Enservco(US:ENSV)2023-03-30 16:00Financial Performance - Revenues for the year ended December 31, 2022 increased by $6.3 million, or 41%, to $21.6 million compared to $15.3 million in 2021, driven by increased demand for services due to higher oil and gas prices [156]. - Total segment profit for the year ended December 31, 2022 increased by $3.4 million, or 171%, to $1.4 million compared to a loss of $2.0 million in 2021, primarily due to increased demand for services [156]. - Net loss for the year ended December 31, 2022 was $5.6 million, or $0.48 per share, a decrease of $2.5 million, or 31%, from a net loss of $8.1 million, or $0.74 per share in 2021 [159]. - Adjusted EBITDA for the year ended December 31, 2022 was a loss of $2.6 million, an improvement from a loss of $6.1 million in 2021 [160]. - The company recognized a loss from operations of $8.4 million for the year ended December 31, 2022, an improvement from a loss of $11.4 million in 2021 [186]. - Adjusted EBITDA loss decreased by $3.4 million, or 56%, to a loss of $2.6 million for the year ended December 31, 2022, compared to a loss of $6.1 million in 2021 [197]. Revenue Segments - Production Services segment revenues increased by $2.2 million, or 24%, to $11.2 million for the year ended December 31, 2022, accounting for 52% of total revenues [170]. - Completion and Other Services segment revenues increased by $4.1 million, or 65%, to $10.4 million for the year ended December 31, 2022, accounting for 48% of total revenues [175]. - Hot oiling revenues increased by $2.0 million, or 24%, to $10.4 million for the year ended December 31, 2022, attributed to higher crude oil prices [172]. - Acidizing revenues increased by $212,000, or 37%, to $779,000 for the year ended December 31, 2022, driven by increased activity levels and demand [173]. Operating Expenses - Direct operating expenses increased by $2.9 million, or 17%, for the year ended December 31, 2022, compared to 2021, primarily due to increased Production and Completion service activity [182]. - Sales, general and administrative expenses rose by $690,000, or 16%, from the previous year, mainly due to increased professional services and stock-based compensation [183]. - Depreciation and amortization expense decreased by $868,000, or 17%, year-over-year, due to the disposal of idle trucks and vehicles [184]. - Interest expense increased to $1.4 million in 2022 from $57,000 in 2021, attributed to the 2022 Financing Facilities [187]. Assets and Liabilities - Current assets increased to $5.96 million in 2022 from $5.59 million in 2021, while total assets decreased to $19.84 million from $25.15 million [199]. - As of December 31, 2022, the company had outstanding principal loan balances of approximately $12.0 million with a weighted average interest rate of 12.13% [198]. - As of December 31, 2022, the Company had a working capital deficit of $4.3 million, improved from a deficit of $6.9 million as of December 31, 2021 [212]. - The Company has scheduled principal payments under various term loans and debt obligations as part of its capital commitments [223]. Cash Flow - Cash used in operating activities for the year ended December 31, 2022 was $2.2 million, a decrease of $2.6 million compared to $4.8 million for the year ended December 31, 2021 [214]. - Cash provided by financing activities for the year ended December 31, 2022 was $1.8 million, down from $3.7 million in the previous year [216]. - The Company raised net proceeds of $3.2 million through the issuance of 3,900,000 shares of common stock in February 2023 [209]. Future Outlook - The Company expects continued demand for services and exploration activity in the oil and gas sector in a stable commodity price environment [164]. - The Company plans to continue expanding operations through organic growth and increasing service volumes to existing customers [219]. - The demand for the Company's services is influenced by fluctuations in oil prices, which have been affected by geopolitical tensions and inflation [221]. - The Company believes that recent financing and cash from operations will provide sufficient liquidity for at least the next twelve months [211]. Accounting and Tax - The Company recognizes revenue for certain projects over time based on the number of days during the reporting period and the agreed-upon price as work progresses [232]. - The Company records contingent liabilities for probable and estimable future liabilities, particularly related to lawsuits, and recognizes a liability for the estimated amount [233]. - The Company analyzes warrant instruments under ASC 480-10 to determine their classification, with all issued warrants classified as permanent equity [234]. - The Company uses a Black-Scholes model to determine the fair value of certain warrants, with expected volatility based on historical data [235]. - Deferred tax liabilities and assets are recognized based on differences between tax basis and reported amounts, measured using enacted tax rates expected to apply in future years [236]. - The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the position will be sustained upon examination [237]. - Interest and penalties associated with tax positions are recorded as income tax expense in the period assessed [238]. - The Company utilizes a cash forecast model to evaluate future cash flows to fund operations for a period extending twelve months or more [239]. - The Company is classified as a smaller reporting company and is not required to provide certain market risk disclosures [240].