SOURCE: ENSERVCO

ENSERVCO

April 02, 2012 06:00 ET

ENSERVCO Reports Full-Year Revenue of $24.7 Million, up 32% From 2010; Adjusted EBITDA* Improves 47% to $3.1 Million Versus Prior Year

DENVER, CO--(Marketwire - Apr 2, 2012) - ENSERVCO Corporation (OTCQB: ENSV) (OTCBB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today reported financial results for its fiscal year and fourth quarter ended December 31, 2011.

Full-year revenue increased 32% to $24.7 million from $18.6 million in 2010. The growth was largely attributable to strong demand early in 2011 for fluid heating services in the northeastern United States, as well as fourth quarter contributions from two new operation centers serving North Dakota's Bakken Shale and Wyoming's Niobrara Shale regions.

Full-year revenue from well enhancement services (frac heating, acidizing and hot oiling) increased 38% to $13.8 million from $10.0 million in fiscal 2010. Revenue from fluid management services (water hauling/disposal and frac tank rentals) increased 28% to $9.6 million from $7.5 million in the prior year. Well-site construction and roustabout revenue increased 12% to $1.3 million from $1.2 million in 2010.

Despite the revenue growth, results were below management expectations due principally to exceptionally mild weather during the fourth quarter across most of ENSERVCO's U.S. service territories. Warm temperatures limited demand for the Company's frac heating and hot-oiling services during what is typically one of the Company's two busiest quarters.

Gross margin during 2011 improved to 24% from 23% in fiscal 2010. Gross margin expansion fell short of internal expectations, reflecting the impact of investments the Company made prior to the start of the fourth quarter in workforce and fleet expansion in anticipation of normal winter weather.

Although Adjusted EBITDA* for fiscal 2011 improved 47% to $3.1 million from $2.1 million, ENSERVCO reported a full-year loss from operations of $2.2 million versus an operating loss of $2.3 million in 2010. The loss was attributable to the aforementioned impacts of mild weather in the fourth quarter, as well as higher depreciation due to the build out of the Company's fleet and higher general and administrative expenses associated with the expansion of the Company's corporate staff and the relocation of its headquarters. ENSERVCO also incurred higher non-cash expenses associated with stock option and warrant grants versus 2010. Net loss was $2.0 million, or $0.09 per share, versus a net loss of $1.8 million, or $0.10 per share, in 2010.

Management Commentary
"We made significant progress in the expansion of our domestic service territory and the build-out of our equipment fleet during 2011, and these efforts helped fuel our top-line growth during the full fiscal year," said Rick Kasch, president and CFO. "Unfortunately, we just experienced one of the warmest winters on record across much of our service area, and this severely curtailed fourth quarter demand for our core heating services. Demand was particularly weak in the Northeast's Marcellus Shale region, where fourth quarter revenue declined by approximately 65% versus the same period of 2010. In light of stronger demand in the central and north central United States, we redeployed equipment and personnel to these regions in recent months."

"Despite some unavoidable challenges, our efforts during 2011 significantly enhanced ENSERVCO's prospects for long-term growth. Our new operation centers in Killdeer, ND and Cheyenne, WY have given us a strong presence in two of the North America's most active unconventional oil and gas fields, and have helped strengthen our ties with a long list of major, mid-major and independent oil and gas companies."

Kasch said that while the first quarter of 2012 started slowly due to persistent warm weather, there has been an uptick in revenues during February and March, particularly in the north central United States. In addition, current customers that are targeting the Mississippi lime formation, which spans portions of Kansas and Oklahoma, are indicating strong interest in ENSERVCO's full suite of well-enhancement and fluid management services.

"As we have discussed previously, we are actively pursuing the addition of less seasonal well-site service offerings and have been in discussions with a potential financial partner that could help fund our expansion initiatives and enhance the strength of our balance sheet. We hope to provide greater detail on this potential relationship in the near future.

"Given the strength of our customer roster and our expanded geographic presence, we believe 2012 could be a year of very solid revenue growth and improved profitability for ENSERVCO," Kasch concluded.

Fourth Quarter Results
Fourth quarter revenue increased 6% to $6.4 million from $6.0 million in the fourth quarter of 2010. Revenue from well enhancement operations increased 9% to $3.8 million versus $3.5 million in the 2010 fourth quarter. Revenue from fluid management services increased 7% to $2.4 million versus $2.2 million in the comparable prior-year quarter. Well-site construction and roustabout revenue declined 21% to $229,000 from $290,000 in the same quarter of 2010 as we began redeployment of these assets to our yard in the Bakken to address customer demand.

Gross profit margin was 21% versus 28% in the 2010 fourth quarter. Operating loss was $1.0 million versus a loss from operations of $41,000 in prior year's fourth quarter. Net loss was $872,000, or $0.04 per diluted share, versus a net loss of $163,000, or $0.01 per diluted share, in the same period of 2010. Adjusted EBITDA* was $401,000 compared with $1.1 million in the 2010 fourth quarter.

About ENSERVCO
Through its various operating subsidiaries, ENSERVCO has rapidly emerged as one of the energy service industry's leading providers of hot oiling, acidizing, frac heating and fluid management services. The Company owns and operates a fleet of more than 245 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO operates in Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, Utah, Wyoming and West Virginia. ENSERVCO became a public company in July 2010 as a result of a merger transaction involving Aspen Exploration Corporation. Additional information about the Company 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 a Form 10-K filed on March 30, 2012. 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 Consolidated Statements of Operations
For the Three Months Ended For the Years Ended
December 31, December 31,
2011 2010 2011 2010
(Unaudited) (Unaudited)
Revenues $ 6,405,057 $ 6,014,786 $ 24,670,671 $ 18,641,286
Cost of Revenue 5,061,758 4,319,525 18,681,469 14,422,412
Gross Profit 1,343,299 1,695,261 5,989,202 4,218,874
Operating Expenses
General and administrative expenses 1,065,060 662,848 3,515,213 2,540,859
Depreciation and amortization 1,289,577 1,073,697 4,699,640 3,992,367
Total operating expenses 2,354,637 1,736,545 8,214,853 6,533,226
Loss from Operations (1,011,338 ) (41,284 ) (2,225,651 ) (2,314,352 )
Other Expense
Interest expense (193,026 ) (176,447 ) (706,944 ) (728,241 )
Loss on disposals of equipment (74,737 ) (58,928 ) (119,023 ) (71,003 )
Gain on sale of investments - 188,186 - 188,186
Other (expense) income (11,329 ) (38,803 ) (49,765 ) 153,557
Total other expense (279,092 ) (85,992 ) (875,732 ) (457,501 )
Loss Before Income Tax Benefit (1,290,430 ) (127,276 ) (3,101,383 ) (2,771,853 )
Income Tax Benefit (Expense) 418,814 (36,186 ) 1,134,127 926,188
Net Loss $ (871,616 ) $ (163,462 ) $ (1,967,256 ) $ (1,845,665 )
Other Comprehensive (Loss) Income
Unrealized (loss) gain on available-for-sale securities, net of tax (3,365 ) 119,570 (133,665 ) 156,738
Comprehensive Loss $ (874,981 ) $ (43,892 ) $ (2,100,921 ) $ (1,688,927 )
Earnings per Common Share - Basic and Diluted
Loss per Common Share $ (0.04 ) $ (0.01 ) $ (0.09 ) $ (0.10 )
Weighted average number of common shares outstanding (presented on an equivalent basis for December 31, 2010)
21,778,866

21,778,866

21,778,866

17,641,876
ADJUSTED EBITDA
Net Loss $ (871,616 ) $ (163,462 ) $ (1,967,256 ) $ (1,845,665 )
Add (Deduct):
Interest expense 193,026 176,447 706,944 728,241
Income tax (benefit) expense (418,814 ) 36,186 (1,134,127 ) (926,188 )
Depreciation and amortization 1,289,577 1,073,697 4,699,640 3,992,367
EBITDA $ 192,173 $ 1,122,868 $ 2,305,201 $ 1,948,755
Add (Deduct):
Stock-based compensation 122,414 49,681 576,498 342,277
Warrants issued - - 46,353 81,771
Loss on disposals of equipment 74,737 58,928 119,023 71,003
Gain on sale of investments - (188,186 ) - (188,186 )
Other expense (income) 11,329 38,803 49,765 (153,557 )
ADJUSTED EBITDA $ 400,653 $ 1,082,094 $ 3,096,840 $ 2,102,063
ENSERVCO Consolidated Balance Sheets
December 31, December 31,
2011 2010
ASSETS
Current Assets
Cash and cash equivalents $ 417,005 $ 1,637,807
Accounts receivable, net 4,505,254 4,101,331
Marketable securities 150,793 365,786
Prepaid expenses and other current assets 593,291 315,521
Inventories 549,432 300,527
Income taxes receivable - 634,941
Deferred tax asset 187,170 20,041
Total current assets 6,402,945 7,375,954
Property and Equipment, net 15,171,870 14,452,298
Non-Competition Agreements, net 180,000 420,000
Goodwill 301,087 301,087
Other Assets 64,770 71,537
TOTAL ASSETS $ 22,120,672 $ 22,620,876
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 2,954,687 $ 2,066,353
Line of credit borrowings 2,263,227 1,050,000
Current portion of long-term debt 3,867,658 3,107,122
Total current liabilities 9,085,572 6,223,475
Long-Term Liabilities
Deferred rent payable 22,044 -
Subordinated debt - related party 1,477,760 1,700,000
Long-term debt, less current portion 8,020,435 8,657,675
Deferred income taxes, net 387,487 1,434,282
Total long-term liabilities 9,907,726 11,791,957
Total liabilities 18,993,298 18,015,432
Commitments and Contingencies
Stockholders' Equity
Common and preferred stock. $.005 par value
Authorized: 100,000,000 common shares and 10,000,000 preferred shares
Issued: 21,882,466 common shares and -0- preferred shares
Treasury Stock: 103,600 common shares
Issued and outstanding: 21,778,866 common shares and -0- preferred shares each at December 31, 2011 and December 31, 2010
108,894

108,894
Additional paid-in-capital 6,112,674 5,489,823
Accumulated deficit (3,117,267 ) (1,150,011 )
Accumulated other comprehensive income 23,073 156,738
Total stockholders' equity 3,127,374 4,605,444
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,120,672 $ 22,620,876

Contact Information

  • CONTACT:
    Geoff High
    Pfeiffer High Investor Relations, Inc.
    303-393-7044