- Total revenue declined to $5.1 million from $9.4 million in 2020 first quarter
- Net loss improved to $2.2 million from $2.8 million
- Adjusted EBITDA declined to $940,000 loss from $503,000 loss
LONGMONT, Colo., May 13, 2021 (GLOBE NEWSWIRE) -- 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 Enservco
Through 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 Statements
This 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 Pfeiffer
Pfeiffer High Investor Relations, Inc.
Phone: 303-880-9000
jay@pfeifferhigh.com
Marjorie Hargrave
President and CFO
Enservco Corporation
mhargrave@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. | ||||||||
| 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. | ||||||||
| 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. | ||||||||
