- Q2 revenue up 44% as Company posts gains across all service offerings
- Q2 net loss improves by 63%, reflecting higher revenue, cost efficiencies, CARES Act tax credits and lower interest expense following debt refinancing
- Q2 adjusted EBITDA improves 24%
Balance Sheet Strengthened Since December 31 Year End
- Working capital increases to $4.2 million from $0.3 million
- Cash and cash equivalents increase to $3.8 million from $1.5 million
- Stockholders’ equity improves to $9.2 million from $2.6 million
$1.9 Million PPP Loan Has Been Fully Forgiven and Will Be Booked into Other Income in Q3
LONGMONT, Colo., Aug. 05, 2021 (GLOBE NEWSWIRE) -- Enservco Corporation (NYSE American: ENSV), a diversified national provider of specialized well-site services to the domestic onshore conventional and unconventional oil and gas industries, today reported financial results for its second quarter and six-month period ended June 30, 2021.
“We are pleased to report a return to year-over-year revenue growth and a marked improvement in profit metrics for our second quarter,” said Rich Murphy, Executive Chairman. “We are seeing increased customer activity across most service areas with steadily increasing commodity prices and rig counts driving revenue increases in all three of our core service offerings – frac water heating, hot oiling and acidizing – as well as our small but growing non-oilfield services initiative. Our hot oiling business led the way in the quarter with 58% year over year growth based on renewed demand in our northern service areas and a growing presence in Texas where we have our largest concentration of units and have opened a second yard to serve the Ark-La-Tex region. Although Q2 an Q3 are typically our slower, offseason quarters, we are gratified with our recent performance and optimistic that with stable commodity prices and a continuation of the economic recovery, we can continue to deliver improved financial results.”
Marjorie Hargrave, President and CFO, added, “In addition to higher revenue, our improved profitability in the second quarter is due largely to our efforts to reduce operating and corporate expenses. We were successful in cutting more than $4.2 million in annualized costs out of our business without compromising our priorities of service excellence and safety. In addition, we booked $1.3 million in CARES Act payroll tax credits into other income in the second quarter and expect to book an additional $1.2 million over the next several quarters. In July, our PPP loan was fully forgiven, and we anticipate booking another $1.9 million into other income in the third quarter. With improving financial results and a balance sheet that was significantly strengthened in recent quarters through our debt refinancing and equity infusions, we are excited about our prospects for building value.”
Second Quarter Results
Total revenue in the second quarter ended June 30, 2021, increased 44% to $3.1 million from $2.1 million in the same quarter last year. The increase was attributable to higher commodity prices, increased customer activity and price increases for the Company’s hot oiling service.
Production services revenue was $2.2 million, up 61% from $1.4 million in the same quarter last year. The production services segment loss improved by 73% to a loss of $117,000 compared to a loss of $431,000 in the same quarter a year ago – a reflection of higher revenue and the impact of cost-cutting measures.
Completion services revenue increased 13% to $858,000 from $758,000 year over year and generated a segment loss of $491,000, a 35% improvement over the segment loss of $758,000 in the year-ago second quarter.
Sales, general and administrative expense declined 20% to $1.0 million from $1.2 million year over year – a reflection of cost-cutting measures and lower personnel and stock-based compensation costs partially offset by higher public company costs related to share offerings. Depreciation and amortization was flat at $1.3 million.
Total operating expenses in the second quarter remained flat year over year at $6.0 million despite a 44% increase in revenue.
The Company reported a reduced net loss of $1.6 million, or $0.14 per diluted share, in the second quarter, compared to a net loss of $4.4 million, or $1.18 per diluted share, in the same quarter last year. The improvement was due to cost containment initiatives, a $536,000 decrease in interest expense and $1.3 million in CARES Act payroll tax credits.
Adjusted EBITDA in the second quarter improved by 24% to a negative $1.6 million compared to a negative $2.1 million in the year ago second quarter.
Six Month Results
Total revenue for the six months ended June 30, 2021, was $8.2 million versus $11.5 million in the same period last year. The decline reflected the challenging first quarter when commodity prices and rig counts were significantly lower than those in the 2020 first quarter prior to onset of the pandemic.
Production services revenue declined to $4.1 million from $4.6 million year over year, although the segment loss improved by 67% to $240,000 from a loss of $723,000 in the same period last year due primarily to cost efficiencies.
Completion services revenue declined to $4.2 million from $6.9 million year over year and generated a segment loss of $334,000 versus a segment profit of $455,000 in the prior year due to lower revenue in the traditionally high margin frac water heating service category.
Total operating expenses in the first six months of 2021 were reduced by 23% to $13.5 million from $17.7 million in the prior year due to lower costs of providing services combined with other cost reductions.
Sales, general and administrative expenses were reduced by $1.0 million to $2.0 million in the second quarter from $3.0 million in the same quarter last year. Depreciation and amortization expense was flat at $2.7 million.
Net loss for the six-month period improved to $3.8 million, or $0.37 per diluted share, compared to a net loss of $7.2 million, or $1.95 per diluted share, in the same period last year.
Adjusted EBITDA in the first half of 2021 was a negative $2.5 million versus a negative $2.6 million in the year ago period.
Enservco used $2.1 million in cash from operations in the first six months of 2021 compared to $0.9 million in the same period last year.
Conference Call Information
Management will hold a conference call today to discuss these results. The call will begin at 2:30 p.m. Mountain Time (4:30 p.m. Eastern) and will be accessible by dialing 888-506-0062 (973-528-0011 for international callers). Entry code: 822510. A telephonic replay will be available through August 12, 2021, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Replay ID # 42147. To listen to the webcast, participants should go to the ENSERVCO website at www.enservco.com and link to the “Investors” page at least 10 minutes early to register and download any necessary audio software. A replay of the webcast will be available until September 5, 2021. The webcast also is available here: https://www.webcaster4.com/Webcast/Page/2228/42147
About Enservco
Through its various operating subsidiaries, Enservco provides a wide range of oilfield services, including hot oiling, acidizing, frac water heating and related services. The Company has a broad geographic footprint covering seven major domestic oil and gas basins and serves customers in Colorado, 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 (net income or loss) 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.
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 Enservco’s annual report on Form 10-K for the year ended December 31, 2020, and subsequently filed documents with the SEC. Forward looking statements in this news release that are subject to risk include ability to sustain increased customer activity and continue delivering improved financial results; expectations of booking additional CARES Act tax credits and PPP loan forgiveness proceeds; and plans to build value. 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.
Contact:
Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
Phone: 303-880-9000
Email: jay@pfeifferhigh.com
Marjorie Hargrave
President and CFO
Enservco Corporation
mhargrave@enservco.com
| ENSERVCO CORPORATION | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||
| (in thousands) | |||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Revenues | |||||||||||||||
| Production services | $ | 2,229 | $ | 1,383 | $ | 4,073 | $ | 4,585 | |||||||
| Completion and other services | 858 | 758 | 4,157 | 6,942 | |||||||||||
| 3,087 | 2,141 | 8,230 | 11,527 | ||||||||||||
| Expenses | |||||||||||||||
| Production services | 2,346 | 1,814 | 4,313 | 5,308 | |||||||||||
| Completion and other services | 1,349 | 1,516 | 4,491 | 6,487 | |||||||||||
| Sales, general and administrative expenses | 992 | 1,247 | 1,997 | 3,009 | |||||||||||
| Severance and transition costs | - | 139 | - | 139 | |||||||||||
| Loss on disposal of equipment | 19 | 23 | 70 | 38 | |||||||||||
| Depreciation and amortization | 1,337 | 1,310 | 2,673 | 2,706 | |||||||||||
| Total operating expenses | 6,043 | 6,049 | 13,544 | 17,687 | |||||||||||
| Loss from operations | (2,956 | ) | (3,908 | ) | (5,314 | ) | (6,160 | ) | |||||||
| Other income (expense) | |||||||||||||||
| Interest expense | (11 | ) | (547 | ) | (44 | ) | (1,188 | ) | |||||||
| Other income | 1,361 | 76 | 1,587 | 96 | |||||||||||
| Total other income (expense) | 1,350 | (471 | ) | 1,543 | (1,092 | ) | |||||||||
| Loss from continuing operations before taxes | (1,606 | ) | (4,379 | ) | (3,771 | ) | (7,252 | ) | |||||||
| Income tax expense | - | (9 | ) | - | (9 | ) | |||||||||
| Loss from continuing operations | $ | (1,606 | ) | $ | (4,388 | ) | $ | (3,771 | ) | $ | (7,261 | ) | |||
| Income (loss) from discontinued operations | - | 31 | (8 | ) | 67 | ||||||||||
| Net loss | $ | (1,606 | ) | $ | (4,357 | ) | $ | (3,779 | ) | $ | (7,194 | ) | |||
| Loss from continuing operations per common share - basic and diluted | $ | (0.14 | ) | $ | (1.19 | ) | $ | (0.37 | ) | $ | (1.96 | ) | |||
| Income from discontinued operations per common share - basic and diluted | - | $ | 0.01 | - | $ | 0.01 | |||||||||
| Net loss per share - basic and diluted | $ | (0.14 | ) | $ | (1.18 | ) | $ | (0.37 | ) | $ | (1.95 | ) | |||
| Weighted average number of common shares outstanding – basic and diluted | 11,433 | 3,690 | 10,316 | 3,696 | |||||||||||
| ENSERVCO CORPORATION AND SUBSIDIARIES | |||||||||||||||
| Calculation of Adjusted EBITDA * | |||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net loss | $ | (1,606 | ) | $ | (4,357 | ) | $ | (3,779 | ) | $ | (7,194 | ) | |||
| Add back | |||||||||||||||
| Interest expense (including discontinued operations) | 11 | 547 | 44 | 1,189 | |||||||||||
| Provision for income tax expense | - | 9 | - | 9 | |||||||||||
| Depreciation and amortization (including discontinued operations) | 1,337 | 1,317 | 2,679 | 2,719 | |||||||||||
| EBITDA | (258 | ) | (2,484 | ) | (1,056 | ) | (3,277 | ) | |||||||
| Add back (deduct) | |||||||||||||||
| Stock-based compensation | 25 | 322 | 49 | 361 | |||||||||||
| Severance and transition costs | - | 139 | 7 | 139 | |||||||||||
| Loss (gain) on disposal of equipment (including discontinued operations) | 19 | (15 | ) | 70 | (54 | ) | |||||||||
| Other (income) expense (including discontinued operations) | (1,361 | ) | (27 | ) | (1,587 | ) | 252 | ||||||||
| EBITDA related to discontinued operations | - | 1 | 1 | 11 | |||||||||||
| Adjusted EBITDA | $ | (1,575 | ) | $ | (2,064 | ) | $ | (2,516 | ) | $ | (2,568 | ) | |||
| Use of Non-GAAP Financial Measures: Non-GAAP results are presented only as a supplement to the financial statements and for use within management’s discussion and analysis based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the reader's understanding of the Company’s financial performance, but no non-GAAP measure should be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided herein. | |||||||||||||||
| EBITDA is defined as net (loss) income (earnings), before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA excludes stock-based compensation from EBITDA and, when appropriate, other items that management does not utilize in assessing the Company’s ongoing operating performance as set forth in the next paragraph. 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. | |||||||||||||||
| All of the items included in the reconciliation from net income to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, impairment losses, etc.) or (ii) items that management does not consider to be useful in assessing the Company’s ongoing operating performance (e.g., income taxes, gain or losses on sale of equipment, severance and transition costs, gain on settlement, expenses to consolidate former Adler facilities, patent litigation and defense costs, other expense (income), EBITDA related to discontinued operations, etc.). In the case of the non-cash items, management believes that investors can better assess the company’s operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company’s ability to generate free cash flow or invest in its business. | |||||||||||||||
| We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Additionally, our fixed charge coverage ratio covenant associated with our Loan and Security Agreement with East West Bank require the use of Adjusted EBITDA in specific calculations. | |||||||||||||||
| Because not all companies use identical calculations, the Company’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the Company’s performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures. | |||||||||||||||
| ENSERVCO CORPORATION | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (In thousands) | |||||||
| June 30, | December 31, | ||||||
| ASSETS | 2021 | 2020 | |||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 3,806 | $ | 1,467 | |||
| Accounts receivable, net | 1,575 | 1,733 | |||||
| Prepaid expenses and other current assets | 2,240 | 858 | |||||
| Inventories | 290 | 295 | |||||
| Assets for held for sale | 527 | 527 | |||||
| Total current assets | $ | 8,438 | $ | 4,880 | |||
| Property and equipment, net | 18,173 | 20,317 | |||||
| Goodwill | 546 | 546 | |||||
| Intangible assets, net | 508 | 617 | |||||
| Right-of-use asset - finance, net | 58 | 129 | |||||
| Right-of-use asset - operating, net | 2,495 | 2,918 | |||||
| Other assets | 434 | 423 | |||||
| Non-current assets of discontinued operations | - | 353 | |||||
| TOTAL ASSETS | $ | 30,652 | $ | 30,183 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||
| Current Liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 1,623 | $ | 1,931 | |||
| Senior revolving credit facility, related party (including future interest payable of $731 and $892, respectively) | 1,664 | 1,593 | |||||
| Lease liability - finance, current | 33 | 65 | |||||
| Lease liability - operating, current | 841 | 854 | |||||
| Current portion of long-term debt | 56 | 100 | |||||
| Current liabilities of discontinued operations | - | 31 | |||||
| Total current liabilities | $ | 4,217 | $ | 4,574 | |||
| Long-Term Liabilities | |||||||
| Senior revolving credit facility, related party (including future interest payable of $249 and $485, respectively) | $ | 13,316 | $ | 17,485 | |||
| Subordinated debt, related party | - | 1,180 | |||||
| Long-term debt, less current portion | 2,023 | 2,052 | |||||
| Lease liability - finance, less current portion | 36 | 55 | |||||
| Lease liability - operating, less current portion | 1,782 | 2,185 | |||||
| Other liabilities | 48 | 88 | |||||
| Long-term liabilities of discontinued operations | - | 9 | |||||
| Total long-term liabilities | $ | 17,205 | $ | 23,054 | |||
| Total liabilities | $ | 21,422 | $ | 27,628 | |||
| Commitments and Contingencies | |||||||
| Stockholders' Equity (Deficit) | |||||||
| 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; 11,439,633 and 6,307,868 shares issued as of June 30, 2021 and December 31, 2020, respectively; 6,907 shares of treasury stock as of June 30, 2021 and December 31, 2020, respectively; and 11,432,726 and 6,300,961 shares outstanding as of June 30, 2021 and December 31, 2020, respectively | 57 | 32 | |||||
| Additional paid-in capital | 40,481 | 30,052 | |||||
| Accumulated deficit | (31,308 | ) | (27,529 | ) | |||
| Total stockholders' equity | $ | 9,230 | $ | 2,555 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 30,652 | $ | 30,183 | |||
| - | |||||||
| Working Capital | 4,221 | 306 | |||||
| Long-term Debt to Equity | 1.85 | 8.77 | |||||
| Current Ratio | 2.00 | 1.07 | |||||
| ENSERVCO CORPORATION | |||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) | |||||||
| For the Six Months Ended | |||||||
| June 30, | |||||||
| 2021 | 2020 | ||||||
| OPERATING ACTIVITIES | |||||||
| Net loss | $ | (3,779 | ) | $ | (7,194 | ) | |
| Net (loss) income from discontinued operations | (8 | ) | 67 | ||||
| Net loss from continuing operations | (3,771 | ) | (7,261 | ) | |||
| Adjustments to reconcile net (loss) income to net cash | |||||||
| used in operating activities | |||||||
| Depreciation and amortization | 2,673 | 2,706 | |||||
| Loss on disposal of equipment | 70 | 38 | |||||
| Board compensation issued in equity | 311 | - | |||||
| Stock-based compensation | 49 | 361 | |||||
| Amortization of debt issuance costs and discount | 8 | 95 | |||||
| Provision for bad debt expense | 3 | 298 | |||||
| Changes in operating assets and liabilities | |||||||
| Accounts receivable | 156 | 4,674 | |||||
| Inventories | 5 | 85 | |||||
| Prepaid expense and other current assets | (1,382 | ) | 68 | ||||
| Income taxes receivable | - | (14 | ) | ||||
| Amortization of operating lease assets | 422 | 416 | |||||
| Other assets | 46 | 320 | |||||
| Accounts payable and accrued liabilities | (260 | ) | (2,365 | ) | |||
| Operating lease liabilities | (416 | ) | (416 | ) | |||
| Other liabilities | (40 | ) | (21 | ) | |||
| Net cash used in operating activities - continuing operations | (2,126 | ) | (1,016 | ) | |||
| Net cash provided by operating activities - discontinued operations | 4 | 134 | |||||
| Net cash used in operating activities | (2,122 | ) | (882 | ) | |||
| INVESTING ACTIVITIES | |||||||
| Purchases of property and equipment | (195 | ) | (306 | ) | |||
| Proceeds from insurance claims | - | 294 | |||||
| Proceeds from disposal of property and equipment | 65 | 335 | |||||
| Net cash (used in) provided by investing activities - continuing operations | (130 | ) | 323 | ||||
| Net cash provided by investing activities - discontinued operations | - | 681 | |||||
| Net cash (used in) provided by investing activities | (130 | ) | 1,004 | ||||
| FINANCING ACTIVITIES | |||||||
| Gross proceeds from stock issuance | 9,660 | - | |||||
| Stock issuance costs and registration fees | (815 | ) | - | ||||
| Term loan repayment | (3,000 | ) | - | ||||
| Net line of credit (repayments) borrowings | (701 | ) | (2,001 | ) | |||
| Proceeds from PPP loan | - | 1,940 | |||||
| TDR accrued future interest payments | (397 | ) | - | ||||
| Repayment of long-term debt | (72 | ) | (49 | ) | |||
| Payments of finance leases | (83 | ) | (245 | ) | |||
| Net cash provided by (used in) financing activities - continuing operations | 4,592 | (355 | ) | ||||
| Net cash used in financing activities - discontinued operations | (1 | ) | (1 | ) | |||
| Net cash provided by (used in) financing activities | 4,591 | (356 | ) | ||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 2,339 | (234 | ) | ||||
| Cash and Cash Equivalents, beginning of period | 1,467 | 663 | |||||
| Cash and Cash Equivalents, end of period | $ | 3,806 | $ | 429 | |||
| Supplemental Cash Flow Information: | |||||||
| Cash paid for interest | $ | 413 | $ | 1,026 | |||
| Supplemental Disclosure of Non-cash Investing and Financing Activities: | |||||||
| Non-cash conversion of subordinated debt and accrued interest to common stock | $ | 1,312 | $ | - | |||
| Non-cash conversion of unamortized subordinated debt discount | 61 | - | |||||