SOURCE: ENSERVCO

November 14, 2011 08:00 ET

ENSERVCO Reports Revenue Increases of 33% and 45% in Third Quarter and Nine-Month Periods Versus Respective Year-Ago Periods

DENVER, CO--(Marketwire - Nov 14, 2011) - ENSERVCO Corporation (OTCQB: ENSV) (PINKSHEETS: ENSV)

Selected Highlights:

  • Third quarter revenue increases to $4.5 million from $3.4 million in Q3 last year
  • Nine-month revenue improves to $18.3 million from $12.6 million in year-ago period
  • Year-to-date adjusted EBITDA* up 164% to $2.7 million versus $1.0 million in same period last year
  • Nine-month operating cash flow at $3.4 million versus cash used in operating activities of $391,000 at nine-month mark last year
  • New operation centers open in Bakken and Niobrara regions

ENSERVCO Corporation (OTCQB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today reported financial results for its third quarter and nine-month periods ended September 30, 2011.

"The third quarter was marked by strong revenue growth in all three of our service segments and in every geographic region we serve," said Rick Kasch, president and CFO. "In addition, we used what is traditionally a seasonally soft quarter to execute a major expansion of our service territory. Our new operation centers serving the Bakken and Niobrara shale formations opened late in the third quarter and have given us a solid foothold in two of the country's most active unconventional oil and gas fields.

"We are preparing to enter our peak season, which we expect will be in full swing during the coming weeks as cold weather sets in across the northern United States," Kasch added. "We are expanding the operations teams at our new facilities in Killdeer, North Dakota and Cheyenne, Wyoming, and are fabricating several new hot oiling and frac heating trucks, which we anticipate will enter our fleet during the fourth quarter. Our operations in the Marcellus Shale region have already experienced an uptick in seasonal demand, with several customers requesting heating services approximately 30 days earlier than last season."

Kasch said management continues to evaluate a range of new service offerings that could augment the Company's revenue stream and help smooth the current seasonal fluctuations in demand. "Exploration and production companies in many of the regions we serve are facing a significant shortage of various oilfield services. Our long-range objective is to play a larger role in addressing this unsatisfied demand."

Third quarter results
Third quarter revenue advanced 33% to $4.5 million from $3.4 million in the same quarter a year ago. At the service level, revenue from well enhancement operations, which includes frac heating, acidizing and hot oil services, increased 59% to $1.5 million versus $970,000 the same quarter last year. Increased demand for acidizing services and early-season hot oiling work in the Rocky Mountain region drove the improvement. Revenue from fluid management services, which consist of water hauling/disposal and frac tank rentals, increased 17% to $2.5 million versus $2.1 million in the third quarter of 2010. Well-site construction and roustabout revenue increased 60% to $512,000 from $321,000 in the same quarter a year ago.

Gross margin, which is generally lower during the third quarter than the Company's annualized rate, was flat at 13% versus last year's third quarter. The Company's operating loss was $1.7 million versus $1.6 million in the year-ago third quarter. The increase was attributable to higher labor costs associated with the expansion of the Company's corporate, administrative and operations staff; expenses incurred in opening the Company's new North Dakota and Wyoming facilities, and costs associated with the relocation of ENSERVCO's corporate headquarters to Denver. The Company also incurred additional non-cash expenses associated with stock option and warrant grants.

Third quarter net loss was $1.1 million, or $0.05 per diluted share, versus a net loss of $1.0 million, or $0.05 per diluted share, in the third quarter last year. Adjusted EBITDA* was a negative $134,000 versus a negative $212,000 in the same period a year ago.

Nine-month Results
Revenue through nine months increased 45% to $18.3 million from $12.6 million in the same period last year. Gross margin improved to 25% from 20% in last year's nine-month period. Operating loss declined to $1.2 million from an operating loss of $2.3 million at the nine-month mark last year. Net loss was $1.1 million, or $0.5 per diluted share, a $587,000 improvement when compared with a net loss of $1.7 million, or $0.10 per diluted share, in the same period last year.

Adjusted EBITDA* through nine months was $2.7 million, up 164% from adjusted EBITDA* of $1.0 million during the same period last year. Operating cash flow at the nine-month mark improved to $3.4 million versus cash used in operating activities of $391,000 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 Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 4,532,274 $ 3,406,290 $ 18,265,614 $ 12,626,500
Cost of Revenue 3,952,923 2,960,385 13,619,711 10,102,887
Gross Profit 579,351 445,905 4,645,903 2,523,613
Operating Expenses
General and administrative expenses 1,058,602 1,031,883 2,450,153 1,878,011
Depreciation and amortization 1,215,524 993,977 3,410,063 2,918,670
Total operating expenses 2,274,126 2,025,860 5,860,216 4,796,681
Income from Operations (1,694,775 ) (1,579,955 ) (1,214,313 ) (2,273,068 )
Other (Expense) Income
Interest expense (161,642 ) (177,553 ) (513,918 ) (551,794 )
Gain (loss) on disposals of equipment - (19,200 ) (44,286 ) (12,075 )
Interest and other income (726 ) 108,996 (38,436 ) 192,360
Total other (expense) income (162,368 ) (87,757 ) (596,640 ) (371,509 )
Income Before Income Tax Expense (1,857,143 ) (1,667,712 ) (1,810,953 ) (2,644,577 )
Income Tax (Expense) Benefit 726,719 661,913 715,313 962,374
Net Income (Loss) $ (1,130,424 ) $ (1,005,799 ) $ (1,095,640 ) $ (1,682,203 )
Other Comprehensive Income
Unrealized losses on investment securities, net of tax (46,451 ) 37,168 (130,300 ) (484,296 )
Comprehensive Income $ (1,176,875 ) $ (968,631 ) $ (1,225,940 ) $ (2,166,499 )
Earnings per Common Share
Income Per Common Share - Basic $ (0.05 ) $ (0.05 ) $ (0.05 ) $ (0.10 )
Income Per Common Share - Fully Diluted $ (0.05 ) $ (0.05 ) $ (0.05 ) $ (0.10 )
Basic weighted average number of common shares outstanding 21,778,866 19,648,325 21,778,866 16,247,725
Add: Dilutive shares assuming exercise of options and warrants 0 0 0 0
Diluted weighted average number of common shares outstanding 21,778,866 19,648,325 21,778,866 16,247,725
ADJUSTED EBITDA
Net Income $ (1,130,424 ) $ (1,005,799 ) $ (1,095,640 ) $ (1,682,203 )
Add Back:
Interest Expense 161,642 177,553 513,918 551,794
Provision for income taxes (726,719 ) (661,913 ) (715,313 ) (962,374 )
Depreciation and amortization 1,215,524 993,977 3,410,063 2,918,670
EBITDA $ (479,977 ) $ (496,182 ) $ 2,113,028 $ 825,887
Add Back (Deduct):
Stock-based compensation 345,219 292,596 454,084 292,596
Warrants issued - 81,771 46,353 81,771
Loss (gain) on disposals of equipment - 19,200 44,286 12,075
Interest and other income 726 (108,996 ) 38,436 (192,360 )
ADJUSTED EBITDA $ (134,032 ) $ (211,611 ) $ 2,696,187 $ 1,019,969

ENSERVCO Consolidated Balance Sheets
September 30, December 31,
2011 2010
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 525,801 $ 1,637,807
Accounts receivable, net 3,249,885 4,101,331
Marketable securities 154,212 365,786
Prepaid expenses and other current assets 651,593 315,521
Inventories 344,537 300,527
Income taxes receivable 0 634,941
Deferred tax asset 109,233 20,041
Total current assets 5,035,261 7,375,954
Property and Equipment, net 15,477,129 14,452,298
Non-Competition Agreements, net 240,000 420,000
Goodwill 301,087 301,087
Other Assets 58,503 71,537
TOTAL ASSETS $ 21,111,980 $ 22,620,876
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 2,195,287 $ 2,066,353
Line of credit borrowings 1,314,358 1,050,000
Current portion of long-term debt 3,771,842 3,107,122
Total current liabilities 7,281,487 6,223,475
Long-Term Liabilities
Deferred rent payable 5,511 -
Subordinated debt – related party 1,477,760 1,700,000
Long-term debt, less current portion 7,735,372 8,657,675
Deferred income taxes, net 731,908 1,434,282
Total long-term liabilities 9,950,551 11,791,957
Total liabilities 17,232,038 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 September 30, 2011 and December 31, 2010




108,894




108,894
Additional paid-in-capital 5,990,260 5,489,823
Retained deficit (2,245,651 ) (1,150,011 )
Accumulated other comprehensive income – investment securities 26,439 156,738
Total stockholders' equity 3,879,942 4,605,444
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,111,980 $ 22,620,876

Contact Information

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