DENVER, CO--(Marketwired - Mar 20, 2014) - ENSERVCO Corporation (
- 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 (
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.
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.
"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:
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.
|CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)|
|For the Three Months Ended||For the Year Ended|
|December 31,||December 31,|
|Cost of Revenues||11,145,205||7,614,754||31,944,279||23,545,101|
|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)|
|Gain (loss) on sale of equipment||(144,105||)||(259,150||)||169,194||(5,739||)|
|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|
|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||)|