ENSV - Earnings call transcript Q2 2018

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Operator

Greetings and welcome to the Enservco Corporation 2018 Second Quarter Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

For opening remarks I will now turn the call over to Jay Pfeiffer, from Pfeiffer High Investor Relations. Mr. you Thank Pfeiffer.

begin. You may

Jay Pfeiffer

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

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

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

Ian Dickinson

and second our to quarter Thanks call. XXXX everyone earnings Jay. Welcome six-month

somewhat of in while second was performance solid mix half is As bag. overall or our indicated a lot this in our to like release there news afternoon quarter a first

not revenue came anymonous in detail service in for nature more Dustin expectations due in year-over-year break QX, that are XX% our will and ongoing several highlighted growth achieved recap. demand core metrics in by offerings factors believe to his all down below during primarily we profit financial cost four we increased Although

drive better business the investments long-term transformation of In to continue in make to we operating addition our efficiencies.

Dustin to in ongoing primarily detail we his factors are during Due will breakdown anomalous several cost that believe that more recap. not Sorry. and nature in financial

continue in transformation to In us are for to The margins profitability as operating drive investments impact to the we addition term. investments our in news efficiencies team this quarter. with investors long is and of you and better also good business and make big these long-term over scale and gains the increase for aligning making to we the transformation enable respect processes the

our of very half our long-term trajectory said were of terms I of both and believe revenue a first and business As better we much solid in indicator results a profitability.

The other fourth XXXX we With XXXX. customer is particularly our expect to financial deliver good the of the prior of commitments of the downturn the quarter news that last half strong be as and to full-year to performance bit best those expected since season well. is exceeding second of

a recap of me year-to-date the highlights. few Let

Marcellus Utica, terms growth In we had and particularly Eagle DJ Ford, gains over the in with distribution central Scoop/Stack. our Bakken eastern the Basin, including the year solid regions board Mountain, double-digit Rocky across the of year and the geographic the revenue

as and our of included grew XX% second EMP to customer national the XX% peers, we moving Acidizing service total last some process. Well we among versus none oiling compared the of it water basin revenue up comes water customer procurement decided XX%. to and year tripled the same and of revenue service year. relatively competitive in particular heating We quarter service when have hot are XX% tripled was XX%, in offer to provider footprint and basin only regional second and consistency achieved a to reminder As set new the Revenue from our the frac with year-over-year. last was year-over-year XX% growth enhancement a account that transfer of advantage a our from national

know XX% a approximately XX% only It better. do of had increase our had we we can nice While is assets utilized.

are the educating streamline our of on more and working at can in procurement water bundling help transfer to them pipeline robust customers by how wellhead. number capabilities We by build better the a reducing vendors

our where We crews also in of May. in materialize the second situation no a ran into we fault idle commitment to the through for month equipment had and quarter we thought a failed resulting of own

better a on segment with So business we we deeper and Overall more there. will need be and this pipeline. that are to consistent because customer bullish come education is demand

business. customers it's good and We a have happy operators, margin great

and to profitability net revenue. million. our fixed generated and $X.X of cut reduced by to amount EBITDA that for XX% in grew XXX% from was pre-tax nearly has increased In period the to Adjusted loss net million loss thirds certain you was contribute $X.X our six-month terms and two remind our a cost non-negotiable To business cash operations don't are of directly half.

of grow then percentage to will incremental to continue higher bottom fully covered are costs As drop those a the line. revenue the revenue streams

CapEx way. successful incremental no gives preceding record surpass potential earlier is Our two us fleet investments profit by processes. operating the transformation if industry we're metrics we which significant utilization goals immediately in the to With and are enhance drive to business structure the this driving the with our our achieve in to the reference There investment and revenue far were year initiative. One, downturn.

operations a development is leadership we and supporting have second a been to quite responding integrating our personnel new challenge they're team nationally process in The field unit. cohesive mind, team Keep a a learning to business past distributed for while sea-change nevertheless into goal platform curve. been a it is corporate has a team, has larger a much the over new quarters well and our This create of business. been capable

across a entire I time how and team to drive has greater long to same to service our the record. I'm efficiency, platforming adapt of changes continuing they say some very customer in business. have of the will of safety our The scale, proud to to field have ability and at year While key result requirements our maintain for continue new This required and process new implementing of series leadership over processes. to a haul. profitability the process end our likely solid through set provide excellent responded while

preparing our this are point heating and upcoming QX at season. we for busy QX So

the We basins. EMPs are season Bakken of prices basins. securing than commitments across the growth increased customer in robust the our commitments across enjoyed key higher the importantly all and continued began the to macro our driven excess we further basins by season all at commodity a in point of and a view in form economic last north longer since for coming last tailwind another have From back recovery several from be of are activity operating

we're reiterate to to Before I call over hand solid finish Dustin optimistic XXXX. I a have and we'll to the carry momentum XXXX want that into

of We have operators. fantastic a fleet a group skilled relatively young and

now new that is just stride. to development business have its We team a beginning hit

for very We our look brief Dustin that in profitability It our value. and exciting to as achievements to of of management CFO, to next creative a progresses. shareholder time our I'll a with Bradford the call motivated that sharing With over you an Enservco year take forward and for highlights. growth team tailwind I improving board activity to this and review the a have opportunities a turn is financial company macro focus are a M&A on benefit of on and the with level

Dustin Bradford

in $X.X of from million. XX% in Total including $X.X X% revenue services XX% oiling million year QX XX% $X.X to to the million straight last XX% in total Ian. and quarter which year-over-year $X.X comprised from a of of million year. operating in revenue components increased year-over-year was enhancement showed profit from all in million $X.X segment ago. frac million $X.X same this represented We from water million, enhancement revenue the sixth The $X.X and to Thanks acidizing $X.X increases. $X.X XX% quarter which segment hot the to three to growth million down increased $XXX,XXXX million $X.X $XXX,XXX up heating our last well million quarter year of from achieved Well from quarter up a

the confluence an upfront But factors involved well quarter our an each accounted enhancement on Within compared self-insured of this and year. second that segment to we the to had in last large partially therefore mentioned contributed spate payment a quarter. is for Ian a As claims claim. in second makes anomalous first of relatively healthcare approximate unusual increase this. Enservco $XXX,XXX

under Additionally, the resulted the quarter. structure legacy to expense to a reserve the which us program into in of change in our compensation second required workers policy expect fund increase we required the our payment in an in final insurance what be

this a transfer in $XX,XXX $XXX,XXX in worth year was service that X% in was The to an our ago. second $XX,XXX significant second segment year over segment new operating is Revenue revenue operating other year-over-year which quarter quarter in anticipate improvement Water a from loss compared $XXX,XXX we $XXX,XXX. had going loss increases the operating by year would $XXX,XXX. showed to $XXX,XXX ago point will well forward from $XXX,XXX ago drive in of we a down relatively in hauling and from XXX% the loss of a the that loss water the of We to increases enhancement the segment profit. grew revenue making corresponding

year. or which down transition a versus development increased of $X.XX million Depreciation $X.X operating of $X insurance XX% due compensation XXXX. to lower the quarter related versus As decreased benefit at included claim. last loss from to to net expense related compensation a expenses. to company stock $X.X expenses and million due in million and of tax $X.X reversed $XX.X an higher $X.X our previously quarter management we slightly primarily the of million with primarily $X.X workers administrative per new that of reminder increased business million mentioned share reported loss $XXX,XXX the tax the diluted our included anomalous team. million of benefit to Sales, net to amortization year-over-year impact per last X% the delivering ago the subsequently last We year-over-year $XX.X were claim services general, share year. costs second combination year's year some versus from last year net in expenses million QX in or of cost diluted to QX based results $X.X Total costs quarter $X.XX year second offset last accrual in the million due The loss in million denying second no

As period any benefit have related tax on operating a recorded allowance for data deferred provision accounting our in EBITDA normally against an a book annual year existing on evaluation assets would in and the allowance or and limitations operating tax evaluate liability to offset a Due versus the loss assets. the previously deferred current tax period depreciation of [indiscernible] our and compared anomalous the results quarter net our current related result tax evaluation We GAAP in an last loss allowance. tax was reminder decrease including $XXX,XXX increase to by QX $XXX,XXX while the our is we tax described same evaluation of Adjusted year. liabilities in basis. cost the treatment loss to the use of in

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

transfer for frac comprised to XXXX to six-month to services including revenue XX% XX% all revenue water three Well total enhancement increased in components million $XX.X from which of million XX, half first the once million again good the $XX.X from period year-over-year XXXX Turning $XX.X heating up million to delivered million; total ended $XX.X last by well June $XX.X year. from XX% growth XX% of results, enhancement oiling grew the $XX.X enhancement segment the in ago. hot $X.X up produced $X.X months of by XX% XX% year to of from six million; from $X.X same The and last from through of operating to million year. income million of Water million $X.X $X.X million XX% million $X.X revenue XXXX year. $X.X well period to last million a first half from million $X.X increased in million acidizing

administrative water The heard a taking big customers boost planning million generated year's due XX% in achieving adding well described to with healthcare associated in from over year declined increased I and to the which last steps period segment expense segment. loss through the customer and $XX,XXX loss. the the service of close from the business the Ian $XXX,XXX hire new same primarily for operating up personnel cost expenses compares first and expenses costs. $X.X other year-over-year. a to say the from increased $XXX,XXX to $X.X hauling revenue compensation $XXX,XXX period is you after-mentioned steadily we to due transfer Water $X.X slightly better the claim and million. insurance year first are cost from year-to-date had XX% operating $XXX,XXX amortization $X.X general, activity half year's loss were same last period loss results in in million last of and million improvement included As XXXX company's half education. Sales, in and the million revenue Last year operating $X.X last last a for build-out $XX.X year. $X.X previously. workers million Again, same accrual getting this we development which to million by to of to two Depreciation down an think was as we're the million primarily Total in to $XX.X profitability and better of team three as

share by per per from the period thought period same for year. improved same to months up Our last million year. XX% $X.XX in XX% share six was million $X.X $X.X year-over-year net to through million or Adjusted million from $X.XX last EBITDA months the $X.X in $X.X or loss six

We increase have $X period over generated last cash the the $X.X a operations from we in million year. year-to-date reported same million XXX% which in is

balance our and sheet capital working ratio current was XX, at June the healthy On million $X.X a of had we X.X:X.

at sheet ratio improved business focused to debt increased discipline to X.X X equity lead delever to from time. X.X:X Our total year-end and and equity on to our million over the in balance million maintaining remain We intend XXXX. period stockholders’

and maintenance unchanged and be QX call questions. spending with for our over to we'll Our from CapEx in will that to fleet remains Operator? related the quarter primarily operator the turn essentially last capital

Operator

Thank you sir.

We session. a question-and-answer conducting now will e b [Operator Instructions].

question first Please Jim from go is Our Capital. [indiscernible] ahead.

Unidentified Analyst

capital you Yes. talk can the Thank your you needs about and working second good Dustin half? in afternoon.

Dustin Bradford

Jim sure.

all that prepared the and a last as navigate similar successfully what while in with we to think capital the of remarks starting the today. CapEx year I trajectory I where helped are we coming to experienced mentioned into good point in and operations requirements terms to our needs capital seeing is will obviously expect our able last year of growth are general season in outside working has working similar of capital we we maintenance follow half year-over-year we were a to second the

Unidentified Analyst

I a $X needs thinking this just $X the thinking million guess have half couple years working that it and capital is it past kind your revenue I been $X.X you'd be less require more of needs of million, was bigger. that with since working capital was in are mean year in your likely Does that million, second I that of line would growth growth? or or

Dustin Bradford

for revenue business a top-line. just agree line in far growth and X X expect you going in to you've similar thus is we've thanks I million million guys the forward needs to in due clarifying increase for we the to we experienced see growth and that seen fair those a as Jim expectation just the think the

Unidentified Analyst

comments second did if your is in miss talked I of a it And geography geographies couple for to services? commitments mostly you. half. or by you specific or mentioned it Did broad-based it about times customer the services you and is were Thank and or for talk Great. limited Okay. – those you

Ian Dickinson

Yes.

relevant. I of on the really across the basins in So but commitments that heating wasn't are for upcoming terms seeing all will we're specific be I it's season that here

the about; we're last South into mention it's didn't Marcellus, additional our the out longer we're few and dynamic a across seeing Colorado did Juan that So and have Dakota Dakota the Texas we're the support increased in board which up have San year up location of seeing commitments operation then customer Wyoming we but seasonal excited North season. that from doesn't the North our Scoop/Stack. commitments really we I a DJ,

a yes it's really basins So it's short that the answer across is are relevant.

Unidentified Analyst

talk you environment; pricing a and finally for about can bit different you? good, the And little bad

Ian Dickinson

– Well environment. pricing Yes. an it's so improving in

up. opportunity take are to We got the we've few seeing instances prices where a

seeing mean got interesting to we've contractual so commitments thing of are pays, around commitments idle time. some now in opportunity of taker maybe is a we've We It's year. the a and commitments are pricing this expanded when some down I where locking actual revisit were a an because some than commitments who their commitments on opening seen like constrained equipment years understanding prior demand last We've bit customers few ours. there that got wallets was these more

So it's labor. a every inflation nice are price we increases around crop mostly pressure cost feeling opportunity but time I'll some say talk around this about we

amount costs. modest see price think I we'll portion labor will increase by while I So offset that think get a of a

Unidentified Analyst

than that is different read And modest into by I modest about mine? X% can your or

Ian Dickinson

to a and customer probably range. by customer that out. I calculate that's think Yes, need at fair to back look really I Frankly go

So fair Jim. range don't but I think that's a

Unidentified Analyst

to sense magnitude. hold just Yes. I for get a to won't it you the I'm trying

guys. all Thanks for That's Great. a Okay. me. lot

Ian Dickinson

Thanks Jim.

Operator

Capital. Pavani next question Bhakti from Our is Please Pacific with Euro go ahead.

Bhakti Pavani

Good guys. afternoon

Ian Dickinson

Bhakti. Hi

Bhakti Pavani

quickly looks already of wanted to improving maybe and second been Would much you half. to-date just will for you comment have would what I commitments. since roles your the like pretty on been has that? playing some guys about exciting you business it's in be talk book new It the filled further team development order how

Ian Dickinson

Yes.

part Can of sorry. the I'm again Okay. that Bhakti. question ask I first

Bhakti Pavani

said you I some to-date, proportion mean said been has of filled already your book you I what commitments. have order

Ian Dickinson

Yes.

to much busy. I so the boy So your those is season. question think commitments. fleet at got of We've all [indiscernible] is how frac the of of our committed designated be going stage right this into majority XX our fleet now Yes, is will

cold teams our around think of opportunity tasks optimize season at right various we'll how is and fully starts fleet aligning our to the evaluating of we're now is if us One maximizing commitments underway but customer equipment for dynamic the the how and but so have season the we of deployment the our quickly the I and and all look gets quickly it the deployed. arc that

an And of the Our second your part optimized task is sorry question. I'm in to do that way.

Bhakti Pavani

The second the part a new hit running. you business place they have was ground how development team – and you just in said

to was they going wondering business? role in So I kind improving play what are of further the

Ian Dickinson

So our with leads. and business glove our development team is hand working operations

of it's working across our so and ways is development efforts. our and our is interactions our and of support strategies each also also front. to those a within with a can a augment team They're account on business folks operating teamwork we got working ton customers the Our on that broader that forefront team customers basins and basins really effectively approach we've but supporting of now basin more multiple and making real progress our

So be locked a throughout day well throughout out. day team they'll active office be the but very with and season bit they'll our in

Bhakti Pavani

about That's perfect. this but your about in to services I business. utilization is order offer doing something point just bundled improve know transfer have else guys further that? wanted water thought the improve to order strategy more you at to in I know to the

Ian Dickinson

hope remarks. do got and are got here across we fronts. mean great the through a over base need working assets, folks we've letting really unbelievable I about to have. assets an in came and we're I'm bit we excited the multiple we've job customer Well, business. prepared we that the and I know better

joint our water that meetings closely is can Our literally those working hooks to team team efficiency. itself. transfer discussing equipment frac and The with bundle drive we ways and very services and heating

in now more concentrated Rocky just it other the is our pretty and just some we broader heating with job focus region. goal the well and do educating looking bundling of the frac pretty so right just to our focused a Mountain that effectively other but the just services. need got deepening customers can at basins opportunities assets and ways those keep We've in better basins support on we We've pipeline. we're So and stayed some to

So and team about line across We're grow fronts. our leads our all We've business. I'm us all of got of operational on excited it. helping working business development focused that

Bhakti Pavani

mention expected referring had your remarks and to transfer And that commitment a to in Where you – did water prepared in just about to through. good May guys That's the that you didn't you know. to wanted that come clarify business? was come

Ian Dickinson

Yes. I was.

clear. wasn't Sorry that

supposed as out When from is found impact support the that to and out an the that team it is to we are didn't to best fact an just start we to that before speaks will on an a see revenue rigging as to efforts deeper way a it rig and crew as delays, time really and one bit has move understands grow the well drop up pipeline this more see to we this describe So we've on more right team This was we May. we continue were time anticipate like growing and to of to we impact effectively costs the to kind and got had delays. that so of a have it's pain business but see that their hope executive that line. we working it

Bhakti Pavani

last I know just debt? the strengthen even plan curious would you I to balance Got was it. or portion? the of or make sheet care mean what And would debt repay by taking how how one about you debt with plans sheet the your or to more are balance do your your you

Dustin Bradford

great the generation XX objective next just months if flows to operating those Well, our through over and us of cash debt XX that our and the cash we so see we'll flows around balance to to for by do down. we continue is opportunity drive primary to delever execute just that

that's debt and a – working hard set healthy that's one, or have focused target to X be think ratio at so on will to one get We The balance think be EBITDA. we X.X to We times growth there. opportunity. to debt to a we're

of fleet focus and the below in drive extent our growth. expansion So going to to it the to continuing be general goal associated on to not the but is ratio debt balance we the take extent down are we're additional debt would on to with that

Bhakti Pavani

side my it from guys. That's Perfect. good and job

Ian Dickinson

Thanks. Bhakti. Appreciate it.

Dustin Bradford

Thank you Bhakti.

Operator

Instructions]. [Operator

private a ahead investor. Please Our from next is [indiscernible] go question sir.

Unidentified Analyst

Good afternoon. guys. Hi

Ian Dickinson

for afternoon. question. Good Thanks the

Unidentified Analyst

talk about like the looks initiative really on Colorado. wondering year this going if was to Yes. that's XX. you quickly could ballot in just be It I

are far the that the you impact of really for of that? the and folks Some is? doing think; around the just Can what industry kind scenario realistic Colorado. you're mean might that painting a any what doomsday be picture What it of just about as might state in kind as talk planning industry you in

Ian Dickinson

Yes.

we're seeing what that if we political with to been is that has an watching mobile of general approach. view is fleet. worst-case our to customers has the knows for My got of This years. but positioned been In is going out Nobody well Colorado scenario are stay acute – and this closely. a So other dynamic we're kind exact providers we've dynamic in kind ongoing pretty results be. an many service the this a course of the because play were what

our fleet. eye but fleet the but working through laterals that a keeping redeploy will how scenario, if to of relatively all see those longer will to the interesting time we're active around dynamic ways impact to position It to plenty an think speaking be there but worst-case in have basins that be or was just portion ongoing EMPs that of for the the a a and be it. redeploying good respond are legislation our Obviously, or have So be I a we're restrictions, goes might some other us. us to going how we'll to mostly organized most equipment shutdown of and move very if on around respond by here we in that's on very close massive would would

Unidentified Analyst

part be just thought I think wells Yes. wondered man that. Okay. that notice something in on even [debt] I'm or of probably curious kind some that overall I had if a positive but ways I of and was that not laterals relocate use just or would me longer almost guess

Ian Dickinson

that's don't I the Utica. possible question – that Yes. I I I do laterals answer there well. is technology if happening in think mean longer don't Marcellus are such can the I know that certainly

I think foot now. horizontals XX,XXX doing they're

that different be advances to acreage. allow around work So technology the there may that on EMPs focusing some

great will if lot it we do had we I have of a we that on is of us. eye basins and look portion our keep is fleet mean can we DJ we to I basin and or So a again, the need rapidly in a But close but the a majority way for operate efficiently. redeploy a at

Unidentified Analyst

And here going you kind analytics your on at same a fleet just and some you little how of different that? you bit a follow-up organize optimization then around recently; that kind more how curious of looking efforts are deploy fleet Can you [indiscernible] how note talk brought it. about

Ian Dickinson

Yes.

that We've making we and next that the up that and of refine across working season out. background. board really logistics our got We're and as I locations then schedules that a so So engaging we've we office this big allow us on right really a strides don't the focused lot step done the our working how fleet up do deploy the be on understanding customer rigor to that before on the be of in largely we've processes is make mean putting with his going what so opportunities from by we're SOPs. deploy into place impressed making to we now OPs meets team, on here that the job excited right company forward May fleet into maintenance ground the we of got well driving mentioned darn take all and utilization that sure on to just kind but got all are and a calls going a heating most job descriptions need think he of robust and on a staffing and I've how driving logistics process there's plans we to more and Kevin fleet has we'll head that Kersting to see joined everybody's that the but the profit about big it across with fantastic match the to be their with we I figure of really pretty we though we making this really and and and in I'm thinking can our rubber efficient and and decisions it's a I road the it that where teams take continue best in pipeline greatest some corporate but is deploying of teams need we so at the to analytics we FedEx us we'll the earn much here and as direction. engagement margins crisp our we're processes and and and if It's organization base geographies our sure

Unidentified Analyst

Okay. the Great. my colors. taking Appreciate questions. Thanks for

Ian Dickinson

the Thanks question. for

Operator

There for this call further I'll are the remarks. any no back to registered presenters at closing the questions over turn time.

Ian Dickinson

as and excellent forward second attention again into We're hard Well afternoon. drive looking XXXX. as team extremely and momentum the wish great call. we and XXXX your great everybody's appreciate is The we half here time always head an appreciate and working of shareholder all you a on time we to to value

Operator

concludes conference call. today's This

You may for disconnect participating a your lines. day. Thank pleasant you have and

Enservco (ENSV) 14 Aug 182018 Q2 Earnings call transcript