ENSERVCO Reports 21% Increase in Third Quarter Revenue and Seventh Consecutive Quarter of Year-Over-Year Top-Line Growth

Marketwired

DENVER, CO--(Marketwire - Nov 13, 2012) - ENSERVCO Corporation (OTCQB: ENSV) (OTCBB: ENSV)

  • Well-enhancement revenue up 43% versus 2011 third quarter
  • Final proceeds from recent equity offering increased to $2.0 million from previously reported $1.3 million
  • Recent debt refinancing and equity offering result in positive working capital -- a substantial improvement from $2.7 million working capital deficit at December 31, 2011
  • Fourth-quarter start of fluid heating season brings surge in customer demand
  • October revenue at Heat Waves division improves to $3.1 million from $900,000 in October 2011

ENSERVCO Corporation (OTCQB: ENSV) (OTCBB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today reported financial results for its third quarter and nine-month period ended September 30, 2012.

Third quarter revenue increased 21% to $5.5 million from $4.5 million in last year's third quarter. The increase, which represents the Company's seventh consecutive quarter of year-over-year revenue growth, came during what is typically the Company's slowest fiscal quarter, and illustrates the impact of ENSERVCO's expanded presence in regions such as the Bakken and Niobrara shale formations, where fluid heating demand can extend throughout much of the year.

Revenue from well enhancement services (frac heating, hot oiling, acidizing and pressure testing) increased 43% to $2.2 million from $1.5 million in last year's third quarter. Revenue from fluid management services (water hauling/disposal and frac tank rentals) increased 16% to $2.9 million from $2.5 million in last year's third quarter, while well site construction and roustabout revenue was $422,000 versus $512,000 in the comparable year-ago quarter.

The third quarter was marked by significant investments in new equipment operators as the Company prepared for the start of the fluid-heating season. These expenditures reduced third quarter gross margin to approximately 5% from 13% in the third quarter last year. The most significant of these investments involved fully staffing the Company's new operations centers in Killdeer, ND and Cheyenne, WY, both of which were only open for one month of the 2011 third quarter.

The Company reduced its third quarter operating loss by 42% to $987,000 from $1.7 million in last year's third quarter. The improvement reflects significant reductions in general and administrative costs, and amortization and depreciation expense. Net loss declined by 58% to $472,000, or $0.02 per diluted share, versus a net loss of $1.1 million, or $0.05 per diluted share, in the third quarter last year. Third quarter adjusted EBITDA* was a negative $383,000 versus a negative $134,000 in last year's third quarter. The decline in adjusted EBITDA is largely attributable to a $252,000 loss on the disposal of obsolete equipment during this year's third quarter, and higher stock based compensation expense in last year's third quarter. 

"Investments in expanding our workforce at the end of the third quarter have proven prudent, as we have experienced a very strong start to our fluid heating season," said Rick Kasch, president and CEO. "In October alone, our Heat Waves division posted revenue of $3.1 million, up from $900,000 in the same month last year. This improvement is in part due to our expanded presence throughout the Rocky Mountains. Hydraulic fracturing techniques employed in regions such as the Williston and D-J Basins often require fluid heating service when ambient air temperatures are as high as 65 to 70 degrees. We also are benefitting from more typical fall and winter weather patterns as compared to last year, not to mention a significant expansion of our customer base."

"The efforts we have made in recent months to expand our service territory, solidify new customer relationships, and expand our workforce and equipment fleet are already paying dividends," Kasch added. "We also have established a new financial partnership with a leading commercial lender to the energy industry. We believe ENSERVCO is now positioned to deliver much improved operational and financial results, and enhanced shareholder value." 

New Credit Facility and Private Placement
As reported on November 6, ENSERVCO closed on a new $16 million credit facility with PNC Bank, and simultaneously completed a private placement of equity. The Company previously reported it had raised $1.3 million in the private placement, however, follow-on participation increased gross proceeds to $2.0 million.

Although the above transactions were completed after the close of ENSERVCO's third quarter, the Company believes it is informative to disclose the impacts of the transactions, which include a swing to positive working capital from a $2.7 million working capital deficit at December 31, 2011, on the Company's balance sheet as if they were effective at September 30, 2012. This pro-forma information can be found at the end of this news release, and is presented in the Company's September 30, 2012, Form 10Q.

Nine-month Results
Revenue through nine months increased 13% to $20.7 million from $18.3 million in the same period last year. Revenue growth for the nine-month period was constrained by the previously reported record warm weather in the northern half of the United States during most of the Company's first fiscal quarter. Gross margin was 20% versus 25% in last year's nine-month period. Operating loss was $964,000 versus $1.2 million, and the Company reported a net loss of $634,000, or $0.03 per diluted share, versus a net loss of $1.1 million, or $0.05 per diluted share, in the nine-month period last year.

Adjusted EBITDA* through nine months was $1.8 million, versus $2.7 million during the same period last year. Operating cash flow at the nine-month mark was $2.1 million versus $3.4 million during the same period last year.

About ENSERVCO
Through its various operating subsidiaries, ENSERVCO has emerged as one of the energy service industry's leading providers of hot oiling, acidizing, frac heating and fluid management services. The Company owns and operates a fleet of more than 245 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO operates in Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia.

*Note on non-GAAP Financial Measures
This press release and the accompanying tables include a discussion of EBITDA and Adjusted EBITDA, which are non-GAAP financial measures provided as a complement to the results provided in accordance with generally accepted accounting principles ("GAAP"). The term "EBITDA" refers to a financial measure that we define as earnings plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation and, when appropriate, other items that management does not utilize in assessing ENSERVCO's operating performance (as further described in the attached financial schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure. We have reconciled Adjusted EBITDA to GAAP net income in the Consolidated Statements of Operations table at the end of this release.

We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.

Cautionary Note Regarding Forward-Looking Statements
This news release contains information that is "forward-looking" in that it describes events and conditions ENSERVCO reasonably expects to occur in the future. Expectations for the future performance of ENSERVCO are dependent upon a number of factors, and there can be no assurance that ENSERVCO will achieve the results as contemplated herein. Certain statements contained in this release using the terms "may," "expects to," and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond ENSERVCO's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. Among these risks are those set forth in a Form 10-K filed on March 30, 2012. It is important that each person reviewing this release understand the significant risks attendant to the operations of ENSERVCO. ENSERVCO disclaims any obligation to update any forward-looking statement made herein.

                               
ENSERVCO Condensed Consolidated Statements of Operations  
                               
                               
  For the Three Months Ended     For the Nine Months Ended  
  September 30,     September 30,  
  2012     2011     2012     2011  
  (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
                       
Revenues $ 5,494,134     $ 4,532,274     $ 20,659,509     $ 18,265,614  
                               
Cost of Revenue   5,208,900       3,952,923       16,521,539       13,619,711  
                               
Gross Profit   285,234       579,351       4,137,970       4,645,903  
                               
Operating Expenses                              
  General and administrative expenses   727,097       1,058,602       2,574,995       2,450,153  
  Depreciation and amortization   544,659       1,215,524       2,527,101       3,410,063  
      Total operating expenses   1,271,756       2,274,126       5,102,096       5,860,216  
                               
Loss from Operations   (986,522 )     (1,694,775 )     (964,126 )     (1,214,313 )
                               
Other Income (Expense)                              
  Interest expense   (211,708 )     (161,642 )     (639,712 )     (513,918 )
  Gain (loss) on disposals of equipment   251,875       -       253,411       (44,286 )
  Gain on sale of investments   -       -       24,653       -  
  Other (expense) income   (14,764 )     (726 )     40,422       (38,436 )
      Total Other Income (Expense)   25,403       (162,368 )     (321,226 )     (596,640 )
                               
Loss Before Income Tax Benefit   (961,119 )     (1,857,143 )     (1,285,352 )     (1,810,953 )
                               
Income Tax Benefit   488,915       726,719       651,332       715,313  
                               
Net Loss $ (472,204 )   $ (1,130,424 )   $ (634,020 )   $ (1,095,640 )
                               
Other Comprehensive Income (Loss)                              
  Unrealized loss on available-for-sale securities, net of tax   -       (46,451 )     (23,073 )     (130,300 )
                               
Comprehensive Loss $ (472,204 )   $ (1,176,875 )   $ (657,093 )   $ (1,225,940 )
                               
                               
                               
                               
Earnings per Common Share                              
  Income per Common Share - Basic $ (0.02 )   $ (0.05 )   $ (0.03 )   $ (0.05 )
  Income per Common Share - Diluted $ (0.02 )   $ (0.05 )   $ (0.03 )   $ (0.05 )
                               
Basic weighted average number of common shares outstanding   21,778,866       21,778,866       21,778,866       21,778,866  
  Add: Dilutive shares assuming exercise of options and warrants   -       -       -       -  
Diluted weighted average number of common shares outstanding   21,778,866       21,778,866       21,778,866       21,778,866  
                               
                               
ADJUSTED EBITDA                              
Net Income $ (472,204 )   $ (1,130,424 )   $ (634,020 )   $ (1,095,640 )
Add:                              
  Interest expense   211,708       161,642       639,712       513,918  
  Income tax benefit   (488,915 )     (726,719 )     (651,332 )     (715,313 )
  Depreciation and amortization   544,659       1,215,524       2,527,101       3,410,063  
    EBITDA $ (204,752 )   $ (479,977 )   $ 1,881,461     $ 2,113,028  
Add (Deduct):                              
  Stock-based compensation   59,198       345,219       248,459       454,084  
  Warrants issued   -       -       -       46,353  
  (Gain) Loss on disposals of equipment   (251,875 )     -       (253,411 )     44,286  
  Gain on sale of investments   -       -       (24,653 )     -  
  Other expense (income)   14,764       726       (40,422 )     38,436  
    ADJUSTED EBITDA $ (382,665 )   $ (134,032 )   $ 1,811,434     $ 2,696,187  
                               
                               
                               
ENSERVCO Condensed Consolidated Balance Sheets  
               
  September 30,     December 31,  
  2012     2011  
  (Unaudited)        
ASSETS          
Current Assets          
  Cash and cash equivalents $ 457,639     $ 417,005  
  Accounts receivable, net   3,764,216       4,505,254  
  Marketable securities   -       150,793  
  Prepaid expenses and other current assets   1,295,944       593,291  
  Inventories   515,278       549,432  
  Deferred tax asset   19,029       187,170  
      Total current assets   6,052,106       6,402,945  
               
Property and Equipment, net   14,943,507       15,171,870  
Non-Competition Agreements, net   45,000       180,000  
Deferred income taxes, net   446,736       0  
Goodwill   301,087       301,087  
Other Assets   65,635       64,770  
               
TOTAL ASSETS $ 21,854,071     $ 22,120,672  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current Liabilities              
  Accounts payable and accrued liabilities $ 3,842,734     $ 2,954,687  
  Line of credit borrowings   669,580       2,263,227  
  Current portion of long-term debt   2,134,950       3,867,658  
      Total current liabilities   6,647,264       9,085,572  
               
Long-Term Liabilities              
  Deferred rent payable   21,156       22,044  
  Subordinated debt - related party   1,477,760       1,477,760  
  Long-term debt, less current portion   10,989,124       8,020,435  
  Deferred income taxes, net   -       387,487  
      Total long-term liabilities   12,488,040       9,907,726  
      Total liabilities   19,135,304       18,993,298  
               
Commitments and Contingencies              
               
Stockholders' Equity              
  Common and preferred stock. $.005 par value              
    Authorized: 100,000,000 common shares and 10,000,000 preferred shares              
    Issued: 21,882,466 common shares and -0- preferred shares              
    Treasury Stock: 103,600 common shares              
    Outstanding: 21,778,866 common shares and -0- preferred shares at September 30, 2012 and December 31, 2011   108,894       108,894  
  Additional paid-in-capital   6,361,159       6,112,674  
  Accumulated deficit   (3,751,286 )     (3,117,267 )
  Accumulated other comprehensive income   -       23,073  
      Total stockholders' equity   2,718,767       3,127,374  
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,854,071     $ 22,120,672  
               
               
   
ENSERVCO Condensed Consolidated Pro Forma Balance Sheets  
   
  September 30,
2012
    Pro Forma
Adjustments
      Pro Forma
as Adjusted
 
  (Unaudited)     (Unaudited)       (Unaudited)  
ASSETS                        
Current Assets $ 6,052,106     $ 1,125,995     {a} $ 7,178,101  
Non-current Assets   15,801,965       572,107     {b}   16,374,072  
TOTAL ASSETS $ 21,854,071     $ 1,698,102       $ 23,552,173  
                         
LIABILITIES                        
Current Liabilities $ 6,647,264     $ (119,128 )   {c} $ 6,528,136  
Long-Term Liabilities   12,488,040       (1,597,654 )   {d}   10,890,386  
TOTAL LIABILITIES   19,135,304       (1,716,782 )       17,418,522  
                         
STOCKHOLDERS' EQUITY                        
Common and Preferred Outstanding   108,894       49,608     {e}   158,502  
Additional Paid-in-Capital   6,361,159       3,422,952     {f}   9,784,111  
Accumulated Deficit   (3,751,286 )     (57,676 )   {g}   (3,808,962 )
TOTAL STOCKHOLDERS' EQUITY   2,718,767       3,414,884         6,133,651  
                         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,854,071     $ 1,698,102       $ 23,552,173  
     
{a}   Current portion of deferred debt issuance costs PLUS net cash received through funding of the Credit Agreement LESS release of deposits recorded for fees directly relating to the Credit Agreement (deposits reclassified as deferred debt issuance costs).
{b}   Long-term portion of deferred debt issuance costs.
{c}   Net line of credit borrowings under the PNC Revolving Letter of Credit (to pay closing and other fees under the Credit Agreement) LESS paydown of remaining GWB Revolving Letter of Credit through proceeds received through the additional equity offering to satisfy the conditions pursuant to the Credit Agreement LESS payment of accrued interest under the related party subordinated debt PLUS reclassification from long-term debt to current portion of long-term debt pursuant to the Credit Agreement.
{d}   Conversion of related party subordinated debt to Units (of common stock and warrants) to satisfy the conditions pursuant to the Credit Agreement LESS reclassification from long-term debt to current portion of long-term debt pursuant to the Credit Agreement.
{e}   Issuance of common stock to accredited investors through an additional equity offering to satisfy the conditions pursuant to the Credit Agreement PLUS the issuance of common stock upon conversion of the related party subordinated debt to satisfy the conditions pursuant to the Credit Agreement.
{f}   Additional paid-in-capital for the issuance of shares of common stock to satisfy the conditions pursuant to the Credit Agreement PLUS additional paid-in-capital for the issuance of common stock upon conversion of the related party subordinated debt to satisfy the conditions pursuant to the Credit Agreement PLUS additional paid-in-capital for the issuance of warrants (to accredited investors and holder of related party subordinated debt) to satisfy the conditions pursuant to the Credit Agreement.
{g}   Interest expense recorded for accrued interest upon payoff of GWB debt facilities to satisfy the conditions pursuant to the Credit Agreement.
     
Contact:
CONTACT:
Geoff High
Pfeiffer High Investor Relations, Inc.
303-393-7044
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