DWSN - Earnings call transcript Q2 2019 | Dawson Geophysical Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Dawson Geophysical Second Quarter 2019 Results Conference call.

Statements made by management during this call with respect to forecasts, estimates, or other expectations regarding future events or which provide any information other than historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties, and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements.

These risks and uncertainties include the Risk Factors disclosed by the company from time to time in its filings with the SEC, including in the Company's Annual Report on Form 10-K filed with the SEC on March 6, 2019.

Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in the company's press release issued this morning, and please note that the contents of the company's conference call this morning is covered by those statements.

management financial references measure. call, is EBITDA, conference non-GAAP a this will to make which During company's a A the on can the applicable of the GAAP earnings reconciliation the measure be non-GAAP company's website, found is of which copy measure www.dawsonXd.com. to current located release, on company call The the scheduled any provide XX for not is guidance. and minutes will

Geophysical I President, and Chairman, to Steve would Jumper, sir. now like ahead, of to Company. Dawson turn go the call over Please CEO

Steve Jumper

Dawson Bethany. Geophysical and you, morning Good XXXX welcome to second thank earnings Company's Well, operation and quarter call.

of Jumper, As company. Bethany is name mentioned my Chairman, Steve President, and CEO the

Joining me call Brata, Jim Officer. President Executive Vice on the Financial and Chief is

the go call, start few a over. we items to Before just

call on available the therefore like that If are to to advised section the speaks today, Investor XXXX, be going Xst, listen as of of you information longer Relations will and this the replay today's Thursday, listening. you website of no any accurate reported would be sensitive Information webcast only at via www.dawsonXd.com. company's time August replay may by time a of to of call it

to June XX, months preliminary second ended Turning financial results. quarter six XXXX, our and

June million, quarter the XX% XX, company the of June the XX, $XX.X ended quarter ended For to $XX.X revenues a reported approximately of for decrease XXXX, compared million XXXX.

loss million For XXXX. share the net of second million loss $X.XX $X.X loss or net $XX.X the common quarter company per compared for of the quarter per of a of XXXX or loss second share to reported common $X.XX

XX, of quarter XXXX, $X.X June $X.X compared EBITDA million positive reported for XXXX. of June the XX, The the company million ended for ended negative to EBITDA quarter

million, June revenues of XX, company of reported a XX% ended XXXX. to months for the ended XXXX, months compared XX June of six million the $XX decrease For six approximately the $XX.X

or million $X.XX loss of For loss net million the common share for a of or loss compared half to net company of of $XX.X XXXX, reported share half loss $X.X the first first common $X.XX the a per per XXXX.

for $XXX,XXX ended six EBITDA XX, XX for compared The XXXX, company six months of to XXXX. ended June the months June of negative reported positive EBITDA the

During operated single quarter in United channel a crew and crews operation, we short including the along five large small a in States, of four XXXX. channel crews the count Canada a compared very count first Canada time microseismic U.S. count channel of second peak in with period for quarter XXXX, the of four large in to in crew of

crews the crews on third in information, and in Based available currently operating the in the early quarter of fourth XXXX U.S. in is Canada company few be quarter additional four the and during quarter we into the fourth two later next to six the the U.S. U.S. operating XXXX four anticipate in to limited with The the two crews in crews fourth to three of deployed weeks. currently activity in with quarter.

multi-client exploration the recent in As Company. directly and of of some quarters, with Production activity projects isolated are in behalf companies the on for our U.S. majority

who will Jim? XXXX. Brata, the I final turn some return fourth the review will third Jim outlook the our with call quarters now and over results, will I financial of of in to and control and remarks

Jim Brata

Steve, you, morning. and good Thank

quarter a decrease Revenues as $XX.X ended quarter $XX.X the of for XXXX the were to XX, million June second million, for compared of XX% XXXX.

small release XXXX, Canada channel quarter. a in in the earnings Canada count quarter crews second operated a short period issued to the morning, large of compares single crew for crews operations first four including in time. four States, in in this peak and the U.S. That count a channel crews of large As stated of microseismic during and company in the five our United channel count

during U.S. operating later in anticipates currently in U.S. Canada of four fourth the quarter. on and the the activity quarter in information, of in with in the into the company quarter to and quarter Based crews XXXX, available the fourth to two the fourth four third crews early XXXX six limited

quarters, some in projects are companies companies. in recent company's of a for of behalf majority directly the U.S. activity on multi-client the As E&P with

Cost of in XX% quarter XXXX the of the to decrease compared was a of second $XX.X $XX.X services quarter million, of same in million XXXX.

quarter recent $X first XXXX, of were second headcount million quarter and expenses in the of severance our administrative quarter numbers and retirements. the an XXXX. executive and million for is accrual reductions in retirement to costs related for $X.X second General to million of compared XXXX Reflected $X.XX in package

quarter million, compared XX% of Depreciation and second the in expense was $X.X of in $X.X quarter million the XXXX. to of XXXX amortization a decrease same

XXXX quarter of per loss of Net loss $X.XX XXXX. second net to compared million the loss or in share $X.X $XX.X loss $X.XX share of was million, or in the quarter per second a

We income tax tax that second quarter $XXX,XXX same of the income recorded an to XXXX. compares an benefit of benefit in $XXX,XXX quarter And of in the XXXX. of

of earnings of the in quarter morning. the positive EBITDA compared this million release EBITDA EBITDA XXXX issued same negative $X.X And in reconciliation was XXXX. period $X.X provided was million of to second in our

million, turn months the as compared million months a $XX six for months decrease ended for to six ended I'll six ended June XXXX. XXXX, June XX, Revenues XX, Now were to of June XXXX. XX, the the $XX.X XX.X%

of half first decrease same million, a the of XXXX. $XX the for of XXXX services was compared to X.X% in $XX.X period of Cost million

were XX% June $X.X of General XX, of six an $X.X the the XXXX, for expenses million months increase million period compared ended to in same as administrative and XXXX.

severance to $X.XX headcount related executive and retirements. second the costs reductions mentioned recent quarter and as accrued And earlier, for we million package retirement in

expense year compared in $XX.X of was to same a ended the million months period XX, XXXX, million, amortization decrease six the XX% ago. and June Depreciation in $XX.X a

a June to ago. or loss Net period $X.XX of compared net same year share was XXXX, share XX, per in loss the for $X.XX ended loss million $X.X $X.X the months per six a or million loss

of the same was in EBITDA compared positive morning. six period for the of EBITDA ago. year million provided in a was release issued months EBITDA reconciliation XXXX first to And $X.X earnings this negative our $XXX,XXX

sheet. Moving onto balance our

XX, to approximately as strong XXXX. had million. continues under June including of obligations remain leases sheet debt, $X.X balance Our of finance We

Cash $XX.X and short-term million. investments of

was current to ratio X. capital approximately finally, And million. was working X.X $XX.X Our

call to I'll with some on Steve turn for And our back the comments that, operations.

Steve Jumper

Well, thank you, Jim.

ended As in microseismic our two quarter. operating utilization conference quarter anticipated quarter in first crews microseismic with the release began during three active projects press call, crew in second overall the project. with and quarter lower crews was that three the two We

smaller during much quarter activity severe second timing count of was a in crew primarily second which projects the the limited first compared Channel during quarter. moves utilization further was of for count quarter crew second and back quarter XXXX conditions, large transitioned as channel channel of the large Oklahoma, Utilization projects on the half into lower the markedly the several to impacted the of channel in count by quarter. wet

Weather to conditions as account the with the quarter be utilization became fourth more crew will levels, quarter anticipate and and compared the beginning into crews favorable in improved We four third the third channel six to operating. of quarter. in quarter in the U.S. second XXXX that both of

or multicomponent project XXX,XXX multicomponent in West June, XX,XXX we large Texas, began In units total a channels. utilizing

multicomponent project anticipated these sufficient winter needs. for Our equipment be quarter, redeploy season. meet current The completed inventory the to Canada multicomponent of to will is channels time fourth at mid is to the which

are Permian and Delaware Texas. of of region the areas Austin Primary region valuation and the Chalk of basins, currently Southeast SCOOP/STACK in Oklahoma

quarter early channel In in fourth we count Wyoming late addition, Louisiana, two or begin larger projected to of third in each this have projects which is year.

capital Bid activity visibility challenging and and levels. to remains evaluate exploration as companies intermittent spending continue remains production

Capital expenditures second quarter $X.XXX maintenance for for the million primarily of million and for months totaled XXXX, six items. capital the $X.XXX

million cash million stated, and of of strong short-term with sheet capital $XX.X June the XX, As of working $XX.X investments Jim balance has XXXX. as remained company's and

as Jim totaling and mentioned, June XXXX. notes leases we million payable finance of of As have $X.X

X-K, industries, as of Dawson Whitener, of XX, Wayne entered retirement. Dawson Executive Vice Eagle and Canada, February Company; and of On Chairman Rob merged June Geophysical both in the Robert into XXXX TGC President the when Legacy Wayne the on subsidiary, Canadian with joined Wood, our reported industry years the experience Officer, as role was of Rob our Eagle was Jackson, in XX Canada. Canadian will of Terry and with Wayne seismic the Eagle Canada, where in President President with Canada. operation, of operations years assume Chief Canadian and Executive TGC's XX

member directors In his a position addition, company of of Wayne Board Directors, seven. to has as active and the the of retired has from the number reduced

Their Industries, recognized the sorely tremendous contributions will Wayne missed. highly and TGC and Dawson distinguished Eagle Rob industry. seismic careers Geophysical and had to leaders very regarded were as be Canada, in

in On them shareholders, behalf the of the wish we for lives. and next me personally, employees well chapter of their Board,

show will anticipate In quarter. improvement over closing, quarter second we our third

channels increase vivid, subsurface on in to trend. and well-positioned this acquisition operators going as base, per multi-client order production in data requesting develop Geophysical personnel overall are industry-leading to robust, We forward continue exploration positioned to companies Dawson project are growing is more capitalize a projects seismic knowledge more with experienced that in equipment uniquely its believe both We and image. scale

ready And the call open with believe Bethany, questions. I that, are to we for

Operator

Absolutely. Instructions]. [Operator

first Raymond question of And our comes today James. McAllister from Sam

Sam McAllister

All right.

into as all to that you is on bleed any impacts better front, of XQ weather us the XQ Oklahoma So, mentioned of wet weather that wondering color were any weather the and Oklahoma was XQ from off, I the effects give you could through extent looking all first on if had but there impacts. utilization

Steve Jumper

really in Louisiana of Weather projects them of No. weather we're the quarter, into We've to prepared. I the us track. on one in quite time second that third end getting one of a has to going two-thirds began would project a slightly delayed delayed the -- did affected had quarter of getting the on for bit But I think prep wet little bit East at half affect and to some back Texas and the say weather which some and some starting conditions back that June, improve. have

particularly been lower utilization you had it weather due channel to crew somewhat the know, -- we Oklahoma than -- we greater have the had and would was the impact probably impact, fact was in crew normally the the So, utilization. overall crew that

two wood, the feels effectively pretty utilization both but four a large fourth. quarter channel back we now and in on balance we're down shortly three crew and for low to So third there the operating better for the deploying more and knock into up crews weeks, it three, weather of level and got right about with

Sam McAllister

correctly? project? scale we larger should efficiencies for cost that stage accounts effect. channel a And XQ will overall which more should on in Well, third project. in than next a color say Great. channel for effect Texas Assumably, job, West we having large one think to your XX,XXX pricing, accretive contribution hinder thanks margins from versus job count up, but there. the I to of as count get offset channel about How an the the thinking XX,XXX Am per about roughly

Steve Jumper

that I just think so. here. What's as that of historically done company a a important is, been we've a a to couple fixed is operation. and fairly cost high have is Sam And remember, we One things over lower of much shift lot variable in to months can work fixed third-party how XX as -- company internal cost the we versus to and our services by we reduce last utilize services. cost as

linear background to setting things our we some line margin a handle And environment impact so see much cost on deploy should expense deploy crews without line. we've standpoint that of from to channel the the count here current so projects the us deploy is to as channels or channels we operational in the channels, improvement from done and larger allowing as having internally we an more say begin as because I'm

believe increases, right to see projects, efficiency we our high, should And utilization margin your as so well. we more on is we count importantly, the at but I improved improve, hope where for with now financial channel that very as these we're the as -- high improvement. efficiency large is when our question. begin answers we're Once has a utilization count operating crew part, that are most operational which level, ground

conventional that That were early quarter, very the were quarter -- the continue XX,XXX with quarter. units predominantly project channel excuse that and full into or utilization me, fourth equipment. and is the comment weather. was channels in began continue the quarter to will mid in had the that your we deployment, second second the late level. anticipate on fourth we deployed affected low to or But by back deployment multi-component -- channel single that We project channel Going

So quarter. from we're third single half, more utilization see of the coming in to fourth early units of channel the going an quarter into the here excuse impact back me

Sam McAllister

Okay.

Steve Jumper

component. single for between difference and channels no multicomponent is there Operationally, the us the

XX,XXX in a data very bit little of crew -- XX,XXX similar a very channel wise, intense. handling more multicomponent station single terms So crew to is it's operationally, a -- -- channel operates

Sam McAllister

to that know sizable it And but and to Okay. towards geosteering? is end guess venture information, of you ability, your your pickup frac of kind clears not or geared up. how data? to I And work associated privy Well you're with best this necessarily optimization, and can users using is that your the there detection a are exactly more

Steve Jumper

where a more actually very pump so in microseismic rock that's getting information during -- question, course, theoretically where go surface energies into side. stages good energy think of to the production far and microseismic they're we're involved being to that work recording, they're I identify that the utilized how that's utilizing the and

utilizing privy end but in certain would they're mapping. the terms be correct geohazard of data, the high-end but to that Permian, data not user, we basins, in you're that, we and In the may Midland, some how we're have others, always those I beyond particularly moved exactly comment providing to that

We I able with and end what more utilized, we're the science getting are through we're getting technologies and where analytics, rock high-end call I users signature in other to and the believe -- being what property identify a bit would process. particularly to little be rock they of in inversion maybe believe should I they place, an in some believe point conjunction help from. type geosteering, a about

hydraulic that are to getting fracturing. is part be to now information while in analog is can relatively an while the is in creates database database the more where industry lateral And beginning beginning in part mature, and that indicator that just seismic into come how as key that are of see long a -- data of drilling to an utilized the The focus. has -- on early we we cycle

believe I past we're so And geohazard.

robust I we're and programs. headed I forward-looking think geosteering toward we're of with drilling think sciences in terms other more involvement in

Sam McAllister

last this competitive address one landscape attrition the consolidation see Okay, industry you bigger great. now a my out you further it going here bit little And as your we if see any in whole? view or, And, equipment is, of can could playing sort seismic? and of on for is picture, the but what right a me kind as on

Steve Jumper

last. The we really competitive landscape hasn't since changed much spoke

by year assets bankruptcy those liquidation and had about financial difficulties another we some and company. course, Of a And asset a ago. were purchased

channels. much going issue But be And to channels going seismic forward, not key. There the in space channel the I believe deploy be increased in ability count. America is the do purchase large at been North to to is new going -- has different that channels least of that the may a that example. we standpoint bit a new some little be very for package are are There of equipment being they technical use, same are from in battery, on terms developed just very

been of terms of there with of just hasn't more how in change, the packaged. there's much GPS terms -- in -- tracking, there's not sensor, been conversion are involved units digital terms But in it's

and where I from an equipment on deploy equipment are we able standpoint we're like crews. so, to variable And

from crew requirements another Our base we is very consistent and equipment a can channels very as particular on project more so count one become channel to fluid. quickly move

So to we're do we utilization well. well-positioned track when on there is are

and the E&P from side, is directly to The spending very And on don't guys increased a the case beyond experiencing think headed are sheet unfortunately, for uncertainty as multi-client that's we handle the that position, capital a decreased towards where well positioned. a a through that's the what -- is flow just a really from a competitive forward. I that difficult be the all level or the indirectly from landscape you're is balance Sam, anybody going the sure this back in your standpoint, But knows spend, a standpoint in going We're thing could we're personal currently standpoint, to to spend, cycle. half year. get in just on from competitive from equipment

Sam McAllister

that's me. so. the I for schedule days XX think And UT we And all till kickoff Steve, football Great. on got

Steve Jumper

we've going to his out going on That is starting a Waco in the o'clock an little and Longhorn to in that. shout we're tournament gentleman player region us the XX at Midland. forward who's assistant here, son I'm a do works a that coach for league team out is to Yes, looking Southwest And of got be a here Network. on

So that's exciting us as for well.

Sam McAllister

We're going sharing. to in tune for have for that. Thanks to

Steve Jumper

Texas West. you. Thank

Operator

from come will question Investments. next of Researched our And Potratz John

John Potratz

seems Wyoming. you've very view, a from point you Jumper, being for and regions it the you and there like prospects Chalk looks -- Stephen answering morning lot business you like there's but business, Austin as not it added of thank Louisiana business say the area beyond way, expanded of Good like questions. have much your overall, Midland, like like From sounds -- it additional of area. sounds a typical In a it

coming is -- more indicative, that's So there's that along maybe line. -- But it's the business

Steve Jumper

well, lead activity Louisiana. SCOOP/STACK. I the that a We've in in some We've trend activity continues up projects, that's Permian just be the J, core projects, our be don't activity sector in the some service activity if space as if in know. I Wyoming. or we believe too seen early would I going seen some field finish as overall sector, oil to -- up in the that tell to seen it's if we have those as pickup they're are energy to Delaware. the and well believe Yes. But comment

visibility. of able of in I those keep know opportunities, yet long-term, those don't that in a And we're so I we're excited particular while crew just regions terms about there terms to in think being

John Potratz

before. you at least didn't have you But them, have which

So that's for that's perspective. future. good And the

is How assume pricing? I sense is as pricing hell? my think I competitive future business. for

Steve Jumper

seismic prior collapsed I'm of because is a and that. question, to evasive time energy to to back to it, these in never since channels, guess sources. able conference of number I've services relative gotten of a on doing really space the oil pricing, we calls XXXX, other pricing the do been in it's safe to evolve has terms because prices is. what really It do when may I have Pricing very difficult continues long pricing levels. say question whereas somewhat the been determine number way The

the to to from think can projects services time. activity the visibility seismic deal -- to don't know other quickly. some the of to with spotty, is opposed we You is to demand we that as schedule continues I issue be time And that is weak go ready biggest very move have on

so and it's And very to the more our terms time some in our is of are project. operations continue operational that. pricing our job level, a But utilization allowing us handle such to in cost difficulties near-term the is nice of a has group say have utilization hard will structure on factor group, a both market, forward. There -- done always our going pricing lower efficiencies to that creating I while that get some lead a we in on while overall

multiple we're issues. with thing well Pricing strong but attacking important. going weather is importantly when difficulty. we problem to the And angles. is so going the When And deal to have we're don't, from do the It we potential barring some utilization, have utilization. to we more always we're have that is,

answer can best I question, So the J. that's the way

John Potratz

cost is how can that cost you and because there you're doesn't focused your you has implementing cost reasonable working thing approaching the the out business basic it? thing a down you've other really, think team reduction margins. of the into have matter that you able but if timeline? what new And is you on prices the I person and very processes. also new price, understand How added reduction. to sounds is goes one Well, my I you is cost mentioned go doing And on sense what materially, factor mentioned the is company are. it the Have think a reduction It good bring been that. Okay. here

Steve Jumper

channels resources, believe things are managing directly Well, and lot our that we doing managing all on -- there source that It's resources, affects be a how well costs. are much a make continue I variables job I continue personnel they in will make believe say improved whether improvement those I which as of energy lowering we those we're as or progress. units, of to asset to utilization we a

group headed that am we're the standpoint. I So entire and from with the pleased direction my

John Potratz

mentioned a line, and any bottom and is besides good about congratulations very that. was And that. reduced you quarter other have did there head on sounds package you the It which other moving the on during net write-off half, severance -- million

Steve Jumper

No sir.

John Potratz

other No, thing.

Steve Jumper

No, sir.

John Potratz

Okay.

the and you Just E&P back basic what become just the will that is the Just under their -- just conditions do budgets. think -- don't basic profitable? you problem here Dawson And need… consistently company cut

Steve Jumper

spending tough where to that. Yes. E&P committed, It out side, and capital it's with those -- levels world is allotments not just enhance completions being drilling the just would or or being it's a whether there budget they're or levels on technology that committed dollars are

I think to cycle. answer And the to demand question, overall that some see in improvement we just so need

John Potratz

Very much. E&Ps I about given you gas articles you're in and amazing Stephen. a is a the doing good great job Wall very It you how thank cutting natural that absolutely there's low the much, given are think talking Thank The Street market. very of back how you're fact prices. Journal lot well doing been And

Steve Jumper

Well, thank you. Thank you, sir.

John Potratz

Yes, I'm done.

Operator

[Operator Instructions].

Joe question from next Our Investment come Washington Fort Heintz, will Advisors.

Joe Heintz

question one of time notes Hi, I just Steve release had today. your James, quick in on and you taking here. press a had the nice

Is a that channel occur? You your to think that continue will terms or that few that Could there utilization going of you projects you How more projects? of had trend Wyoming seen threaten channel. kind smaller larger towards by is shift channel in mentioned that the was of guys? with Louisiana a a

Steve Jumper

is count appreciate our sometimes that timing We time. the start of a beyond Joe. answer. control one expand happy channel and situation; deal with on question so the and large to the projects I the No, and the of issues is had we that

don't continue from second -- us believe high that had channel channel we forward. where that count moved to channel count weren't anticipate the did during into of we seeing point see an will I ready, so going count But this today. quarter. And quarter, several projects large quite expansion at projects, they not the projects we we are third

projects the we with some of smaller crew of the some utilization channel backfill And or count. so

been in for projects. is to that is And unfortunately, But world, in something dealing majority stay would that with what the we're market for some to we return so continue channel for in projects count is the standpoint, we several but an quarters count hoping gaps now. ideal year I'll maybe know conventional gaps. this that we large some go have utilization so, weakness. going And large and be high channel will a hoping not smaller channel drilling projects Then happen channel even going projects fill there'll count -- to standpoint, or is the second resource, a smaller is our back have and to fill that of from we're from to be an some and count to that quarter. a unconventional utilization probably maybe projects from but both that short-term in then a available will conventional they seem what we've

XX,XXX, don't we in to the of I that be is that XX,XXX going it going shows QX I think but the believe and what leave deal be have XX,XXX And to continue further base its don't we are count so had with we would channel issue something to what equipment equipment that overall past And up to up. in that confident we have control point, to industry to demand have increase the very to continue in channel as consider the think at handle timing, handle we was always count issue. a you to we and this to it's with we're North larger base is America a projects have but we channels. would We've that an since demands, there's

Operator

are further time. there And it appears questions at this no

Steve Jumper

Well, thank to thank quarter in for you, Bethany. want our everybody participating I call. second

choppy say press have operate standpoint, that laid position will channel are and that a our continue we navigate personnel count, in. from our in we're in a sheet I balance that comments standpoint, here we I think release to we a out in equipment continue the but to and a standpoint, from to situation market, in

our that clients operations group work I to the to to our continued doing. I they're outstanding want in particular for for I want thank and employees thank support their thank want again about our shareholders trust. support and a speaking trust. summer, their days. end for with forward our look hope everybody we we to you. And early good has continued of fall. And you and in XX Thank

Operator

And this We conference. conclude thank today’s participation. your does ladies and gentlemen, for you

disconnect. You may now

Dawson Geophysical (DWSN) 3 Aug 192019 Q2 Earnings call transcript