SOURCE: ENSERVCO

ENSERVCO

March 18, 2015 07:00 ET

ENSERVCO Reports Fourth Quarter and Full Year Financial Results

DENVER, CO--(Marketwired - Mar 18, 2015) - ENSERVCO Corporation (NYSE MKT: ENSV)

Selected Highlights:

  • Record Q4 adjusted EBITDA of $5.3 million, up 80% over prior year, drives EPS growth of 133% to $0.07 from $0.03

  • Full year revenue and adjusted EBITDA at record levels despite several unexpected events that impacted revenue and profitability

  • All three well enhancement business lines deliver double digit revenue growth

  • Fleet expansion strengthens recurring, year-round maintenance capabilities to further reduce dependence on drilling activity

  • Working capital increases 67% and stockholders' equity increases of 40%

  • Company positioned to weather oil price downturn and pursue M&A opportunities

ENSERVCO Corporation (NYSE MKT: ENSV), a diversified national provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today reported financial results for its fourth quarter and full year ended December 31, 2014.

"We are very pleased to announce record revenue and adjusted EBITDA for the full year -- highlighted by a strong fourth quarter in which we achieved record revenue, an 80% increase in adjusted EBITDA and a 133% increase in earnings per share," said Rick Kasch, Chairman and CEO. "These results are especially gratifying given the unusual confluence of certain issues we faced during the year, including (i) temporary safety stand-downs by two large customers (neither deemed a result of our actions); (ii) the effects of severe propane price fluctuations (which among other impacts influenced customers to utilize alternative fuel sources); and (iii) unfavorable weather patterns in the fourth quarter. 

"During 2014 we successfully executed an aggressive capital expenditure program that contributed to record revenue in all three of our well enhancement business lines -- hot oiling, acidizing and frac water heating," Kasch added. "This capacity increase -- essentially doubling our fleet size year over year -- was our response to growing demand from existing and new customers throughout our traditional service territories as well as in new geographical expansion areas. We are particularly focused on growing our hot oiling and acidizing services, which represent less seasonal, recurring revenue streams that give us a more balanced revenue mix while reducing the risks associated with oil and gas price fluctuations. We also continue to build on our leadership position in frac water heating by increasing our capacity 81% year over year and capturing new business with our flexible bi-fuel system, which allows our frac water heating units to switch between using propane or natural gas. Although our introduction of bi-fuel heating units contributed to lower propane revenue in the short term, our early mover status in providing E&P customers with this cost-saving service resulted in increased market share and improved customer loyalty that will serve us well in the long term.

"Looking forward, as projected, we will have 100% of the new equipment from our 2014 capex program available for service by March 31, 2015, resulting in 81 frac water heating units (up from 42 last season); 59 hot oil units (up from 27); and 7 acidizing units (up from 3). This increase in capacity also includes our acquisition in Tioga, ND, which has met our expectations and enabled us to expand our operations in the Bakken, capture additional market share with major producers and grow our recurring maintenance work. In addition to successfully expanding our fleet, we entered 2015 with a track record of solid cash flows; a strong, underleveraged balance sheet; and significant capacity under our bank line. I believe we are in an excellent position to weather the current oil price decline and to aggressively pursue M&A opportunities that we anticipate will be accretive to earnings and enable us to diversify our service offerings, balance revenue streams between recurring maintenance and drilling-related work, further reduce the seasonality aspect of our business, and achieve high gross margins."

Fourth Quarter Results
Revenue in the fourth quarter increased to a record $18.3 million, up 21% over $15.2 million in the same quarter last year. This $3.1 million increase is net of a $4.2 million decline in revenue year over year due to unseasonably warm temperatures until mid-November and lower propane revenues. Core well enhancement services -- hot oiling, acidizing and frac water heating -- increased 27% to a record $16.1 million from $12.6 million a year ago, more than offsetting a 17% decline in fluid management services -- to $2.0 million from $2.4 million. Hot oiling revenue growth was particularly strong (up 52% to $4.0 million from $2.7 million). Frac water heating revenue increased 20% to $11.3 million from $9.4 million. This across the board growth in well enhancement services reflected our fleet expansion, increased equipment utilization, and geographic expansion.

Gross profit margin in the fourth quarter increased to 34% from 26% in the same quarter a year ago. This increase reflected higher overall revenue and increased utilization of equipment in the fourth quarter of 2014 in addition to the mathematical impact of lower propane costs and related revenues.

Total operating expenses in the fourth quarter increased 59% to $2.5 million from $1.6 million. This increase reflected an additional $700,000 in depreciation and amortization expense due to the larger fleet size, and a nearly $300,000 increase in legal costs associated primarily with the Company's efforts to invalidate certain patent claims. General and administrative expense in the fourth quarter declined slightly to $1.0 million from $1.1 million as the Company continued to carefully manage its cost structure.

Operating income in the fourth quarter increased 55% to $3.7 million from $2.4 million year over year. Net income increased 129% to $2.5 million, or $0.07 per diluted share, from $1.1 million, or $0.03 per diluted share, in the same quarter last year. 

Adjusted EBITDA grew by 80% year over year to $5.3 million from $2.9 million. It is estimated that the effects on revenue of the warm weather and the lower propane revenues resulted in lower EBITDA for the quarter of approximately $1.6 million.

Full-Year Results
Revenue in 2014 increased 22% to a record $56.6 million from $46.5 million in 2013. This increase reflected growing fleet capacity and utilization in combination with geographic expansion and new customer wins, more than offsetting a $3.0 million decline in year-over-year revenue resulting from the aforementioned challenging events.

Gross profit margin declined to 27% from 31% a year ago due to higher expansion-related costs in the third quarter as well as higher propane prices in the first quarter, unexpected frac water-heating downtime in the second quarter, and unseasonably warm weather in the fourth quarter.

Total operating expenses in 2014 increased 32% to $8.4 million from $6.4 million a year ago. Of the $2.0 million increase, $1.3 million was due to higher depreciation and amortization expense ($3.4 million vs. $2.1 million year over year) related to fleet growth and $370,000 was due to patent-related expense ($560,000 vs. $190,000 year over year). While general and administrative expense increased 8% to $4.4 million from $4.1 million due to higher personnel costs, professional fees, stock-based compensation expense, and listing of the Company's common stock on the New York Stock Exchange, it improved to 8% of revenue from 9% of revenues a year ago. 

Operating income in 2014 declined to $6.9 million from $8.2 million due to a combination of lower gross margins and higher operating expenses. Net income was $4.0 million, or $0.10 per diluted share, versus $4.3 million, or $0.12 per diluted share, a year ago. 

Adjusted EBITDA for the full year was a record $11.5 million, up from $11.0 million a year ago. It is estimated that the impact of the lower revenue resulting from all of the issues described in the first paragraph was to lower EBITDA by approximately $2.9 million.

ENSERVCO generated $6.2 million in net cash from operations in 2014, up 17% from $5.3 million in 2013. The Company closed the year with working capital of $13.7 million, up 67% from $8.2 million a year ago.

Conference Call Information
Management will hold a conference call today to discuss these results. The call will begin at 1:00 p.m. Eastern (11 a.m. Mountain) and will be accessible by dialing 877-407-8031 (201-689-8031 for international callers). No passcode is necessary. A telephonic replay will be available through March 25, 2015, by calling 877-660-6853 (201-612-7415 for international callers) and entering the Conference ID #13604000. To listen to the webcast, participants should go to the ENSERVCO website at www.enservco.com and link to the "Investors" page at least 15 minutes early to register and download any necessary audio software. A replay of the webcast will be available for 90 days. The webcast also is available at the following link:
http://www.investorcalendar.com/IC/CEPage.asp?ID=173722

About ENSERVCO
Through its various operating subsidiaries, ENSERVCO has emerged as one of the energy service industry's leading providers of hot oiling, acidizing, frac water heating and fluid management services in seven major domestic oil and gas fields, serving customers in Colorado, Kansas, 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 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 our fiscal year 2013 Form 10-K filed on March 20, 2014, subsequently filed documents, and those to be disclosed in our fiscal year 2014 Form 10-K, which we expect to file on or about March 19, 2015. 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.

   
ENSERVCO CORPORATION  
Consolidated Statement Of Operations And Comprehensive Income (Loss)  
(Unaudited)  
                       
  For the Quarter Ended     For the Year Ended  
  December 31,     December 31,  
  2014     2013     2014     2013  
                               
Revenues $ 18,278,289     $ 15,154,458     $ 56,563,944     $ 46,472,677  
                               
Cost of Revenues   12,049,312       11,175,528       41,257,600       31,869,312  
                               
Gross Profit   6,228,977       3,978,930       15,306,344       14,603,365  
                               
Operating Expenses                              
  General and administrative expenses   1,003,489       1,083,468       4,393,129       4,076,088  
  Patent litigation and defense costs   382,679       89,079       562,486       189,645  
  Depreciation and amortization   1,113,478       394,896       3,402,330       2,088,767  
    Total Operating Expenses   2,499,646       1,567,443       8,357,945       6,354,500  
                               
Income from Operations   3,729,331       2,411,487       6,948,399       8,248,865  
                               
Other Income (Expense)                              
  Interest expense   (70,670 )     (259,861 )     (791,159 )     (1,073,875 )
  Gain (Loss) on disposals of equipment   170,159       (144,105 )     179,903       169,194  
  Other income   5,252       7,045       40,470       36,383  
    Total Other (Expense) Income   104,741       (396,921 )     (570,786 )     (868,298 )
                               
Income Before Tax Expense   3,834,072       2,014,566       6,377,613       7,380,567  
Income Tax Expense   (1,315,241 )     (916,289 )     (2,371,872 )     (3,079,330 )
Net Income $ 2,518,831     $ 1,098,277     $ 4,005,741     $ 4,301,237  
                               
Other Comprehensive Income (Loss)                              
  Unrealized gain (loss) on interest rate swaps, net of tax   -       5,423       (7,025 )     8,875  
  Settlements - interest rate swap   -       6,441       19,368       27,331  
  Reclassification into earnings - interest rate swap   2,955       (6,441 )     (16,413 )     (27,331 )
    Total Other Comprehensive Income (Loss)   2,955       5,423       (4,070 )     8,875  
                               
Comprehensive Income $ 2,521,786     $ 1,103,700     $ 4,001,671     $ 4,310,112  
                               
                               
Earnings per Common Share - Basic $ 0.07     $ 0.03     $ 0.11     $ 0.13  
                               
Earnings per Common Share - Diluted $ 0.07     $ 0.03     $ 0.10     $ 0.12  
                               
Basic weighted average number of common shares outstanding   37,036,306       33,614,572       36,529,906       32,454,965  
Add: Dilutive shares assuming exercise of options and warrants   1,666,632       3,744,463       2,469,099       4,658,052  
Diluted weighted average number of common shares outstanding   38,702,938       37,359,035       38,999,005       37,113,017  
                               
                               
ENSERVCO CORPORATION  
Calculation of Adjusted EBITDA *  
                               
  For the Quarter Ended     For the Year Ended  
  December 31,     December 31,  
  2014     2013     2014     2013  
                               
Adjusted EBITDA*                              
  Net Income $ 2,518,831     $ 1,098,277     $ 4,005,741     $ 4,301,237  
  Add Back (Deduct)                              
    Interest Expense   70,670       259,861       791,159       1,073,875  
    Income Tax Expense   1,315,241       916,289       2,371,872       3,079,330  
    Depreciation and amortization   1,113,478       394,896       3,402,330       2,088,767  
  EBITDA*   5,018,220       2,669,323       10,571,102       10,543,209  
  Add Back (Deduct)                              
    Stock-based compensation   42,385       26,357       562,903       472,356  
    Patent litigation and defense costs   382,679       89,079       562,486       189,645  
    (Gain) Loss on sale and disposal of equipment   (170,159 )     144,105       (179,903 )     (169,194 )
    Interest and other income   (5,252 )     (7,045 )     (40,470 )     (36,383 )
  Adjusted EBITDA* $ 5,267,873     $ 2,921,819     $ 11,476,118     $ 10,999,633  
                               
                               
 
ENSERVCO CORPORATION
Consolidated Balance Sheets
       
  December 31,   December 31,
ASSETS 2014   2013
  (Unaudited)    
Current Assets          
  Cash and cash equivalents $ 954,058   $ 1,868,190
  Accounts receivable, net   14,679,858     11,685,866
  Prepaid expenses and other current assets   1,540,667     923,758
  Inventories   390,081     315,004
  Income tax receivable   1,776,035     -
  Deferred tax asset   135,055     336,561
    Total current assets   19,475,754     15,129,379
           
Property and Equipment, net   37,789,004     17,425,828
Goodwill   301,087     301,087
Long-Term Portion of Interest Rate Swap   -     18,616
Other Assets   716,836     547,338
           
TOTAL ASSETS $ 58,282,681   $ 33,422,248
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
  Accounts payable and accrued liabilities $ 5,462,268   $ 3,102,912
  Income tax payable   -     1,278,599
  Current portion of long-term debt   340,520     2,562,141
  Current portion of interest rate swap   9,895     11,966
    Total current liabilities   5,812,683     6,955,618
           
Long-Term Liabilities          
  Senior revolving credit facility   28,634,037     -
  Long-term debt, less current portion   801,968     11,200,048
  Deferred income taxes, net   4,992,681     2,421,466
    Total long-term liabilities   34,428,686     13,621,514
    Total Liabilities   40,241,369     20,577,132
           
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, 37,159,815 and 34,926,136 shares issued, respectively; 103,600 shares of treasury stock; and 37,056,215 and 34,822,536 shares outstanding, respectively   185,282     174,113
  Additional paid-in capital   12,751,389     11,568,033
  Accumulated earnings   5,104,641     1,098,900
  Accumulated other comprehensive income   -     4,070
    Total stockholders' equity   18,041,312     12,845,116
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 58,282,681   $ 33,422,248
           
           
           
ENSERVCO CORPORATION        
Condensed Consolidated Statement of Cash Flows        
(Unaudited)        
                       
  For the Three Months ended     For the 12 months ended  
  December 31,     December 31,  
  2014     2013     2014     2013  
OPERATING ACTIVITIES                              
  Net income $ 2,518,831     $ 1,098,277     $ 4,005,741     $ 4,301,237  
  Adjustments to reconcile net income to net cash (used in) provided by operating activities                              
    Depreciation and amortization   1,113,478       394,896       3,402,330       2,088,767  
    Gain on sale and disposal of equipment   (170,159 )     144,105       (179,903 )     (169,194 )
    Deferred income taxes   2,720,937       37,928       2,785,196       1,781,057  
    Stock-based compensation   42,385       26,357       562,903       472,356  
    Amortization of debt issuance costs   27,980       76,944       253,803       309,236  
    Bad debt expense   4,785       79,412       96,592       249,809  
  Changes in operating assets and liabilities                              
    Accounts receivable   (10,979,863 )     (9,094,517 )     (3,090,584 )     (4,144,333 )
    Inventories   (13,463 )     (16,939 )     (75,077 )     (41,901 )
    Prepaid expense and other current assets   (179,414 )     220,443       (417,084 )     (121,738 )
    Other non-current assets   (27,542 )     5,318       (423,301 )     (175,262 )
    Accounts payable and accrued liabilities   1,629,435       1,031,395       2,359,356       (503,733 )
    Income taxes receivable   (1,497,767 )     -       (1,776,035 )     -  
    Income taxes payable   -       861,279       (1,278,599 )     1,278,599  
      Net cash (used in) provided from operating activities   (4,810,377 )     (5,135,102 )     6,225,338       5,324,900  
                               
INVESTING ACTIVITIES                              
  Purchases of property and equipment   (11,195,598 )     (2,130,068 )     (23,955,603 )     (5,837,126 )
  Proceeds from sale and disposal of equipment   320,000       46,277       370,000       2,053,568  
    Net cash (used in) provided by investing activities   (10,875,598 )     (2,083,791 )     (23,585,603 )     (3,783,558 )
                               
FINANCING ACTIVITIES                              
  Net line of credit borrowings   14,871,036       -       28,634,037       (2,151,052 )
  Proceeds from issuance of long-term debt   -       3,720,000       -       3,720,000  
  Proceeds from excerise of warrants   77,494       1,246,300       265,298       1,246,300  
  Proceeds from excerise of options   -       -       127,987       -  
  Excess tax benefits from exercise of options and warrants   16,956       -       238,337          
  Repayment of long-term debt   (138,025 )     (1,235,750 )     (12,619,701 )     (2,971,605 )
  Deferred financing costs   (35,863 )     (50,422 )     (199,825 )     (50,422 )
  Payments upon interest rate swap settlements   -       -       -       -  
    Net cash provided by (used in) financing activities   14,791,598       3,680,128       16,446,133       (206,779 )
                               
Net (Decrease) Increase in Cash and Cash Equivalents   (894,377 )     (3,538,765 )     (914,132 )     1,334,563  
                               
Cash and Cash Equivalents, Beginning of Period   1,848,435       5,406,955       1,868,190       533,627  
                               
Cash and Cash Equivalents, End of Period $ 954,058     $ 1,868,190     $ 954,058     $ 1,868,190  
                               
                               
Supplemental cash flow information consists of the following:                              
  Cash paid for interest $ 40,519     $ 180,371     $ 519,050     $ 764,667  
  Cash paid for taxes $ 83,093     $ -     $ 2,412,681     $ 19,672  
                               
Supplemental Disclosure of Non-cash Investing and Financing Activities:                              
  Equipment purchased through installment loans $ -     $ 50,037     $ -     $ 206,523  
  Cashless exercise of stock options and warrants $ -     $ 719     $ 7,532     $ 3,656  
                                 

Contact Information

  • Contact:

    Jay Pfeiffer
    Pfeiffer High Investor Relations, Inc.
    Phone: 303-393-7044
    Email: Email Contact