SOURCE: ENSERVCO

ENSERVCO

August 15, 2011 07:00 ET

ENSERVCO Reports Revenue Growth of 34% and 49% in Second Quarter and Six-Month Periods, Respectively

COLORADO SPRINGS, CO--(Marketwire - Aug 15, 2011) -

Selected Highlights:

  • Second quarter revenue up 34% to $4.5 million, adjusted EBITDA* improves to $80,000 from $19,000 in second quarter a year ago
  • Six-month revenue increases 49% to $13.7 million versus year-ago period; Six month adjusted EBITDA* up 133% to $2.8 million
  • Six-month operating cash flow up 227% to $3.6 million versus same period last year
  • New operation centers in Bakken and Niobrara regions scheduled to open in late Q3

ENSERVCO Corporation (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 second quarter and six-month periods ended June 30, 2011.

"Our expansion into the Marcellus Shale region coupled with strong customer demand fueled solid period-over-period revenue growth and positive adjusted EBITDA* during our seasonally limited second quarter," said Rick Kasch, president and CFO. "Greater market penetration in our current basins drove revenue improvements across all our geographic territories. Moreover, each of our service platforms delivered increased revenue versus the same quarter last year."

"Much of our attention during the quarter was focused on launching our North Dakota and Wyoming operations centers, which will serve customers in the Bakken Shale and Niobrara Shale regions, respectively. The lengthy heating seasons in both of these regions should further accelerate our revenue growth and increasingly smooth out the seasonal pullbacks we historically have experienced in the second and third quarters. We expect both the North Dakota and Wyoming facilities will open during the latter half of the third quarter. In light of current customer demand, we believe these new facilities should fuel significant financial growth in the fourth quarter and throughout fiscal 2012."

Mike Herman, chairman and CEO, said, "The customer response to our expansion efforts has been very encouraging, and validates our aggressive push into the Bakken and Niobrara. We already have small, advance teams operating in both of these regions, which illustrates the strong demand for our service platform. We will soon have nine operations centers in various oil and gas basins in the northern half of the United States, where substantial investments are being made in unconventional oil and gas fields by majors, mid majors and independents.

"Our mission is to offer a broad energy service platform at all of our regional yard locations, and we are working to integrate our entire suite of services at each of our new sites. We also are actively exploring new service offerings, which if successfully introduced, could further mitigate our seasonal fluctuations and significantly accelerate our revenue growth. We believe the impact of our expansion initiatives will be evident in our fourth quarter, and we expect the second half of fiscal 2011 will be much improved versus the same period last year."

Second quarter results
Second quarter revenue increased 34% to $4.5 million from $3.3 million in the same quarter a year ago. From a service perspective, revenue from well enhancement operations, which includes frac heating, acidizing and hot oil services, increased 39% to $1.8 million versus last year's second quarter, while revenue from fluid management services, which consist of water hauling/disposal, and frac tank rentals, increased 31% to $2.3 million, versus the second quarter of 2010.

Gross margin increased to 15% from 12% in the second quarter of 2010. Operating loss was $1.2 million versus $953,000 last year. The increase was largely attributable to higher legal, accounting and consulting fees associated with the ENSERVCO's transition to public-company status following its July 2010 merger transaction. The Company also incurred additional non-cash expenses associated with stock option and warrant grants.

ENSERVCO reported a second quarter net loss of $850,000, or $0.04 per diluted share, versus a net loss of $784,000, or $0.05 per diluted share, in the second quarter last year. However, Adjusted EBITDA* improved to $80,000 from $19,000 in the comparable year-ago quarter.

Six-month Results
Revenue through six months increased 49% to $13.7 million from $9.2 million in the same period last year. Gross margin improved to 30% from 23% in last year's six-month period. Operating income improved to $480,000, a positive swing of $1.2 million when compared with a loss from operations of $706,000 at the six-month mark last year. Net income was $35,000, or $0.00 per diluted share, a $710,000 improvement when compared with a net loss of $675,000, or $0.05 per diluted share, in the same period last year.

Adjusted EBITDA* through six months was $2.8 million, up 133% from adjusted EBITDA* of $1.2 million during the same period last year. Operating cash flow at the mid-year mark improved to $3.6 million, up 227% increase versus $1.1 million during the same period last year.

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 225 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO operates in Colorado, Kansas, 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 EBITDA to GAAP net income in the following table.

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 28, 2011. 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 Six Months Ended
June 30, June 30,
2011 2010 2011 2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 4,470,679 $ 3,345,640 $ 13,732,200 $ 9,220,210
Cost of Revenue 3,788,550 2,946,094 9,666,788 7,141,107
Gross Profit 682,129 399,546 4,065,412 2,079,103
Operating Expenses
General and administrative expenses 707,377 380,589 1,390,410 865,794
Depreciation and amortization 1,128,865 971,935 2,194,539 1,919,716
Total operating expenses 1,836,242 1,352,524 3,584,949 2,785,510
Income from Operations (1,154,113 ) (952,978 ) 480,463 (706,407 )
Other (Expense) Income
Interest expense (171,965 ) (169,371 ) (352,276 ) (359,552 )
Gain (loss) on disposals of equipment - - (44,286 ) 7,125
Unrealized Derivative Loss - (13,078 ) - -
Interest and other income (42,454 ) (152,057 ) (37,710 ) 83,364
Total other (expense) income (214,419 ) (334,506 ) (434,272 ) (269,063 )
Income Before Income Tax Expense (1,368,532 ) (1,287,484 ) 46,191 (975,470 )
Income Tax (Expense) Benefit 518,229 503,581 (11,406 ) 300,461
Net Income (Loss) $ (850,303 ) $ (783,903 ) $ 34,785 $ (675,009 )
Other Comprehensive Income
Unrealized losses on investment securities, net of tax (2,504 ) - (83,848 ) -
Comprehensive Income $ (852,807 ) $ (783,903 ) $ (49,063 ) $ (675,009 )
Earnings per Common Share
Income Per Common Share - Basic $ (0.04 ) $ (0.05 ) $ 0.00 $ (0.05 )
Income Per Common Share - Fully Diluted $ (0.04 ) $ (0.05 ) $ 0.00 $ (0.05 )
Basic weighted average number of common shares outstanding 21,778,866 14,519,244 21,778,866 14,519,244
Add: Dilutive shares assuming exercise of options and warrants 0 0 651,502 0
Diluted weighted average number of common shares outstanding 21,778,866 14,519,244 22,430,368 14,519,244
Reconciliation from the Company's Net Income to Adjusted EBITDA*
ADJUSTED EBITDA
Net Income $ (850,303 ) $ (783,903 ) $ 34,785 $ (675,009 )
Add Back:
Interest Expense 171,965 169,371 352,276 359,552
Provision for income taxes (518,229 ) (503,581 ) 11,406 (300,461 )
Depreciation and amortization 1,128,865 971,935 2,194,539 1,919,716
EBITDA $ (67,702 ) $ (146,178 ) $ 2,593,006 $ 1,303,798
Add Back (Deduct):
Stock-based compensation 59,184 - 108,865 -
Warrants issued 46,353 - 46,353 -
Loss (gain) on disposals of equipment - - 44,286 (7,125 )
Unrealized derivative gain - 13,078 - -
Interest and other income 42,454 152,057 37,710 (83,364 )
ADJUSTED EBITDA $ 80,289 $ 18,957 $ 2,830,220 $ 1,213,309
ENSERVCO Consolidated Balance Sheets
June 30, December 31,
2011 2010
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 1,695,279 $ 1,637,807
Accounts receivable, net 2,855,600 4,101,331
Prepaid expenses and other current assets 794,960 681,307
Inventories 299,204 300,527
Income taxes receivable - 634,941
Deferred tax asset 93,694 20,041
Total current assets 5,738,737 7,375,954
Property and Equipment, net 14,216,914 14,452,298
Non-Competition Agreements, net 300,000 420,000
Goodwill 301,087 301,087
Other Assets 61,149 71,537
TOTAL ASSETS $ 20,617,887 $ 22,620,876
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 1,537,370 $ 2,066,353
Line of credit borrowings - 1,050,000
Current portion of long-term debt 4,054,876 3,107,122
Total current liabilities 5,592,246 6,223,475
Long-Term Liabilities
Subordinated debt – related party 1,700,000 1,700,000
Long-term debt, less current portion 7,141,258 8,657,675
Deferred income taxes, net 1,472,786 1,434,282
Total long-term liabilities 10,314,044 11,791,957
Total liabilities 15,906,290 18,015,432
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 at March 31, 2011 and December 31, 2010 108,894 108,894
Additional paid-in-capital 5,645,041 5,489,823
Retained deficit (1,115,228 ) (1,150,011 )
Accumulated other comprehensive income – investment securities 72,890 156,738
Total stockholders' equity 4,711,597 4,605,444
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,617,887 $ 22,620,876

Contact Information

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