- 8th consecutive quarter of YOY revenue growth, continued improvement in profit metrics
- Revenue up 4% to $8.9 million from $8.6 million
- Gross profit up 56% to $2.0 million from $1.3 million
- Adjusted EBITDA up 255% to $0.7 million compared to $0.2 million
- Company continues to de-lever balance sheet, reducing long-term debt to $7.2 million from $8.4 million since 2022 year-end and from $36 million at peak debt in 2019; Company plans for additional debt reduction through remainder of 2023
- Company will conduct investor conference call today at 5:00 p.m. Eastern (call details below)
LONGMONT, Colo., May 15, 2023 (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 first quarter ended March 31, 2023.
“We are pleased to report our eighth consecutive quarter of higher year-over-year revenue,” said Rich Murphy, Executive Chairman. “In addition to a 4% increase in revenue, our gross profit improved by 56% year over year and adjusted EBITDA more than tripled. We anticipate improved profit metrics based on expected non-recurrence of certain legal and stock-based compensation expenses combined with Company-wide cost reductions.
“Going forward, we are focused on three primary initiatives – improving cost efficiencies, further de-levering our balance sheet, and continuing to grow and diversify our revenue,” Murphy added. “We are implementing expense reductions across our business, with an emphasis on lowering corporate overhead, including headcount and public company costs. Having already reduced our peak long-term debt of $36 million to $7.2 million, we anticipate further debt reduction in 2023 and are working on a refinancing plan designed to lower debt service and enhance cash flows. And, finally, we expect to continue driving organic growth while exploring opportunities to add accretive revenue streams through M&A activity and potentially adding new, internally developed service offerings.”
First Quarter Results
Revenue increased 4% year over year to $8.9 million from $8.6 million due to increased customer demand coupled with continued growth in the Company’s East Texas hot oiling operations and price increases in certain markets.
Gross profit increased 56% to $2.0 million from $1.3 million in the same quarter last year due to the positive impact of cost reduction measures.
Adjusted EBITDA in the first quarter was up 255% to $0.7 million compared to adjusted EBITDA of $0.2 million in the same quarter last year.
Net loss in the first quarter was $1.0 million, or $0.07 per basic and diluted share, versus net income of $3.1 million, or $0.27 per basic and diluted share, in the same quarter last year. The first quarter 2023 net loss included approximately $0.3 million in legal costs, a large portion of which are expected to be non-recurring, as well as $0.1 million for a one-time restricted stock issuance. The year-ago first quarter included a $4.3 million gain on extinguishment of debt related to the Company’s first quarter 2022 debt refinancing.
The Company continued to reduce long-term debt in the first quarter, which declined to $7.2 million from $8.4 million at 2022 year-end and from a high of $36 million in 2019 when the Company began its debt reduction program.
Enservco closed the first quarter with stockholders’ equity of $4.3 million, up from $1.2 million at December 31, 2022. Per the NYSE American Exchange’s continued listing standards, the Company is required to have stockholders’ equity in excess of $6.0 million, a threshold it expects to achieve assuming Enservco shareholders approve Proxy Proposal 2 at the upcoming June 13, 2023, Annual Meeting. Management strongly encourages shareholders to approve Proxy Proposal 2, which clears the way for its largest shareholder Cross River Partners to convert up to $2.5 million of convertible debt to equity. Such conversion would not only help Enservco meet the NYSE American’s stockholders’ equity requirement, but it would support the Company’s ongoing initiative to reduce long-term debt to enhance cash flows and increase financial flexibility.
Conference Call Information
Management will hold a conference call today to discuss these results. The call will begin at 3:00 p.m. Mountain Time (5:00 p.m. Eastern) and will be accessible by dialing 888-506-0062 (973-528-0011 for international callers). Entry code: 48443. A telephonic replay will be available through May 29, 2023, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Replay ID # 48443. 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 June 15, 2023. The webcast also is available here: https://www.webcaster4.com/Webcast/Page/2228/48443
About Enservco
Through its various operating subsidiaries, Enservco provides a 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, West Virginia, Utah, Michigan, Illinois, Florida, and Louisiana. 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 loss 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," “should,” 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, 2022, and subsequently filed documents with the SEC. Forward looking statements in this news release that are subject to risk include ability to reduce costs, improve efficiencies and grow and diversify revenue through M&A and internal service development; potential for shareholder approval of Cross River Partners’ debt conversion; ability to meet the NYSE American’s stockholders’ equity standard and to achieve further debt service reduction, debt refinancing and improvement in profit metrics and cash flows; and expectations that certain legal and accounting expenses will be non-recurring. It is important that each person reviewing this release understand the significant risks attendant to the operations of Enservco. The Company disclaims any obligation to update any forward-looking statement made herein.
Contact:
Mark Patterson
Chief Financial Officer
Enservco Corporation
mpatterson@enservco.com
| ENSERVCO CORPORATION AND SUBSIDIARIES | |||||||
| Condensed Consolidated Statements of Operations | |||||||
| (In thousands, except per share amounts) | |||||||
| (Unaudited) | |||||||
| For the Three Months Ended March 31, | |||||||
| 2023 | 2022 | ||||||
| Revenues: | |||||||
| Production services | $ | 2,863 | $ | 2,747 | |||
| Completion and other services | 6,049 | 5,836 | |||||
| Total revenues | 8,912 | 8,583 | |||||
| Expenses: | |||||||
| Production services | 2,317 | 2,584 | |||||
| Completion and other services | 4,580 | 4,710 | |||||
| Sales, general, and administrative expenses | 1,503 | 1,111 | |||||
| Severance and transition costs | 1 | - | |||||
| (Gain) Loss on disposal of equipment | (1 | ) | 35 | ||||
| Depreciation and amortization | 971 | 1,143 | |||||
| Total operating expenses | 9,371 | 9,583 | |||||
| Loss from operations | (459 | ) | (1,000 | ) | |||
| Other (expense) income: | |||||||
| Interest expense | (590 | ) | (172 | ) | |||
| Gain on debt extinguishment | - | 4,277 | |||||
| Other (expense) income | 29 | 35 | |||||
| Total other (expense) income | (561 | ) | 4,140 | ||||
| (Loss) income from before taxes | (1,020 | ) | 3,140 | ||||
| Deferred Income tax benefit | 16 | - | |||||
| Net (loss) income | $ | (1,004 | ) | $ | 3,140 | ||
| Net (loss) income per share - basic and diluted | $ | (0.07 | ) | $ | 0.27 | ||
| Weighted average number of common shares outstanding - basic and diluted | 14,208 | 11,452 | |||||
| Add: Dilutive shares | - | 135 | |||||
| Diluted weighted average number of common shares outstanding | 14,208 | 11,587 | |||||
| NON-GAAP FINANCIAL MEASURES | |||||||
| Adjusted EBITDA | |||||||
| For the Three Months Ended March 31, | |||||||
| Reconciliation from Net (Loss) Income to Adjusted EBITDA | 2023 | 2022 | |||||
| Net (loss) income | $ | (1,004 | ) | $ | 3,140 | ||
| Add back: | |||||||
| Interest expense | 590 | 172 | |||||
| Deferred Income tax benefit | (16 | ) | - | ||||
| Depreciation and amortization | 971 | 1,143 | |||||
| EBITDA (non-GAAP) | 541 | 4,455 | |||||
| Add back (deduct): | |||||||
| Stock-based compensation | 196 | 21 | |||||
| (Gain) Loss on disposal of assets | (1 | ) | 35 | ||||
| Gain on debt extinguishment | - | (4,277 | ) | ||||
| Other (income) expense | (29 | ) | (35 | ) | |||
| Adjusted EBITDA (non-GAAP) | $ | 707 | $ | 199 | |||
| ENSERVCO CORPORATION AND SUBSIDIARIES | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (In thousands, except share and per share amounts) | |||||||
| (Unaudited) | |||||||
| March 31, 2023 | December 31, 2022 | ||||||
| ASSETS | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 1,771 | $ | 35 | |||
| Accounts receivable, net | 4,221 | 4,463 | |||||
| Prepaid expenses and other current assets | 508 | 989 | |||||
| Inventories | 322 | 320 | |||||
| Note receivable, current | 75 | 75 | |||||
| Assets held for sale | 78 | 78 | |||||
| Total current assets | 6,975 | 5,960 | |||||
| Property and equipment, net | 10,349 | 11,236 | |||||
| Goodwill | 546 | 546 | |||||
| Intangible assets, net | 127 | 182 | |||||
| Note receivable, less current | 200 | 225 | |||||
| Right-of-use asset - finance, net | 19 | 22 | |||||
| Right-of-use asset - operating, net | 1,338 | 1,476 | |||||
| Other assets | 187 | 191 | |||||
| TOTAL ASSETS | $ | 19,741 | $ | 19,838 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current Liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 3,660 | $ | 4,868 | |||
| Utica facility (Note 5) | 1,301 | 1,250 | |||||
| LSQ facility (Note 5) | 2,611 | 2,945 | |||||
| March 2022 convertible note, related party (note 2 and Note 5) | 120 | 100 | |||||
| July 2022 convertible note, related party (note 2 and Note 5) | 90 | 60 | |||||
| Lease liability - finance, current | 14 | 13 | |||||
| Lease liability - operating, current | 611 | 597 | |||||
| Current portion of long-term debt | 39 | 54 | |||||
| Other Current Liabilities | 76 | 354 | |||||
| Total current liabilities | 8,522 | 10,241 | |||||
| Non-Current Liabilities: | |||||||
| Utica facility, less current portion (Note 5) | 3,636 | 3,963 | |||||
| March 2022 convertible note, related party (note 2 and Note 5) | 29 | 1,100 | |||||
| July 2022 convertible note, related party (note 2 and Note 5) | 1,110 | 1,140 | |||||
| Nov Cross River Revolver note, related party (note 2 and Note 5) | 870 | 818 | |||||
| Utica Residual Liability | 146 | 110 | |||||
| Lease liability - finance, less current portion | 12 | 11 | |||||
| Lease liablity - operating, less current portion | 833 | 991 | |||||
| Deferred tax liabilities | 257 | 273 | |||||
| Other non-current liabilities | 22 | 22 | |||||
| Total non-current liabilities | 6,915 | 8,428 | |||||
| TOTAL LIABILITIES | 15,437 | 18,669 | |||||
| Commitments and Contingencies | |||||||
| Stockholders' Equity: | |||||||
| 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; 11,835,753 and 11,439,191 shares issued as of December 31, 2022 and December 31, 2021, respectively; 6,907 shares of treasury stock as of December 31, 2022 and December 31, 2021, respectively; and 11,828,846 and 11,432,284 shares outstanding as of December 31, 2022 and December 31, 2021, respectively | 90 | 59 | |||||
| Additional paid-in capital | 46,374 | 42,266 | |||||
| Accumulated deficit | (42,160 | ) | (41,156 | ) | |||
| Total stockholders' equity | 4,304 | 1,169 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 19,741 | $ | 19,838 | |||
| ENSERVCO CORPORATION AND SUBSIDIARIES | |||||||
| Condensed Consolidated Statements of Cash Flows | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| For the 3 Months Ended Mar 31, | |||||||
| 2023 | 2022 | ||||||
| OPERATING ACTIVITIES: | |||||||
| Net (loss) income | $ | (1,004 | ) | $ | 3,140 | ||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities | |||||||
| Depreciation and amortization | 971 | 1,143 | |||||
| (Gain) Loss on disposal of equipment | (1 | ) | 35 | ||||
| Board compensation issued in equity | - | 60 | |||||
| Gain on debt extinguishment | - | (4,277 | ) | ||||
| Interest paid-in-kind on line of credit | - | 119 | |||||
| Stock-based compensation | 196 | 21 | |||||
| Amortization of debt issuance costs and discount | 70 | 12 | |||||
| Income tax benefit | (16 | ) | - | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 243 | (2,821 | ) | ||||
| Inventories | (1 | ) | (60 | ) | |||
| Prepaid expense and other current assets | 481 | 927 | |||||
| Amortization of operating lease assets | 139 | 198 | |||||
| Other assets | 17 | 5 | |||||
| Accounts payable and accrued liabilities | (1,189 | ) | 2,194 | ||||
| Operating lease liabilities | (143 | ) | (199 | ) | |||
| Other liabilities | (242 | ) | - | ||||
| Net cash (used in) provided by operating activities | (479 | ) | 497 | ||||
| INVESTING ACTIVITIES: | |||||||
| Purchases of property and equipment | (49 | ) | (68 | ) | |||
| Proceeds from disposals of property and equipment | 9 | - | |||||
| Collections on note receivable from sale of Tioga property in North Dakota | 25 | - | |||||
| Net cash used in investing activities | (15 | ) | (68 | ) | |||
| FINANCING ACTIVITIES: | |||||||
| Net proceeds from February 2023 Offering | 2,952 | - | |||||
| Term loan contractual repayments | - | (350 | ) | ||||
| Term loan repayment consummated in conjunction with Refinance | - | (8,400 | ) | ||||
| Establishment of LSQ Facility consummated in conjunction with Refinance | - | 2,400 | |||||
| Establishment of Utica Facility consummated in conjunction with Refinance, net | - | 6,000 | |||||
| Repayments on LSQ Facility, net | (334 | ) | - | ||||
| Repayments of Utica Facility | (294 | ) | - | ||||
| Troubled debt restructuring accrued future interest payments | - | (176 | ) | ||||
| March 2022 Convertible Note proceeds, net, related party | - | 963 | |||||
| Repayment of long-term debt | (15 | ) | (14 | ) | |||
| Payments of finance leases | (80 | ) | - | ||||
| Payments of finance leases | 1 | (11 | ) | ||||
| Net cash provided by financing activities | 2,230 | 412 | |||||
| Net Increase in Cash and Cash Equivalents | 1,736 | 841 | |||||
| Cash and Cash Equivalents, beginning of period | 35 | 149 | |||||
| Cash and Cash Equivalents, end of period | $ | 1,771 | $ | 990 | |||
| Supplemental Cash Flow Information: | |||||||
| Cash paid for interest | 312 | $ | 176 | ||||
| Supplemental Disclosure of Non-cash Investing and Financing Activities: | |||||||
| Non-cash establishment of EWB Obligation consummated in conjunction with the Refinance (Note 5) | - | $ | 1,000 | ||||
| Non-cash partial conversion of March 2022 Convertible Note to equity | 1,051 | - | |||||
