ENSERVCO Reports Fourth Quarter and Full-Year Financial Results

Marketwired

DENVER, CO--(Marketwired - Mar 20, 2014) - ENSERVCO Corporation ( NYSE MKT : ENSV )

  • Fourth Quarter and Full-Year Revenue up 35% and 48% Versus 2012 Periods
  • 2013 Operating Income Improves 392%, Adjusted EBITDA* up 121%
  • Expanded Service Fleet Positions Company for Continued Strong Growth
  • ENSERVCO Named Rocky Mountain Region Service Company of the Year

ENSERVCO Corporation ( NYSE MKT : ENSV ), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today announced financial results** for its fourth quarter and full fiscal year ended December 31, 2013.

Fourth quarter revenue was a quarterly record $15.2 million, up 35% from $11.3 million in the fourth quarter last year, and slightly better than previously reported preliminary revenue of $15.0 million. Revenue from the Company's core well enhancement services (frac water heating, hot oiling, acidizing) increased 46% to $12.6 million versus the 2012 fourth quarter, while fluid management revenue declined 2% to $2.4 million quarter-over-quarter. 

The increase in well enhancement revenue is largely attributable to increased frac water heating and hot oiling capacity, which enabled the Company to more effectively address very strong customer demand in the D-J, Powder River and Green River basins, as well as the Bakken, Utica and Marcellus shale territories.

Fourth quarter gross margin was 26% versus 32% in the 2012 fourth quarter. As detailed in a recent operations update, this decline was due to a steep, sudden increase in propane costs in the D-J Basin, where prices charged for heating frac water included the cost of propane. The increase triggered price renegotiation clauses, and allowed for implementation of a new pricing structure, which now mirrors the cost-plus pricing model utilized in each of ENSERVCO's other regions. The new pricing was in effect by mid-January, and is expected to return frac water heating margins to normalized levels beginning early in the first quarter. Management said that if propane prices had remained flat during the comparable quarters, the Company would have expected a gross margin improvement to 33% for the 2013 fourth quarter. 

Fourth quarter income from operations was $2.4 million versus $2.2 million in the fourth quarter last year. Net income was $1.1 million, or $0.03 per diluted share, on 37.4 million diluted shares outstanding, versus net income of $549,000, or $0.02 per diluted share, on 28.4 million diluted shares outstanding, in the comparable year-ago quarter.

Fourth quarter adjusted EBITDA was $2.8 million versus $2.8 million in the 2012 fourth quarter. The flat performance resulted from the propane price spike discussed above.

Full-Year Results
Revenue for the full fiscal year increased 48% to $46.5 million from $31.5 million in 2012. Revenue from well enhancement services, which generated 80% of total 2013 revenue, was up 74% to $37.2 million versus fiscal 2012, while fluid management services, which generated 19% of revenue, declined approximately 8% to $9.0 million year-over-year. Full-year gross margin increased to 31% from 25% in 2012, despite the impact of the fourth quarter increase in propane prices.

Operating income for 2013 increased 392% to $8.4 million from $1.7 million in 2012. Net income was $4.3 million, or $0.12 per diluted share on 37.1 million diluted shares outstanding, versus a net loss of $85,000, or $0.00 per diluted share on 24.3 million diluted shares outstanding. Income in 2013 reflected an $871,000 decrease in depreciation expense versus 2012. The decrease resulted from an April 2012 reassessment of the estimated useful lives of the Company's trucks, equipment and disposal wells.

Full-year adjusted EBITDA increased 121% to $10.9 million from $4.9 million during in 2012. Operating cash flow was $5.3 million, up 361% from $1.2 million in the prior year.

Balance sheet highlights
ENSERVCO closed 2013 with working capital of $8.2 million, up from $1.5 million at the end of 2012. Total current assets improved 58% to $15.1 million from $9.6 million, resulting in the current ratio improving to 2.2:1 from 1.2:1. Total stockholders' equity at December 31, 2013, was $12.8 million, up 88% from $6.8 million at the end of 2012, resulting in the Company's total liability-to-stockholders' equity ratio decreasing from 2.8:1 to 1.6:1.

Management commentary
"Our record-breaking top-line performance during 2013 reflects very strong demand for our services from the exploration and production industry, and our improved ability to meet that demand," said Rick Kasch, president. "The investments made during the past year to expand our equipment fleet have allowed us to better serve customers in our existing territories, and have made possible a continued expansion of our geographic footprint."

"By the end of the fourth quarter, frac water heating capacity had increased by 40% versus the end of 2012, while hot oiling capacity was up 18%. Our fleet expansion has continued into the first quarter, during which we added several additional frac water heating units and hot oilers. By the time we enter our next busy cycle this fall, we will benefit from the full effect of a much larger fleet than we had at the beginning of the current season."

Kasch said aggressive investments in capacity are expected to continue during 2014, and will likely be funded primarily with internal cash flow. "Our next capex budget, which we expect to announce in May, will likely include increased emphasis on acidizing and hot oiling services, which are non-seasonal and experiencing considerable customer demand. We recently opened an acidizing dock at our new service yard in Rock Springs, Wyoming, and are in discussions with prospective customers about expanding these services into north Texas and the Eagle Ford Shale region of southwest Texas."

Kasch said ENSERVCO's next major territory will likely be in Texas or northeast Nevada, where Noble Energy, a large existing customer, has built a 350,000-acre position in Elko County. "We already are servicing the test wells Noble has drilled in the area, which reportedly have delivered initially encouraging results. We are currently serving this region from our Rock Springs facility, but may open a Nevada yard if development activity accelerates as planned. Noble has estimated the Elko play could contain the equivalent of more than one billion barrels of oil."

Kasch said growth opportunities in existing service territories remain strong. "We recently entered into a two-year service commitment with one of the largest operators in the Utica Shale region, and have watched with great interest as customers in the D-J Basin and Marcellus, Utica and Bakken shale regions have released their 2014 drilling plans. It is clear the next 12 months should be another period of strong growth for ENSERVCO.

"We started 2014 with considerable momentum, as January and February represented the two strongest revenue months in Company history," Kasch added. "In addition, earlier this month we completed an up-listing of our common stock to the NYSE MKT exchange, which we believe gives us much greater visibility within the investment community. 

"Last week, we were named the Rocky Mountain region's Service Company of the Year at the annual Oil and Gas Awards event in Denver. This recognition is a source of great pride to the Company, as we were selected by a panel of industry peers, and our category included roughly a dozen other respected service companies, many of which are much larger than ENSERVCO. This award is a tribute to the effort and dedication of our outstanding operational and administrative staff. I am incredibly proud of the entire ENSERVCO team, which has allowed us to deliver very strong financial growth and industry-leading customer satisfaction."

Conference Call Information
Management will hold a conference call today to discuss these results. The call will begin at 1 p.m. Eastern (11 a.m. Mountain) and will be accessible by dialing 877-407-8031 ( 201-689-8031 for international callers). No passcode is necessary. A telephonic replay will be available through March 27, 2014, by calling 877-660-6853 ( 201-612-7415 for international callers) and entering the Conference ID # 13578622. To listen to the webcast, participants should access the ENSERVCO website, located at www.enservco.com , and link to the "Investors" page at least 15 minutes early to register and download any necessary audio software. A replay of the webcast will be available for 90 days. The webcast also is available at the following link:
http://www.investorcalendar.com/IC/CEPage.asp?ID=172482 .

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-water heating and fluid management services. The Company owns and operates a fleet of more than 230 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO serves customers in seven major domestic oil and gas fields, and operates in Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia. Additional information is available at www.enservco.com .

*Note on non-GAAP Financial Measures
This press release and the accompanying tables include a discussion of EBITDA and Adjusted EBITDA, which are non-GAAP financial measures provided as a complement to the results provided in accordance with generally accepted accounting principles ("GAAP"). The term "EBITDA" refers to a financial measure that we define as earnings 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.

**All revenue and earnings results discussed herein exclude discontinued operations, which resulted in pretax losses of (a) $1,225 and $316,921 for the fourth quarters of 2013 and 2012, respectively, and (b) $122,070 and $797,636 for the fiscal years of 2013 and 2012, respectively. 

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 20, 2014. 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 CORPORATION  
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)  
                         
    For the Three Months Ended     For the Year Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
    (Unaudited)     (Unaudited)              
                                 
Revenues   $ 15,155,598     $ 11,254,266     $ 46,473,902     $ 31,497,787  
                                 
Cost of Revenues     11,145,205       7,614,754       31,944,279       23,545,101  
                                 
Gross Profit     4,010,393       3,639,512       14,529,623       7,952,686  
                                 
Operating Expenses                                
  General and administrative expenses     1,205,342       909,594       4,070,884       3,291,898  
  Depreciation and amortization     394,896       544,273       2,088,767       2,960,153  
    Total operating Expenses     1,600,238       1,453,867       6,159,651       6,252,051  
                                 
Income (Loss) from Operations     2,410,155       2,185,645       8,369,972       1,700,635  
                                 
Other Income (Expense)                                
  Interest expense     (259,860 )     (264,039 )     (1,072,912 )     (902,152 )
  Gain (loss) on sale of equipment     (144,105 )     (259,150 )     169,194       (5,739 )
  Other income     7,045       (29,552 )     36,383       35,523  
    Total Other Income (Expense)     (396,920 )     (552,741 )     (867,335 )     (872,368 )
                                 
Income From Continued Operations, before tax     2,013,235       1,632,904       7,502,637       828,267  
Income tax expense     (916,768 )     (890,632 )     (3,126,937 )     (426,779 )
Income From Continued Operations, net of tax     1,096,467       742,272       4,375,700       401,488  
                                 
Discontinued Operations                                
  Loss From Discontinued Operations, before tax     (1,225 )     (316,921 )     (122,070 )     (797,636 )
  Income tax benefit     477       123,599       47,607       311,078  
  Loss From Discontinued Operations, net of tax     (748 )     (193,322 )     (74,463 )     (486,558 )
                           
      Net Income (Loss)   $ 1,095,719     $ 548,950     $ 4,301,237     $ (85,070 )                                   Other Comprehensive Income (Loss)                                   Unrealized gain (loss) on interest rate swaps, net of tax     5,423       -       8,875       (4,805 )   Settlements - interest rate swap     6,441       -       27,331       -     Reclassification into earnings     (6,441 )     -       (27,331 )     (40,579 )   Unrealized gain on available-for-sale securities, net of tax     -       -       -       17,506       Total Other Comprehensive Income (Loss)     5,423       -       8,875       (27,878 )                                   Comprehensive Income (Loss)   $ 1,101,142     $ 548,950     $ 4,310,112     $ (112,948 )                                   Earnings (Loss) per Common Share - Basic                                   Income from Continuing Operations   $ 0.03     $ 0.03     $ 0.13     $ 0.02     Income (Loss) from Discontinued Operations     -       (0.01 )     -       (0.02 )   Net Income   $ 0.03     $ 0.02     $ 0.13     $ -   Earnings per Common Share - Diluted                                   Income from Continuing Operations   $ 0.03     $ 0.03     $ 0.12     $ 0.02     Income (Loss) from Discontinued Operations     -       (0.01 )     -       (0.02 )   Net Income   $ 0.03     $ 0.02     $ 0.12     $ -                                     Basic weighted average number of common shares outstanding     33,614,572       28,184,999       32,454,965       23,389,151   Add: Dilutive shares assuming exercise of options and warrants     3,744,463       194,991       4,658,052       927,718   Diluted weighted average number of common shares outstanding     37,359,035       28,379,990       37,113,017       24,316,869                                                                        
                         
ENSERVCO CORPORATION  
CALCULATION OF ADJUSTED EBITDA*  
                         
    For the Three Months Ended     For the Year Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
                                 
EBITDA* from Continuing Operations:                                
  Income from Continuing Operations   $ 1,096,467     $ 742,272     $ 4,375,700     $ 401,488  
  Add (Deduct)                                
    Interest expense     259,860       264,039       1,072,912       902,152  
    Income tax expense     916,768       890,632       3,126,937       426,779  
    Depreciation and amortization     394,896       544,273       2,088,767       2,960,153  
  EBITDA* from Continuing Operations     2,667,991       2,441,216       10,664,316       4,690,572  
  Add (Deduct)                                
    Stock-based compensation     26,356       30,903       472,356       279,362  
    (Gain) on sale and disposal of equipment     144,105       259,150       (169,194 )     5,739  
    Interest and other income     (7,045 )     29,552       (36,383 )     (35,523 )
  Adjusted EBITDA* from Continuing Operations   $ 2,831,407     $ 2,760,821     $ 10,931,095     $ 4,940,150  
                                 
EBITDA* from Discontinued Operations:                                
  Income (Loss) from Discontinued Operations   $ (748 )   $ (193,322 )   $ (74,463 )   $ (486,558 )
  Add Back (Deduct)                                
    Interest expense     -       171       963       1,770  
    Income tax benefit     (477 )     (123,599 )     (47,607 )     (311,078 )
    Depreciation and amortization     -       17,714       -       128,935  
  EBITDA* and Adjusted EBITDA* from Discontinued Operations   $ (1,225 )   $ (299,036 )   $ (121,107 )   $ (666,931 )
   
   
ENSERVCO CORPORATION  
Consolidated Balance Sheets  
           
    December 31,   December 31,  
ASSETS   2013   2012  
           
Current Assets              
  Cash and cash equivalents   $ 1,868,190   $ 533,627  
  Accounts receivable, net     11,685,866     7,791,342  
  Prepaid expenses and other current assets     923,758     802,020  
  Inventories     315,004     273,103  
  Deferred tax asset     336,561     153,466  
    Total current assets     15,129,379     9,553,558  
               
Property and Equipment, net     17,425,827     15,020,890  
Fixed assets held for sale, net     -     304,429  
Non-competition agreements, net     -     30,000  
Goodwill     301,087     301,087  
Long-term portion of interest rate swap     18,616     16,171  
Other assets     547,339     630,891  
               
TOTAL ASSETS   $ 33,422,248   $ 25,857,026  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current Liabilities              
  Accounts payable and accrued liabilities   $ 3,102,912   $ 3,606,645  
  Line of credit borrowings     -     2,151,052  
  Income tax payable     1,278,599     -  
  Current portion of long-term debt     2,562,141     2,236,343  
  Current portion of interest rate swap     11,966     24,048  
    Total current liabilities     6,955,618     8,018,088  
               
Long-Term Liabilities              
  Long-term debt, less current portion     11,200,048     10,570,928  
  Deferred income taxes, net     2,421,466     451,662  
    Total long-term liabilities     13,621,514     11,022,590  
    Total Liabilities     20,577,132     19,040,678  
               
Commitments and Contingencies              
               
Stockholders' Equity              
  Preferred stock, $.005 par value, 10,000,000 shares authorized, no shares issued or outstanding     -     -  
  Common stock, $.005 par value, 100,000,000 shares authorized, 34,926,126 and 31,928,894 shares issued, respectively, 103,600 shares of treasury stock, and 34,822,536 and 31,825,294 shares outstanding, respectively     174,113     159,127  
  Additional paid-in capital     11,568,033     9,864,363  
  Accumulated earnings (deficit)     1,098,900     (3,202,337 )
  Accumulated other comprehensive income (loss)     4,070     (4,805 )
    Total stockholders' equity     12,845,116     6,816,348  
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 33,422,248   $ 25,857,026  
               
      -     -  
ENSERVCO CORPORATION
Consolidated Statement of Cash Flows
                         
    For the three months ended     For the year ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
      (Unaudited )     (Unaudited )                
OPERATING ACTIVITIES                                
  Net income (loss)   $ 1,095,719     $ 548,950     $ 4,301,238     $ (85,070 )
  Adjustments to reconcile net income to net cash provided by operating activities                                
    Depreciation and amortization (includes $17,156 and $111,220 from discontinued operations in 2012, respectively)     394,895       561,987       2,088,767       3,089,088  
    (Gain) Loss on sale and disposal of equipment     145,999       259,150       (169,195 )     5,739  
    Realized gain on sale of marketable securities     -       -       -       (24,653 )
    Deferred income taxes     38,594       791,686       1,781,057       73,116  
    Stock-based compensation     26,356       30,877       472,356       279,362  
    Amortization of debt issuance costs     76,944       50,652       309,236       50,652  
    Bad debt expense (recoveries)     79,412       49,072       249,809       57,957  
    Common stock issued to consultant in exchange for services             50,000       -       50,000  
  Changes in operating assets and liabilities                                
     Accounts receivable     (9,094,517 )     (4,076,198 )     (4,144,333 )     (3,344,045 )
     Inventories     (16,939 )     242,175       (41,901 )     276,329  
     Prepaid expense and other current assets     220,443       704,672       (121,738 )     77,324  
     Other non-current assets     5,318       70,192       (175,262 )     18,675  
     Accounts payable and accrued liabilities     1,031,395       (256,062 )     (503,733 )     631,098  
     Deferred rent payable     -               -          
     Income taxes payable     861,279       -       1,278,599       -  
       Net cash provided from operating activities     (5,135,102 )     (972,847 )     5,324,900       1,155,572  
                                 
INVESTING ACTIVITIES                                
  Purchases of property and equipment     (2,130,068 )     (1,518,605 )     (5,837,126 )     (3,814,431 )
  Proceeds from sale and disposal of equipment     46,277       768,680       2,053,568       1,154,180  
  Sales of available-for-sale securities     -       -       -       180,208  
    Net cash used by investing activities     (2,083,791 )     (749,925 )     (3,783,558 )     (2,480,043 )
                                 
FINANCING ACTIVITIES                                
  Net line of credit (payments) borrowings     -       (512,175 )     (2,151,052 )     (112,175 )
  Proceeds from issuance of long-term debt     3,720,000       10,608,975       3,720,000       11,968,882  
  Proceeds from issuance of common stock     -       1,994,800       -       1,994,800  
  Proceeds from exercise of options and warrants     1,246,300       -       1,246,300       -  
  Repayment of long-term debt     (1,235,750 )     (9,370,155 )     (2,971,605 )     (11,487,729 )
  Payment of debt issuance costs     (50,422 )     (922,685 )     (50,422 )     (922,685 )
  Payments upon interest rate swap settlements     -       -       -       -  
    Net cash (used) provided by financing activities     3,680,128       1,798,760       (206,779 )     1,441,093  
                                 
Net Increase (Decrease) in Cash and Cash Equivalents     (3,538,765 )     75,988       1,334,563       116,622  
                                 
Cash and Cash Equivalents, Beginning of Period     5,406,955       457,639       533,627       417,005  
                                 
Cash and Cash Equivalents, End of Period   $ 1,868,190     $ 533,627     $ 1,868,190     $ 533,627  
                                 
                                 
Supplemental cash flow information consists of the following:                                
    Cash paid for interest   $ 170,209     $ 250,898     $ 764,667     $ 857,330  
    Cash paid for taxes   $ -     $ -     $ 19,672     $ -  
                                 
Supplemental Disclosure of Non-cash Investing and Financing Activities:                                
    Equipment purchased through installment loans   $ 50,037     $ 438,025     $ 206,523     $ 438,025  
    Cashless exercise of stock options and warrants   $ 719     $ -     $ 3,656     $ -  
    Non-cash conversion of related party debt into common stock           $ 1,477,760             $ 1,477,760  
    Increase (decrease) in fair value of available-for-sale securities   $ -     $ -     $ -     $ 29,415  
Contact:
Pfeiffer High Investor Relations, Inc.
Geoff High
Phone 303-393-7044
Email: Email Contact
Web: www.pfeifferhigh.com
View Comments (0)