Dawson(US:DWSN)2021-05-13 16:00Part I. FINANCIAL INFORMATION Financial Statements The company's Q1 2021 financial statements reflect a significant downturn, reporting a $5.2 million net loss and 69.9% revenue decrease year-over-year Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $55,174 | $58,590 | | Property and equipment, net | $35,409 | $38,900 | | Total Assets | $96,222 | $103,377 | | Total Current Liabilities | $5,460 | $7,441 | | Total Long-term Liabilities | $4,714 | $4,962 | | Total Stockholders' Equity | $86,048 | $90,974 | | Retained Deficit | ($68,155) | ($62,927) | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Operating Revenues | $11,748 | $38,979 | | Operating Costs | $17,183 | $37,594 | | (Loss) Income from Operations | ($5,435) | $1,385 | | Net (Loss) Income | ($5,228) | $993 | | Basic (Loss) Income Per Share | ($0.22) | $0.04 | | Diluted (Loss) Income Per Share | ($0.22) | $0.04 | Condensed Consolidated Statements of Cash Flows Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($172) | ($173) | | Net cash provided by (used in) investing activities | $94 | ($1,679) | | Net cash provided by (used in) financing activities | $448 | ($1,432) | | Net increase (decrease) in cash | $416 | ($3,419) | | Cash at end of period | $46,371 | $27,852 | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity decreased from $90.97 million at December 31, 2020, to $86.05 million at March 31, 2021, primarily due to a net loss of $5.23 million for the quarter21 Notes to Condensed Consolidated Financial Statements - The company is a leading provider of North American onshore seismic data acquisition services for major and independent oil and gas companies24 Disaggregated Revenues by Geography (in thousands) | Region | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | United States | $8,783 | $27,188 | | Canada | $2,965 | $11,791 | | Total | $11,748 | $38,979 | - The company has a $15 million revolving credit facility with Dominion Bank, unused as of March 31, 2021, secured by accounts receivable and a $5 million restricted cash deposit56 - The company is a defendant in a lawsuit by Weatherford International regarding alleged groundwater contamination, which management believes will not have a material adverse effect on financial condition6870 - The effective tax rate for Q1 2021 was 0.0% due to valuation allowances against deferred tax assets from a history of cumulative losses7577 - Subsequent to quarter end, on April 8, 2021, the Board of Directors adopted a one-year Shareholder Rights Plan to protect against coercive takeover techniques81 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 69.9% revenue decline in Q1 2021 to low crew utilization and market weakness, resulting in negative EBITDA - The near-term outlook for seismic data acquisition in the U.S. is challenging, with historically low crew and bid activity, anticipating limited crew activity in Q2 202184 Results of Operations Comparison (in thousands) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $11,748 | $38,979 | -69.9% | | Operating Expenses | $10,942 | $29,016 | -62.3% | | General & Administrative | $2,807 | $3,674 | -23.6% | | Depreciation & Amortization | $3,434 | $4,904 | -30.0% | EBITDA Reconciliation (Non-GAAP, in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net (loss) income | ($5,228) | $993 | | Depreciation and amortization | $3,434 | $4,904 | | Interest (income) expense, net | ($64) | ($65) | | Income tax benefit | — | ($1) | | EBITDA | ($1,858) | $5,831 | - The 2021 capital budget is set at a minimal $1.0 million for necessary maintenance, with no capital expenditures made in the first three months of 2021106103 Quantitative and Qualitative Disclosures about Market Risk The company's market risks include commodity price fluctuations, credit risk concentration in the oil and gas industry, foreign currency risk, and interest rate risk - The company's principal market risks include fluctuations in commodity prices affecting service demand and credit risk concentration with clients in the oil and natural gas industry121 - Business conducted in Canada exposes the company's results and cash flows to foreign currency exchange rate risk120 - The company is exposed to interest rate risk on its variable-rate Revolving Credit Facility, but there is no outstanding indebtedness under this facility as of the reporting date125 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021127 - No material changes were made to the company's internal control over financial reporting during the first quarter of 2021128 Part II. OTHER INFORMATION Legal Proceedings The report refers to Note 7 for legal proceedings, primarily a lawsuit regarding groundwater contamination not expected to have a material adverse effect - For details on legal proceedings, the report refers to Note 7 in Part I, Item 1, which discusses the Weatherford lawsuit regarding groundwater contamination13068 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for 2020 - There have been no material changes in the company's risk factors from those disclosed in the 2020 Annual Report on Form 10-K131 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data - The exhibits filed with this report include certifications from the Chief Executive Officer and Chief Financial Officer as required by the Securities Exchange Act of 1934133 Signatures - The report was duly signed and authorized on May 14, 2021, by Stephen C. Jumper, Chairman, President & CEO, and James K. Brata, EVP, CFO, Secretary & Treasurer135136