ENSV - Earnings call transcript Q1 2018

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Operator

Greetings and welcome to the Enservco Corporation 2018 First Quarter Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jay Pfeiffer, from Pfeiffer High Investor Relations. sir. ahead go Please

Jay Pfeiffer

to the XXXX Dickinson, Company CFO. Dustin welcome call. CEO; quarter Presenting Bradford, for today the and first Enservco's conference and Hello are Ian

ability those Company's forward-looking forward-looking respond discussed to this projections most during is estimates, assumptions forward-looking recent is statements A statements. the as subsequent could risks as of to business its and well call limited As anticipated untrue call Reg and of FD, on information. date available non-public and in by become disclosure other assumes today's the XX-K the webcast management's at because subject call selective actual of in replay reminder, are based cause point as certain matters no differ which may a today's call. SEC. to to filings update Company's enservco.com from that include risks be are statements after material of also prohibits uncertainties events. materially questions that management's obligation in The this to I'll subject with SEC to Enservco disclosed that results that will out

telephone hours for to are Ian a be addition, turn approximately over call news Ian, I'll call. the webcast available accessing release. or Dickinson. will go today's two In beginning in after available the replay ahead. Instructions the replay With please that,

Ian Dickinson

XXXX XXXX into to welcome have and our All earnings renewed everyone Jay, say quarter XXXX. pleased momentum right, we call. thanks first carried our I'm to

our increases for of was second below are company and services quarter fifth growth their consecutive General considering is increase operating adjusted and customer double-digit service well demand in quarter pricing our to our quarter The also net straight year-over-year levels per history. peak rates. oil earnings first and growth our activity in metric in of our revenue second including which driving It in income, levels steady EBITDA. share quarter and prices revenue fleet our XXXX. highest utilization still An impressive income, profit continue growth of solid increase, resultant was

in time we now and any history. release indicated have in at more we've more working company’s areas geographic our than As equipment today, press

and commodity from bullish also ongoing for process as for yet transforming unrealized profit business. the be we is activities. growth, Given platform prices are strategic way platform to program well that create generally to and M&A we outlook an positioned We benefits that long-term accretive ideally improvement the believe will a revenue sustainable a and do suited

price $XXX when the down quarter. our revenue have highlights to million a point QX quarter that $XXX of drill require financial Enservco in was and $XX.X in $XX oil. not million of profit all high. growth pricing was the in $XX correspondingly on in range high the time we and compares same million me XXXX for been to recently does the the first service oil of This underscores making from that approximately first last few Let XX% quarter $XX.X Revenue the year from increased million

to runway there modest turn grew Assuming double-digit to fleet. the by relatively capacity equipment remain the prior year. profit water well of can oil to versus growth to we a believe rates time, and At utilization quarter. $XX Likewise, we new above Merrill all year.” willing certainly a hot in same heating, the benefit earning our and nose the enhancement risk bundle of we cost significant our the Well, oil. continue increase the services of to expansion prices out three we is next analyst is business a service a acidizing, of – customers our significant. stable our water growth Merrill Also Lynch generated expanded notable revenue that's lot from our saying Lynch other barrel, taking with oil frac advantage Earlier of $XXX of today, improvement oiling showed opportunity up because components for margin $XXX a won't a and put ability in margin fixed “risk our a fraction our relatively assume. transfer note the QX contributed and structure, double-digits There's and segment, modest are and small services, only transfer but the are

income component year-over-year. income earnings operating will profit our adjusted EBITDA And overall transfer with forward. than XX% mix up relevant share revenue XXX%, up metrics We per we we resurgence become an continue more finally, enjoyed net to up move in as of believe Xx fold, up continued water increasingly a XX and

me let the provide been we've some experiencing Now what on field color level. at

the competitors driven year-over-year gains, where demand we our Enservco reduce As XX% service, and a our a many first reminder, many all in major serves helping service a core for strong The companies a up an million. is enjoying of company to led as growth in and sized services lines in have largest X.X by exploration With production respect began to operations, Colorado, national that procurement our costs. single who first the in way well quarter have are process medium specialized our U.S. major the increased customers advantage to Enservco simplify the most the most therefore we small United and like to States. as revenue is of basins being five And competitive in

million. XX% water largest QX the DJ to the in and dominated of $XX.X are mix in We provider heating revenue service that Colorado's frac Basin up total

job As great retaining we did a legacy added customers. customers, of new we

new Mexico Oklahoma. and Wyoming North Dakota in some the Bakken Basin the a and River Powder also in Basin We wins in and solid The Juan customer and in Pennsylvania performance San Scoop/Stack in had and in Marcellus the New

of remains our Wyoming Dakota to to take work units grew Eagle are As for in the North with discussions We XX% our more revenue demand year-over-year advantage on driven Bakken season and maintenance and improvement commitments season. strength the north we areas of talk we program new maintenance as sales Chalk season and now activity results of grew prices. strong Texas, also lining with deploy the longer by into The a down, the multiple million a minutes. winds oiling when initiative lot heating just year-over-year to up again hot in in customers as rig We're we XX% QX further next that $X.X Austin in plan as higher rise. the activity Ford over our process into DJ. Acidizing commodity of was expect XXX% think I'll about seeing in get a our well we improve there's good million, few that to year-over-year happen primarily resumption but to room X the growth to of nice, on revenue and further as and we

retain in where business primary we win and for Texas, is to Our focus customers. South continue new legacy acidizing

We’re second also and and quarters. Kansas activity expect three third and all Wyoming increase in in active in the areas to

transfer revenue On XX% $X QX. we the to in million grew water front,

big business. staff organization in our increasing a of toward as earlier, than transformation equipment operations. same we order be capacity a operations Enservco and operating quarter, in is won't programs our the and our The important and culture repeat earnings to our but our in process there a structure the fleet the common to we collaboration optimizing in miles. lay in full total enhancing story corporate of theme our our world-class our of continue calls continues all our to provided recent improvement utilization As leverage improve This manage mentioned to XXXX in quarter in leveraging are an further sales five in our I ongoing business miles details refine In geographic line we additional relationships. base. and through invested performance, been unlocking strengthening upside regional our I processes customer by all involves as and it think and growth, our XX bolster in flat which transparency the Other hose we we objective first way deployment communication, the this a anticipation and which are footprint this critically marketing direction the I increase ultimate pulling our significant solid value customer interest. to to line recurring top because has drive bottom and will business the view last

is will fully engaged significantly will and in workforce this with resonate ultimately shareholders. we lead Our and and believe it returns proposition our process our for customers value to outstanding our enhance

Dustin, to XX a over service. say about call Austin to the of hand Enservco I following recently who want left committed I Peitz, few years Before words

years not through very a and recent the company beginning. the a to into highly know, For you who the season. successful major to was in Enservco’s the mention role XXXX successfully those formative since who helping campaign and co-founder, run don't company the successful guide a downturn of played heating to banner He the up had in most been with Austin

respectfully serve Over strategic other of declined in determined logistics effort opportunity logistics a hiring We optimize at have on a process the roles in take level fact efficiency driving certainly new Austin required. focused we and skill the Austin to was and the challenges support and recognized to in specific and board in the that and him, past to COO mind a to couple interest level but pursuing agreed of our decision. and operations board enhance as a for his loved respect keep with next the go our year systems we he in scale to would had growth, processes set and of our in

In profit entire for to search quarter to future and of all role In of company contributions expect his want the delivered we've the meantime, team are summary, So a have endeavors. fill Austin COO best behalf that incredible his soon. revenue we growth. pleased him the initiated the new and and in another on to a for to Enservco strong I wish thank

activity all rise customers the count, on serve. core maintenance conversations for our drilling, with rig Our continued Well completion markets and the demand all services. we indicate in are permitting,

review plan. of and a of remains for marketing I'll ability the continue positive. call Accordingly, the With brief price to we XXXX. proceeding improved to for sales, financial remainder financial commodity strength Dustin? Dustin our turn over that growth according initiatives about economic highlights. CFO, are Our our process to are outlook improvement the our in results optimistic Bradford, The for delivering

Dustin Bradford

Thanks, Ian. quarter XX% last the in million of revenue same XXXX Total to from first $XX.X $XX.X the million year. in increased quarter

services three the improvement year. mentioned, in well in $XX increased pre-downtown enhancement the approached last million without enhancement $XX.X revenue of Ian levels prices oil we pricing Well for peak from quarter. XX% revenue year-over-year million All showed As high of providers. service benefit to components year-over-year correspondingly

$X.X $X.X million heating year $X.X year. last $X.X Specifically, income $X.X from grew million. in was last frac million to $X last oiling water sharply transfer from that year. to Operating Water million up $XX.X comparable to in million to million last QX from XXX% revenue increased year. the QX XX% to from increased million in to of in million in quarter up XX% segment acidizing Hot first was quarter and $XXX,XXX the $XXX,XXX XX% $X compared

million As a increased approximately to in Ian $X invested structure in quarter increase was our at year. hauling related last last our operating transition lean accordingly and quarter we QX $XX.X increased additional That revenue XXX% profit this play a X% development costs cost indicated, We business and quarter due $XXX,XXX income primarily year. the in compared $XXX,XXX the of revenue to million. million combined expenses first of formal amortization service establishment costs. in expense less had and Selling, million of $XXX,XXX during income in operating $X.X $X.XX million from pushed the or a can net the grew per the the same fixed Total to costs significant in quarter segment the relatively from offering Water big general XX% services. loss principally down was quarter year. year-over-year direct last operating this $XX Adjusted In reported per delivering $XX,XXX. $XX,XXX in a transfer due the to million produced assets think personnel an first $XXX,XXX with to XXXX. Depreciation of to $XXX,XXX. to with and We QX $X.X or increase role an water in from in penny the quarter. quarter diluted in higher expenses administrative last share in EBITDA was operating versus comparable share quarter approximately net higher from QX XX% million than $X $XXX,XXX of same our in of million, $X.X to growth in management first up $X.X team flat higher The year. income

intensive our due evaluate of nature the reminder capital adjusted business. our performance business, is to we a EBITDA investors the for important health As to operating of and metric our an believe our

capital On end $X.X $X.X was the $X XX of March equity the from XXXX. XX% to balance million. sheet, the from the million XX% at at working year-end million million, in quarter Stockholders' $XX.X up grew

Our X.XX to our at X X.XX to to and X.X ratio debt X X from year current to X.XX to to ratio to improved equity X from at improved year end. end

stated, focused discipline over time. sheet to balance and are we delever maintaining As our on we previously intent business

quarter I essentially with transfer mentioned. from unchanged remains exception additions fleet last Our water the the of

existing the anticipate that the range to the in capital fleet. of $X CapEx, call the primarily turn QX we'll for to any remainder the questions. $X in to for million. we XXXX, And million to And on CapEx spending be will with over be CapEx Our of operator related maintenance

Operator

you. Thank

now will question first begin sir. question-and-answer [Operator Instructions] the is We session. ahead, Bhakti Please Euro Capital. The Pacific go Pavani, from

Bhakti Pavani

Congratulations afternoon guy. on the Good quarter.

Ian Dickinson

Bhakti. you, I that. Thank appreciate

Bhakti Pavani

best of while. the the had a I was company quarters guess that one in

Ian Dickinson

XXXX since Yeah, of that’s QX right.

Bhakti Pavani

Yeah.

the the do quickly, about over are how to plans next business, you what’s are and your the just talking utilization acidizing intend rate the improve what know, currently or quarters? two you So utilization

Ian Dickinson

and prepared rate We're Kansas of right additional bear down for around also in me quarter. drive Texas in So city ones. for in some activity in out and will utilization a River relationships of the South as Powder in new garden seeing the Bhakti, current up customer believe We I expansion pick acidizing, also through mentioned Wyoming the the XX% utilization in was with office. our remarks

we're our some got we've additional and So on current with customer lining customers. up base additional some work working that's new that

Bhakti Pavani

Perfect.

Or I also to wanted mentioned going the are certain team. currently business focusing understand throughout be you expanding to looking to is about or hire on You with have business? expertise your people sales you certain that lines it operate?

Ian Dickinson

current lines. somebody of environment. for those service can skill customer throughout particular one our the something business folks We're as this set will experience to be the well rounded accrue across Obviously full significant in field benefit, suite looking into if have that looking has relationships for develop That selling but their of a oil lines we're will services. and who

Bhakti Pavani

I the had colder similar in month to know is the strongest QX April, that regards specifically and frac QX With it. Got we guys considering you water heating to should of business, of last QX expect in year? performance see kind that of

Ian Dickinson

heading I gone the as Obviously, see referenced that second and season. last we Yeah, momentum map at would here quarter, kind into really we’re from where haven't how back we shoulder get year look QX our into quarter. we the against what into second as to of

And down. so work obviously as temperatures slows rise, the

part in don't compare that good second seen into have the now, how we on that begin and quarter but last got the Now, have latter year. part quarter of move first right second quarter, and off we taper real – work into of Bhakti, I a as as the to to sense we to latter

Bhakti Pavani

Okay.

can to business, grow grow and have? Moving QX, you on fleet think are in do assets some marketing units you are how water given order acquired that there business front what – business what current to you that you transfer quickly taking the in that or the initiatives

Ian Dickinson

our River there new of of a base and the although Well, making is potential mean, so them way that we're customer our Rockies, opportunities I up we marketing and fully come the are trying our into big aware the focus – current out a reaching to customers geographies. obviously of from have We're Powder other into into standpoint, what doing piece so and are the our DJ service energies some offering. to and

Search to line related awareness so, – enhancement is of the service to enhancement, that the that’s some we're limited focus. website that developed a done drive we Google marketing Rockies, fact we’re try We've better basic offer. some And collateral, this putting some to not where but

be most of going at current that is we the with some the customers. to but work the relationship direct level of So have going, really

Bhakti Pavani

Got it.

question. one Just housekeeping

should kind $XX,XXX in any You transition have severance QX estimate one-time QX, point? of at and we this extraordinary about you in expense costs know in

Ian Dickinson

costs be Well, associated with there will transition Austin's departure.

Bhakti Pavani

the what’s should or remind expectation be what you range this the Can time? at

Dustin Bradford

Hi, Bhakti. here. is Dustin

So we have quarter. will did that $XXX,XXX add It’s in within the of $XXX,XXX that range the in to in the dollar departure amounts the associated our we with footnotes XX-Q.

Bhakti Pavani

That’s Okay, from thanks Again it my congratulations. side. guys.

Ian Dickinson

Thanks, Bhakti. I appreciate it.

Operator

next go The Ribe, Please Macro Gary question Consulting. sir. from ahead is

Gary Ribe

everything. on job Good guys. Hi,

Ian Dickinson

Gary. Thanks,

Gary Ribe

but optimistic quick pretty fine, you that's a I you're going would I have and pretty like breakeven. that's and you're guidance are would QX, the things It know you guys expect EBITDA give be into think reasonable you guess excellent. like sounds of don't just that level I the I guys given you seeing? and seasonally are QX expect and to weak any kind that a well activity one. of since coming Is expectation

Ian Dickinson

Well, quarter third work. combined. Texas in roughly a yeah, positive QX and a record into oiling, give when us we lost $X.X $XX.X actually hot we certainly out of around have example. somewhat – the see for uptick about don't of as traditionally. We're million we in again our is of EBITDA as XXXX generating it’s small It's roughly million, note to is $XX on a of acidizing We amount flows and countercyclical. that EBITDA start in second QX putting revenues important cash doing as to focus We're a guidance. we're did there does and we QX million major Obviously, but QX. dynamic, round focus South down our which more seasonal fair and including And year move an services year

new new relatively line year have dynamic is Our for seasonal is – business, to round does and transfer not really which water it. us service a a

And across that's no we increasing driving those positive service again the give lines, so on as fleet, goal our expect any I won't – what cash we or expanding focus to quarters. flows around out start from guidance But utilization specific as QX QX. of

Gary Ribe

fleet fair guys that you optimizing of of that sort Okay, now given you know the and on the sort stuff. focus enough. have it’s And utilization

similar you you environment look stuff. you then people of expansion where and sort kind back but at XXXX utilization that I you think get you like to – would you if when think maybe the and the get to that to margins drive? similar Do that back the of know environment, and were the fleet I because all in of be can utilization mean expect of are not better trying you guys get up, better to

Ian Dickinson

Well, I that speaks deck do on that think in out our dynamic. I website question. slide understand a have that's We to your our investor

compressed if top XXXX get our line we do margins Obviously, a as somewhere we levels, so that's XXXX teens is component is cost rates anticipate back million scale We our that we million to with we that would And our the the fixed fleet, fleet, to mentioned the there the in million of we've $XX new that that in margin EBITDA customers. think top to other get saw current rates utilization back have range. the line in $XX we pricing current rate $XX that were is at From if a we and can we of expanded in drive in rates economy utilization drive grow. we But XXXX, thing assuming high if saw dollars perspective, business. back higher. to our capacity earning the rates remain to current billing in that

dropping labor certainly to I put providers through we market. more at the most XXXX would of very against cost guess some say move tight are guard bottom services line increase would and that well. anticipate just scale I pricing to cost, And here some do into so to think oilfield it XXXX. we inflation, I of a I expectation as as would drawing we in we but primarily. it’s mean direct this opportunity dynamic seeing pressure, way anticipate terms It's margins I job as line, of revenues, prices I a as

think extent to along inflation a gain be there some goes some with will we it it. So can still positive net would increases, cost be the we price but

Gary Ribe

inflation. it. Got about to next That and question leading price increases cost is was my

kind you. job appreciate I Good up you caught in past. the of everything. So it. me cool. thank in Alright, Well,

Ian Dickinson

Thanks, I the questions. appreciate

Operator

[indiscernible]. is sir. ahead, The next from question go Please

Unidentified Analyst

quarter that Number you've there Yes, couple that to one-time seen in about. one, expect Is increase A good forward we questions substantial XX% guys. wouldn't got quarters? should SG&A. see be there in future going in or level of is a a cost that

Ian Dickinson

cost. as business we did mentioned Dustin – Well that an ongoing development invest think and in the his remarks, be will mentioned I in prepared team we

We are against targets. some – accruing bonuses our month to against month based performance, internal

business to as in did investment But into revenue our same and quarters, costs the that costs. to extent we’ll QX costs. we the continue so to continue some – we hard continue those We we actually And grow incremental SG&A as it's top-line. QX you bonuses. But related we some the so expect to expect not for one-time future tell have at cost do you will there, to the a perform, transition I wouldn't the but in gains least to one-time accrue exactly, teams percent know in development have decline of me

Unidentified Analyst

growing I water those those to around businesses with of just are transfer your as million $X are do services, on if and a the breakeven What my expected second base? return hauling Okay. the guess get you're basically. question of which investment each water you with businesses? in quarter see successful you customer going kinds around businesses those Where right margins is out

Ian Dickinson

so distinct they Yeah, are businesses.

is generate XX% low, on of the can level margin have a that get Once – me relatively fleet we still start business that’s water We fleet is margins. So level certain utilization, we're transfer. the believe a still let today to with so we that compressed. utilization

relatively been On service, the water a hauling side commoditized. that’s been that's

that and over recently labor, a reducing the have way manage few We done rates reworking we renegotiating in time. some of here the kind things

water moves to some try margins to hauling side the there. making the we're enhance on So

Unidentified Analyst

you traditional on Mom undercut But water that always the reason a there why staying in what's revenues? and Is keep the your Pops business hauling water – the I then? mean are – hauling – one and water Okay. that's where your you costs

Ian Dickinson

is are it's of of constantly we evaluating our do so always base lines It's Well, from customer looking the business of the we have. one those are the blending hauling at that – – bundling It's things services. we we’re customer valuable And the if service. kind of a we water accretive and business standpoint to better it. a better job, and

can think to to of think ability that we I out some profits take rates driving but business that recovered our we not we non-commoditized may of margins our can services, has markets out. more especially the drive as start line in up and business to that proven levels other of rise

Unidentified Analyst

I'm and makes right, the at business. sense run All but guys – looking that – you the that's numbers again to me, that's

your thanks for much information. So very

Ian Dickinson

I questions. it. the Thanks for appreciate

Operator

go [indiscernible] a sir. We question Please have from ahead,

Unidentified Analyst

be quickly is like production how customers to them? that the want for thank spike Yeah, on consensus earlier there quarter. question much that can mentioned or be to they feeling your seems be be and wrap My it? to to able is you – do in the you your for would how how taking service would soon. question you possibly a And up time lead graduations much oil How my up business to able quickly there

Ian Dickinson

very our ready keep We entire to go. we respond can fleet Well, quickly.

by our is to program, that active ready fleet we've mobilize. so, maintenance It nature CapEx a an program its ensure got to mobile fleet. is And

it's on first trailer. and most power's by pulled cases itself so, And wheels in

is So go. we've mobile a got to very and fleet ready fleet the

the we as deliver respond our call to other from I'm be demand rapidly. can soon today, but your that that, in about would we request thoughtful question that that basin move can as immediately. relatively we'd a answers or To basins So not or customers sure. Is even to comes not? not services, our almost how we're very extent

Unidentified Analyst

be of the your mean a have issues and industry decision you – I price we can up. to process high. questions ramp their up will in if customers Yeah they what’s of quickly know that spiked of more find does every And oil general on quickly terms kind trying then well do have would think start to how to [indiscernible] deciding some of obviously while you what’s geopolitical

Ian Dickinson

in our considered a commodity hard bit general oil a on and to piece rise, what who clearly from that, of of obviously be are ramp how that may every services depends can and customers as but has in and And in different their they’re if quickly. say to can. it, think ask to question exactly they'll dynamics think field more that and hope least that a prices be that’s increase for Well know next demand, to than oil – of consideration at that active. respond meet obviously I in demand basin difficult to but prices others behind there – increased an increase strategy, the I well oil answer but continue demand one to set be you there customer is could it's the just But my very drive terms. mean positioned perspective would prices one answer do how to answer I will because in I to broader every that think going hard services we're it's the I from do – it

Unidentified Analyst

you good and Okay, my well, for thank luck. question understanding

Ian Dickinson

Thanks, Ed.

Operator

go sir. Ian and Mr. turn Please Dickinson, call Ladies to questions. there like CEO. further ahead to no the gentlemen, I'd back are

Ian Dickinson

at your join you end look to great rest again for time all driving the of Well, another and call. to again with forward QX. thank all We you to making of the good Have a talking quarter here day.

Enservco (ENSV) 12 May 182018 Q1 Earnings call transcript