Full Year Results – 2019 vs. 2018
Total revenue increased slightly to $43.0 million from $42.8 million
Production services revenue increased to $14.7 million from $14.5 million
Completion services revenue increased to $28.3 million from $28.2 million
Net loss increased to $7.7 million from $5.9 million
Adjusted EBITDA declined to $2.8 million from $4.7 millionFourth Quarter Results – 2019 vs. 2018Total revenue declined to $8.1 million from $13.3 million
Production services revenue flat at $3.5 million
Completion services revenue declined to $4.6 million from $9.8 million
Net loss of $3.3 million versus net loss of $517,000
Adjusted EBITDA of $168,000 versus $2.0 millionDENVER, March 20, 2020 (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 fourth quarter and full year ended December 31, 2019.“After two years of solid growth, followed by a strong start to 2019 that included 19% year-over-year revenue growth and positive EBITDA through the first three quarters, customer activity levels began a steady decline, resulting in a challenging fourth quarter that offset much of our early gains. During 2019 the U.S. rig count declined by 26% from 2018 and capital budget exhaustion late in the year led to pricing pressure that negatively impacted our completion services revenue. In addition, an unseasonably warm fourth quarter in Oklahoma and Pennsylvania negatively impacted frac water heating revenue. As a result, we reported only modest overall revenue growth and a decline in adjusted EBITDA for the full year,” said Ian Dickinson, President and CEO. “Activity levels have continued to decline into 2020 and are likely to remain depressed in the near term due to pressure on crude oil prices related to the Saudi-Russia oil price war and to the impact of COVID-19 on the world economy.“On a positive note, we grew our market share in 2019 as a result of our acquisition of Adler Hot Oil Services and ended the year with our largest customer base in company history,” Dickinson added. “In addition, we closed our non-strategic water transfer business that had been a drain on profitability and renewed our focus on core competencies in production and completion services with the aim to increase fleet utilization and optimize fleet deployment. Over the past two years we have made significant investments in process improvement initiatives designed to increase efficiencies and take better advantage of our expanded fleet and national leadership position in frac water heating. We believe we can drive further efficiencies through technology and de-levering our balance sheet. In addition, we continue to look at ways to take costs out of our business. In the second half of 2019 we eliminated $1.1 million in redundant costs associated with the Adler transaction. We will realize additional cost savings from the closing of our water transfer business in 2019 and the closing of our Oklahoma field operation in the first quarter of 2020.”Full Year Results
Total revenue for the year ended December 31, 2019, increased 1% to $43.0 million from $42.8 million in the prior year.Production services revenue grew 1% year over year to $14.7 million from $14.5 million. The production services segment includes hot oiling revenue, which increased 6% in 2019 to $12.4 million from $11.7 million due to the larger fleet size and an increase in market share; and acidizing revenue, which decreased year over year to $2.3 million from $2.9 million due primarily to a decline in services performed for two large customers that changed their well maintenance programs. That decline was partially offset by new customer wins.Production services generated a segment profit of $1.1 million in 2019, down from a segment profit of $1.7 million in the prior year.Completion services revenue, which consists of frac water heating services, rose slightly in 2019 to $28.3 million from $28.2 million in the prior year. Completion services generated a segment profit of $7.3 million, down from $7.6 million in the prior year.Total operating expenses in 2019 increased 6% to $46.6 million from $44.2 million in the prior year due to several factors, including higher direct variable costs associated with increased activity and investments in South Texas and Wyoming growth initiatives, first quarter cost overruns in the now discontinued water transfer division, and higher sales, general and administrative and depreciation and amortization expenses. Sales, general and administrative expenses increased 18% year over year to $6.2 million from $5.2 million due to an increase in bad debt reserve, higher overhead related to the Adler acquisition, higher D&O insurance costs, and an increase in professional fees related to investment in IT infrastructure and processes. In the second half of 2019 the Company achieved approximately $1.1 million in cost reductions through elimination of redundant personnel and facilities primarily related to the Adler acquisition. Depreciation and amortization expense increased 17% to $5.7 million from $4.9 million due to the increase in fleet size.Operating loss in 2019 was $3.6 million, up 157% year over year from $1.4 million. Net loss from continuing operations in 2019, including a gain of approximately $1.2 million related to the April settlement agreement with the sellers of Adler, increased 31% to $5.3 million from $4.1 million in the prior year. Net loss from discontinued operations totaled $2.3 million in 2019 versus a net loss from discontinued operations of $1.8 million in the prior year. Net loss for 2019 increased to $7.7 million, or $0.14 per diluted share, from a net loss of $5.9 million, or $0.11 per diluted share, in the prior year.Adjusted EBITDA in 2019 declined 41% to $2.8 million from $4.7 million in the prior year.Enservco generated $4.5 million in cash from operations in 2019, up 234% from $1.3 million in 2018.Fourth Quarter Results
Total revenue in the fourth quarter ended December 31, 2019, declined 39% to $8.1 million from $13.3 million in the same quarter last year.Production services revenue was flat year over year at $3.5 million. Production services included hot oiling, which was flat at $3.0 million, and acidizing, which was essentially flat at $455,000 versus 486,000 year over year.Production services generated a segment loss of $116,000 in the fourth quarter as compared to a segment profit of $468,000 in the same quarter last year.Completion services revenue was down 53% year over year to $4.6 million from $9.8 million.Completion services generated a segment profit of $404,000 in the fourth quarter, down from a segment profit of $2.7 million in the same quarter last year.Total operating expenses in the fourth quarter declined 17% year over year to $10.5 million from $12.7 million due primarily to lower costs of providing production and completion services. Sales, general and administrative expense declined 7% in the fourth quarter to $1.4 million from $1.5 million due to cost efficiencies achieved in connection with the Adler acquisition. Depreciation and amortization expense increased 14% to $1.4 million from $1.3 million due to the increase in fleet size.Operating loss in the fourth quarter was $2.5 million compared to operating income of $544,000 in the same quarter last year. Net loss from continuing operations in the fourth quarter increased to $3.0 million from a net loss from continuing operations of $141,000 in the same quarter last year. Net loss from discontinued operations totaled $340,000 in the fourth quarter compared to a net loss from discontinued operations of $376,000 in the fourth quarter a year ago. Net loss in the fourth quarter was $3.3 million, or $0.06 per diluted share, versus a net loss of $517,000, or $0.01 per diluted share, in the same quarter last year.
Adjusted EBITDA in the fourth quarter was $168,000, down from $2.0 million in the same quarter last year.Conference Call Information
Management will hold a conference call today to discuss these results. The call will begin at 2:30 p.m. Mountain Time (4:30 p.m. Eastern) and will be accessible by dialing 844-369-8770 (862-298-0840 for international callers). No passcode is necessary. A telephonic replay will be available through April 3, 2020, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #33431. 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 until April 20, 2020. The webcast also is available at the following link:
https://www.webcaster4.com/Webcast/Page/2228/33431About Enservco
Through its various operating subsidiaries, Enservco provides a wide 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 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 (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 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 Enservco’s annual report on Form 10-K for the year ended December 31, 2019, and subsequently filed documents with the SEC. Forward looking statements in this news release that are subject to risk include the ability to continue generating positive financial results; expectations that activity levels will remain depressed in the near term; ability to increase fleet utilization, optimize fleet deployment, increase efficiencies and take better advantage of the Company’s expanded fleet and national leadership position in frac water heating; and ability to de-lever the balance sheet and take costs of our the business. 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.Contact:Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
Phone: 303-880-9000
Email: jay@pfeifferhigh.com
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