revenue increased 21% to $5.5 million from $4.5 million in last year's third quarter. The increase, which represents the Company's seventh consecutive quarter of year-over-year revenue growth, came during what is typically the Company's slowest fiscal quarter, and illustrates the impact of ENSERVCO's expanded presence in regions such as the Bakken and Niobrara shale formations, where fluid heating demand can extend throughout much of the year.
Revenue from well enhancement services (frac heating, hot oiling, acidizing and pressure testing) increased 43% to $2.2 million from $1.5 million in last year's third quarter. Revenue from fluid management services (water hauling/disposal and frac tank rentals) increased 16% to $2.9 million from $2.5 million in last year's third quarter, while well site construction and roustabout revenue was $422,000 versus $512,000 in the comparable year-ago quarter.
The third quarter was marked by significant investments in new equipment operators as the Company prepared for the start of the fluid-heating season. These expenditures reduced third quarter gross margin to approximately 5% from 13% in the third quarter last year. The most significant of these investments involved fully staffing the Company's new operations centers in Killdeer, ND and Cheyenne, WY, both of which were only open for one month of the 2011 third quarter.
The Company reduced its third quarter operating loss by 42% to $987,000 from $1.7 million in last year's third quarter. The improvement reflects significant reductions in general and administrative costs, and amortization and depreciation expense. Net loss declined by 58% to $472,000, or $0.02 per diluted share, versus a net loss of $1.1 million, or $0.05 per diluted share, in the third quarter last year. Third quarter adjusted EBITDA* was a negative $383,000 versus a negative $134,000 in last year's third quarter. The decline in adjusted EBITDA is largely attributable to a $252,000 loss on the disposal of obsolete equipment during this year's third quarter, and higher stock based compensation expense in last year's third quarter.
"Investments in expanding our workforce at the end of the third quarter have proven prudent, as we have experienced a very strong start to our fluid heating season," said Rick Kasch, president and CEO. "In October alone, our Heat Waves division posted revenue of $3.1 million, up from $900,000 in the same month last year. This improvement is in part due to our expanded presence throughout the Rocky Mountains. Hydraulic fracturing techniques employed in regions such as the Williston and D-J Basins often require fluid heating service when ambient air temperatures are as high as 65 to 70 degrees. We also are benefitting from more typical fall and winter weather patterns as compared to last year, not to mention a significant expansion of our customer base."
"The efforts we have made in recent months to expand our service territory, solidify new customer relationships, and expand our workforce and equipment fleet are already paying dividends," Kasch added. "We also have established a new financial partnership with a leading commercial lender to the energy industry. We believe ENSERVCO is now positioned to deliver much improved operational and financial results, and enhanced shareholder value."
New Credit Facility and Private PlacementAs reported on November 6, ENSERVCO closed on a new $16 million credit facility with PNC Bank, and simultaneously completed a private placement of equity. The Company previously reported it had raised $1.3 million in the private placement, however, follow-on participation increased gross proceeds to $2.0 million.
Although the above transactions were completed after the close of ENSERVCO's third quarter, the Company believes it is informative to disclose the impacts of the transactions, which include a swing to positive working capital from a $2.7 million working capital deficit at December 31, 2011, on the Company's balance sheet as if they were effective at September 30, 2012. This pro-forma information can be found at the end of this news release, and is presented in the Company's September 30, 2012, Form 10Q.
Nine-month ResultsRevenue through nine months increased 13% to $20.7 million from $18.3 million in the same period last year. Revenue growth for the nine-month period was constrained by the previously reported record warm weather in the northern half of the United States during most of the Company's first fiscal quarter. Gross margin was 20% versus 25% in last year's nine-month period. Operating loss was $964,000 versus $1.2 million, and the Company reported a net loss of $634,000, or $0.03 per diluted share, versus a net loss of $1.1 million, or $0.05 per diluted share, in the nine-month period last year.
Adjusted EBITDA* through nine months was $1.8 million, versus $2.7 million during the same period last year. Operating cash flow at the nine-month mark was $2.1 million versus $3.4 million during the same period last year.
About ENSERVCOThrough its various operating subsidiaries, ENSERVCO has emerged as one of the energy service industry's leading providers of hot oiling, acidizing, frac heating and fluid management services. The Company owns and operates a fleet of more than 245 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO operates in Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia.
*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 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 a Form 10-K filed on March 30, 2012. 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.
ENSERVCO Condensed Consolidated Statements of Operations
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 5,494,134 $ 4,532,274 $20,659,509 $18,265,614
Cost of Revenue 5,208,900 3,952,923 16,521,539 13,619,711
----------- ----------- ----------- -----------
Gross Profit 285,234 579,351 4,137,970 4,645,903
----------- ----------- ----------- -----------
Operating Expenses
General and
administrative
expenses 727,097 1,058,602 2,574,995 2,450,153
Depreciation and
amortization 544,659 1,215,524 2,527,101 3,410,063
----------- ----------- ----------- -----------
Total operating
expenses 1,271,756 2,274,126 5,102,096 5,860,216
----------- ----------- ----------- -----------
Loss from Operations (986,522) (1,694,775) (964,126) (1,214,313)
----------- ----------- ----------- -----------
Other Income (Expense)
Interest expense (211,708) (161,642) (639,712) (513,918)
Gain (loss) on
disposals of equipment 251,875 - 253,411 (44,286)
Gain on sale of
investments - - 24,653 -
Other (expense) income (14,764) (726) 40,422 (38,436)
----------- ----------- ----------- -----------
Total Other Income
(Expense) 25,403 (162,368) (321,226) (596,640)
----------- ----------- ----------- -----------
Loss Before Income Tax
Benefit (961,119) (1,857,143) (1,285,352) (1,810,953)
Income Tax Benefit 488,915 726,719 651,332 715,313
----------- ----------- ----------- -----------
Net Loss $ (472,204) $(1,130,424) $ (634,020) $(1,095,640)
=========== =========== =========== ===========
Other Comprehensive
Income (Loss)
Unrealized loss on
available-for-sale
securities, net of tax - (46,451) (23,073) (130,300)
----------- ----------- ----------- -----------
Comprehensive Loss $ (472,204) $(1,176,875) $ (657,093) $(1,225,940)
=========== =========== =========== ===========
Earnings per Common Share
Income per Common Share
- Basic $ (0.02) $ (0.05) $ (0.03) $ (0.05)
Income per Common Share
- Diluted $ (0.02) $ (0.05) $ (0.03) $ (0.05)
Basic weighted average
number of common shares
outstanding 21,778,866 21,778,866 21,778,866 21,778,866
Add: Dilutive shares
assuming exercise of
options and warrants - - - -
---------- ---------- ---------- ----------
Diluted weighted average
number of common shares
outstanding 21,778,866 21,778,866 21,778,866 21,778,866
========== ========== ========== ==========
ADJUSTED EBITDA
Net Income $ (472,204) $(1,130,424) $ (634,020) $(1,095,640)
Add:
Interest expense 211,708 161,642 639,712 513,918
Income tax benefit (488,915) (726,719) (651,332) (715,313)
Depreciation and
amortization 544,659 1,215,524 2,527,101 3,410,063
----------- ----------- ----------- -----------
EBITDA $ (204,752) $ (479,977) $ 1,881,461 $ 2,113,028
Add (Deduct):
Stock-based
compensation 59,198 345,219 248,459 454,084
Warrants issued - - - 46,353
(Gain) Loss on
disposals of equipment (251,875) - (253,411) 44,286
Gain on sale of
investments - - (24,653) -
Other expense (income) 14,764 726 (40,422) 38,436
----------- ----------- ----------- -----------
ADJUSTED EBITDA $ (382,665) $ (134,032) $ 1,811,434 $ 2,696,187
=========== =========== =========== ===========
ENSERVCO Condensed Consolidated Balance Sheets
September 30, December 31,
------------- -------------
2012 2011
------------- -------------
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 457,639 $ 417,005
Accounts receivable, net 3,764,216 4,505,254
Marketable securities - 150,793
Prepaid expenses and other current assets 1,295,944 593,291
Inventories 515,278 549,432
Deferred tax asset 19,029 187,170
------------- -------------
Total current assets 6,052,106 6,402,945
Property and Equipment, net 14,943,507 15,171,870
Non-Competition Agreements, net 45,000 180,000
Deferred income taxes, net 446,736 0
Goodwill 301,087 301,087
Other Assets 65,635 64,770
------------- -------------
TOTAL ASSETS $ 21,854,071 $ 22,120,672
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 3,842,734 $ 2,954,687
Line of credit borrowings 669,580 2,263,227
Current portion of long-term debt 2,134,950 3,867,658
------------- -------------
Total current liabilities 6,647,264 9,085,572
------------- -------------
Long-Term Liabilities
Deferred rent payable 21,156 22,044
Subordinated debt - related party 1,477,760 1,477,760
Long-term debt, less current portion 10,989,124 8,020,435
Deferred income taxes, net - 387,487
------------- -------------
Total long-term liabilities 12,488,040 9,907,726
------------- -------------
Total liabilities 19,135,304 18,993,298
------------- -------------
Commitments and Contingencies
Stockholders' Equity
Common and preferred stock. $.005 par value
Authorized: 100,000,000 common shares and
10,000,000 preferred shares
Issued: 21,882,466 common shares and -0-
preferred shares
Treasury Stock: 103,600 common shares
Outstanding: 21,778,866 common shares and
-0- preferred shares at September 30, 2012
and December 31, 2011 108,894 108,894
Additional paid-in-capital 6,361,159 6,112,674
Accumulated deficit (3,751,286) (3,117,267)
Accumulated other comprehensive income - 23,073
------------- -------------
Total stockholders' equity 2,718,767 3,127,374
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,854,071 $ 22,120,672
============= =============
ENSERVCO Condensed Consolidated Pro Forma Balance Sheets
September 30, Pro Forma Pro Forma
2012 Adjustments as Adjusted
------------- ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
ASSETS
Current Assets $ 6,052,106 $ 1,125,995 {a} $ 7,178,101
Non-current Assets 15,801,965 572,107 {b} 16,374,072
------------- ------------ ------------
TOTAL ASSETS $ 21,854,071 $ 1,698,102 $ 23,552,173
============= ============ ============
LIABILITIES
Current Liabilities $ 6,647,264 $ (119,128) {c} $ 6,528,136
Long-Term Liabilities 12,488,040 (1,597,654) {d} 10,890,386
------------- ------------ ------------
TOTAL LIABILITIES 19,135,304 (1,716,782) 17,418,522
------------- ------------ ------------
STOCKHOLDERS' EQUITY
Common and Preferred
Outstanding 108,894 49,608 {e} 158,502
Additional Paid-in-Capital 6,361,159 3,422,952 {f} 9,784,111
Accumulated Deficit (3,751,286) (57,676) {g} (3,808,962)
------------- ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,718,767 3,414,884 6,133,651
------------- ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 21,854,071 $ 1,698,102 $ 23,552,173
============= ============ ============
{a} Current portion of deferred debt issuance costs PLUS net cash received
through funding of the Credit Agreement LESS release of deposits
recorded for fees directly relating to the Credit Agreement (deposits
reclassified as deferred debt issuance costs).
{b} Long-term portion of deferred debt issuance costs.
{c} Net line of credit borrowings under the PNC Revolving Letter of Credit
(to pay closing and other fees under the Credit Agreement) LESS paydown
of remaining GWB Revolving Letter of Credit through proceeds received
through the additional equity offering to satisfy the conditions
pursuant to the Credit Agreement LESS payment of accrued interest under
the related party subordinated debt PLUS reclassification from long-
term debt to current portion of long-term debt pursuant to the Credit
Agreement.
{d} Conversion of related party subordinated debt to Units (of common stock
and warrants) to satisfy the conditions pursuant to the Credit
Agreement LESS reclassification from long-term debt to current portion
of long-term debt pursuant to the Credit Agreement.
{e} Issuance of common stock to accredited investors through an additional
equity offering to satisfy the conditions pursuant to the Credit
Agreement PLUS the issuance of common stock upon conversion of the
related party subordinated debt to satisfy the conditions pursuant to
the Credit Agreement.
{f} Additional paid-in-capital for the issuance of shares of common stock
to satisfy the conditions pursuant to the Credit Agreement PLUS
additional paid-in-capital for the issuance of common stock upon
conversion of the related party subordinated debt to satisfy the
conditions pursuant to the Credit Agreement PLUS additional paid-in-
capital for the issuance of warrants (to accredited investors and
holder of related party subordinated debt) to satisfy the conditions
pursuant to the Credit Agreement.
{g} Interest expense recorded for accrued interest upon payoff of GWB debt
facilities to satisfy the conditions pursuant to the Credit Agreement.
CONTACT:Geoff High
Pfeiffer High Investor Relations, Inc.
303-393-7044