DENVER, CO — (Marketwire) — 11/13/12 — ENSERVCO Corporation (OTCQB: ENSV) (OTCBB: ENSV)
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.”
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.
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.
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.
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.
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.
Geoff High
Pfeiffer High Investor Relations, Inc.
303-393-7044